People v. Levey, A118999 (Cal. App. 4/10/2009), A118999

• Decision Date: 10 April 2009
• Docket Number: A118999
• Parties: THE PEOPLE, Plaintiff and Respondent, v. DAVID MARK LEVEY, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

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THE PEOPLE, Plaintiff and Respondent, v. DAVID MARK LEVEY, Defendant and Appellant.

A118999

Court of Appeals of California, First Appellate District, Division Three

April 10, 2009

Not to be Published in Official Reports

Appeal from the Contra Costa County, Super. Ct. No. 05-0511857.

SIGGINS, J.

David Mark Levey appeals from an award of victim restitution following his no contest plea to embezzlement of more than a million dollars, forgery, and attempting to file false or forged instruments. Levey contends the trial court improperly placed the burden of proof upon him to show that the victim claimed an excessive amount of restitution. He also argues that restitution was awarded for unauthorized losses, was improperly made payable to the individual victim rather than to the business entities that incurred certain losses, and that the lawyer who represented Levey in the restitution proceedings had a disqualifying conflict of interest.

We conclude that the court properly allocated the burden of proof and did not abuse its discretion in establishing the measure of restitution or directing that Levey pay it directly to his individual victim. Levey's representation was not impaired by a disqualifying conflict of interest that affected his defense counsel.

We agree with Levey and the Attorney General that the trial court erred when it failed to award the correct amount of conduct credits. Accordingly, we order that the abstract of judgment be modified to reflect an award to Levey of four additional days of conduct credits, but in all other respects we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Levey and Michael Stead were business partners. Their ventures included Redwood Empire Restaurants (Redwood Empire), that owned a number of Taco Bell restaurants, and Double Eagle Enterprises (Double Eagle), that owned the real property underlying several of the restaurants and a condominium in Hawaii. Levey ran the day-to-day affairs of both businesses. As a result of an introduction facilitated by Levey, Stead also acquired a controlling interest in Vintner's Golf Club, LLC (Vintner's) through a limited partnership, Double Bogey, of which Stead was "one hundred percent owner."¹ Double Bogey purchased the interest of one of the shareholders of Vinter's operator Yountville Associates, LLC, and agreed to assume and pay Vintner's existing $3.7 million loan owed to Wells Fargo Bank. As a result of the purchase, Double Bogey held a 55 percent interest, Yountville held a 42.5 percent interest, and Levey held a 2.5 percent interest (which he received as a finder's fee). Levey managed the operation of Vintner's, and was responsible for paying its bills and keeping its books and records.

In late 2002, Stead was notified by Wells Fargo that the Vinter's loan was in default. He then discovered that Levey had misappropriated more than $1 million in checks Stead had written approximately two years earlier for the purpose of paying off the Wells Fargo loan. The bank also warned Stead of a "blizzard" of intercompany financial transactions. Stead contacted his attorney, who retained a forensic accountant to investigate why the Wells Fargo loan had not been paid as Stead directed. The forensic accountant uncovered a tangled web of complex fund transfers between various business entities that had concealed the precarious state of Levey's finances.

Stead confronted Levey, and Levey admitted the embezzlement but promised to repay the money. In February 2003, Levey and his wife entered into a restitution and security agreement (the RSA) with Stead and Vintner's. Levey agreed to repay Stead the amount of $1.257 million (plus interest and other direct economic losses), and "also to repay the costs of discovering the misappropriation and recovering the misappropriated funds and resulting loss, including but not limited to attorneys' fees, accountants' fees, costs of investigators, title fees and other costs . . . ."² The RSA was secured by interests in Levey's real and personal property, including his home. Levey continued to manage Redwood Empire and Double Eagle, but was removed from the management of Vintner's.

In June 2003, Stead's attorney learned that Levey had forged a deed of reconveyance for property that served as security for Levey's obligations under the RSA.³ Stead then secured the appointment of a receiver to take over management of Levey's assets that were pledged as security for the RSA. Stead also learned the Taco Bell franchises were in default, and that Levey's businesses survived due to a "blizzard of kiting transactions back and forth between his multiple bank accounts." Stead advanced $352,000 to keep the Taco Bells open, on the advice of an expert who opined they would be more valuable as an ongoing business.

Later that summer, creditors placed Levey in involuntary bankruptcy. The bankruptcy trustee attempted to hold Stead personally liable for some of the debts of the business entities Stead owned with Levey, and some of Levey's creditors brought (or threatened to bring) suit against Stead based on alter-ego and negligent entrustment theories.⁴ To resolve the claims of his personal liability, Stead paid $100,000 to Taco Bell, at the request of the bankruptcy trustee. The bankruptcy trustee ultimately settled with Levey's creditors, and some of the money owed to Stead was paid from the bankruptcy estate, but Stead's attorney fees and other expenses incurred in obtaining payment remained outstanding.

Levey was charged with grand theft by embezzlement, with an enhancement for loss of more than $1 million; forgery; and three counts of attempted filing of a forged instrument. He entered a no contest plea to all charges. The court suspended imposition of sentence and placed Levey on five years' probation, including a condition of one year in county jail.

The court held three evidentiary hearings on victim restitution, and received extensive briefing from the parties. Prior to the hearings, a restitution supplemental probation report was served on Levey's counsel. It reflects that documentation supporting the report was located in Levey's probation file. A victim claim statement and description of loss that Stead completed and filed with probation officials was admitted into evidence. Stead claimed he was owed over $2 million in fees and costs. Levey argued that only $111,290.45 of that amount constituted legitimate restitution, and claimed Stead had already been "overpaid" by almost $30,000. In a detailed 27-page order, the court considered the evidence and legal positions advanced by the parties, and awarded Stead $3,189,733.31 as restitution for his economic losses incurred as a result of Levey's criminal conduct. Levey timely appealed.

DISCUSSION

A. General Legal Standards Regarding Restitution

Section 28 was added to article I of the California Constitution by voters in the June 1982 primary election. Commonly known as the Victims' Bill of Rights, it gives all crime victims the constitutional right to receive restitution "from the persons convicted of the crimes for losses they suffer." (Cal. Const., art. I, § 28, subd. (b).) The Legislature subsequently "enacted various provisions to implement [section 28's] call for mandatory restitution from persons convicted of crimes to their victims." (People v. Birkett (1999) 21 Cal.4th 226, 236.)

Penal Code⁵ section 1202.4 is one such enactment. Subdivision (a)(1) provides: "It is the intent of the Legislature that a victim of crime who incurs any economic loss as a result of the commission of a crime shall receive restitution directly from any defendant convicted of that crime." Section 1202.4 further provides, in relevant part: "[I]n every case in which a victim has suffered economic loss as a result of the defendant's conduct, the court shall require that the defendant make restitution to the victim or victims in an amount established by court order, based on the amount of loss claimed by the victim or victims or any other showing to the court. . . . The court shall order full restitution unless it finds compelling and extraordinary reasons for not doing so, and states them on the record. . . . [¶] (1) The defendant has the right to a hearing before a judge to dispute the determination of the amount of restitution. The court may modify the amount, on its own motion or on the motion of the district attorney, the victim or victims, or the defendant. . . ." (§ 1202.4, subd. (f).)

"To the extent possible, the restitution order shall be prepared by the sentencing court, shall identify each victim and each loss to which it pertains, and shall be of a dollar amount that is sufficient to fully reimburse the victim or victims for every determined economic loss incurred as the result of the defendant's criminal conduct, including, but not limited to," lost wages or profits, 10 percent interest, and "actual and reasonable attorney's fees and other costs of collection." (§ 1202.4, subds. (f)(3)(D), (G) & (H).)

"A victim's restitution right is to be broadly and liberally construed." (People v. Mearns (2002) 97 Cal.App.4th 493, 500-501.) "We review a restitution order for abuse of discretion." (Id. at p. 498.) "`When there is a factual and rational basis for the amount of restitution ordered by the trial court, no abuse of discretion will be found by the reviewing court.'" (Id. at p. 499.)

"California courts have long interpreted the trial courts' discretion to encompass the ordering of restitution as a condition of probation even when the loss was not necessarily caused by the criminal conduct underlying the conviction. . . . There is no requirement the restitution order be limited to the exact amount of the loss in which the defendant is actually found culpable, nor is there any requirement the order reflect the amount of damages that might be recoverable in a civil action." (People v. Carbajal (1995) 10 Cal.4th 1114, 1121.) The scope of a trial court's discretion...