State v. Folley, 011020 NHSC, 2018-0708

Docket Nº:2018-0708, 2018-0710
Opinion Judge:DONOVAN, J.
Party Name:THE STATE OF NEW HAMPSHIRE v. JAMES FOLLEY THE STATE OF NEW HAMPSHIRE v. KAREN FOLLEY
Attorney:Gordon J. MacDonald, attorney general (Bryan J. Townsend, II, assistant attorney general, on the brief), for the State. Law Office of Shepherd & Osborne, of Nashua (Justin C. Shepherd on the brief), for James Folley. Law Office of Michael J. Zaino, PLLC, of Hampton (Michael J. Zaino on the brief)...
Judge Panel:HICKS, BASSETT, and HANTZ MARCONI, JJ., concurred.
Case Date:January 10, 2020
Court:Supreme Court of New Hampshire

THE STATE OF NEW HAMPSHIRE

v.

JAMES FOLLEY

THE STATE OF NEW HAMPSHIRE

v.

KAREN FOLLEY

Nos. 2018-0708, 2018-0710

Supreme Court of New Hampshire

January 10, 2020

Submitted: November 20, 2019

Hillsborough-northern judicial district

Gordon J. MacDonald, attorney general (Bryan J. Townsend, II, assistant attorney general, on the brief), for the State.

Law Office of Shepherd & Osborne, of Nashua (Justin C. Shepherd on the brief), for James Folley.

Law Office of Michael J. Zaino, PLLC, of Hampton (Michael J. Zaino on the brief), for Karen Folley.

DONOVAN, J.

The defendants, James Folley and his wife, Karen Folley, appeal their convictions following a joint jury trial in the Superior Court (Abramson, J.) on two counts of theft by unauthorized taking as a principal or accomplice, see RSA 637:3 (2016); RSA 626:8 (2016), and, as to James, an additional count of financial exploitation of an elderly adult, see RSA 631:9 (Supp. 2018).1 They also appeal the trial court's restitution order requiring that they pay restitution to an assisted living facility where the victim resided at the time of the crimes. They argue that: (1) the evidence was insufficient to support their convictions; and (2) the trial court erred by ordering them to pay restitution to the facility because it is not entitled to compensation under RSA 651:62 (2016). We affirm the defendants' convictions but reverse the restitution order because the economic loss claimed by the facility was not a direct result of the defendants' criminal conduct. See RSA 651:62, III.

I. Facts

The jury could have found the following facts based upon the evidence at trial and the reasonable inferences drawn therefrom. In 2006, James' elderly sister, the victim, executed a durable power of attorney agreement which prospectively authorized James to act as her attorney-in-fact on financial decisions in the event she became unable to make decisions for herself. Thereafter, she moved into an assisted living facility. At this time, the victim had been diagnosed with Parkinson's disease but had no mobility or memory issues.

Until 2011, the victim had sole control over her finances and paid her bills independently. She did not have a debit card and instead paid her bills by check. The majority of the victim's spending was on housing and medical expenses. She also made small expenditures on retail purchases, which consisted mostly of purchases from a gift basket company, and contributed a small amount to charities. On September 28, 2011, the victim added James as a co-owner of her bank account.

In October 2011, when the victim was 77 years old, she moved to another assisted living facility. In her application for admission, she listed assets of $170, 000, monthly Social Security and pension income of approximately $1, 923, and monthly expenses of approximately $346. When she applied, the facility staff informed her that she was expected to make her assets available for costs associated with living there. During this period of time, neither defendant worked due to health problems.

The victim moved into a small one-room unit at the facility, at a cost of $4, 000 per month, which did not have a kitchen or other amenities. The victim did not drive and could not prepare meals without assistance, and thus relied upon the facility to provide her meals, transportation, and entertainment. She spent her time reading, playing games, and watching television, and she continued to pay for housing and medical expenses by check. She rarely made retail purchases, and when she did, they consisted of used books and sneakers. When the defendants visited the victim, they brought her personal necessities.

Within weeks of being added as a co-owner of the victim's bank account, James obtained a debit card associated with the account. The defendants used the debit card in November 2011 to make a $600 ATM withdrawal. On the same day, $700 was deposited into the defendants' bank account. Between November and December 2011, they also used the debit card to pay for purchases at retail stores totaling approximately $89.

For several months, there were no debit card expenditures from the victim's account. However, in April 2012, James changed the address on the victim's bank account to his own address. Then, in August, when the victim had nearly $140, 000 in her account, the defendants engaged in an "explosion in spending" that was "uncharacteristic" of the victim's spending patterns, consisting of debit card purchases and cash withdrawals from the victim's bank account. This spike in spending occurred shortly after the victim had visited her doctor on August 7 to assess concerns about her increased mobility challenges, frequent falls, and decline in short-term memory, which are symptoms associated with Parkinson's disease.

Between August 2012 and September 2013, the defendants used the debit card to purchase thousands of dollars of retail items from local and online stores and to conduct thousands of dollars in ATM withdrawals. These purchases included cookware, pet supplies, groceries, car parts, toys, airplane tickets, and cigarettes. The large majority of items purchased from online retailers - 90 of 93 items purchased from one retailer - were shipped to Karen at the defendants' address. They also used funds to pay for household and personal expenses, such as cable, heating, and mobile phone expenses.

The defendants made numerous cash withdrawals from the victim's account, often withdrawing hundreds of dollars at a time. These withdrawals frequently occurred shortly before the defendants deposited similar amounts of money in their own bank account. Prior to this period, the defendants rarely made such large deposits. In March 2013, James withdrew $50, 000 from the victim's account and deposited $47, 500 into the defendants' bank accounts and retained the remaining $2, 500 in cash. By August 2013, the victim had only $1, 342 in her account.

In July 2013, the facility moved the victim into its memory care unit as a result of her frequent falls and increasing memory issues. During this time frame, James began exercising control over the victim's finances under his power of attorney. Due to the defendants' concern about the victim's financial situation, the facility agreed to reduce the cost of the victim's room from $5, 400 per month to $3, 500 per month. Although the defendants deposited $5, 000 into her account in September 2013 and $500 in May 2014, they continued to use funds from her account. Between October 2013 and November 2014, the defendants made an additional withdrawal, with a corresponding deposit into their account, and debit card purchases, totaling $3, 080.

In February 2014, James informed the facility that the victim's funds had been depleted. Because the facility did not "want[] to see [the victim] go," it asked James for an amount the victim could reasonably afford to pay. James informed the facility the victim could pay $1, 860 per month, based upon her monthly Social Security and pension income, which the facility accepted. In March and September 2015, James made two withdrawals of $812 and $425 respectively, which were deposited into the defendants' checking account.

In April 2015, James applied for Medicaid for the victim through the New Hampshire Department of Health and Human Services (DHHS), with the intent of moving her into a nursing care facility that accepted Medicaid. As part of the application process, a DHHS staff member met with the defendants. The staff member informed them that DHHS would review the victim's financial history for the last five years (lookback period) and asked whether any "red flag[s]" would appear. The defendants informed DHHS that its review would reveal a $50, 000 gift from the victim, which James described as an "inheritance," but that the transaction occurred prior to the lookback period.

When DHHS conducted its review, it noticed the high rates of debit card spending and withdrawals beginning in August 2012 that seemed uncharacteristic of the victim's previous financial activity. DHHS provided the defendants with a list of transactions it considered to be "questionable" and requested additional information within 10 days. James sent an e-mail to DHHS, remarking on the number of questions DHHS asked the defendants to answer and noting that the victim handled the money herself until he "took over" in August 2013. After receiving an extension, James explained withdrawals and purchases in mostly general terms, providing only a few specific explanations for certain transactions. He represented that the defendants had made cash withdrawals at the victim's request to give as gifts to the victim's stepchildren and step-grandchildren; that they made grocery store purchases of fruits and candy for "huge" gift baskets that the victim gave to the facility staff; that Karen purchased items to decorate the victim's room at the facility; that the victim wanted "other things" that the facility did not provide for her; and that the victim purchased satellite cable for the defendants as a Christmas gift. James acknowledged purchases of car parts, but stated only that he "used the debit card," noting that it was "in both names."

DHHS denied the application due, in part, to the defendants' failure to provide sufficient information about the questionable transactions. Following the denial, James represented to DHHS that he had not received the lookback logs. Subsequently, DHHS sent the defendants a packet containing them. The defendants thereafter provided DHHS with transaction-by-transaction explanations for the items listed on the log, but many of their explanations were similar to James' previous representations and did not...

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