State v. Johnson

• Decision Date: 02 August 1994
• Docket Number: No. CR-93-0340-PR,CR-93-0340-PR
• Citation: 880 P.2d 132,179 Ariz. 375
• Parties: STATE of Arizona, Appellee, v. Robert E. JOHNSON, Appellant.
• Court: Arizona Supreme Court

Page 132

880 P.2d 132

179 Ariz. 375

STATE of Arizona, Appellee, v. Robert E. JOHNSON, Appellant.

No. CR-93-0340-PR.

Supreme Court of Arizona, In Banc.

Aug. 2, 1994.

[179 Ariz. 376] Grant Woods, Atty. Gen. by Paul J. McMurdie, Dawn M. Northup, Phoenix, for appellee.

John M. Antieau, Phoenix, for appellant.

OPINION

Memorandum Decision of the Court of Appeals, Division One filed June 1, 1993 vacated

FELDMAN, Chief Justice.

A jury convicted Defendant Robert Earl Johnson of one count of fraudulent scheme and artifice (hereinafter "fraud"). The trial court sentenced Defendant to concurrent terms of nine years for fraud and four years on an earlier conviction, for which he was on probation at the time he allegedly committed the fraud. By memorandum decision, the court of appeals affirmed. State v. Johnson, No. 1-CA-CR 91-0935 (June 1, 1993). We granted Defendant's petition for review, believing that the court of appeals may have erred in its application of the law. See Ariz.R.Civ.App.Proc. 23(c)(2). This court has jurisdiction under Ariz. Const. art. 6, § 5(3) and A.R.S. § 12-120.24.

FACTS

From January 2 until March 31, 1990, Defendant was a driver for Delivery Systems Inc. (DSI), a trucking company. By contract, Cardlock Fuel Services (Cardlock) provided gasoline for all DSI vehicles. DSI gave its drivers cards that let them obtain gas at any Cardlock station. The cards were similar to bank debit cards and activated the pump when inserted into a Cardlock machine. Cardlock then billed DSI for all gasoline purchases. Although employees were not authorized to use the cards for personal gas purchases, DSI had no system to track the issuance and use of its cards, nor any way to ensure that issued cards were returned.

A Cardlock employee eventually noticed unusual activity at one station and suspected that someone was using DSI cards to fuel non-DSI vehicles. The employee reported the activity to his supervisor, who informed DSI. DSI called the police, who set up a stakeout and arrested Billy Ivery shortly after he finished fueling a motor home by using a DSI card. Ivery was not a DSI employee and the motor home was a personal vehicle.

During police questioning, Ivery implicated his cousin, Robert Earl Johnson (hereinafter "Defendant"). Ivery said his cousin gave him the card in late January 1990 (a few weeks after Defendant went to work for DSI) so that Ivery could exchange gasoline for drugs and cash. The two then split the proceeds.

Based on Ivery's statement, police arrested Defendant at work on March 31, 1990. In addition to the card that Ivery had when arrested, police found another Cardlock fuel card in Defendant's wallet. Testimony showed that the two cards, and particularly Ivery's card, were used far more than most DSI cards. For example, on some days the same card was used three different times. Once, a card apparently was used to fill a vehicle with a greater gasoline capacity than any DSI vehicle. Because of lax security, Defendant had used other cards to fill his company truck, although he had not returned the two cards the police had seized.

In exchange for testifying against Defendant, Ivery obtained a favorable plea agreement. ¹ Defendant was convicted of fraudulent scheme or artifice, a class 2 felony. See A.R.S. § 13-2310(A). The court of appeals affirmed the trial court's judgment. We granted review to determine whether the trial court had erred in refusing to grant Defendant's motion for a directed verdict of acquittal on the fraud charge.

We conclude that the trial court erred because Defendant should have been convicted only of theft, a class 3 felony, under the facts of this case. See A.R.S. § 13-1802(C).

DISCUSSION

The fraudulent scheme and artifice statute provides, in pertinent part:

Any person, who, pursuant to a scheme or artifice to defraud, knowingly obtains any benefit by means of false or fraudulent pretenses, representations, promises or material omissions is guilty of a class 2 felony.

A.R.S. § 13-2310(A) (emphasis added).

In support of his acquittal motion, Defendant argued that "there's been no evidence that [he] used any fraudulent pretenses, that he made any fraudulent representations, promises or material omissions." The state made various responsive arguments at different stages of the proceedings. At trial, it argued that "the acts that constitute the fraudulent pretenses and misrepresentations are the defendant's representation to his company that when he took possession of those cards that they would only be used for legitimate business purposes ..." There was, however, no evidence that Defendant made any statement or omission to gain possession of the cards.

The state proffered an alternate misrepresentation theory to the court of appeals: "Appellant made or used, false representations or false pretenses when he used the Cardlock fuel card, or allowed someone else to use the card, for his own personal gain knowing it was his employer who paid for the gas." Emphasis in original. Again, the record contains no evidence of any statement or representation at the time the card was inserted into the pump.

The state best summarized its position at oral argument before this court. Rather than pointing to an explicit statement or representation, the state claimed that the fraud statute is satisfied when an employee breaches the trust relationship automatically arising from employment. The state argued that, by accepting employment, Defendant implicitly represented to his employer that he would act honestly. The representation is particularly to be implied, the state contended, when, as in this case, the employer entrusted the employee with something of value to be used for a specific or limited purpose. DSI entrusted Defendant with a gas card and, therefore, the gas. When it did so, Defendant implicitly agreed to use the card only for the employer's authorized purpose--to purchase gas for company vehicles. He also implicitly agreed to use the gas only for company business.

A. Characterizing the statute

In State v. Haas, we clarified and explained the statutory elements necessary to support a fraud conviction under § 13-2310(A):

[T]he state must prove not only (1) a scheme or artifice to defraud, but also that (2) defendant knowingly and intentionally participated in it and that (3) it was a scheme for obtaining money or property by means of "false or fraudulent pretenses, representations or promises."

138 Ariz. 413, 419, 675 P.2d 673, 679 (1983) (emphasis added).

In the present case, the first two elements are undisputed. The state proved Defendant knowingly acted pursuant to a scheme when Defendant provided the card and planned the thefts with his cousin, who supplied customers willing to pay money or drugs for gas. The state also proved Defendant obtained benefit from this scheme. Defendant does not challenge these findings, but argues on appeal, as he did at trial, that he did not obtain the benefit by means of a false pretense, representation, or promise.

The state responds that there need not be an actual misrepresentation or even a material omission. We agree. It is possible to satisfy this statutory element by a false pretense, including a subterfuge, ruse, trick, or dissimulation upon another. Id. at 422, 675 P.2d at 682. The state points to our words in Haas: "the definition of 'fraud' must be broad enough to cover all of the varieties made possible by boundless human ingenuity." Id. at 424, 675 P.2d at 684.

Haas exemplifies the type of ingenuity the statute must be broad enough to cover. In Haas, the defendant made numerous agreements to purchase real estate from his victims. In doing so, the defendant intimated that a mortgage on the property secured the purchases. In reality, only worthless securities backed the purchases. Although the defendant's purchase agreement reflected the true security, it was so worded that an average person might believe it meant something else. The defendant claimed he never lied about the security and, on the contrary, always answered truthfully when asked about the clause in the agreement. Presumably those who asked did not complete the deal, leaving only those who were misled to enter into the agreement. Thus, we held the facts in Haas sufficient to support a finding that the defendant obtained a benefit by misrepresenting the nature of the agreement, knowingly leading gullible persons to believe that the contract contained provisions giving the purchaser security when, in reality, it did not.

Haas illustrates the special type of crime the fraud statute was intended to cover. It contemplates swindles, Ponzi schemes, confidence games, and similar frauds in which the perpetrator takes advantage of the victim by inducing the latter to turn over property or money based on a false picture painted by the perpetrator. The statute's scope is illuminated by its history, for it was adopted almost chapter and verse from the federal mail fraud statute. ² See id. at 418, 675 P.2d at 678; State v. Moses, 123 Ariz. 296, 297, 599 P.2d 252, 253 (Ct.App.1979).

Congress enacted the first version of the federal mail fraud statute shortly after the Civil War to combat a wide variety of ingenious postal frauds. See Gregory Howard Williams, Good Government by Prosecutorial Decree: The Use and Abuse of Mail Fraud (hereinafter "Use and Abuse of Mail Fraud "), 32 ARIZ.L.REV. 137, 140 (1990). A Congressman who introduced an early version of the mail fraud statute "referred to the problem as 'frauds which are mostly gotten up in the large cities ... by thieves, forgers, and rapscallions generally, for the purpose of deceiving and fleecing the innocent people in the country.' " Id. at 140-41 (quoting H.R. No. 2295, Cong.Globe, 41st Cong., 3d Sess. 35 (1871)). Common frauds included offers of obscene materials, lotteries, gift schemes, and counterfeit money hoaxes known as "sawdust swindles." Id. All of these contemplate, as their basis, a...