State v. Stan's Contracting, Inc.

• Decision Date: 15 June 2006
• Docket Number: No. 25394.,25394.
• Citation: 137 P.3d 331
• Parties: STATE of Hawai`i, Plaintiff-Appellant, v. STAN'S CONTRACTING, INC., Roy Shioi, G.W. Murphy Construction Company, John Patrick Henderson and Mark L. Henderson, Defendants-Appellees.
• Court: Hawaii Supreme Court

Page 331

137 P.3d 331

STATE of Hawai`i, Plaintiff-Appellant, v. STAN'S CONTRACTING, INC., Roy Shioi, G.W. Murphy Construction Company, John Patrick Henderson and Mark L. Henderson, Defendants-Appellees.

No. 25394.

Supreme Court of Hawai`i.

June 15, 2006.

Adina L.K. Cunningham, Deputy Attorney General, on the briefs, for the plaintiff-appellant, State of Hawai`i.

David J. Minkin, of McCorriston Miller Mukai MacKinnon, on the briefs, Honolulu, for the defendants-appellees, Stan's Contracting and Roy Shioi.

William A. Harrison, of Harrison & Matsuoka, on the briefs, Honolulu, for the defendants-appellees, G.W. Murphy Construction Co., John Patrick Henderson, and Mark L. Henderson.

MOON, C.J., LEVINSON, NAKAYAMA, ACOBA, and DUFFY, JJ.

Opinion of the Court by LEVINSON, J.

The plaintiff-appellant State of Hawai`i [hereinafter, "the State" or "the prosecution"] appeals from the August 9, 2002 order of the circuit court of the first circuit, the Honorable Reynaldo D. Graulty presiding, dismissing a two-count theft indictment as time-barred and fatally defective. Count I was filed against the defendants-appellees Stan's Contracting, Inc. and Roy Shioi [hereinafter, collectively, "Stan's Contracting"], charging them with theft in the second degree, in violation of Hawai`i Revised Statutes (HRS) § 708-831(1)(b) (1993).¹ Count II of the indictment was filed against the defendants-appellees G.W. Murphy Construction Company, John Henderson, and Mark Henderson [hereinafter, collectively, "Murphy Construction"], charging them with theft in the first degree, in violation of HRS § 708-830.5(1)(a) (1993).² On appeal, the prosecution argues that the circuit court erred in concluding: (1) that theft by deception does not include "an element of ... fraud" and is thus not subject to the fraud exception tolling the statute of limitations under HRS § 701-108(3)(a) (Supp.1997);³ and (2) that the prosecution is required to prove to the grand jury, and to allege in the indictment, that the prosecution began within the time period specified in the fraud exception. We agree with the prosecution that, for the purposes of HRS § 701-108(3)(a), theft by deception does include "an element of fraud" so as to invoke the tolling provisions of that section.

Nevertheless, we hold that when the charged offense is theft by deception, as defined by HRS § 708-830(2) (1993),⁴ and the prosecution is relying on the tolling provision of HRS § 701-108(3)(a), relating to "[a]ny offense an element of which is ... fraud," the prosecution must not only allege the timely date or dates of commission of the offense in the indictment, but also the earliest date of the "discovery of the offense by an aggrieved party or ... a person who has a legal duty to represent [the] aggrieved party." Because the indictment failed to aver the date of the earliest discovery of the alleged offenses, we affirm the circuit court's order dismissing the indictment with prejudice.

I. BACKGROUND

The present matter arises out of the State's investigation of a Department of Accounting and General Services (DAGS) employee, Fidel Eviota II. Apparently, Eviota submitted multiple invoices totaling more than $700,000 for unperformed construction services ostensibly in accordance with construction contracts and DAGS reimbursement procedures. Stan's Contracting and Murphy Construction [hereinafter, collectively, "the Appellees"] were general contractors involved in two separate contracts that Eviota oversaw in 1996 and 1997. Shioi was a project manager for Stan's Contracting, Inc. and the Hendersons were president and vice president of G.W. Murphy Construction Company at the time. Boyd Sakai, an auditor for the Department of the Attorney General, determined that through a series of bogus change orders—i.e., unwarranted construction purchase orders allowing reimbursement for unexpected costs in a state construction contract—Eviota allegedly funneled at least $6,117.00 through Stan's Contracting and $88,428.00 through Murphy Construction toward the construction of three homes owned by Eviota in M;a`ili. During the course of the investigation, Sakai tracked the payments through a number of parties and accounts, and traveled to California to gather original tissue copies of some of the checks in question.

On May 15, 2002, an O`ahu grand jury returned an indictment: (1) charging Stan's Contracting with one count of theft in the second degree, in violation of HRS § 708-831(1)(b), see supra note 1; and (2) charging Murphy Construction with one count of theft in the first degree, in violation of HRS § 708-830.5(1)(a), see supra note 2.⁵

On June 19, 2002, Stan's Contracting filed a motion pursuant to Hawai`i Rules of Penal Procedure (HRPP) Rule 12⁶ to dismiss Count I on the grounds: (1) that the prosecution was not commenced within three years of the commission of the offense as required by HRS § 701-108(2)(c), see supra note 3; (2) that the evidence put to the grand jury regarding the statute of limitations was insufficient; and (3) that the indictment was fatally defective for failing to allege facts establishing the tolling of the statute of limitations.⁷ On July 24, 2002, Murphy Construction filed a joinder in the motion, asking that the circuit court dismiss Count II.

On July 26, 2002, the circuit court conducted a hearing on the motion to dismiss. In response to the Appellees' contention that the indictment was not brought within the statute of limitations, the prosecution made an offer of proof that Ephrain Ho, an investigator for the Department of the Attorney General, was assigned on June 3, 1999 to investigate criminal allegations involving Eviota.⁸ In the offer of proof, the prosecution stated that Ho would testify that he first heard of the Appellees on June 16, 1999, in an interview with one of the subcontractors through which the bogus change orders were funneled. Ho would further testify, however, that it was not until February 14, 2000 that he first had reason to suspect the Appellees' alleged criminal involvement in Eviota's schemes. The circuit court and the Appellees accepted the offer of proof, the latter entering objections that the offer was insufficient to cure the indictment's alleged insufficiencies.

On August 9, 2002, the circuit court entered findings of fact (FOFs), conclusions of law (COLs), and an order dismissing the indictment with prejudice. The circuit court concluded in relevant part:

2. The Indictment returned by the O[']ahu Grand Jury on May 15, 2002 did not require the prosecution [to] prove, beyond a reasonable doubt as required by [HRS] § 701-114(a) [(1993)⁹], that the [Appellees] fraudulently obtained or controlled property of the State ... as an element of the offense of Theft by Deception or that they acted with intent to defraud. See [HRS] § 708-830(2)[, supra note 4].

3. For purposes of tolling the statute of limitations under [HRS] § 701-108(3)(a)[, see supra note 3], fraud is not synonymous with "deception" for crimes defined under [HRS ch.] 708. See [HRS] § 708-800 (Supp.1996) (different statutory definitions for "deception" and "intent to defraud").[¹⁰]

4. Whereas [HRS ch.] 708 contains numerous statutes expressly requiring "intent to defraud" as an element of the offense necessary to sustain a conviction, Theft by Deception does not require the intent to defraud[;] rather, the State must prove a defendant knowingly used deception with the intent to deprive an owner of his/her property. See State v. Freeman, 70 Haw. 434, 438-39, 774 P.2d 888, 8[9]1 (1989) (Theft by Deception is not an included offense of Fraudulent Use of a Credit Card because the offenses require different states of mind to be proven beyond a reasonable doubt); ... Hawai[`]i [Standard] Jury Instruction—Criminal, 10.19 Theft in the Second Degree—Deception (Instruction for Theft by Deception does not require "fraud" as an element of the offense the finder of fact must find proven beyond a reasonable doubt).

5. Thus, the exception provided in [HRS] § 701-108(3)(a) does not apply to the crime of Theft by Deception, as defined by [HRS] § 708-830(2), wherein fraud is not an element that must be proven beyond a reasonable doubt for conviction. Accordingly, the indictment of [the Appellees] for Theft by Deception on May 15, 2002, for crimes allegedly committed in 1997, occurred beyond the [three-]year time period permitted by [HRS] § 701-108(2)(c).

6. Furthermore, to commence a prosecution pursuant to the statute of limitations exception under [HRS] § 701-108( [3)(a) ], the State ... must present evidence to the Grand Jury establishing probable cause of when the alleged criminal conduct was discovered, i.e., that it was discovered at a time within the statute of limitations exception. See State v. Ontai, 84 Hawai`i 56, 63-64, 929 P.2d 69, 76-[77] (... 1996)[;] State v. Arceo, 84 Hawai`i 1, 13, 928 P.2d 843, 855 ( ... 1996) ("In an indictment, the offense ... may be stated with so much detail of time, place, and circumstances and such particulars . . . as are necessary to identify the transaction, to bring it within the statutory definition of the offense charged, to show that the court has jurisdiction, and to give the accused reasonable notice of the facts.") ([emphasis in] original).

7. The State's ... offer of proof ... of... Ho's discovery of the alleged thefts on June 16, 1999 failed to satisfactorily identify when the proper Complainant (DAGS) first discovered the alleged thefts. Thus, the offer of proof of ... Ho's testimony could not cure the evidentiary defect arising from the failure to present any evidence to the Grand Jury as to the date of discovery of the alleged offense. Cf. Arceo, 84 Hawai`i at 13 .

8. Accordingly, the quantum of evidence presented to the O[']ahu Grand Jury was insufficient to invoke the exception provided in [HRS] § 701-108(3)(a) and allow prosecution of the Defendants beyond the [three-]year time limitation of [HRS] § 701-108(2)(c). Id...