State v. Waigand
| Citation | 953 N.W.2d 689 |
| Decision Date | 22 January 2021 |
| Docket Number | No. 19-0089,19-0089 |
| Parties | STATE of Iowa, Appellee, v. Joseph Scott WAIGAND, Appellant. |
| Court | United States State Supreme Court of Iowa |
Martha J. Lucey, State Appellate Defender, and Theresa R. Wilson, Assistant Appellate Defender, for appellant.
Thomas J. Miller, Attorney General, Katie Krickbaum, Assistant Attorney General, and Timothy Ray Kenyon, County Attorney, for appellee.
In this appeal, we must determine whether the district court erred in awarding criminal restitution in the full amount of the victim bank's deficiency judgment, beyond the specific amounts the defendant admitted converting in his guilty plea colloquy. The bank had financed the defendant's farming operation and collateralized its loans with mortgages and security agreements. The defendant sold crops and illegally diverted the proceeds he owed the bank. The defendant was charged with ongoing criminal conduct and multiple counts of theft with intent to defraud a secured party. The theft charges were dismissed in a plea agreement in which he pled guilty to ongoing criminal conduct for forty-eight specific transactions. He ultimately admitted the bank's losses for those sales totaled $288,000. The bank foreclosed on his farmland and equipment and obtained a civil deficiency judgment of $988,636.25. The district court, despite expressing skepticism, ordered the defendant to pay restitution in the full amount of the bank's loss, rather than the amount he admitted converting.
The defendant appealed the restitution award, arguing the amount was excessive, the court erred in failing to allow an offset for the civil judgment, and that his counsel was ineffective for failing to demand a jury trial on restitution and for failing to assert equitable estoppel against the State. We transferred the case to the court of appeals, which affirmed the full amount. We granted the defendant's application for further review.
On our review, we determine that the State failed to prove the full amount was caused by the crime of conviction: ongoing criminal conduct. We vacate the amount in excess of $288,000 and remand the case for entry of an amended restitution award in that amount. All parties and the victim agree that amounts paid on the civil judgment will be credited to the restitution judgment and vice versa to avoid a double recovery. Based on our determination, we need not reach the defendant's claim raised for the first time on appeal that his trial counsel was ineffective for failing to demand a jury trial on the amount of restitution or argue equitable estoppel.
Joseph Waigand ran a large farming operation in Union County, which he financed through the Iowa State Savings Bank. Between 2009 and 2015, the bank and Waigand executed loan agreements secured by mortgages on the real estate and security interests in Waigand's property, including his livestock, crops, equipment, and receivables.
When extending credit, the bank relied in part on Waigand's balance sheet dated March 23, 2015, which reported $4,287,000 in assets, $2,499,000 in liabilities, and a net worth of $1,788,000. At that time, the amount of debt was $1,045,000. On December 23, loan officers checked the grain bins and discovered that Waigand had misrepresented the amount of grain that he owned. That day, bank president Kevin Stewart notified Waigand by letter that the bank terminated the line of credit. On January 6, 2016, senior vice president William Kunert notified Waigand by letter that the bank would extend no new credit for 2016. The letter was based on a farm call to view collateral, the review of Waigand's financial information, and Waigand's inability to make payments.
During that spring, the bank's collection efforts were largely unsuccessful. On June 10, the bank filed a petition for foreclosure. On July 7, Waigand filed for bankruptcy. During the bankruptcy proceedings, the trustee determined that Waigand had misrepresented the value of assets, converted crops, and diverted funds to third parties. On August 25, at the first meeting of the creditors, Waigand disclosed that the grain, grain checks, and valuations were substantially less than what he had listed in the March 2015 statement. The bank discovered that one asset Waigand had valued at $897,000 was actually worth zero. At the bankruptcy hearing on September 7, Waigand openly admitted to selling grain subject to the bank's security interests at the United Farmers Cooperative in Afton in a renter's name, Jake Hayes, to pay rent.
On January 20, 2017, the district court granted the bank's petition for foreclosure. The bank proceeded to liquidate assets. On October 3, the district court executed a levy on Waigand for a deficiency judgment of $988,636.25 in the civil action.
On December 8, the State filed a trial information charging Waigand with five counts of theft in the first degree, class "C" felonies in violation of Iowa Code sections 714.1(5), 714.2(1), and 902.9(1)(d ) ; five counts of theft in the second degree, class "D" felonies in violation of Iowa Code sections 714.1(5), 714.2(2), and section 902.9(1)(e ) ; and one count of ongoing criminal conduct, a class "B" felony in violation of Iowa Code sections 706A.1, 706A.2(1), and 706A.4. The Code provides, in part: "A person commits theft when the person does any of the following: ... [t]akes, destroys, conceals or disposes of property in which someone else has a security interest, with intent to defraud the secured party." Iowa Code § 714.1(5) (2018).
The criminal investigation had begun in September 2016 after bank personnel discovered that secured crops had been liquidated and funds diverted to other individuals. At that time, the case was referred to the Iowa Department of Criminal Investigation (DCI). DCI Agent Marc Ridout obtained records from the bank and third parties that had done business with Waigand.
The criminal investigation corroborated the facts disclosed in the bankruptcy proceeding: Waigand had misrepresented the amount of grain that belonged to him and converted crop sale proceeds that belonged to the bank. Agent Ridout confirmed that on April 8, Waigand completed an "Authorization for Third Party Payment" to Hayes Cattle Co. (Jake Hayes) from United Farmers Cooperative in Afton for 7000 bushels of corn, which equated to $23,520. While Waigand claimed this was the only transaction he completed like that, Agent Ridout discovered forty-eight similar transactions. These transactions resulted in the sale of corn, hay, and beans, totaling approximately $268,788.91, the proceeds of which were paid to Waigand and third parties. The transactions involved several third parties, occurred without the bank's knowledge or permission, and resulted in no payments to the bank.
Waigand pled guilty to the offense of ongoing criminal conduct on June 15, 2018. The State dismissed the remaining counts. During the plea hearing, the prosecutor said restitution was "already requested in the approximate amount of $270,000" but that it "intend[ed] to request that amount or near that based upon the final arithmetic calculations."
President Stewart testified at the sentencing hearing on August 29. He testified that the deficiency balance on all loans still owed by Waigand was "right at a million dollars." The prosecutor argued,
The court gave the State thirty days to provide the specific amount sought in restitution and told Waigand that he could request a hearing if he objected to the State's restitution figure. The court sentenced Waigand to a term of imprisonment not to exceed twenty-five years, suspended, and placed Waigand on supervised probation for five years.
On September 19, the State filed an application for a supplemental restitution order. The court ordered restitution in the amount the State claimed: $988,636.25. Waigand filed an objection and request for hearing, primarily arguing that the district court in the civil proceeding had already ordered the defendant to repay the amounts that the court ordered in the criminal proceeding. In a supplement to his original objection, Waigand claimed the restitution award should be offset by $104,069 in expenses "legitimately directed at sustaining the farming operation." In these filings, Waigand's counsel stated the amount converted was $276,518.66.
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