Thursday, November 16, 2017
Court of Appeal:
Restitution Is Tied to Victim’s Loss, Not Perpetrator’s Gain
Defendant’s Protest That Receipt of Up to $60,000 in Bribes Doesn’t Justify $1 Million Restitution Order Is Rejected; Order Is Termed an ‘Act of Clemency’ Where Conspiracy Deprived Employer of $10.3 Million
By a MetNews Staff Writer
A man who received about $50,000 to $60,000 in bribes in a scheme under which his employer was deprived of about $10.3 million in revenues based on the concealment of the extent of a third party’s dumping on its landfill was properly ordered to pay $1 million in restitution, the Sixth District Court of Appeal has held.
Justice Adrienne M. Grover wrote the opinion, which was filed Tuesday and not certified for publication. It affirms an order of the Santa Clara Superior Court.
The appellant is Joseph Morse, who was district manager of Waste Management of California, Inc. He oversaw the Kirby Canyon Landfill in San Jose.
In exchange for bribes, he and some of his subordinates looked the other way while Resources Development Services (“RDS”), owned by James Lucero, dumped its waste at the landfill without paying anything to Waste Management, or paying a reduced rate based on employees intentionally misclassifying contents of the RDS dump trucks.
Morse, three employees, and Lucero were convicted of conspiracy to commit grand theft and commercial bribery. On appeal, Morse contested the amount of the restitution order, insisting that the record established his receipt of only about $30,000, not $1 million.
The opinion says that earlier, Morse “himself estimated that he received between $50,000 and $60,000 in bribes,” but adds that “even if he received less or received some of that money outside the time period alleged in the information, the $1 million obligation is rational and supported by the record.”
What counts, Grover said, is the amount of the employer’s loss of income to which it was entitled by virtue of RDS’s dumping, not the benefit to Morse in the form of bribes he received.
“Defendant was complicit and instrumental in the fraud scheme, and his restitution liability amounts to less than 10 percent of the victim’s loss,” Grover wrote.
She pointed to Penal Code §1202.4(f) which provides that, with specified exceptions, “in 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 section provides for restitution based on “profits lost due to injury incurred by the victim.”
Purpose of Restitution
Morse, the jurist said, “overlooks” the fact that the purpose of the restitution is “to make his employer whole for the fraud perpetrated by the conspiracy for which he was convicted.” She noted the subsection in the version of §1202.4 in effect at the time of sentencing requiring full restitution absent “compelling and extraordinary reasons.”
(The current version also so provides, though not in the cited subsection.)
“Defendant did not argue in the trial court any compelling and extraordinary reason for being relieved from paying the full $10.3 million restitution, and on this record we can only view the decision to impose a $1 million restitution obligation as an act of clemency.”
Morse sought to minimize his role in the scheme, saying he had no idea as to the scope of his employer’s lost profits, did not counsel employees to take bribes, wasn’t aware of the scope of the wrongdoing, and merely desisted from reporting what he did know. Grover responded:
“The court relied on the fact that defendant was ‘the highest ranking manager’ involved in the fraud scheme. Defendant’s conduct was egregious because that position should have instilled the highest degree of loyalty to his employer, impelling him to reject and report the scheme. That is a rational basis on which to impose liability for the ill-gotten gains received by him and his subordinate employees, regardless of whether his subordinates reported to him directly or to a middle manager. Defendant’s decision to remain ignorant of the day-to-day fraudulent transactions taking place at the landfill is not a compelling and extraordinary reason for excusing his liability.”
The opinion notes that Morse is not entirely relieved of any potential liability for payment of a sum in excess of $1 million. Lucero was ordered to make restitution in the full amount of $10.3 million, but “jointly and severally” with the other defendants.
The case is People v. Morse, H043571.
2008 News Report
A Christmas Day report on the case in 2008 in the Monterey Herald News says:
“Investigators estimate Lucero paid landfill employees $500,000—from heavy equipment operators to managers. One of the landfill managers allegedly received both bribery checks and the use of a brand-new $50,000 Ford Expedition.”
Lucero is presently charged in U.S. District Court for the Northern District of California of unlawfully dumping polluted earth and debris into wetlands and waters of San Francisco’s National Wildlife Refuge. A hearing on a motion is scheduled to be heard on Monday.
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