Wednesday, May 09, 2012

Polo, Markdowns and Embezzlement

After a jury convicted Whitney Lyn Wells of embezzlement in violation of Virginia Code § 18.2 – 111, she appealed.  Wells v. Commonwealth, __ S.E.2d __, 2012 WL 1498433 (Virginia Court of Appeals 2012). 

The case arose from something Wells (allegedly) did on October 30, 2010, while she

was working as a sales associate/cashier at Macy's in the children's department. On that day she gave unauthorized discounts to a customer and permitted that customer to take other items without paying for them.

Wells v. Commonwealth, supra.

At Wells’ trial, Robert Street, the loss prevention officer for Macy's, testified that he viewed the store surveillance tape for that day and observed the following:

A couple of minutes later the customer's transaction was complete. The customer walks away with three large bags.

Wells v. Commonwealth, supra. 

(The opinion notes that a “digital video recorder scanned” Wells’ registrar, but the video was not  “produced at trial because the hard drive had crashed.”  Wells v. Commonwealth, supra.  The prosecution therefore relied on Street, who “testified as to what he observed when he first viewed the video.”  Wells v. Commonwealth, supra.)

The opinion also explains that Macy’s computer records showed that

nine boys' Polo shirts and three men's Polo shirts were marked down by [Wells]. Each boy's shirt was originally priced at $35 but had been marked down to $17.50. Each of the men's shirts was originally priced at $75 but rang up at $28.99. None of those items was on sale. . . .The value of the unauthorized markdowns exceeded $200.

Wells v. Commonwealth, supra. 

Wells did “not contest the value” of the markdowns.  Wells v. Commonwealth, supra.  She also admitted she gave “the same customer eleven boys' Polo shirts [valued at $385] without any payment” because “she was trying to make people happy.” Wells v. Commonwealth, supra.  

For Wells “to manually alter the price of any item of merchandise,” she had to “enter an override code into the register/computer.” Wells v. Commonwealth, supra.  According to the opinion, a sales associate “generally” must “receive permission from a manager” before “changing a price”.  Wells v. Commonwealth, supra. I gather Wells did not.

When Street “confronted” Wells with the facts outlined above, she

admitted making the markdowns. She said the customer, whom she claimed to know only from the store, `always asked for discounts and asked for items for free.’ [Wells] told Street that `she gives in easy, that she is easily manipulated and that she changed the prices for the customer.’

[Wells] admitted that she was stealing and knew it was wrong. She thought she could get away with it. There was no evidence [she] received any of the proceeds from the sale or that she received any of the merchandise.

Wells v. Commonwealth, supra.

Virginia Code § 18.2 – 111 defines the crime of embezzlement as follows:

If any person wrongfully and fraudulently use, dispose of, conceal or embezzle any money, bill, note, check, . . . or any other personal property, tangible or intangible, which he shall have received for another or for his employer, . .  or by virtue of his office, trust, or employment, or which shall have been entrusted or delivered to him by another or by any court, corporation or company, he shall be guilty of embezzlement.

On appeal, Wells challenged “the sufficiency of the evidence [to support her conviction], contending that the uncontradicted evidence shows she did not benefit from the price markdowns.”  Wells v. Commonwealth, supra.  Wells raised this issue below, when the trial judge was preparing to instruct the jurors on the applicable law.  Wells v. Commonwealth, supra.

As Wikipedia explains, in the U.S. judicial system, jurors are the trier of fact in a jury trial (and judges are the trier of fact in a bench trial). 

In other words, it is their job to sort through disputed accounts presented in evidence. The judge decides questions of law, meaning he or she decides how the law applies to a given set of facts. The jury instructions provide something of a flow chart on what verdict jurors should deliver based on what they determine to be true. . . .

At Wells’ trial, the trial judge found

there was no evidence showing any pecuniary benefit to [Wells], but opined that such benefit is not mandated by the law. The Commonwealth, the trial court concluded, must prove benefit to the defendant or benefit to another. 

Wells v. Commonwealth, supra. 

He therefore instructed the jury (in Instruction No. 4ii) that

The defendant is charged with the crime of embezzlement. The Commonwealth must prove beyond a reasonable doubt each of the following elements of that crime:

2. That the property had been received by the defendant by virtue of her employment, office, or trust for her employer; and

3. That the value of the property was $200 or more.

Wells v. Commonwealth, supra. 

The trial judge refused to give this instruction, which was proposed by Wells:

To establish the crime of embezzlement, the Commonwealth must prove the accused wrongfully appropriated to his or her own benefit, with the intent to deprive the owner thereof, the property entrusted or delivered to the accused. Proof of the misappropriation of property entrusted to the possession of the accused is insufficient standing alone to prove embezzlement.

Wells v. Commonwealth, supra. 

He did give this instruction, which was also proposed by Wells:  “A fraudulent or dishonest act is one which involves bad faith, breach of honesty, a want of integrity or moral turpitude.”  Wells v. Commonwealth, supra. 

Wells’ challenge to the sufficiency of the evidence on appeal was based on two arguments.  One was that the “evidence shows she did not benefit from the price markdowns.”  Wells v. Commonwealth, supra.  The other was that “she entertained no fraudulent intent, as her only intent was to please the customer.”  Wells v. Commonwealth, supra. 

The Court of Appeals did not buy her first argument, for two reasons.  Wells v. Commonwealth, supra.  The first reason was that the

plain language of the statute does not require the employee to personally benefit in order to be guilty of embezzlement. Proof of the `[u]nauthorized and wrongful exercise of dominion and control over another's personal property, to [the] exclusion of or inconsistent with [the] rights of the owner,’ is sufficient to prove embezzlement. Evans & Smith v. Commonwealth, 226 Va. 292, 308 S.E.2d 126 (1983).

In Chiang v. Commonwealth, 6 Va. App. 13, 365 S.E.2d 778 (1988), this Court concluded that it is not necessary to show that the defendant misappropriated the property for `his own personal use and benefit’ [to prove embezzlement]; it is sufficient to show that the defendant took the property to benefit another.   

Wells v. Commonwealth, supra. 

As to the second reason, the Court of Appeals initially noted that “at trial, [Wells] did not object to Commonwealth's Instruction No. 4ii which stated, in part, that the prosecution must prove that `the defendant wrongfully and fraudulently converted . . . to the use of another. . . .’”  Wells v. Commonwealth, supra. 

It then explained that the Virginia Supreme Court

opined in Wintergreen Partners v. McGuireWoods, 280 Va. 374, 698 S.E.2d 913 (2010), `”‘instructions given without objection become the law of the case and thereby bind the parties in the trial court and this Court on review.’“’ Id. at 379, 698 S.E.2d at 916 (quoting Owens–Illinois, Inc. v. Thomas Baker Real Estate, Ltd., 237 Va. 649, 379 S.E.2d 344 (1989)). . .

Thus, [Wells] is bound by Instruction No. 4ii, i.e., that the Commonwealth need not prove appellant personally benefitted from the misappropriation.

Wells v. Commonwealth, supra.  In other words, Wells waived her right to raise the issue by not objecting to the instruction at the time the trial judge was considering it.

The court then took up her second argument, which was that “there was no evidence of fraudulent intent because her only intent was to accommodate the customer and that she was authorized to mark down items.”  Wells v. Commonwealth, supra.  It noted that

`[t]o constitute embezzlement, fraudulent intent to deprive the owner of his property must be proved beyond a reasonable doubt.’ Dove v. Commonwealth, 41 Va.App. 571, 586 S.E.2d 890 (2003). . . . `Proof of intent inheres in the words or conduct of the accused.’ Id. . . . . Intent often must be proved by circumstantial evidence. See Wilson v. Commonwealth, 249 Va. 95, 452 S.E.2d 669 (1995)(`Intent is a state of mind that may be proved by an accused's acts or by his statements and that may be shown by circumstantial evidence.’).

Wells v. Commonwealth, supra.

The Court of Appeals found that Well’s argument on this issue failed

two reasons. First, it ignores [her] statement to Street, the store's loss prevention officer, that she was stealing and she knew it was wrong. She said she thought she could get away with it. Second, [Wells] told Street that if a customer wanted a price reduction, `I would call a manager.’ During the transaction which is the subject of this appeal, she did not call a manager. Further, Street testified that a sales associate, in order to mark down a sale price, must get permission from a manager, except in limited circumstances not applicable here. Furthermore, in addition to these unauthorized markdowns, [Wells] also gave away other shirts to the customer.

Wells v. Commonwealth, supra.

The court concluded by first rejecting her argument that “proof of misappropriation of property is not enough to prove embezzlement” and then finding that

the evidence proved more than that [Wells] simply misappropriated Macy's property. [She] admitted to stealing her employer's property. Further, there was evidence that [her] acts were unauthorized.

Wells v. Commonwealth, supra.  For this and other reasons, it affirmed her conviction (and whatever punishment was imposed on her – the opinion does not say what it was).  Wells v. Commonwealth, supra.


Anonymous said...

here are a couple of articles that you might want to talk about. I realize that one of them is 2 yrs old, but it is quite a case and I have never heard of the ACLU being able to do something like that.

Anonymous said...

what does this case have to do with cybercrime?

Susan Brenner said...

(i) the override on the computer/register;
(ii) the crashed hard drive on the digital recorder;
(iii) the doctrinal proposition that manipulating digital devices to appropriate property for someone constitutes embezzlement.