eBay, Spoofing and Grand Theft

Graham Welsh Kidde was charged with, and went to trial on, four counts of grand theft in violation of California Penal Code § 487(a) “on the theory that he aided and abetted or conspired to commit the offense of grand theft by false pretense.” People v. Kidde, 2014 WL 703514 (California Court of Appeals 2014).  He was

acquitted of counts 1 and 2 (victims Iqbal and Juntti, respectively) and convicted of counts 3 and 4 (victims Power and Nagel, respectively). The court sentenced him to 180 days in custody, stayed the sentence, and granted him probation.

People v. Kidde, supra.

Kidde appealed his convictions on the two counts, arguing, on appeal, that the trial

record does not support that he was aware of the fraudulent scheme and hence he cannot properly be convicted of theft. Alternatively, he argues that as a matter of law he committed only one grand theft because he was acting pursuant to a single overall scheme. 

People v. Kidde, supra.

The Court of Appeals began its analysis of Kidde’s arguments by explaining that the

fraudulent eBay scheme in this case involved a ‘”spoofing’”’operation in which the seller placed an ad on eBay to sell a vehicle, and once a buyer was secured, the buyer was directed to a fake eBay invoice page. The invoice page gave the buyer the option of paying for the vehicle through a purported eBay escrow agent, who would hold the money for the seller until the vehicle was delivered to the buyer. In fact, there was no vehicle for sale and no such thing as an eBay escrow agent. The defrauded buyers wired money to a bank account belonging to the purported escrow agent, but never received the vehicle or a return of the money.

[Kidde] served as the purported eBay agent in these fraudulent transactions. Thomas Hutchings, an eBay fraud investigator, explained that in this type of fraud scheme a person known as a `money mule’ acts as a conduit for the transfer of the money between the buyer and the seller. Money mules are typically solicited in work-from-home advertisements that offer a person a percentage of the money received in the transaction in exchange for the person's receipt of the money in his or her bank account, followed by the transfer of the money to another location, often to a foreign bank.

[Kidde] was charged with four counts of grand theft based on four fraudulent eBay transactions during the month of August 2010 involving advertisements to sell a car or motorcycle. [He] did not directly communicate with the victims, but the victims were instructed to wire the money to his bank accounts. After receiving the money, [he] transferred the money to accounts in Hungary. [He] did not deny serving as the conduit for the money sent by the victims but claimed he thought the transactions were legitimate. The jury found him not guilty for the first two incidents, and guilty for the third and fourth incidents.

People v. Kidde, supra.

These, according to the opinion, are the four “incidents” in question:

The first two incidents (of which [Kidde] was acquitted) occurred on or about August 2 and 3, 2010. In the first incident, Imran Iqbal attempted to purchase a BMW car on eBay. After an online chat with a `live agent’ who he believed worked for eBay, he wired $8,009 to [Kidde’s] account at Chase Bank in San Diego. He became suspicious; discovered from a BMW dealership that the vehicle's VIN number was not legitimate; contacted the seller and Chase Bank in an unsuccessful attempt to get his money back; and learned the transaction was a scam.

In the second incident, Terry Juntti attempted to purchase a 1967 Ford Mustang from eBay. Juntti wired $8,060 to [Kidde’s] San Diego bank account, thinking [he] was an escrow agent who would hold the money until the car was received. Juntti later learned there was no such thing as an eBay escrow agent; there was no car for sale; he had been directed to a fraudulent eBay site; and he could not get his money back.

The third and fourth incidents (of which [Kidde] was convicted) occurred on or about August 5 and August 18, 2010. In the third incident, Carl Power attempted to purchase a motorcycle on eBay. He wired more than $950 to [Kidde’s] bank account at Chase Bank in San Diego, thinking [he] was an eBay representative. He never received the motorcycle. 

In the fourth incident, Jonathan Nagel attempted to purchase a 1955 Chevrolet vehicle advertised on eBay. Nagel wired $9,000 from the carpet cleaning company where he worked to [Kidde’s] Wells Fargo account in San Diego. The car never arrived, and Nagel never got his money back. When Nagel spoke to Wells Fargo personnel, they told him they could not do anything but advised him to call the police because he was not the only person who had called about [Kidde’s]account. On September 13, 2010, [Kidde’s] account at Wells Fargo was closed by the bank's loss prevention department.

People v. Kidde, supra.

The Court of Appeals then took up Kidde’s two arguments on appeal, the first of which was that “there is insufficient evidence to support the finding that he knew the victims' money was being taken under false pretenses.”  People v. Kidde, supra.  The court began its analysis of the arguments by noting that in reviewing a

challenge to the sufficiency of the evidence, we examine the entire record in the light most favorable to the judgment to determine whether there is substantial evidence from which a reasonable trier of fact could find the defendant guilty beyond a reasonable doubt. People v. Nelson, 51 Cal.4th 198 (California Supreme Court 2011). We presume in support of the judgment the existence of every fact the jury could reasonably deduce from the evidence. People v. Nelson, supra. If the circumstances reasonably justify the jury's findings reversal is not warranted merely because the circumstances might also be reasonably reconciled with a contrary finding. People v. Nelson, supra.

To be culpable for theft under aider and abettor or conspiracy principles, the defendant must know about and share the perpetrator's intent to defraud. . . . The courts recognize that evidence `of a defendant's state of mind is almost inevitably circumstantial, but circumstantial evidence is as sufficient as direct evidence to support a conviction.’ People v. Bloom, 48 Cal.3d 1194 (California Supreme Court 1989). 

Further, `[d]irect evidence of the mental state of the accused is rarely available except through his or her testimony. The trier of fact is and must be free to disbelieve the testimony and to infer that the truth is otherwise when such an inference is supported by circumstantial evidence regarding the actions of the accused.’ People v. Beeman, 35 Cal.3d 547 (California Supreme Court 1984). 

People v. Kidde, supra.

The Court of Appeals then explained that

[i]t appears from the acquittals on counts 1 and 2 that the jury deduced that [Kidde] may have initially thought he was participating in legitimate transactions designed to avoid a tax payment for customers who sent money to his accounts. The guilty verdicts on counts 3 and 4 reflect that the jury determined that he subsequently figured out the transactions were fraudulent, but he continued participating. The record supports the jury's finding that defendant knew about the fraud.

The prosecution's evidence showed that [he] was repeatedly closing and opening bank accounts; victims were unable to get their money back when they contacted the banks; and in an August 28 e-mail to his employer [Kidde] indicated that he knew a customer was seeking to freeze his Wells Fargo account, asked if he should close the Wells Fargo account after receiving a wire transfer, and asked if his Bank of America information had been received. 

From this evidence, the jury could deduce that [Kidde] knew that fraudulent activity was occurring because a customer was worried about a transfer to his Wells Fargo account; knew his employer had adopted a strategy of closing accounts after wire transfers to impede efforts by suspicious customers to retrieve their money; and notwithstanding this knowledge was continuing to engage in the transactions at different banks.

People v. Kidde, supra (emphasis in the original).

Testifying at trial, Kidde said he “became involved in the operation” after he contacted a

company (KFP–Partners) who advertised on a website about at-home business opportunities. [He] was told that KFP–Partners helped investors save money on the VAT (value added tax) in Europe by allowing them to first send money to agents rather than directly to Europe. 

The company hired people to work as transaction agents who, in exchange for a commission, received wired money from the investors and then wired the money to individuals in Europe. [Kidde] said he . . . found out the VAT was an actual excise tax and he thought the enterprise was legitimate. [His] contact person at KFP–Partners was Klaus Bergstein, with whom he communicated primarily by e-mail.

People v. Kidde, supra.

When authorities searched Kidde’s computers, they found “numerous e-mail exchanges between” him and Bergstein.  People v. Kidde, supra.  In an email Kidde sent in

November 2010, [he] stated he could no longer work with Bergstein because Bank of America had put him on ChexSystems, which prevented him from opening a bank account anywhere in the United States. In this e-mail exchange, [Kidde] also described the fraudulent nature of the wire transfers, and suggested he did not want to continue participating in fraudulent transactions. 

People v. Kidde, supra.

The Court of Appeals found Kidde’s challenge to the sufficiency of the evidence presented at his trial failed for several reasons, noting, for example, that his statements to

investigator Braca and at trial buttress the inference that [he] knew about the fraud. [He] acknowledged that after he was told by Citibank about the suspicion of fraud, he moved on to participate in a transaction at Chase Bank, and after he again received a report of possible fraud from Chase Bank, he nevertheless moved on to participate in a transaction at Wells Fargo, and this pattern repeated again with Bank of America.  

The jury could reasonably infer that based on the complaints of suspected fraud and his employer's directives that he close accounts, [Kidde] must have realized the transactions were illegitimate. 

The jury could also consider that, even under [Kidde’s] version of the events, he did not end his participation in the scheme until he lost a commission based on Bank of America's return of the money to the customer, and until Bank of America placed him under the ChexSystems which effectively precluded him from serving as a conduit for the money. The jury could assess from this evidence that notwithstanding reports of suspected fraud, [he] stopped participating in the transactions only when he was essentially forced to stop, and this reflected that he was not acting with an innocent state of mind.

People v. Kidde, supra.

It also rejected his argument that “as a matter of law he can be convicted of only one grand theft offense for counts 3 and 4 because the thefts from Power and Nagel were based on a single plan.”  People v. Kidde, supra.  In making this argument, he relied on the California Supreme Court’s decision in People v. Bailey, 55 Cal.2d 514 (1961), in which the court held that the defendant’s “fraudulent procurement” of “several welfare checks” could be aggregated to satisfy the amount of loss needed for grand theft.  People v. Kidde, supra.  

The Bailey court also articulated a 

test for determining whether one grand theft, rather than multiple grand thefts, was committed, stating: `Whether a series of wrongful acts constitutes a single offense or multiple offenses depends upon the facts of each case, and a defendant may be properly convicted upon separate counts charging grand theft from the same person if the evidence shows that the offenses are separate and distinct and were not committed pursuant to one intention, one general impulse, and one plan.’ People v. Bailey, supra.  

The facts and analysis in Bailey concerned multiple takings from the same victim. Based on Bailey, numerous courts have applied the one-plan/one-offense standard to determine whether a series of takings from a single victim could support only a single grand theft conviction.

People v. Kidde, supra (quoting People v. Bailey, supra (emphasis in the original)).  

The Court of Appeals also noted that

[i]n contrast, when (as here) multiple victims were involved, the fact that the takings were pursuant to a single design is not determinative. Rather, the courts have reasoned that if the takings from different victims occurred on multiple occasions, multiple convictions are appropriate even if the takings were pursuant to one overall plan. . . . On the other hand, if the multiple takings from multiple property owners occurred on a single occasion, the courts have found a single conviction is proper. . . .

People v. Kidde, supra (citations omitted and emphasis in the original).

And the court explained that the question of whether a defendant has committed

a series of independent thefts or one overall theft is generally a question of fact. . . .The question may be resolved as a matter of law if the evidence can support only one reasonable conclusion. . . . .

The record does not show as a matter of law that [Kidde] committed only one theft for counts 3 and 4. Rather, the evidence supports distinct convictions given that the two counts involved a different victim, date of occurrence, and bank. Count 3 concerned a taking from Power via a transfer to Chase Bank, and count 4 concerned a taking from Nagel several weeks later via a transfer to Wells Fargo. 

Although the takings were accomplished as part of the same overall eBay fraud scheme, a conviction for each count was proper based on the multiple victims and separate transactions.

People v. Kidde, supra.

The Court of Appeals therefore affirmed Kidde’s convictions and sentence.  People v. Kidde, supra.