Wednesday, February 20, 2013

Fraud, Overtime and the Sheriff’s Computer System

After she was convicted of “engaging in an organized scheme to defraud, in violation of section 817.034(4), Florida Statutes”, Kathy Dent appealed.  Dent v. State, __ So.3d ___, 2013 WL 440117 (Florida Court of Appeals 2013).  The scheme at issue involved a computer program that Deputies in the Palm Beach County Sheriff’s Office used to sign up for overtime work.  Dent v. State, supra.

According to the opinion, the Sheriff’s Office provides

deputies for hospital duty to guard an inmate or arrested person who is admitted to a hospital. Initially, a deputy on the current shift is assigned to the hospital when the prisoner is admitted, and that deputy serves until the end of his or her shift, at which time it becomes an overtime assignment.

To fill these assignments, the Sheriff's department utilizes a computer program which allows deputies to sign up to work overtime shifts. The lieutenant on the shift when the prisoner is admitted to the hospital creates a computer record of the prisoner's admittance. It generates a weekly list of overtime shifts for the week for that prisoner, although if the prisoner is released from the hospital those overtime shifts would not be used. The positions for new overtime shifts become available for signup at midnight on Sunday night for the following week.

To obtain the right to work one of these shifts, deputies must log into the system and sign up for one shift at a time. Once the deputy signs up for a shift he/she must wait 48 hours before signing up for another one. No one is allowed to sign up another person for an overtime shift except supervisors who are signing deputies to cover a present shift. Lieutenants can also sign up others for overtime shifts.

Complaints were raised because several deputies noticed that . . . Kathy Dent was already assigned to work various overtime shifts when the shifts became available at midnight on Sunday night. An investigation revealed that Dent was assigned on the computer system to a hospital overtime shift 388 times. Dent's friend, Lieutenant Sandra Nealy, assigned Dent to work 100 hospital overtime shifts during a one-year period. Although Dent did not work all the overtime shifts she was assigned, she earned more than $18,000 working hospital overtime shifts.

Dent v. State, supra.

The investigation resulted in Dent’s being charged, as noted above, with engaging in a scheme to defraud in violation of Florida Statutes § 817.034(4), which makes it a crime to “engage[] in a scheme to defraud and obtain[] property thereby”.  Dent v. State, supra. The statute defines “property” as “anything of value,” and defines “scheme to defraud” as

a systematic, ongoing course of conduct with intent to defraud one or more persons, or with intent to obtain property from one or more persons by false or fraudulent pretenses, representations, or promises or willful misrepresentations of a future act.

The information that was used to charge Dent alleged that she “`did engage in a scheme constituting a systematic, ongoing course of conduct with intent to defraud one or more persons, or to obtain property from one or more persons by false or fraudulent, representations, or promises, and did obtain property from one or more of such persons. . . .’” Dent v. State, supra.  And the Court of Appeals’ opinion notes that

[a]t trial, the state presented its theory that Dent's manipulation of the computer overtime signup system prevented other Sheriff's deputies from signing up for overtime, and that other deputies lost the opportunity to get these assignments and earn overtime pay. Dent earned over $18,000 in overtime pay for overtime shifts that she actually worked. This was not a case, however, where she was paid for shifts that she did not work. The jury convicted her of a third degree felony, prompting this appeal.

Dent v. State, supra.

On appeal, Dent argued that

the state failed to prove that she obtained `property’ within the meaning of the statute when all the state proved was the inability of other deputies to sign up for the opportunity to obtain overtime. In other words, her conduct did not amount to a crime

Dent v. State, supra.

The Court of Appeals began its analysis of her argument by noting that in adopting Florida Statutes § 817.034, entitled the “Florida Communications Fraud Act,”, the Florida legislature “specifically” articulated “its intent in adopting this criminal statute”:

`(1) Legislative intent.—

(a) The Legislature recognizes that schemes to defraud have proliferated in the United States in recent years and that many operators of schemes to defraud use communications technology to solicit victims and thereby conceal their identities and overcome a victim's normal resistance to sales pressure by delivering a personalized sales message.

(b) It is the intent of the Legislature to prevent the use of communications technology in furtherance of schemes to defraud by consolidating former statutes concerning schemes to defraud and organized fraud to permit prosecution of these crimes utilizing the legal precedent available under federal mail and wire fraud statutes.’

Dent v. State, supra.

Since the Florida Legislature directed it to use federal cases involving fraud prosecutions under federal law as a source of guidance in interpreting this statute, the Court of Appeals noted that “we look to those precedents and conclude that the opportunity to sign up for overtime, which was deprived to other deputies by Dent's conduct, is not “property” within the meaning of the statute.”  Dent v. State, supra.

It began with the U.S. Court of Appeals for the Third Circuit’s decision in U.S. v. Henry, 29 F.3d (1994), in which two public officials were charged with bank fraud and wire fraud

for corruption of the process by which banks were chosen as depositories for funds from various toll bridges. The commission in charge of the funds conducted a competitive bidding process with various banks for their short-term deposits. The two public officials interfered with the process by notifying one bank of the bid information in advance, allowing that bank to outbid the other banks. . . . In return, the public officials received campaign contributions and favorable treatment on loans from the bank.

The government asserted that what the other banks lost in this scheme was a fair opportunity to bid in the process. The court concluded, however, that this loss of opportunity was not `property’ within the meaning of the bank and wire fraud statutes.

`Here, . . . the money had not yet been deposited, and there is no way of knowing to which, if any, of the bidding banks it would have gone. . . . The issue . . . is whether the competing banks' interest in having a fair opportunity to bid for something that would become their property if and when it was received is in itself property. . . .

`. . . .[T]o determine whether a particular interest is property for purposes of the fraud statutes, we look to whether the law traditionally has recognized and enforced it as a property right. . . .The competing banks' interest in a fair bidding opportunity does not meet this test. Clearly, each bidding bank's chance of receiving property -- the deposits if its bid were accepted -- was, at least in part, dependent on the condition that the bidding process would be fair. 

This condition, which is all that the bidding banks allegedly lost, was thus valuable to them, but it is not a traditionally recognized, enforceable property right. . . . Violation of this condition may have affected each bidding bank's possible future receipt of property, but that does not make the condition property.’

U.S. v. Henry, supra.

The Court of Appeals noted that in the Henry case, the “loss of an opportunity interest did not constitute `property’ within the meaning of the wire and mail fraud statutes,” which “govern the interpretation of § 817.034.”  Dent v. State, supra.  It also noted that another federal court applied the same reasoning in U.S. v. Alsugair, 256 F.Supp.2d 306 (U.S. District Court for the District of New Jersey 2003).  Dent v. State, supra. 

In Alsugair, the defendant “was charged with wire fraud in a scheme to defraud English skills testing services by allowing imposters to take English tests for foreign students” under a statute that “made it a crime to engage in a scheme to obtain money or property by false pretenses.” Dent v. State, supra.  The Alsugair court explained that in order to

`”determine whether a particular interest is property for purposes of the fraud statutes, we look to whether the law traditionally has recognized and enforced it as a property right.”’ U.S v. Henry, supra. Two of the hallmarks of traditional property are exclusivity.’

U.S. v. Alsugair, supra. The Court of Appeals noted that what was “[i]mportant to this case” in the Alsugair court’s reasoning was its “reiteration of the hallmarks of property, namely exclusivity and transferability, neither of which are present in the lost opportunity of working overtime, which is what the state sought to prove in this case.”  Dent v. State, supra. 

It also noted that it had “determined that expectation interests do not constitute property under similar definitions of property in the theft statute.”  Dent v. State, supra.  In Balcor Property Management, Inc. v. Ahronovitz, 634 So.2d 277 (Florida Court of Appeals 1994), the court found that to have a cognizable interest in property, “the `owner’ must be capable of having `an interest in the property upon which another person is not privileged to infringe without consent’”.  Dent v. State, supra (quoting Florida Statutes § 812.012(5)).  Section 812.012(5) defines “property of another,” as used in Florida theft statutes, as “property in which a person has an interest upon which another person is not privileged to infringe without consent, whether or not the other person also has an interest in the property.” 

The Court of Appeals then found that in this case,

what the state alleged was lost was the opportunity for other deputies to work for overtime pay. This opportunity did not belong to any one of them. It simply does not fit the definition of property traditionally used in criminal prosecutions and specifically not used in similar federal statutes. See U.S. v. Henry, supra.

While Dent's manipulation of the signup system for overtime duty may have violated the policies of the department, and may be grounds for discipline or termination, she did not obtain `property’ within the meaning of the statute. Therefore, no violation of section 817.034 occurred.

Dent v. State, supra. 

It therefore reversed Dent’s conviction and directed that the sentence imposed on her be vacated.  Dent v. State, supra.  According to the news story you can find here, she was one of “seven jail supervisors” who were fired and charged with fraud.  For more on the impact this decision will have on other pending and completed cases, check out the story you can find here.

No comments: