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State v. Kessler

August 19, 2009

STATE OF SOUTH DAKOTA, PLAINTIFF AND APPELLEE,
v.
JEROME D. KESSLER, DEFENDANT AND APPELLANT.



APPEAL FROM THE CIRCUIT COURT OF THE THIRD JUDICIAL CIRCUIT LAKE COUNTY, SOUTH DAKOTA HONORABLE TIM D. TUCKER Judge.

The opinion of the court was delivered by: Konenkamp, Justice

CONSIDERED ON BRIEFS ON MAY 26, 2009

[¶1.] A jury found defendant guilty of aggravated grand theft by deception and he appeals. Because there was insufficient evidence that defendant intended to deceive his victims at the time he entered into a loan agreement or accepted loan proceeds, we reverse.

Background

[¶2.] Defendant Jerome Kessler met Sharon and Eugene Hemmer sometime in 2005, while defendant was handing out fliers advertising his construction business. The Hemmers hired defendant to do handyman work, and throughout the next year, he completed two projects for them. The Hemmers were satisfied with defendant's efforts and paid him. In 2006, the Hemmers again hired defendant, and paid him for the work he completed. In the fall of 2006, defendant told the Hemmers that he had incurred some legal bills and wanted to know if he could borrow money in exchange for doing work. They loaned him $3,500. Defendant never repaid the loan, but completed certain repairs in the summer of 2007 without requesting payment.

[¶3.] Also in the fall of 2006, defendant asked the Hemmers if they would finance his construction of a "spec house."*fn1 Defendant did not believe he could obtain financing through a bank. He proposed that they would loan him a certain amount, which he would later repay with interest. The Hemmers agreed, and the parties entered into a contract and escrow agreement. The contract provided that defendant would take periodic draws for a total of$169,000 to build a house in Brookings County, South Dakota. Upon sale of the house, he would repay the Hemmers $169,000, plus 10% interest. The contract contained an attached document setting forth the schedule of draws and interest. Throughout the remainder of 2006, and into the summer of 2007, defendant took draws in accord with the contract and constructed the home. In July 2007, defendant repaid the Hemmers $177,260.83 ($169,000, plus 10% interest).

[¶4.] Sometime in May 2007, Gene Hemmer agreed to finance another "spec house" for defendant to build in Brookings County. They executed a second contract substantially similar to the first, dated August 15, 2007. One difference was an increase in the loan amount: $199,990. Another difference was the absence of an attached schedule of anticipated draws and interest. Nonetheless, as with the first agreement, defendant obtained periodic draws on the loan from the Hemmers. Noted on some of the checks were the words "loan" or "draw." Sharon Hemmer was not always present when defendant received the draws. The last four times defendant requested money, Gene was extremely ill and Sharon signed defendant's requested draws. According to Sharon, when defendant would request a draw, she or Gene would ask how the house was coming. Defendant would usually respond, "The house is going well."

[¶5.] On February 6, 2008, defendant met with the Hemmers. The meeting was held in part to discuss a contract for deed arrangement between the parties.*fn2

At this meeting, defendant requested a draw of $35,000 for the second Brookings home. According to Sharon, Gene asked defendant if he was inside the house finishing up, to which defendant responded, "Yes." The Hemmers were concerned about the amount of money defendant had already drawn and asked him how much he had received. Defendant responded that he had already drawn approximately $220,000. The Hemmers refused to give defendant his requested $35,000.

[¶6.] The next day, Sharon went to Brookings to check on the progress of the house. When she saw it, she was shocked that it had no roof, no windows, and appeared to her to be a house just beginning construction. Sharon contacted defendant and her attorney, David Jencks. That evening, February 7, 2008, defendant met with the Hemmers and Jencks at the Hemmers' home. Sharon asked defendant to account for where the money had gone, to which he responded that he had no writtenaccounting. Defendant admitted that the money was spent on things other than the construction of the house. He also admitted that he had lied to the Hemmers on the progress of the house, concerned that the Hemmers would be upset. Nonetheless, at all times defendant repeated that he intended to complete the construction and gave no indication that he did not intend on repaying the loan.

[¶7.] On February 8, 2008, defendant gave the Hemmers a written accounting, which showed that he had drawn $198,681.66 for the house. The accounting indicated that only $72,746 went to construction, while the rest went to other items, including defendant's personal obligations, e.g., child support. Defendant told the Hemmers that he needed another $103,828 to finish the house.

The Hemmers refused to give defendant any more money, since their own accounting revealed that defendant had drawn $216,000.

[¶8.] Despite not receiving any additional money, between February 8 and February 14, defendant continued to work on the house. In the meantime, however, attorney Jencks contacted Lake County Deputy Sheriff Tim Walburg. Jencks reported that defendant had stolen over $100,000 from the Hemmers. Deputy Walburg met with the Hemmers and visited the Brookings construction site. In Deputy Walburg's videotaped interview of defendant, defendant maintained that he intended on finishing the house and that the reason he was so behind was due to poor management of his money and anxiety problems.

[¶9.] The Hemmers stopped defendant from working on the house and sold it for $99,000. Defendant was indicted of aggravated grand theft by deception in violation of SDCL 22-30A-3(1).*fn3 Under SDCL 22-30A-17.1, "Theft is aggravated grand theft, if the value of the property stolen exceeds one hundred thousand dollars." A jury trial was held in October 2008. Defendant was found guilty. He was sentenced to ten years imprisonment, with seven suspended, on the conditions that he pay restitution plus attorney's fees and have no contact with the Hemmers. Defendant appeals asserting that the court erred when it denied his motion for a judgment of acquittal based on the State's failure to (1) prove venue under SDCL 23A-16-3, (2) establish identification, and (3) set forth sufficient evidence.

Analysis and Decision

[¶10.] Our review of a denial of a motion for a judgment of acquittal is a question of law examined de novo. State v. Packed, 2007 SD 75, ¶17, 736 NW2d 851, 856 (quoting State v. Disanto, 2004 SD 112, ¶14, 688 NW2d 201, 206 (citing United States v. Staula, 80 F3d 596, 604 (1stCir 1996))). "We must decide anew whether the evidence was sufficient to sustain a conviction." Disanto, 2004 SD 112, ¶14, 688 NW2d at 206 (citations omitted). "In measuring evidentiary sufficiency, we ask 'whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.'" Id. (quoting Jackson v. Virginia, 443 US 307, 319, 99 SCt 2781, 2789, 61 LEd2d 560 (1979)).

[¶11.]We recently examined a sufficiency of the evidence question in a theft by deception conviction in State v. Morse, 2008 SD 66, 753 NW2d 915, 919. There, and in a subsequent case, State v. Jackson, we ruled that there must be evidence of a purpose to deceive or an intent to defraud at the time the property or money is obtained. Id. ¶12; see also 2009 SD 29, ¶18, 765 NW2d 541, 545-46. As we recognized in Morse, intent to defraud "'means to act willfully and with the specific intent to deceive or cheat, ordinarily for the purpose of either causing some financial loss to another or bringing about some financial gain to one's self.'" 2008 SD 66, ¶12, 753 NW2d at 919 (citation omitted).

[ΒΆ12.] This case is not comparable to Morse or Jackson. In those cases, the defendants obtained money from another based on a promise to complete certain construction work. The money was paid to Morse and Jackson with no expectation for repayment. Rather, Morse and Jackson were paid based on their promises to perform their agreed-upon work. When Morse and Jackson did not complete the work as promised, theft by deception charges ensued and convictions were obtained. On appeal, we found insufficient evidence to sustain the theft by deception ...


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