2013 UT App 110

_________________________________________________________



### T HE 

### U TAH 

### C OURT OF 

### A PPEALS

S TATE OF U TAH

, Plaintiff and Appellant,

v.

B ENJAMIN J AY G RAHAM

, Defendant and Appellee.

Opinion

No. 20110509

‐ CA

Filed May 2, 2013

Fourth District, Provo Department

The Honorable Claudia Laycock

No. 091402829

John E. Swallow, Karen A. Klucznik, and

Craig L. Barlow,

Attorneys for Appellant

Edward K. Brass, Attorney for Appellee

J UDGE M ICHELE M. C HRISTIANSEN authored this Opinion,

in which J UDGES G REGORY K. O RME

and W ILLIAM A. T HORNE J R

. concurred.

CHRISTIANSEN, Judge:

¶1 The State charged Defendant Benjamin Jay Graham

(Defendant) with multiple counts of communications fraud, theft,

and unlawful pattern of activity. Following the preliminary

hearing, the magistrate granted Defendant’s motion to dismiss all

of the charges based on insufficient evidence. The State appeals theState v. Graham

1. At a preliminary hearing, “[t]he magistrate should view the

evidence in a light most favorable to the prosecution and resolve

all inferences in favor of the prosecution.” State v. Hawatmeh

, 2001

UT 51, ¶ 3, 26 P.3d 223 (citation and internal quotation marks

omitted). We state the facts here accordingly. See id.

2. Defendant’s Father is a defendant in a related case. See State v.

Graham

, 2013 UT App 109.

20110509

‐ CA 2013 UT App 110 2 magistrate’s refusal to bind Defendant over on one count of second

degree felony theft. We reverse and remand.

BACKGROUND 1

¶2 In the spring of 2005, the owner of Graham Ironworks,

Rodger Graham (Defendant’s Father), 2 approached the chief

executive officer of Marinda Holdings (Investor) about a potential

business opportunity involving the salvage and resale of wood

reclaimed from the site of a former steel mill. Defendant’s Father

asked Investor for a total investment of $500,000 to start this

business—$250,000 to purchase the salvage rights, and another

$250,000 to remove the wood. Defendant’s Father also told Investor

that the salvaged wood was worth “anywhere from 5 to 8 million

bucks.” Investor agreed to work with Defendant’s Father on the

salvage project, mainly because he viewed it as an opportunity to

involve his son (Investor’s Son) in a business. Defendant’s Father

indicated that he would also like his son, Defendant, to be involved

in the project.

¶3 Defendant’s Father and Investor decided that their sons

would co

‐ own the salvage business, though Defendant’s Father

would be the “brains” behind the operation because neither young

man had much business experience. Investor agreed to provide the

financing, and thereafter, the parties formed Green Harvest

Materials, Inc. (Green Harvest). Investor’s Son, as co

‐ owner, was toState v. Graham

20110509

‐ CA 2013 UT App 110 3 be in charge of marketing, and Defendant, as the other co

‐ owner,

was to be in charge of operations. They hired an assistant to serve

as Green Harvest’s secretary and office manager (Office Manager).

Office Manager’s responsibilities included collecting all receipts

from debit card purchases on the company’s bank account,

purchasing office supplies, and paying all invoices presented to

Green Harvest. Shortly after the company’s formation, Investor

began making substantial payments to Graham Ironworks and

Green Harvest. Defendant, Investor’s Son, and Office Manager

were all listed as signatories on Green Harvest’s bank account, and

each had a company debit card. All three individuals could also

unilaterally authorize wire transfers.

¶4 No written company policy was ever created to address the

appropriate uses of the company’s debit cards. However, Office

Manager testified at the preliminary hearing that several

conversations took place among the signatories regarding the

parameters of appropriate use of the company debit cards. Office

Manager explained that the three individuals discussed how

“charges for cigarettes or food weren’t appropriate for card use.

That [the debit card] was strictly for business purposes and

necessary

. . . related costs of the business and not personal

expenses.” In contrast, Investor’s Son testified at the preliminary

hearing that no such discussion had taken place prior to November

2005. Specifically, he testified that he did not “think [any of the

signatories] had a formal conversation about [the appropriate uses

of the company debit card]” prior to November 2005.

¶5 In November 2005, Defendant traveled to Mexico with his

family for a personal vacation. While there, he used his company

debit card and spent over $7,500 on rental car fees. Office Manager

noticed the charges and brought them to the attention of Investor’s

Son, who immediately contacted Defendant about the personal

expenditures charged to the Green Harvest account. Defendant

told Investor’s Son that he used his company debit card in Mexico

only because he and his family had been caught in a hurricane, he

had left his personal credit card at home, and he was “desperate.”State v. Graham

3. Because the relevant statutory provisions have not materially

changed, we cite the most current version of the Utah Code

throughout this opinion.

20110509

‐ CA 2013 UT App 110 4 Investor’s Son indicated that even though he understood

Defendant’s predicament, he believed that Defendant had

inappropriately used the company debit card. Investor’s Son also

told Defendant that “[i]t’s company money,” that the charges in

Mexico did not “have anything to do with [their] business,” and

that, therefore, Defendant should not have used business funds for

personal expenditures. Defendant agreed to pay the money back to

Green Harvest. However, and quite tellingly, Defendant has never

repaid the amount due pursuant to what he characterized as a

short term loan necessitated by the happenstance that he had

forgotten his personal card. Additionally, a certified weather report

submitted by the State at the preliminary hearing revealed that no

hurricane or other notable weather phenomenon was reported in

Mexico during the time of Defendant’s trip.

¶6 In addition to multiple counts of communications fraud and

unlawful pattern of activity, the State subsequently charged

Defendant with theft, a second degree felony, based upon the use

of his Green Harvest debit card for personal expenses in Mexico

and his failure to repay that amount. See generally Utah Code Ann.

§ 76

‐ 6

‐ 412(1)(a)(i) (LexisNexis 2012) 3 (classifying a theft offense as

a second degree felony when “the value of the property or services

[that have been stolen] is or exceeds $5,000”). Following his

preliminary hearing, Defendant filed a motion to dismiss all of the

charges for insufficient evidence. The magistrate granted the

motion, and as to the theft charge at issue on appeal, the magistrate

ruled that before Defendant had used the company debit card

while on vacation, “there were no policies in place at Green

Harvest forbidding personal use of the [debit] card” and that

Investor’s Son “ratified the transaction by agreeing to let

[Defendant] repay the money.” Therefore, the magistrate

determined that “the State failed to show the first element of theftState v. Graham

20110509

‐ CA 2013 UT App 110 5 because there is no evidence that [Defendant] exercised

unauthorized control over any property.” See id

. § 76

‐ 6

‐ 404 (“A

person commits theft if he obtains or exercises unauthorized

control over the property of another with a purpose to deprive him

thereof.”). The State appeals.

ISSUE AND STANDARD OF REVIEW

¶7 The sole issue on appeal is whether the magistrate

incorrectly refused to bind Defendant over on the theft charge

following the preliminary hearing. “A [magistrate’s] decision to

bind over a criminal defendant for trial presents a mixed question

of law and fact and requires the application of the appropriate

bindover standard to the underlying factual findings.” In re I.R.C.

,

2010 UT 41, ¶ 12, 232 P.3d 1040. Thus, “an appellate court should

grant commensurate limited deference to a magistrate’s application

of the bindover standard to the facts of each case.” State v. Virgin,

2006 UT 29, ¶ 34, 137 P.3d 787. “Applying the wrong legal

standard, however, will always exceed whatever limited discretion

the magistrate has in the bindover decision.” State v. Ramirez

, 2012

UT 59, ¶ 7, 289 P.3d 444.

ANALYSIS

I. The Bindover Standard

¶8 To support the bindover of a defendant for trial, the

prosecution must put forward enough evidence at the preliminary

hearing to establish probable cause. See Utah R. Crim. P. 7(i)(2)

(allowing for bindover when the magistrate “finds probable cause

to believe that the crime charged has been committed and that the

defendant has committed it”); see also Virgin, 2006 UT 29, ¶ 17. “[A]

showing of ‘probable cause’ entails only the presentation of

‘evidence sufficient to support a reasonable belief that the

defendant committed the charged crime.’” Ramirez

, 2012 UT 59, ¶ 9State v. Graham

20110509

‐ CA 2013 UT App 110 6 (quoting Virgin, 2006 UT 29, ¶ 17). A “reasonable belief” in this

context parallels the standard for an arrest warrant, meaning that

the level of evidence that the prosecution must show is less than

what is required to find guilt beyond a reasonable doubt. Id.

Indeed, “[a]ll that is required is reasonably believable evidence—as

opposed to speculation—sufficient to sustain each element of the

crime(s) in question.” Id. “Inclusion of the word ‘reasonable’ in this

standard suggests that, at some level of inconsistency or

incredibility, evidence becomes incapable of satisfying the probable

cause standard. When that is the case, magistrates are empowered

to deny bindover.” Virgin

, 2006 UT 29, ¶ 22.

¶9 At a preliminary hearing, the magistrate is not to weigh or

sift through conflicting evidence. See State v. Clark

, 2001 UT 9, ¶ 10,

20 P.3d 300. Rather, the “magistrate must view all evidence in the

light most favorable to the prosecution and must draw all

reasonable inferences in favor of the prosecution.” Id. (citation and

internal quotation marks omitted). Indeed, the magistrate’s “role

does not encompass an assessment of whether such inference[s

are] more plausible than an alternative that cuts in favor of the

defense” because “the choice between two alternative, reasonable

inferences is a matter for the factfinder at trial, not for the

magistrate at the preliminary hearing.” Ramirez

, 2012 UT 59, ¶¶ 10,

13. Though it is true that a magistrate may make some initial

credibility determinations at the preliminary hearing, “the extent

of those determinations is limited.” Virgin

, 2006 UT 29, ¶ 24. The

magistrate “may [only] disregard or discredit evidence that is

wholly lacking and incapable of creating a reasonable inference

regarding a portion of the prosecution’s case” or evidence that is

“so contradictory, inconsistent, or unbelievable that it is

unreasonable to base belief of an element of the prosecutor’s claim

on that evidence.” Id. ¶¶ 24–25 (citation and internal quotation

marks omitted). However, when the evidence conflicts but is

otherwise credible, it is inappropriate for the magistrate to weigh

or disregard that evidence at the preliminary hearing. Id.State v. Graham

20110509

‐ CA 2013 UT App 110 7 II. The Evidence Presented at the Preliminary Hearing

¶10 To properly bind Defendant over on the second degree theft

count, the evidence must support a reasonable belief that

(1) Defendant obtained or exercised unauthorized control; (2) over

the property of Green Harvest; (3) with a purpose to permanently

deprive Green Harvest of that property; and (4) the property has a

value equal to or exceeding $5,000. See Utah Code Ann. §§ 76

‐ 6

‐ 404,

‐ 412(1)(a)(i). The magistrate dismissed the theft count because the

State failed to prove the first of these four elements–

‐ unauthorized

control. Specifically, the magistrate determined,

The State argues that [Defendant] exercised

unauthorized control over the Green Harvest Credit

Card when he charged $7,569.45 for the rental car.

However, the evidence presented shows the exact

opposite. Before [Defendant] used the credit card on

vacation, there were no policies in place at Green

Harvest forbidding personal use of the credit card.

Furthermore,

. . . [Investor’s Son] ratified the

transaction by agreeing to let [Defendant] repay the

money. Thus, the evidence only shows that

[Defendant] owed Green Harvest $7,569.45.

Consequently, the State failed to show the first

element of theft because there is no evidence that

[Defendant] exercised unauthorized control over any

property.

¶11 We determine that the prosecution carried its burden at the

preliminary hearing. The key piece of evidence presented by the

State was Officer Manager’s testimony that Office Manager,

Investor’s Son, and Defendant had discussed the appropriate uses

and parameters of the company debit cards prior to Defendant’s

vacation to Mexico. Office Manager testified at the preliminary

hearing that they had several conversations and that, based on

those conversations, Defendant was on notice that he was notState v. Graham

20110509

‐ CA 2013 UT App 110 8 authorized to use his company debit card for personal

expenditures.

¶12 In viewing the evidence in the light most favorable to the

prosecution, Office Manager’s testimony demonstrates that

Defendant should have known prior to leaving for his Mexican

vacation that he was not authorized to use his company debit card

for personal expenditures. This evidence was sufficient to support

a reasonable belief that Defendant exercised unauthorized control

over the Green Harvest debit card. In addition, reasonably

believable evidence suggests that Defendant intentionally

misrepresented to Investor’s Son the existence of a hurricane.

Defendant would have no need to lie about a hurricane if he truly

believed he was authorized to use his card for personal reasons. It

appears that if Defendant’s story about the hurricane were true, he

would have immediately disclosed his use of the debit card to

Investor’s son upon his return and made arrangements to pay back

the company. These facts demonstrate that the State introduced

sufficient evidence that Defendant exercised unauthorized control

over the company debit card and intended to deprive the company

of those funds when he failed to repay them.

III. Whether the Magistrate Acted Within Her Discretion in Not

Binding Defendant Over for Trial

¶13 In making her bindover decision, it appears that the

magistrate disregarded Office Manager’s testimony when she

found that “there were no policies in place at Green Harvest

forbidding personal use of the credit card.” Although a magistrate

is entitled to make “some limited credibility determinations at the

preliminary hearing,” the magistrate may only disregard

testimonial evidence when it is “wholly lacking and incapable of

creating a reasonable inference regarding a portion of the

prosecution’s case,” State v. Virgin

, 2006 UT 29, ¶¶ 23–24, 137 P.3d

787 (citation and internal quotation marks omitted), or if the

evidence falls “to a level of inconsistency or incredibility that no

reasonable jury could accept it,” State v. Ramirez

, 2012 UT 59, ¶ 14,State v. Graham

20110509

‐ CA 2013 UT App 110 9 289 P.3d 444 (citation and internal quotations marks omitted). On

the record before us, Office Manager’s testimony does not appear

to be patently inconsistent or incredible. Accordingly, “[i]t is

inappropriate for [the] magistrate to weigh credible but conflicting

evidence at a preliminary hearing as a preliminary hearing is not

a trial on the merits but a gateway to the finder of fact.” Virgin

,

2006 UT 29, ¶ 24 (citation and internal quotation marks omitted).

¶14 Though Investor’s Son testified at the preliminary hearing

that no conversations regarding appropriate use of the company

debit cards had taken place prior to Defendant’s trip, his testimony

conflicts with Office Manager’s testimony. Evaluating the

competing testimony of witnesses is the function of the factfinder,

not the magistrate. Thus, it was error for the magistrate to reject

Office Manager’s version of the facts in favor of Investor’s son’s

version. Resolution of this evidentiary conflict should have been

left to the factfinder at trial.

¶15 The State analogizes the facts of this case to those of State v.

Ramirez

, 2012 UT 59, 289 P.3d 444. In that case, the magistrate

refused to bind the defendant over on drug possession charges

after considering the evidence presented at the preliminary

hearing. Id. ¶ 5. The evidence included drug paraphernalia

containing drug residue located in a motel room in the exact

location the defendant had directed and permitted officers to

search and the defendant’s admission to having a drug problem. Id.

¶¶ 2–5, 11. The magistrate “opined that there was no evidence that

Ramirez had knowledge that the drug residue and paraphernalia

were present in the motel room either when he was personally

present in the room or when officers searched the room.” Id. ¶ 11.

Therefore, the magistrate was faced with a choice between two

competing inferences based on the evidence. In the magistrate’s

view, “it [was] a stronger inference [that the defendant] didn’t

know the drugs were there, or he wouldn’t have sent the police

officers to that place to look around.” Id. ¶ 5 (internal quotation

marks omitted).State v. Graham

20110509

‐ CA 2013 UT App 110 10 ¶16 In reversing the magistrate’s decision to refuse bindover, the

Utah Supreme Court explained that there was sufficient evidence,

though circumstantial, to find probable cause in support of the

charges against the defendant and that the magistrate erred by

rejecting the inference put forward by the prosecution because

“[t]he relative strength of the competing inferences in the case was

a question for the jury at trial.” Id. ¶ 13. The court acknowledged

that the prosecution could have presented more evidence

connecting Ramirez to the contraband in the motel room. Id. ¶ 16.

However, the court also made clear that “it is not the [magistrate’s]

role in a preliminary hearing to hold the prosecution to the

presentation of a comprehensive or ‘best’ case against the accused.”

Id. ¶ 17.

¶17 Here, similar to Ramirez, the magistrate was faced with two

competing, reasonable inferences to be derived from the evidence

presented at the preliminary hearing. On one hand, the theft

charges are supported by Office Manager’s testimony that

Defendant should have been aware that using his company debit

card for personal expenses was not allowed. In addition,

Defendant’s dishonesty regarding the hurricane and his failure to

reimburse the company for his personal expenses suggest that he

intended to deprive Green Harvest of its funds. On the other hand,

Defendant’s behavior can be explained by Investor’s Son’s

testimony that no conversation had taken place prior to

Defendant’s trip regarding the appropriate use of the company

debit cards.

¶18 We determine that the magistrate erred in denying bindover

and in granting Defendant’s motion to dismiss. As explained

above, an evidentiary conflict should be resolved by the jury at trial

because, first, the magistrate is bound to “view all evidence in the

light most favorable to the prosecution and must draw all

reasonable inferences in favor of the prosecution.” State v. Clark

,

2001 UT 9, ¶ 10, 20 P.3d 300 (citation and internal quotation marks

omitted). Second, “[i]n the face of two competing inferences that

could reasonably be accepted at trial, the magistrate should haveState v. Graham

4. We take note of Defendant’s argument that the bindover

determination is not a mere “rubber stamp for the prosecution,”

State v. Hester, 2000 UT App 159, ¶ 7, 3 P.3d 725, abrogated on other

grounds by State v. Clark

, 2001 UT 9, ¶ 14, 20 P.3d 300, and that

magistrates must “attempt to ensure that all ‘groundless and

improvident prosecutions’ are ferreted out no later than the

preliminary hearing,” Clark

, 2001 UT 9, ¶ 10 (quoting Hester

, 2000

UT App 159, ¶ 7). Though the evidence in this case could be

stronger, the facts presented at the preliminary hearing were

sufficient to support a finding of probable cause for theft. Thus, this

case does not present a “groundless and improvident prosecution.”

See id.

20110509

‐ CA 2013 UT App 110 11 bound the matter over for trial. It is not for the [magistrate] to

choose between competing reasonable inferences from the evidence

presented at a preliminary hearing.” Ramirez, 2012 UT 59, ¶ 15.

Here, the magistrate erred by drawing inferences from the

evidence in favor of the defense. Because both the prosecution and

the defense advanced reasonable inferences derived from the

evidence, the magistrate should have allowed the jury to resolve

the conflict.

¶19 Certainly, the prosecution’s evidence could be stronger, but

the prosecution is not required to present a “comprehensive or

‘best’ case against the accused” at the preliminary hearing. See id.

¶ 17. The question is only whether the evidence is “‘sufficient to

support a reasonable belief that

. . . [D]efendant committed the

charged crime.’” See id. ¶ 9 (quoting Virgin, 2006 UT 29, ¶ 17). In

this case, the totality of the evidence and the inferences drawn

therefrom were sufficient to support a reasonable, non

‐ speculative

belief that Defendant committed the theft alleged by the State.

Accordingly, we hold that the magistrate erred in refusing to bind

Defendant over on the theft charge. 4State v. Graham

20110509

‐ CA 2013 UT App 110 12 CONCLUSION

¶20 Though it could have been stronger, the evidence presented

by the prosecution at the preliminary hearing meets the probable

cause standard for second degree felony theft. Accordingly, we

reverse and remand with instructions to bind Defendant over for

trial.