#25031-r-JKK 

2009 SD 76

IN THE SUPREME COURT 

OF THE 

STATE OF SOUTH DAKOTA 

* * * * 

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 

* * * * 

LAWRENCE E. LONG 

Attorney General 

STEVEN R. BLAIR 

Assistant Attorney General Attorneys for plaintiff 

Pierre, South Dakota and appellee. 

MANUEL J. de CASTRO, JR. of 

de Castro Law Offices, PLLC Attorney for defendant 

Madison, South Dakota and appellant. 

* * * * 

 CONSIDERED ON BRIEFS 

 ON MAY 26, 2009 

 OPINION FILED 08/19/09 
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KONENKAMP, Justice 

[¶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.”1 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 

1. A “spec house” is built for sale with no specific purchaser in mind. See 

Jutting v. Hendrix, 2000 SD 25, ¶3 n2, 606 NW2d 140 n2. 
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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.” 
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[¶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.2 

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 written accounting. 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. 

2. At the time, defendant had been living at a residence on the Hemmers’ 

acreage outside of Wentworth. Defendant was living there as part of an 

agreement that he would buy the acreage through a contract for deed. 
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[¶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).3 Under SDCL 22-30A-17.1, “Theft is aggravated 

3. SDCL 22-30A-3(1) provides: 

Any person who obtains property of another by deception is guilty of 

theft. A person deceives if, with intent to defraud, that person: 

 (1) Creates or reinforces a false impression, including false 

impressions as to law, value, intention, or other state of mind. 

However, as to a person’s intention to perform a promise, deception 

 (continued . . .) 
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__________________ 

(. . . continued) 

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, 

may not be inferred from the fact alone that that person did not 

subsequently perform the promise. . . . 
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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). 

[¶12.] 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 

convictions because there was no evidence in either case that at the time Morse or 

Jackson obtained the money that they intended to deceive. 

[¶13.] Here, defendant was not paid any money based on his promise to 

complete certain construction work. He was loaned money under a loan contract, 

which money, plus interest, was due regardless of defendant’s completion of the 

construction work. That this situation involved a loan contract, rather than monies 

paid based on a promise to perform certain construction work, is further evident 

based on the fact that the Hemmers’ loan to defendant was secured to a certain 
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extent by the real estate the home was being constructed on.4 When defendant 

purchased the land, it was titled in the name of the Hemmers’ trust. 

[¶14.] Defendant’s obligation to repay the Hemmers existed regardless of 

whether he completed construction on the home. He was building the house for his 

own profit. The Hemmers’ profit would come from the interest defendant would pay 

on the loan. There was no specific date in the contract by which defendant was 

required to repay the Hemmers. Most importantly, however, there was no claim by 

4. This situation is equally dissimilar to the decision in State v. Phair, 2004 SD 

88, 684 NW2d 660, relied upon in Justice Zinter’s dissent. Phair was charged 

with theft by deception for her failure to “disclose a known lien, adverse claim 

or other legal impediment to the enjoyment of property. . . .” See id. (quoting 

SDCL 22-30A-3(4)). Defendant was charged with theft by deception in 

“[c]reat[ing] or reinforce[ing] a false impression, including false impressions 

as to law, value, intention, or other state of mind[.]” See SDCL 22-30A-3(1). 

Phair’s decision not to disclose a known impediment to her lender is 

irrelevant to deciding whether there is sufficient evidence to convict a 

defendant for creating or reinforcing false impressions with the intent to 

defraud. In Phair, the Court examined whether it was acceptable to exclude 

evidence of Phair’s intent to repay the loan. Properly, the Court concluded 

that evidence of an intent to repay the loan did not save a defendant from 

conviction for a failure to “disclose a known lien, adverse claim or other legal 

impediment to the enjoyment of property” under SDCL 22-30A-3(4), because 

regardless of the intent to repay, Phair made the improper disclosure at the 

time the loan was obtained. Here, the parties’ contract provided that the 

Hemmers would loan defendant money and defendant would repay under the 

terms of the agreement. There is no evidence that defendant intended not to 

fulfill his obligation to repay. This lack of evidence, unlike the evidence that 

the defendant in Phair intended to repay, is important in light of the fact that 

an 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.’” See 

Morse, 2008 SD 66, ¶12, 753 NW2d at 919 (citations omitted). There is no 

evidence that defendant intended to cause a financial loss to the Hemmers or 

a gain to himself. Regardless of his use of the loan proceeds for personal 

expense, defendant remained obligated to repay on the loan and there is no 

evidence that he did not intend on fulfilling this obligation. 

 
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the Hemmers that at the time defendant obtained any of the advances he had no 

intent on repaying them under the terms of the parties’ loan contract. In fact, 

under the contract, from the dates of each draw, the Hemmers accrued 10% interest 

on defendant’s loan obligation, which interest would continue to accrue until 

defendant repaid Hemmers. 

[¶15.] Theft by deception is a specific intent crime that requires proof that 

defendant obtained property with the intent to defraud. SDCL 22-30A-3. There 

must be evidence that defendant acted “willfully and with the specific intent to 

deceive or cheat[,]” to either cause some financial loss to another or bring about 

some financial gain to himself. Morse, 2008 SD 66, ¶12, 753 NW2d at 919 (citations 

omitted). The prosecution provided no evidence that at the time defendant obtained 

the draws or when he entered into the loan contract, he did so with the intent to 

defraud. There is no pattern of conduct on defendant’s part of entering into a loan 

agreement and absconding with the money.5 Rather, the evidence shows that 

defendant entered into an agreement similar to the one made earlier with the 

Hemmers that was successfully completed. 

[¶16.] Essentially, the State argues that because defendant failed to proceed 

with the construction of the house in a timely fashion and spent part of the loan 

proceeds on items not related to the construction of the house, defendant stole 

5. Both dissents contend that there is evidence of a common scheme by 

defendant to support finding defendant guilty of theft by deception in this 

case. These claims miss the mark because the previous situations in which 

defendant obtained money did not involve construction loan agreements. In 

those instances, defendant was paid money, with no expectation of 

repayment, based on his promise to complete certain work. See infra note 6. 
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money from the Hemmers by deception.6 A crucial element of theft by deception is 

missing, however. There is no evidence, and nothing by which this Court can infer 

such evidence, that defendant entered into the loan agreement or obtained the loan 

proceeds “with the intent to defraud[.]”7 See SDCL 22-30A-3. 

[¶17.] We recognize that at times when defendant obtained money under the 

loan agreement, he lied to the Hemmers about the progress on the house, which 

may have “[c]reate[d] or reinforce[d] a false impression as to law, value, intention, 

or other state of mind.” See SDCL 22-30A-3(1). Yet, creation of these false 

impressions about the progress on the house in no way supplanted the requisite 

proof of the “intent to defraud” element. There is no evidence that at the time 

defendant obtained the draws from the Hemmers that he deceived them into 

6. The State called witnesses who testified about construction projects 

defendant failed to complete despite being paid. Those instances did not 

involve loan agreements with defendant. In those cases defendant was paid 

to complete certain construction work and it did not get completed as 

promised. Here, defendant did not promise to complete construction of the 

Brookings home in a certain amount of time, or agree to construct the home 

per Hemmers’ desires. Therefore, while the loan was for the purpose of 

constructing a “spec house,” the other construction-related experiences with 

defendant provided no proof that defendant did not intend on repaying the 

Hemmers under the terms of the loan agreement. 

7. Although Justice Zinter’s dissent is correct that defendant falsely represented 

the status of the house in order to obtain additional advances under the 

terms of the parties’ contract, these false representations alone do not 

establish that at the time he obtained the draws he intended to defraud the 

Hemmers under the terms of the parties’ agreement. No evidence was 

offered that defendant did not intend on repaying under the terms of the 

loan. The dissent’s evidence, on the other hand, supports the view that 

defendant failed to comply with the terms of the parties’ contract, i.e., the 

expending of funds for labor and expenses. Defendant’s failure to comply 

with the contract terms, however, is a breach of contract, not theft by 

deception. 
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believing he would repay the loan, when in fact he had no such intent. Moreover, 

while the loan contract states that defendant is to “pay from such loan proceeds for 

all material and labor used in the construction of such house[,]” this clause is not 

exclusive. 

[¶18.] A careful reading of the parties’ Construction Loan and Escrow 

Agreement reveals no promise by defendant to apply all loan proceeds to the 

construction of the “spec house.” Indeed, at the time defendant obtained the loan 

proceeds, he obtained additional debt, and had a consequent obligation to repay it. 

There is no evidence that at the time he received the loan proceeds he intended to 

deprive the Hemmers of their money. As the contract states, “all monies lent by 

Hemmers” to defendant under the contract were to be repaid in full plus 10% 

interest. Thus, regardless of defendant’s progress on the house or where he spent 

the loan proceeds, defendant was indebted to the Hemmers for the full loan amount, 

plus 10% interest.8 The statute under which defendant was charged does not 

criminalize defaulted loans. 

[¶19.] There being no evidence to support proof that defendant entered into 

the loan agreement, or obtained loan proceeds, with the intent to defraud the 

Hemmers, there is insufficient evidence to sustain defendant’s conviction. Because 

8. Contrary to Justice Zinter’s claim that it can be inferred from defendant’s 

failure to complete the project that he had the intent to defraud, such 

inference would be improper in this case. The parties’ contract does not 

require completion by a certain date and there is no evidence that defendant 

obtained the advances from the Hemmers based on a promise to complete the 

house within a certain time. 
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the conviction cannot stand, we need not consider whether the State proved venue 

or established identification. 

[¶20.] Reversed. 

[¶21.] MEIERHENRY and SEVERSON, Justices, concur. 

[¶22.] GILBERTSON, Chief Justice and ZINTER, Justice, dissent. 

GILBERTSON, Chief Justice (dissenting). 

[¶23.] I respectfully dissent for the reasons stated in State v. Morse, 2008 SD 

66, ¶¶30-44, 753 NW2d 915, 923-27 (Gilbertson, C.J., dissenting), and State v. 

Jackson, 2009 SD 29, ¶¶29-34, 765 NW2d 541, 548-550 (Gilbertson, C.J., 

dissenting). 

This Court does not retry cases de novo. Instead, we review the 

evidence in the light most favorable to the jury’s verdict. In a 

similar theft by deception case, we set forth our standard of 

review. . . . Where conflicting evidence is present, as in this 

case, and the credibility of witnesses is in issue, then it is a 

question of fact for the jury. The jury is physically present at 

the trial and, therefore, in the best position to judge the 

demeanor and credibility of the witnesses. This standard of 

review is vitally important in a theft by deception case, because 

rarely, if ever, will a defendant get on the stand and announce 

that he or she had the specific intent to defraud. “The proof of 

fraudulent intent need not be direct; it may be inferred from 

expressly proven acts of the accused and surrounding 

circumstances.” People ex rel. BJT, 2005 SD 123, ¶10, 707 

NW2d 489, 492 (quoting State v. Teutsch, 80 SD 462, 466, 126 

NW2d 112, 115 (1964)). 

Morse, 2008 SD 66, ¶31, 753 NW2d at 923-24 (citations omitted) (emphasis added). 

[¶24.] As in Morse and Jackson, the Court eschews the jury’s ability to 

consider the demeanor and credibility of the witnesses and to draw conclusions 

about the defendant’s specific state of mind and intent from the evidence. The 
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Court supplants the jury’s conclusions with its own by re-weighing the evidence and 

improperly disregarding evidence put before the jury. 

[¶25.] The jury could have reasonably inferred from the evidence that Kessler 

did not intend to ever complete the project, but instead sought to take draws from 

the Hemmers for his personal financial gain. While the Court relies heavily on 

Kessler’s self-serving statements that he always intended to complete the second 

home, the jury is the proper judge of his credibility. The jury was free to disregard 

his stated intent and instead infer that he had planned to dupe the Hemmers from 

the beginning. The Court appears to reason that simply because Kessler had 

performed some of the construction, or because he completed the first home, he must

not have intended to defraud the Hemmers when he agreed to build the second 

home. However, this is not a necessary conclusion; Kessler could have performed 

some of the work on the second home, and intended to defraud the Hemmers. The 

jury found that he did so intend. 

[¶26.] The jury heard evidence that Kessler had a number of previous 

construction projects where he had failed to complete the project, and from which he 

had received significant amounts of money for his personal financial interests. 

These other projects established a common scheme for Kessler to enter into 

construction projects, receive money over a period of time, claim delays and the 

need for additional money, spend the money on personal debts and expenses, only 

partially complete the work, then walk away from the unfinished project leaving the 

other party in the lurch. 
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[¶27.] For example, in 2001, Kessler entered into a home construction project 

in Omaha, Nebraska. After Kessler received money to pay for the construction 

materials and labor, numerous liens were placed against the home by lumberyards 

and subcontractors. Rather than using the advanced money to pay for the 

construction, Kessler had used some of the money for his own purposes. The 

outstanding liens totaled approximately $104,000. Eventually, Kessler signed a 

$41,000 promissory note to the homeowner for repayment of monies advanced to 

him. Kessler had only paid $1,100 against this promissory note, signed in 2002, by 

the time of the instant trial, October 2008. 

[¶28.] The Court’s statement that “There is no pattern of conduct on 

defendant’s part of entering into a loan agreement and absconding with the money” 

is misleading. See supra ¶15. While it is true that the Omaha project did not 

technically involve a “loan,” it was a similar enough “agreement” to warrant a jury’s 

conclusion that this was Kessler’s scheme for deceiving the Hemmers. 

[¶29.] The Court attempts to distinguish the legal consequence of Kessler’s 

contractual “duty to repay” the loan to the Hemmers from the contractual “duty to 

perform services” present in Morse and Jackson. See supra ¶¶12-14, ¶16 n3. This 

should be a distinction without a difference; under SDCL 22-30A-3(1) we are 

concerned with the promissor’s specific intent to obtain property of another by 

deception, regardless of whether that deception is accomplished by a false promise 

to repay or a false promise to perform. The Court appears to suggest that if one 

borrows money with no specific repayment date, the “obligation to repay” that loan 

precludes any criminal liability, irrespective of the borrower’s intent never to repay. 
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See supra ¶14. This is an invalid basis for disregarding the State’s evidence. See 

supra ¶16, n3. Furthermore, Kessler has not appealed from the circuit court’s 

admission of this evidence; the Court makes this argument sua sponte. The Court’s 

disregard of this evidence simply reflects its effort to override the jury’s decision and 

retry the evidence. 

[¶30.] In the instant transaction, the Construction Loan and Escrow 

Agreement for the second home was signed on August 15, 2007. This agreement 

provided up to $199,900 to Kessler from the Hemmers. Kessler received 

approximately $141,000 under this agreement by early October 2007. The bank 

account where Kessler had deposited the money was overdrawn by October 7, 2007. 

Because he had not used this money to build the second home, he was unable to 

complete the project. In fact, Kessler asked for an additional $35,000 from the 

Hemmers the day before they discovered that the house was nowhere near 

complete. The Hemmers, quite reasonably, refused to “loan” another $35,000 to 

Kessler. The evidence showed that Kessler never provided an accounting of his 

spending to the Hemmers until after they had visited the construction site and 

refused to loan him any more money. By his own accounting, of the $198,681.66 

Kessler had borrowed, only $72,746 went toward construction expenses. The 

remaining $126,000 went toward his personal expenses. Kessler admitted that he 

had no other source of income; he had no means of either repaying the loan or 

finishing the home. 

[¶31.] Given this evidence, and the evidence of Kessler’s previous schemes, 

the jury could have reasonably inferred that, at the time Kessler entered into the 
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agreement in August 2007, he did not intend to repay the loan but to deposit it into 

a bank account and spend it all within two months. He then continued the façade, 

seeking to get more money from the Hemmers, until they actually visited the 

worksite and discovered his deception. These inferences are neither unreasonable, 

nor are they “inferred from the fact alone that [Kessler] did not subsequently 

perform the promise.” See SDCL 22-30A-3(1) (emphasis added). 

[¶32.] The Court correctly states that “The statute under which defendant 

was charged does not criminalize defaulted loans.” See supra ¶18. However, while 

this statement is true, it misses the more salient point; the statute does criminalize 

entering into a loan with the specific intent to default on it. That is what Kessler 

was convicted of by the jury. The jury’s verdict should be upheld as required by our 

standard of review. The circuit court did not err in denying Kessler’s motion for a 

judgment of acquittal. 

[¶33.] I dissent. 

[¶34.] I also join the dissent of Justice Zinter. 

ZINTER, Justice (dissenting). 

[¶35.] The majority reverses, finding no evidence of deception with intent to 

defraud because this case involved a loan and there was no evidence “at the time 

[Kessler] obtained the draws or when he entered into the loan” that he “had no 

intent [to repay Hemmers] under the terms of the parties’ loan contract.” See supra

¶¶14-15, 17. The majority errs in: (1) misapplying our standard of review; (2) 

failing to consider Kessler’s history of similar schemes and the misrepresentations 
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he made to obtain loan advances that he could not have received without deceiving 

Hemmers; and, (3) misapplying the law regarding intent to defraud in loan 

transactions. Kessler concededly made misrepresentations to obtain four advances 

that were restricted by the agreement to be used “for the purpose of purchasing 

such lot and constructing such house.”9 When the misrepresentations are 

considered with Kessler’s history under the correct legal standards, a rational jury 

could have found that he obtained $105,000 from the Hemmers by deception. 

Because “[a]mounts involved in thefts, whether from the same person or several 

persons, committed pursuant to one scheme or course of conduct, may be aggregated 

in determining the degree of the offense,” SDCL 22-30A-18, and because “[t]heft is 

aggravated grand theft, if the value of the property stolen exceeds one hundred 

thousand dollars,” SDCL 22-30A-17.1, I would affirm the circuit court. 

[¶36.] The majority correctly observes “that there must be evidence of a 

purpose to deceive or an intent to defraud at the time the property or money is 

obtained.” Supra ¶11 (emphasis added) (citing State v. Morse, 2008 SD 66, ¶12, 753 

NW2d 915, 919; State v. Jackson, 2009 SD 29, ¶18, 765 NW2d 541). In this case, 

Kessler obtained money in the form of checks (loan advances) from the Hemmers on 

four occasions when there is no dispute he made misrepresentations. The first of 

9. The Construction Loan and Escrow Agreement, which governed the 

advances, further provided that Kessler was to pay from the advances “all 

materials and labor used in the construction of such house.” Kessler also 

deceived the Hemmers with respect to this condition. In obtaining the 

advances, he did not disclose that he was using substantial loan proceeds for 

purposes unrelated to the purchase of materials and labor for the house.
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those occasions was on September 14, 2007, and the last on November 27, 2007. 

The aggregate amount obtained was $105,000. 

[¶37.] Because that money was advanced for construction of the house, on 

each of these occasions Sharon Hemmer inquired about the status of the house. 

Kessler falsely responded that “the house was doing well.” In his last unsuccessful 

attempt to obtain an advance, Kessler falsely represented that construction had 

proceeded to the point that he was “inside the house finishing up.” Supra ¶5. 

There is, however, no dispute that only limited framing had been completed, the 

house had no windows, no roof, and it appeared to only be at the beginning stage of 

construction. Supra ¶6. Thus, the majority properly concedes that Kessler “lied to 

the Hemmers about the progress on the house, which may have ‘[c]reated or 

reinforce[d] a false impression as to the law, value, intention, or other state of 

mind.’” Supra ¶17. 

[¶38.] Further, there is no dispute that Kessler had no money to finish the 

project or repay the loan, and that he used the advances for personal purposes 

unrelated to the house. Moreover, there was evidence of a common scheme 

(involving three other projects) in which Kessler would obtain money for other 

construction projects, but divert the money for personal use and fail to complete the 

project. See supra ¶¶26-28 (Gilbertson, C.J., dissenting). See also Iowa v. Rivers, 

588 NW2d 408 (Iowa 1998) (concluding there was sufficient evidence in light of 

prior history of obtaining payments without completing the project); Baker v. State, 

588 So2d 945 (Ala Crim App 1991) (same). 
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[¶39.] Considering Kessler’s financial condition, his common scheme, and the 

nature of his misrepresentations, a jury could have concluded that Kessler’s lies 

were intended to obtain money by deception on those four occasions. This evidence 

was sufficient to support the jury’s finding that Kessler “obtained property of 

another by deception,” and that he did so with intent to defraud by “creat[ing] or 

reinforc[ing] a false impression” regarding existing facts, aside from his intent to 

repay the loan in the future. The existing facts included the status of the project 

and his use of the advances, either one of which was sufficient to constitute 

aggravated grand theft under SDCL 22-30A-3(1), 22-30A-17.1, and 22-30A-18. See 

infra ¶41. 

[¶40.] The majority attempts to create a distinction between an agreement to 

perform services and a loan agreement to repay money. See supra ¶¶12-14. The 

majority rationalizes that no criminal offense occurred because the money taken 

from Hemmers was due “regardless of defendant’s completion of the construction,” 

that the loan “was secured to a certain extent,” supra ¶13, and that Hemmers were 

entitled to interest at 10% from the date of each draw, supra ¶14. Thus, the 

majority proclaims there was “no evidence, and nothing by which this Court can 

infer such evidence, that defendant entered into the loan agreement or obtained the 

loan proceeds ‘with the intent to defraud.’” Supra ¶16. In the majority’s view, there 

must be evidence that Kessler never intended to repay the loan; and, neither 

Kessler’s history of prior similar schemes nor his contemporaneous

misrepresentations made to obtain advances on the loan are relevant under SDCL 

22-30A-3(1) because Kessler was still required to repay a partially secured loan and 
#25031 

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Hemmers were entitled to interest. The majority states that SDCL 22-30A-3(1) 

“does not criminalize defaulted loans.” Supra ¶18. This analysis is incorrect for 

two reasons. 

[¶41.] First, the majority’s rationale for not considering Kessler’s “lies,” supra

¶17, is at odds with our settled law on intent to defraud in loan transactions. 

Despite the lies Kessler used to obtain the advances, the majority finds no evidence 

of intent to defraud because “[t]here is no evidence that at the time defendant 

obtained the draws from the Hemmers that he deceived them into believing he 

would repay the loan, when in fact he had no such intent.” Id. This Court, 

however, when interpreting SDCL 22-30A-3 (including its broader historical origin 

in the common law of larceny by false pretenses), adopted the law that “intent to 

repay the loan” is irrelevant when misrepresentations are used to obtain loan 

advances. State v. Phair, 2004 SD 88, ¶7, 684 NW2d 660, 662-63 (holding evidence 

of repayment was irrelevant in case involving title misrepresentations to obtain 

loans). This Court explained that “[t]he gravamen of the offense is obtaining the 

property of another by purposely creating a false impression.” Id. In specifically 

rejecting the argument that evidence of “intent to not repay the loan” was required, 

we adopted the law “that a loan transaction may result in [the commission of this 

offense] where loan funds are obtained by a false pretense irrespective of the 

defendant’s intent to repay or actual repayment of the loan.” Id., ¶9 (citing Com. v. 

Lewis, 48 MassAppCt 343, 720 NE2d 818, 822 n3 (1999) (emphasis added). The 

language we adopted by our reference to Lewis applied to the broad common-law 
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offense of larceny by “false pretenses,” which underlies all aspects of SDCL 22-30A3 and unequivocally provides: 

Although couched in the form of a loan, the transaction could 

still result in a larceny by false pretense even if the defendant 

intended to repay the loan and even if the loan had been repaid; 

the gravamen of the charge is obtaining the funds by a false 

pretense and not whether there was present intent to repay or 

actual repayment. 

Lewis, 48 MassAppCt at 346 n3, 720 NE2d at 822 n 3 (emphasis added). In 

evaluating the nature of the evidence necessary to prove specific intent to deceive or 

cheat by causing financial loss to another in loan cases, we adopted the rule that the 

lender must merely be deprived of accurate information necessary to assess the risk 

of loss it faces:

[S]ufficient intent to inflict harm can be found from the 

intentional withholding of information from a lender which 

lowers the value of the transaction due to the lender’s lack of 

information pertinent to the accurate assessment of the risk it 

faces and the propriety of extending credit to that particular 

individual, and because of the increased expense and difficulty 

of any necessary bill collection efforts. Because this intent is 

sufficient, it is irrelevant whether the borrower intended in good 

faith to repay the loan. 

Phair, 2004 SD 88, ¶10, 684 NW2d at 664 (quoting US v. Karro, 257 F3d 112, 

118 (2dCir 2001)). Today’s majority errs in failing to follow our precedent that does 

not require proof of “intent to not repay the loan” at the time the loan was made or 

the advances were obtained.10

 

 (continued . . .) 

10. The majority contends that Phair is distinguishable because it involved a 

different subdivision of theft by deception. See supra note 3, pointing out that 

subdivision (4) involves failure to disclose a lien, adverse claim, or other 

impediment to the property given as collateral, and subdivision (1) involves 

the creation or reinforcement of false impressions regarding law, value, 
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__________________ 

(. . . continued) 

[¶42.] Second, the majority fails to follow our standard of review of the 

evidence. With respect to the evidence regarding Kessler’s intent in obtaining the 

advances, the majority attempts to justify its result by offering potential reasons 

why the evidence of Kessler’s prior similar schemes, his contemporaneous “lie[s]. . . 

about the progress on the house,” supra ¶17, and his inability to repay the advances 

should not be considered evidence of intent to deceive or defraud. See supra notes 3, 

4, and 5, and ¶¶17-18. “However, in reviewing rulings on acquittal motions, 

[including a case in which false statements were made to obtain loan advances], this 

Court does not look to the evidence favorable to the appellant.” Phair, 2004 SD 88, 

¶16, 684 NW2d at 665. Therefore, the majority’s possible rationalizations 

improperly reweigh the evidence and fail to give the verdict the deferential 

inference to which it is entitled. See State v. Frazier, 2001 SD 19, ¶44, 622 NW2d 

246, 261. As we have often stated: “In measuring evidentiary sufficiency, we [only] 

ask ‘whether, after viewing the evidence in the light most favorable to the 

intention, or other state of mind. The majority is mistaken because the issue 

is one of intent to defraud and the "intent to defraud" element is found in 

identical language contained in the preamble to both subdivisions. 

Furthermore, in the context of this case, there is no material distinction 

between “intent to defraud” through deception causing financial loss to 

another by failing to disclose a lien or other impediment regarding the home 

under subdivision (4) and creating a false impression regarding the home 

under subdivision (1). The essence of Kessler's deception fits either 

subdivision. Regardless of intent to repay the loan, he made 

misrepresentations concerning the value of the home at the time he obtained 

advances. He could not have obtained the loan advances without deceiving 

Hemmers with regard to the status of their collateral. This is significant 

because, as previously noted, the entire “theft by deception [statute] is a 

codification of the common law offense of theft by false pretenses.” Phair,

2004 SD 88, ¶7, 684 NW2d at 662. 
#25031 

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prosecution, any rational trier of fact could have found the essential elements of the 

crime beyond a reasonable doubt.’” State v. Disanto, 2004 SD 112, ¶14, 688 NW2d 

201, 206 (quoting Jackson v. Virginia, 443 US 307, 319, 99 SCt 2781, 2789, 61 

LEd2d 560 (1979)). 

[¶43.] Surely, if the evidence is viewed without reweighing Kessler’s history 

of similar conduct, his financial condition at the time of the advances, his lies to 

obtain the advances, and his failure to finish the project and repay the advances,11

the evidence was sufficient to inferentially suggest he had the specific intent to 

“deceive or cheat” at the time he made the misrepresentations to obtain those four 

advances. See supra ¶11. Here, the jury was clearly justified in finding that 

through his misrepresentations, Kessler obtained $105,000 that the Hemmers 

would not have otherwise advanced. Through his lies, Kessler withheld information 

from Hemmers regarding the value of the transaction and deprived them of 

information pertinent to the accurate assessment of the risk they faced in making 

the advances. Kessler’s lies also increased the expense and difficulty of collection. 

Ultimately, the majority’s failure to follow South Dakota law on the nature of the 

evidence necessary to provide proof of intent to defraud in loan transactions, and 

the majority’s failure to give the jury verdict the deference to which it is entitled, 

provide an unprecedented form of criminal insulation to those who utilize 

11. The majority fails to recognize that the statute allows some inference of 

intent to deceive when the actor does “not subsequently perform.” See SDCL 

22-30A-3(1) (providing that deception may not be inferred solely from an 

actor's failure to perform a promise).
#25031 

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misrepresentations to obtain loan advances. The proscription in SDCL 22-30A-3(1) 

is not so limited. The bench, bar and Legislature will be surprised to learn that, 

following the majority’s analysis, so long as a loan agreement is made with innocent 

intent, subsequent deceit regarding existing facts (the status and value of the 

collateral) employed to obtain unauthorized loan advances is not subject to the theft 

by deception statute. I cannot join that erroneous premise. 

[¶44.] Because Kessler concededly lied to obtain at least $105,000 in loan 

advances that he, quite obviously, could not have otherwise obtained without 

deception, I respectfully dissent.