Title: State v. Angela A. Keyes
Citation: 2008 WI 54
Docket Number: 2004AP001104-CR
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: June 3, 2008

2008 WI 54 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2004AP1104-CR & 2004AP1105-CR 
COMPLETE TITLE: 
 
 
State of Wisconsin, 
          Plaintiff-Respondent, 
     v. 
Angela A. Keyes, 
          Defendant-Appellant-Petitioner. 
 
 
State of Wisconsin, 
          Plaintiff-Respondent, 
     v. 
Matthew E. Keyes, 
          Defendant-Appellant-Petitioner. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2007 WI App 163 
Reported at: 304 Wis. 2d 372, 736 N.W.2d 904 
(Ct. App. 2007-Published) 
 
 
OPINION FILED: 
June 3, 2008   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
March 4, 2008   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
La Crosse   
 
JUDGE: 
Michael McAlpine   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the defendant-appellant-petitioner there were briefs by 
Michael J. Devanie and Devanie & Belzer, S.C., La Crosse, and 
oral argument by Michael J. Devanie. 
 
For the plaintiff-respondent the cause was argued by Maura 
F.J. Whelan, assistant attorney general, with whom on the brief 
was J.B. Van Hollen, attorney general. 
 
An amicus curiae brief was filed by William E. McCardell, 
Chad R. Gendreau, and DeWitt Ross & Stevens S.C., Madison, on 
behalf of the Associated General Contractors of Wisconsin, Inc., 
the Associated General Contractors of Greater Milwaukee, Inc., 
 
 
2 
and the Associated Builders and Contractors of Wisconsin, Inc., 
and there was oral argument by William E. McCardell. 
 
 
 
 
2008 WI 54
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2004AP1104-CR & 2004AP1105-CR  
(L.C. No. 
2003CF339 & 2003CF340) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
State of Wisconsin, 
 
          Plaintiff-Respondent, 
 
     v. 
 
Angela A. Keyes, 
 
          Defendant-Appellant-Petitioner. 
 
 
FILED 
 
JUN 3, 2008 
 
David R. Schanker 
Clerk of Supreme Court 
 
 
 
 
State of Wisconsin, 
 
          Plaintiff-Respondent, 
 
     v. 
 
Matthew E. Keyes, 
 
          Defendant-Appellant-Petitioner. 
 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
ANN WALSH BRADLEY, J.   The petitioners, Angela and 
Matthew Keyes, seek review of a published court of appeals 
decision affirming a circuit court order denying a motion to 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
2 
 
dismiss their bindover and information.1 The Keyes were each 
charged with felony theft by contractor, party to a crime, in 
violation of Wis. Stat. §§ 779.02(5) and 943.20(1)(b) (1999-
2000).2 The charges stemmed from payments they received on a 
house 
construction 
project 
for 
which 
they 
were 
prime 
contractors. 
¶2 
The Keyes maintain that the court of appeals erred 
when it concluded that the circuit court properly found probable 
cause to believe that the Keyes violated the theft by contractor 
statute, Wis. Stat. § 779.02(5). They assert that payments made 
                                                 
1 See State v. Keyes, 2007 WI App 163, 304 Wis. 2d 372, 736 
N.W.2d 904 (affirming order of the circuit court for La Crosse 
County, Michael J. McAlpine, Judge). Both the motion to dismiss 
the bindover and the motion to dismiss the information were 
based on the alleged insufficiency of evidence presented at the 
preliminary hearing to support the bindover. 
2 All references to the Wisconsin Statutes are to the 1999-
2000 version unless otherwise indicated. 
The court of appeals noted that "[a]lthough the 'felony 
theft by contractor' criminal charge against the Keyeses also 
includes the intent element of Wis. Stat. § 943.20(1)(b), the 
felony element of § 943.20(3)(c), and the 'party to a crime' 
element of Wis. Stat. § 939.05, we will at times refer to the 
statutes collectively as Wis. Stat. § 779.02(5)." Keyes, 304 
Wis. 2d 372, ¶9 n.4. We shall do likewise. 
Wisconsin Stat. § 943.20 is Wisconsin's theft statute. The 
court of appeals and the parties refer to the 2001-02 version of 
the Wisconsin Statutes. The Keyes were charged with a Class C 
felony pursuant to Wis. Stat. § 943.20(3)(c)(1999-2000), which 
requires that the amount of property at issue exceed $2500. The 
Wisconsin legislature revised the statute in 2001 such that 
§§ 943.20(3)(bf), (bm), and (c) are different classes of felony 
based on the amount of property at issue. 2001 Wis. Act 109, 
§ 146. The changes do not affect our analysis. 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
3 
 
to 
Angela 
Keyes 
were 
for 
her 
legitimate 
claims 
as 
a 
subcontractor and that the payments were not "used for any other 
purpose." They further contend that the State failed to present 
sufficient evidence to support the bindover as to whether there 
were unpaid claims to subcontractors due at the time Angela 
received the payments. 
¶3 
Based upon the language of § 779.02(5) and its 
purpose, we agree with the court of appeals that the circuit 
court's finding of probable cause was based on a proper 
interpretation of the statute. However, we disagree with the 
court of appeals to the extent that its decision implies that 
contractors or subcontractors may not receive profit on a 
project until the project ends. We further conclude that the 
State presented sufficient evidence at the preliminary hearing 
to support the bindover. Accordingly, we affirm the decision of 
the court of appeals.  
I 
¶4 
The defendants were each charged with felony violation 
of the theft by contractor statute, Wis. Stat. § 779.02(5). The 
criminal complaints alleged that the defendants were trustees 
over moneys paid for improvements on land and "intentionally 
retain[ed] possession of such money without the owner's consent, 
contrary to [their] authority, and with intent to convert to 
[their] own use . . . ."  
¶5 
In December 2001, James and Rose Wettstein entered 
into a contract to build a home with general contractors Angela 
and Matthew Keyes, who were doing business as Keyes to Design, 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
4 
 
Inc. The parties agreed to a contract price of $2500 for pre-
construction services and $37,500 for construction services plus 
the cost of the work. In addition, the contract provided that 
Matthew Keyes would receive $50 per hour for labor. The first 
estimate of construction cost was $467,723. A series of change 
orders increased the estimate to $492,204. The parties signed a 
notice to proceed in March 2002. 
¶6 
The project was financed through a bank construction 
loan administered by The Title Company. The money was to be paid 
in a series of draws. Between June 4, 2002, and November 19, 
2002, the Keyes took seven draws from the Wettsteins' loan 
account, 
totaling 
$417,647. 
Lien 
releases 
filed 
by 
subcontractors indicated that $219,155.43 had been paid to 
subcontractors. In August 2002, while the home was being 
constructed, the Wettsteins became suspicious when they learned 
that some subcontractors on the project were not being paid and 
that Angela Keyes was doing some of the contracting work 
herself.  
¶7 
Ultimately, The Title Company denied the Keyes' 
request for an eighth draw. In addition, the Wettsteins asked 
Linda Jones, a certified public accountant, to investigate 
project finances. Based on Jones's investigation, the Wettsteins 
filed a complaint with the Onalaska Police Department. A 
criminal complaint against the Keyes for felony theft by 
contractor pursuant to Wis. Stat. §§ 779.02 and 943.20 followed 
in January 2003.  
No. 
2004AP1104-CR & 2004AP1105-CR   
 
5 
 
¶8 
According to the criminal complaint, the investigator 
reviewed paperwork provided by Jones showing that Angela Keyes 
had paid herself $75,000 for materials, with approximately 
$35,000 of that amount unaccounted for. The investigator was 
also informed that Matthew Keyes took out a contractor fee of 
$35,875 at one time, and when James Wettstein inquired about the 
entire amount being withdrawn at once, Matthew stated, "[y]ou 
bet. I took it all out when I thought you were going to pull the 
plug."  
¶9 
The 
criminal 
complaint 
also 
described 
billing 
discrepancies. Based on her log of time she spent at the house, 
Rose Wettstein told the investigator that Matthew Keyes billed 
9.5 hours of work for days she knew he was not at the house. 
Further, the complaint recounted Jones's explanation to the 
investigator 
that 
she 
traced 
money 
from 
the 
Wettsteins' 
construction account and found it being used for purposes other 
than the Wettstein project. Those uses included making payments 
on other jobs, paying off loans not related to the Wettstein 
project, and making payments into personal accounts. The 
criminal complaint stated that Jones had determined that money 
had been: 
used for other purposes such as paying other jobs, 
payments to Coulee State Bank for loan payments, cash 
in the amount of $17,286.48 and deposits into their 
personal 
accounts 
in 
the 
amount 
of 
$31,018.58, 
including a $3,000 check to Dahl Ford. . . . there 
were obvious payments being made from the Wettstein 
draws that should have been going towards the house 
being turned into cashier's checks and being used for 
other purposes.  
No. 
2004AP1104-CR & 2004AP1105-CR   
 
6 
 
¶10 The State presented two witnesses at the preliminary 
hearing, James Wettstein and Linda Jones. The Keyes presented 
none. James Wettstein testified regarding the building contract, 
the construction loan, and project budgets. He stated that he 
had agreed to a budget that included estimated costs for various 
aspects 
of 
the 
project, 
including 
materials. 
He 
further 
testified that he had consulted with both Angela and Matthew 
Keyes regarding proposals for the provision of materials, and 
that the parties had agreed to several change orders that 
revised the original budget. Specifically, James Wettstein 
agreed that he had discussed with Angela Keyes what type of 
carpeting, cabinets, tile, and countertops to purchase.  
¶11 Jones's testimony was based on her examination of 
documents relating to the project, including draw requests, 
checks, lien waivers, and invoices, as well as documents from 
the Keyes, including bank records obtained by subpoena. She 
testified that as of December 2002, the Keyes had received 
approximately $417,000 in draws from the construction account. 
Of that money, Jones testified that the Keyes made payments of 
approximately $317,000 to subcontractors and suppliers from the 
draws. The remaining money, approximately $100,000, was used for 
a variety of purposes, including loan payments and general 
business expenses:  
[T]here was some $8,000.00 made——payments on loans to 
Coulee State Bank. There was a $3,000.00 check that 
was written out to Dahl Ford. There was some other——60 
some thousand dollars that was paid for just general 
business expenses like telephone or utilities. They 
paid themselves rent . . . . 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
7 
 
There was a substantial amount of money paid on 
previous jobs, some vendors that were not even used on 
the Wettstein job, . . . credit card payments, a lot 
of credit card payments . . . , sales tax, tax liens, 
that type of items . . . . 
¶12 Her analysis of the information revealed that $30,750 
had been paid for Matthew Keyes' labor and $33,375 had been paid 
to the Keyes as a contractor fee. In addition, Jones found 
invoices for $75,241.12 paid to Angela Keyes. She was able to 
account for some of the money invoiced to Angela Keyes as having 
been paid to third parties for materials. However, Jones was 
unable to account for $36,036.28 of the payments made to Angela 
Keyes. According to Jones, there also remained approximately 
$47,000 
in 
unpaid 
bills 
and 
invoices 
submitted 
by 
subcontractors.  
¶13 During cross-examination, Jones stated that she did 
not include in her analysis several proposals for materials 
prepared by Angela Keyes on the grounds that there were no 
receipts verifying the amounts contained in the proposals. 
Similarly, Jones testified that she did not include invoices 
supplied by Angela Keyes in her calculations of the accounted 
for sums. She stated that she considered the invoices "bogus."  
¶14 According to Jones, Angela Keyes received cashier's 
checks for the balance of money left from draws and then created 
invoices to match that amount. 
When I look at the——what their practice was, to take 
the draw and convert it into a cashier check and then 
out of the cashier check——and that cashier check was 
made out to them, to Keyes to Design, Inc.; and then a 
day or so later . . . they would go back to the bank 
and redeem that cashier check for a series of other 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
8 
 
checks 
and 
some 
checks 
were 
made 
out 
to 
the 
subcontractors and then another check would be made 
out to [the Keyes] for the balance, and it just so 
happened that there's  . . . an invoice that happens 
to match that cashier's check.  
Jones further testified that Angela Keyes had been "recycling" 
money by using cashier's checks to conceal what she was doing: 
But then that cashier's check would be turned in and 
redeemed and another payment or they might . . . put 
some money into their checking account out of that 
cashier check and another cashier's check was made out 
to them and there's another invoice that would happen 
to match that cashier's check. So she's creating an 
invoice to match a cashier check, she's not paying 
herself with new moneys. She's paying herself out of 
that first moneys that she's gotten. So they're just 
like recycling money or generating invoices to match a 
cashier check so she could say that she was entitled 
to this money.  
The Keyes' attorney asked whether Jones' testimony was "saying 
they stole the money and used it to pay other jobs or anything?" 
Jones responded that she thought they had done so.  
¶15 In addition to determining that there were $36,036.28 
in unaccounted for payments made to Angela Keyes, Jones 
indicated that she was dubious as to whether Matthew Keyes was 
entitled to the entire amount paid for labor: 
Jones: I have also——after reviewing the labor records 
that were turned in have a lot of questions as to how 
much of the labor actually he was entitled to of that 
30,000. 
Q: And when you say that, you mean Matt——Matt Keyes' 
labor? 
A: Yes. Yeah, right.  
Q: So you——you think he might have padded the bill, so 
to speak, on his labor? 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
9 
 
A: Yes. 
¶16 The circuit court bound the Keyes over for trial. It 
based its decision on Jones's testimony that the Keyes retained 
over $36,000 to pay themselves while there were unpaid claims of 
$47,000 due to other subcontractors. Thus, it determined that 
the 
unpaid subcontractors should have been proportionally 
compensated under Wis. Stat. § 779.02(5). 
[F]or the purpose of the preliminary hearing I 
consider the defendants retained slightly more than 
$36,000 for the purpose of paying themselves, I infer, 
while 
other subcontractors remain unpaid in the 
approximate amount of $47,000. That there were unpaid 
subcontractors due approximately $47,000 supports the 
inference deficiencies existed in the draws. The 
unpaid subcontractors should have been at least 
proportionally compensated. 
¶17 The Keyes moved to dismiss the bindover and the 
information, alleging that there was insufficient evidence to 
support the bindover. The circuit court denied the motion, and 
the Keyes appealed. The court of appeals affirmed the decision 
of the circuit court, and the Keyes petitioned for review.  
II 
¶18 This case requires that we interpret Wisconsin's theft 
by contractor statute, Wis. Stat. § 779.02(5), and apply that 
interpretation 
to 
the 
facts 
of 
this 
case. 
Statutory 
interpretation and application present questions of law that we 
review independently of the determinations rendered by the 
circuit court and court of appeals. State v. House, 2007 WI 79, 
¶11, 302 Wis. 2d 1, 734 N.W.2d 140. 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
10 
 
¶19 In addition, this case involves a question of whether 
there was sufficient evidence presented at the preliminary 
hearing to support the bindover. In determining whether evidence 
is sufficient to support a bindover, we employ a limited review. 
The reviewing court examines the evidence to the extent 
necessary to determine "whether there was any substantial ground 
for the exercise of judgment by the committing magistrate."  
State v. Berby, 81 Wis. 2d 677, 684, 260 N.W.2d 798 (1978). Once 
the reviewing court has discerned sufficient evidence to support 
the circuit court's determination of probable cause, the inquiry 
stops, and the court cannot proceed to weigh the evidence. Id. 
III 
¶20 We address first whether the circuit court erred in 
finding probable cause that the Keyes committed a felony. In 
resolving this question we examine the words of § 779.02(5) and 
its purpose.  
¶21 The Keyes were charged with theft by contractor under 
Wis. Stat. § 779.02(5), part of Wisconsin's construction lien 
law. Section 779.02(5) safeguards against misappropriation of 
construction project funds by creating trust funds for the 
benefit of owners, subcontractors, and suppliers. The trust fund 
is to pay claims due or to become due for labor and materials3 
used for the improvements: 
                                                 
3 Wisconsin Stat. § 779.02(5) was modified by 2005 Wis. Act 
204. It now provides that the trust fund is for claims due or to 
become due or owing "for labor, services, materials, plans, and 
specifications used for the improvements." The change does not 
affect our analysis.  
No. 
2004AP1104-CR & 2004AP1105-CR   
 
11 
 
Theft by contractors. The proceeds of any mortgage on 
land paid to any prime contractor or any subcontractor 
for improvements upon the mortgaged premises, and all 
moneys paid to any prime contractor or subcontractor 
by any owner for improvements, constitute a trust fund 
only 
in 
the 
hands 
of 
the 
prime 
contractor 
or 
subcontractor to the amount of all claims due or to 
become due or owing from the prime contractor or 
subcontractor for labor and materials used for the 
improvements, until all the claims have been paid, and 
shall not be a trust fund in the hands of any other 
person.  
The statute prohibits the use of the money in the trust fund for 
any purpose other than paying claims until such time as the 
claims have been paid in full. In case of deficiency, the claims 
are to be paid proportionately. Violation of the payment 
provisions constitutes theft by contractor: 
The use of any such moneys by any prime contractor or 
subcontractor for any other purpose until all claims, 
except those which are the subject of a bona fide 
dispute and then only to the extent of the amount 
actually in dispute, have been paid in full or 
proportionally in cases of a deficiency, is theft by 
the prime contractor or subcontractor of moneys so 
misappropriated 
and 
is 
punishable 
under 
s. 
943.20. . . .  
Wis. Stat. § 779.02(5).   
¶22 In examining the words of the statute, it is worth 
noting that the words "profit" and "priority" do not appear. As 
discussed more fully below, the court of appeals and at times 
the parties spend much of their discussion addressing "profits" 
and priority of payment. Such a discussion overlooks the basis 
of the circuit court's determination of probable cause: the 
claims were not paid proportionately. Tracking the statutory 
language, the focus of our inquiry is on whether payments 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
12 
 
received by Angela were used "for any other purpose" before "all 
claims . . . [had] been paid in full or proportionally in cases 
of a deficiency."  
¶23 The 
Keyes 
assert 
that 
Angela 
was 
acting 
as 
a 
subcontractor, and that the payments Angela received (i.e., the 
entire $75,241.12) did not include "profit." Rather, they 
maintain the $75,241.12 paid to Angela was for the materials she 
provided at a price agreed to by the parties, and therefore it 
is simply a payment for a claim due within the meaning of the 
statute. They argue that so long as the money goes toward the 
project, payments do not violate the statute. 
¶24 Like the court of appeals, we will assume without 
deciding that Angela was acting as a subcontractor on the 
project.4 Even accepting the Keyes' assertion that the entire 
$75,241.12 is money to which they are entitled by virtue of 
                                                 
4 The parties dispute whether Angela was a self-performing 
contractor or a subcontractor on the project. The circuit court 
and the court of appeals did not make a determination in this 
regard, and simply assumed for the sake of discussion that 
Angela was a subcontractor. The Keyes' claim that Angela was a 
subcontractor appears to conflict with this court's longstanding 
interpretation 
of 
"subcontractor" 
within 
the 
context 
of 
construction lien law. See Marks Bros. Co. v. Goossen 197 
Wis. 562, 568, 222 N.W. 818 (1929)(defining "subcontractor" 
within the meaning of construction lien law as "a person whose 
relation to the principal contractor is substantially the same 
as to a part of the work as the latter's relation is to the 
proprietor. . . . "); see also Steven W. Martin, Wisconsin 
Construction Lien Law Handbook, (3d ed. 2007) § 1.7 ("Generally, 
a party offering labor or materials for an improvement project 
is a subcontractor if that party is not dealing directly with 
the owner . . . ."). However, whether Angela was a subcontractor 
or self-performing prime contractor does not bear upon our 
analysis. 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
13 
 
their agreements with the Wettsteins, their action conflicts 
with the language of the statute. Section 779.02(5) requires 
that using trust fund money "for any other purpose until all 
claims . . . have been paid in full or proportionally in cases 
of a deficiency, is theft by the prime contractor . . . ." Wis. 
Stat. § 779.02(5)(emphasis added). 
¶25 The uncontroverted evidence in this case is that 
Angela received payments of $75,241.12, and the Keyes maintain 
that the payments were for Angela providing materials. In their 
brief, the Keyes maintain that the cost of those materials in 
the proposed budget (including increases effected through change 
orders) was $72,792.5 Thus, Angela was fully compensated.  
¶26 In 
contrast, 
Jones 
testified 
that 
there 
were 
subcontractors who had claims due, totaling more than $47,000. 
After the final draw from the construction account in November, 
there was not enough money to pay the claims due the third-party 
subcontractors and also pay Angela the full $75,241.12 for 
                                                 
5 The Keyes' argument turns on the claim that they provided 
the 
Wettsteins 
with materials (including carpeting, tile, 
cabinetry, and countertops) at the price agreed upon by the 
parties. It is unclear from the record, however, what the Keyes 
contend is the agreed upon price. They state in their brief that 
the proposed budget for the materials supplied by Angela was 
originally $68,855, and was increased by subsequent change 
orders to $72,792. They also direct our attention to proposals 
for providing the materials (which are not signed by the 
Wettsteins) totaling $69,594. They do not explain how the 
$75,241.12 figure constitutes the agreed upon price, except that 
it is the total of invoices Angela submitted for her work. We 
note, however, that Jones's testimony was that the invoices 
appeared tailored to match the amount of money left in the draw.  
No. 
2004AP1104-CR & 2004AP1105-CR   
 
14 
 
materials. Accordingly, this was a case of deficiency, and the 
unpaid subcontractors were not compensated proportionally to 
Angela. As the circuit court stated in its written decision, 
"[t]he 
unpaid 
subcontractors 
should 
have 
been 
at 
least 
proportionally compensated." 
¶27 Moreover, 
the 
Keyes 
ignore 
the 
proportionality 
requirement when they claim that so long as money goes toward 
the project, payments do not violate the statute. While the 
Keyes are correct that money cannot be used for purposes outside 
of the project, that does not end contractors' responsibilities 
under the statute. Using the money to pay themselves in full 
while other subcontractors have not been paid proportionally 
constitutes using money for a non-statutory purpose. 
¶28 The 
Keyes' 
actions 
therefore 
conflict 
with 
the 
language of § 779.02(5). Assuming that Angela had a claim to the 
payments she received, taking full payment when third-party 
subcontractors remained unpaid violates the proportionality 
requirement of the statute.  
¶29 Our view is further supported by the purposes of the 
statute. This court has determined that § 779.02(5) creates a 
trust, and payments made to a prime contractor are not actually 
owned by the prime contractor. Burmeister Woodwork Co., Inc. v. 
Friedel, 65 Wis. 2d 293, 302, 222 N.W.2d 647 (1974). Rather, 
"the funds upon which the statute imposes the trust were 
received by the contractor for a particular purpose, the 
construction of improvements upon property." Id. The statutory 
purposes of the law are "(a) to protect the owner from having to 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
15 
 
pay twice and (b) to secure payments to subcontractors and 
workers." Wisconsin Dairies Coop. v. Citizens Bank & Trust, 160 
Wis. 2d 758, 765, 467 N.W.2d 124 (1991). The statute serves to 
insure that the funds are used for those purposes. Burmeister, 
65 Wis. 2d at 302. 
¶30 In Kraemer Bros., Inc. v. Pulaski State Bank, this 
court determined that the policy underwriting the statute is "to 
assist subcontractors and their subcontractors and suppliers in 
getting paid and to protect owners and prime contractors from 
paying twice." 138 Wis. 2d 395, 402-03, 406 N.W.2d 379 (1987). 
It therefore concluded that money in a subcontractor's hands was 
held 
in 
trust 
for 
the 
benefit 
of 
second-tier 
or 
sub-
subcontractors, even though the money was not paid directly to 
the subcontractor by the owner. Id. at 403.  
¶31 The Keyes maintain that the statutory purpose of 
protecting owners from paying twice for work supports their 
interpretation of the statute. That is, so long as trust fund 
money stays in the project and is used for payments that owners 
would owe, then it is not "used for any other purpose" under 
§ 779.02(5).  
¶32 This is also the interpretation proffered by amicus 
Association 
Contractors. 
They 
argue 
that 
the 
proper 
interpretation of the statute is that it prohibits contractors 
from diverting money away from a project rather than prohibiting 
payment for a contract that includes profit within a particular 
project. They cite a litany of cases in which § 779.02(5) has 
been applied to prohibit paying non-project expenses from trust 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
16 
 
fund moneys. See, e.g. Capen Wholesale, Inc. v. Probst, 180 
Wis. 2d 354, 509 N.W.2d 120 (Ct. App. 1993) (money used to pay 
general 
corporate 
expenses); 
State 
v. 
Sobokowiak, 
173 
Wis. 2d 327, 496 N.W.2d 620 (Ct. App. 1992) (money from one 
project used to pay car payments and expenses from other 
projects); Burmeister Woodwork, 65 Wis. 2d 293 (money used for 
general business expenses); Pauly v. Keebler, 175 Wis. 428, 185 
N.W. 
554 
(1921) 
(money 
used 
to 
pay 
contractor's 
living 
expenses).  
¶33 Their interpretation, however, ignores the second 
statutory 
purpose, 
securing 
payments 
for 
subcontractors. 
Allowing a prime contractor acting as a subcontractor to pay 
itself in full while leaving subcontractors with unpaid claims 
totaling $47,000 is incompatible with the purpose of "secur[ing] 
payments to subcontractors and workers."  Wisconsin Dairies, 160 
Wis. 2d at 765. Assisting subcontractors and workers in getting 
paid 
at 
least 
demands 
that, 
in 
cases 
of 
deficiency, 
subcontractors be paid proportionally. 
¶34 In sum, we determine that under the language of the 
statute, the Keyes are required to pay trust fund money 
proportionally to subcontractors in cases of deficiency. Here, 
the uncontroverted evidence is that Angela was paid while 
$47,000 in claims from subcontractors remained unpaid. Such 
payments would constitute use of trust fund money for "any other 
purpose [before] all claims . . . have been paid in full or 
proportionally in cases of a deficiency." Our interpretation is 
further supported by the statutory purpose of § 779.02(5), which 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
17 
 
is to both protect owners from paying twice and secure payments 
for subcontractors and workers. Accordingly, we determine that 
the circuit court's finding of probable cause was based on a 
proper interpretation of the statute. 
IV 
¶35 Although the circuit court's conclusion that there was 
probable cause to believe that the Keyes had committed a felony 
was based upon its determination that the subcontractors should 
have been paid proportionally, the court of appeals jettisoned 
the inquiry. Instead of focusing on proportionality, it focused 
on profit.  
¶36 In their original brief to the court of appeals, the 
Keyes indicated that the unaccounted for $36,036.28 was really 
profit on materials, to which they were entitled. The court of 
appeals then, sua sponte, asked for supplemental briefs on the 
question of whether § 779.02(5) prohibits a prime contractor 
acting as subcontractor from paying itself for profit on 
materials supplied as a subcontractor.  
¶37 In proposing this question the court of appeals took 
an 
argument of the parties and transformed it into an 
"undisputed fact" upon which it relied as a basis of its 
analysis. Indeed, the penultimate paragraph of the majority 
opinion begins: "In sum, the record and the Keyeses' own 
concessions that the $36,036.28 was kept as a profit . . . ." 
State v. Keyes, 2007 WI App 163, ¶36, 304 Wis. 2d 372, 736 
N.W.2d 904. 
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2004AP1104-CR & 2004AP1105-CR   
 
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¶38 The 
circuit 
court, 
however, 
made 
no 
such 
determination. It is not clear from the record whether the money 
was taken as profit, was diverted by the Keyes through bogus 
invoices and recycling of funds as Jones testified, or was 
something else altogether. After acknowledging the argument of 
the Keyes, the circuit court concluded that there was probable 
cause to believe that the use of the funds "was criminal in 
nature rather than innocent in nature." Ultimately, without 
making a factual determination regarding the $36,036.28, the 
circuit court was going to let the finder of fact decide: "The 
finder of fact in these matters may very well conclude the 
defendants were entitled to retain all of the monies they kept."  
¶39 Even if it turns out that the money was profit, that 
alone is neither here nor there. Rather, the issue is whether 
payment was proportional as required by § 779.02(5). 
¶40 Nevertheless, based on the parties' briefs, and 
relying on Sobokowiak, 173 Wis. 2d 327, the court of appeals 
determined that § 779.02(5) prohibits prime contractors acting 
as subcontractors from receiving profit prior to paying other 
subcontractors for their labor and materials:  
[Section] 779.02(5) precludes a prime contractor who 
also acts as a subcontractor from paying itself a 
profit before all other subcontractors have been paid 
in full for amounts due or to become due and owing for 
their labor and materials, or paid proportionately 
where there is a deficiency. 
Keyes, 304 Wis. 2d 372, ¶16. The Keyes may be criminally liable 
under 
§ 779.02(5), 
the 
court 
asserted, 
insofar 
as 
"they 
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2004AP1104-CR & 2004AP1105-CR   
 
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intentionally used money from the entrusted funds to pay 
themselves a profit . . . ." Id., ¶22.  
¶41 For several reasons, we decline to follow the court of 
appeals' approach here. As noted above, it bases its analysis on 
a faulty assumption, i.e., that it is undisputed that the Keyes 
kept the unaccounted for $36,036.28 as profit. Id.  
¶42 In addition, it is unclear how to construe "profit."  
The State does not contend that the Keyes violated the statute 
for receiving some or all of their contractor fee prior to the 
end of the project. However, a leading treatise on construction 
law understands contractor fees to include profit; "[t]he 
contractor's fee covers non-reimbursable costs which will be 
expended and the profit on the work." 2 Steven G.M. Stein, 
Construction Law, § 7.01[5][a] (2007). The court of appeals' 
view would potentially preclude taking that fee.6  
                                                 
6 Association Contractors (Associated General Contractors of 
Wisconsin, Inc., Associated General Contractors of Greater 
Milwaukee, Inc., and Associated Builders and Contractors of 
Wisconsin, Inc.) filed an amicus brief.  They assert that there 
are a wide variety of construction contracts as well as many 
contingencies that can affect profits within a construction 
project. They note that in addition to the "fixed price/lump 
sum" contracts like the one in this case, there are other 
construction contracts, such as "time and material," "cost of 
work plus profit," "guaranteed maximum price with or without 
shared savings," and "design build." They also advance that 
projects may appear profitable at one moment but become 
unprofitable later due to unforeseen problems.  
Thus, Association Contractors object to the court of 
appeals' focus on profits and complains that its treatment is 
ill-defined and unduly burdensome. Because we base our analysis 
on the language of the statute in requiring proportionality, we 
need not further analyze here the concept of profits in the 
construction arena. 
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2004AP1104-CR & 2004AP1105-CR   
 
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¶43 Further, the court of appeals' approach appears to 
require that any profit be deferred until the end of a project.7 
Its 
statement 
that 
primary 
contractors 
must 
"pay 
all 
subcontractors for their labor and materials in full, or 
proportionally 
in 
cases 
of 
a 
deficiency, 
before 
paying 
themselves a profit," Keyes, 304 Wis. 2d 372, ¶23, is open-ended 
and could be interpreted to require foregoing profit even before 
a bill is due or to become due.  
¶44 The court of appeals' approach also does not follow 
from Sobokowiak. The defendant, Sobokowiak, entered into a 
contract to build a home, and the owners placed money from a 
construction loan into an account. On Sobokowiak's request for a 
draw on the account, the bank issued a cashier's check and 
Sobokowiak deposited the money in his company's checking 
                                                 
7 Association Contractors contend that the court of appeals 
decision may be read to preclude a primary contractor's first-
tier subcontractors (i.e., those who contract directly with the 
primary contractor) from receiving full payment because profit 
is incorporated into the price negotiated between the primary 
and 
the 
subcontractor. 
Although 
we 
disagree 
with 
that 
interpretation of the court of appeals decision, we agree that 
Wis. 
Stat. 
§ 779.02(5) 
does 
not 
preclude 
first-tier 
subcontractors from receiving full payment until the end of a 
project. 
Section 779.02(5) 
states 
that 
payments 
to 
subcontractors "constitute a trust fund only in the hands of 
the . . . subcontractor to the amount of all claims due or to 
become due or owing from the . . . subcontractor for labor, 
services, materials . . . ." The plain language of the section 
is that such payments are held in trust for claims due or to 
become due or owing from the subcontractor, that is, payments to 
the sub-subcontractors or second-tier subcontractors. This view 
is made clear in Kraemer Bros., Inc. v. Pulaski State Bank, 138 
Wis. 2d 395, 403, 406 N.W.2d 379 (1987).  
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2004AP1104-CR & 2004AP1105-CR   
 
21 
 
account. 173 Wis. 2d at 331. As of December 22, 1989, Sobokowiak 
had disbursed the entire amount of the draw, had little money in 
the account, and yet owed a lumber supplier over $30,000. Id. at 
332. During that period, he used over $18,000 from his account 
for labor and materials on other jobs, a car lease payment, and 
a telephone bill. Id. at 335.  
¶45 Sobokowiak sought to introduce evidence that the 
lumber supplier had waived its claim to money from the account 
and had accepted a credit arrangement instead. Id. at 332.  The 
court of appeals, however, determined that it was irrelevant 
whether he had fulfilled the obligation at some point in time. 
Rather, what mattered was whether the money had been used for 
other purposes prior to the claims being satisfied. Id. at 334. 
It quoted Burmeister for the proposition that under § 779.02(5), 
funds "can only be used for the payment of claims of the 
beneficiaries until all such claims are paid." Id. (quoting 
Burmeister, 65 Wis. 2d at 299)(emphasis in Sobokowiak). Thus, 
Sobokowiak does not prevent profit outright in the way implied 
by the court of appeals.  
¶46 It is not clear whether the unaccounted for $36,036.28 
was merely profit. Further, the court of appeals' approach fails 
to explain how to construe "profit," implies that contractors or 
subcontractors may not receive profit on a project until the 
project ends, and is not required under Sobokowiak. We therefore 
disagree with the court of appeals that § 779.02(5) prohibits 
prime contractors acting as subcontractors from receiving profit 
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2004AP1104-CR & 2004AP1105-CR   
 
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prior to paying other subcontractors for their labor and 
materials. 
V 
¶47 We turn next to the question of whether there was 
sufficient evidence presented at the preliminary hearing to 
support the bindover. Under Wis. Stat. § 970.03(7), a court 
shall bind a defendant over for trial if after the preliminary 
hearing the "the court finds probable cause to believe that a 
felony has been committed by the defendant." As we stated in 
section II, our review is limited to whether there exists "any 
substantial 
ground 
for 
the 
exercise 
of 
judgment 
by 
the 
committing magistrate."  Berby, 81 Wis. 2d at 684. 
¶48 The Keyes' primary argument that the evidence does not 
support the bindover is their legal argument that § 779.02(5) 
was not violated because Angela was a subcontractor and the 
payments to her were for claims due. For the reasons explained 
in the previous sections, we are not persuaded by that 
contention.  
¶49 In addition, the Keyes contend that the State failed 
to present sufficient evidence that there were claims due or to 
become due or owing when Angela received payments. They argue 
that Jones's testimony does not specify when third-party 
subcontractor claims became due. Because work on the project 
continued after the Keyes left the project, and Jones's 
investigation took place after they left the project, the Keyes 
maintain that the work giving rise to the claim could have been 
performed after Angela had received payment. 
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2004AP1104-CR & 2004AP1105-CR   
 
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¶50 Although the Keyes are correct that Jones's testimony 
did not specify a time when the $47,000 in subcontractors' 
claims became due, her investigation began shortly after the 
Keyes left the Wettstein job. Jones testified regarding the 
$36,036.28 in unaccounted for payments received by Angela. Such 
evidence is a substantial ground for the circuit court's 
determination. The fact that Jones's testimony did not specify a 
precise time at which the $47,000 in unpaid claims became due 
goes to the weight of the evidence. However, our review of a 
bindover does not extend to weighing the evidence. Berby, 81 
Wis. 2d at 684. 
¶51 Moreover, Jones's testimony was not limited to the 
existence of $47,000 in unpaid claims and $36,036.28 in 
unaccounted for payments to Angela. She testified regarding the 
Keyes' 
irregular 
practices 
regarding 
invoices, 
which 
she 
considered "bogus." These irregular practices included the 
apparent tailoring of invoices to match cashier checks for the 
exact funds remaining in their account. It also included 
"recycling money or generating invoices to match a cashier check 
so she could say that she was entitled to this money."  
¶52 At the preliminary hearing Jones testified that the 
payments 
to 
Angela 
had 
not 
been 
supported 
by 
adequate 
documentation. Additionally, she testified that she was dubious 
that the Keyes were entitled to all of the money they claimed as 
payment for Matthew Keyes' labor. 
¶53 The testimony provided by Jones is substantial, and it 
is sufficient to support the circuit court's determination that 
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2004AP1104-CR & 2004AP1105-CR   
 
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subcontractors should have received proportionate payment. The 
evidence presented therefore provides a substantial ground for 
the circuit court's exercise of judgment in determining that a 
felony had been committed by the Keyes. We therefore decline to 
upset the circuit court's decision to bind over the defendants.  
VI 
¶54 In sum, based upon the language of § 779.02(5) and its 
purpose, we agree with the court of appeals that the circuit 
court's finding of probable cause was based on a proper 
interpretation of the statute. However, we disagree with the 
court of appeals to the extent that its decision implies that 
contractors or subcontractors may not receive profit on a 
project until the project ends. We further conclude that the 
State presented sufficient evidence at the preliminary hearing 
to support the bindover. Accordingly, we affirm the decision of 
the court of appeals. 
By the Court.—The decision of the court of appeals is 
affirmed. 
 
 
No. 
2004AP1104-CR & 2004AP1105-CR   
 
 
 
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