Title: George v. Commonwealth
Citation: N/A
Docket Number: 080339
State: Virginia
Issuer: Virginia Supreme Court
Date: October 31, 2008

Present:  Hassell, C.J., Koontz, Kinser, Lemons, Goodwyn, and 
Millette, JJ., and Lacy, S.J. 
 
FRANCIS HABO GEORGE  
 
v.  Record No. 080339 
 
 
OPINION BY SENIOR JUSTICE 
 
 
 
 
 
 
         ELIZABETH B. LACY 
COMMONWEALTH OF VIRGINIA              October 31, 2008 
 
FROM THE COURT OF APPEALS OF VIRGINIA 
 
In this appeal, Francis Habo George asks us to reverse 
his four felony convictions for embezzlement in violation of 
Code § 18.2–111.  He asserts that the Court of Appeals erred 
in holding that the evidence was sufficient to support those 
convictions and in refusing to address his argument that there 
was a fatal variance between the indictments, evidence and 
jury instructions because he failed to raise that issue in the 
trial court.  For the reasons stated below, we will affirm 
George’s felony embezzlement convictions because the evidence 
was sufficient to support those convictions and, although the 
Court of Appeals erred in holding that George did not raise 
the fatal variance issue in the trial court, no such fatal 
variance existed. 
FACTS 
Code § 58.1-461 requires employers to withhold funds from 
their employees’ wages.  These funds reflect the employees’ 
expected state income tax liability.  The funds are to be 
reported and paid to the Commissioner of the Virginia 
Department of Taxation.  Code § 58.1-472.  Code § 58.1-474 
provides that “sums withheld in accordance with the provisions 
of this article shall be deemed to be held in trust for the 
Commonwealth.” 
 
George, a physician, owned and operated a general medical 
practice in Page County from 1996 to 2004.  In 2000, a tax 
representative with the Virginia Employment Commission 
informed George that he could not treat his nurses and 
assistants as independent contractors but had to treat them as 
employees and withhold employee income taxes.  From 2000 to 
2004, George withheld income taxes from his employees’ wages 
but did not remit those funds to the Virginia Department of 
Taxation.  George used a single bank account to operate his 
medical practice and pay personal and business expenses.  The 
funds withheld from employee wages were not segregated in a 
separate account.  Bank statements showed that at times 
between 2001 and 2004, George’s bank account balance 
registered below the amount of funds withheld from the 
employees’ wages. 
 
George was indicted for four counts of “unlawfully and 
feloniously embezzl[ing] money belonging to the Commonwealth” 
in violation of Code § 18.2-111.1  At his jury trial, following 
                                                 
1 Code § 18.2-111 states in relevant part: 
 
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the conclusion of the evidence, the Commonwealth proposed the 
following jury instructions: 
Instruction No. 3 
 
The defendant is charged with four counts of the 
crime of embezzlement.  In regard to each of those 
four offenses, the Commonwealth must prove beyond a 
reasonable doubt each of the following elements: 
(1) That the defendant wrongfully and 
fraudulently used, disposed of or converted to the 
use of himself or his business the wages of his 
employees withheld by him; and 
(2) That the wages had been received by the 
defendant, in trust, by virtue of his position as 
their employer; and 
(3) During each of the four periods specified 
in each of the four indictments, the amount of the 
wages withheld from the employee’s pay was more 
than $200.  
 
 
Instruction No. 4 
 
All sums withheld by every employer from an 
employee’s wages for the purpose of paying state 
income taxes are deemed by law to be held in trust 
for the Commonwealth. 
 
George objected to Instruction 3 arguing that he was indicted 
for embezzling funds belonging to the Commonwealth but the 
instruction referred to funds belonging to his employees.  
George further argued that Instruction 3 was “an incorrect 
statement of the law of embezzlement.”  The trial court 
                                                                                                                                                        
 
If any person wrongfully and fraudulently use, 
dispose of, conceal or embezzle any money . . . 
which he shall have received for another or for 
his employer, principal or bailor, or by virtue 
of his office, trust, or employment, or which 
shall have been entrusted or delivered to him by 
another or by any court, corporation or company, 
he shall be guilty of embezzlement. 
 
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overruled George’s objection.  The jury convicted George on 
all counts.  The trial court entered judgment on the jury’s 
verdict, sentenced George to serve consecutive six-month jail 
terms and pay a $2500 fine for each count, and denied George’s 
motion to set aside the verdict.2 
 
The Court of Appeals affirmed George’s felony 
convictions, George v. Commonwealth, 51 Va. App. 137, 146-47, 
655 S.E.2d 43, 48 (2008), and George filed a timely petition 
for appeal with this Court, assigning three errors to the 
judgment of the Court of Appeals.  
DISCUSSION 
I. 
 
 In his first assignment of error, George asserts that 
the evidence was insufficient to support his embezzlement 
convictions.  George first argues that the embezzlement 
statute, Code § 18.2-111, requires proof that the defendant 
lawfully acquired possession of another’s property and then 
wrongfully converted it to his own use.  See Evans v. 
Commonwealth, 226 Va. 292, 297, 308 S.E.2d 126, 129 (1983).  
The evidence in this case, George contends, showed that the 
funds at issue were not funds of another but were his own 
                                                 
2 George was also charged with and convicted of nine 
misdemeanor counts of failure to file tax returns, violations 
of Code § 58.1-1814, but these convictions are not at issue in 
this appeal. 
 
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funds.  According to George, the funds he deposited in his 
bank account were funds owed to him by his patients for 
services rendered, “although a portion of that money would, at 
some point, be owed to the Commonwealth for withheld income 
taxes.”  Citing Dove v. Commonwealth, 41 Va. App. 571, 586 
S.E.2d 890 (2003), George asserts that he had a debtor-
creditor relationship with the Commonwealth and that type of 
relationship cannot support a charge of embezzlement. 
The Commonwealth replies that George’s argument ignores 
Code § 58.1-474, which imposes a trust for the benefit of the 
Commonwealth on funds withheld from employees’ wages for 
payment of their state income tax liability.  According to the 
Commonwealth, the trust relationship created by Code § 58.1-
474 between the employer and the Commonwealth negates the 
existence of any debtor/creditor relationship.  In support of 
its position, the Commonwealth cites Begier v. IRS, 496 U.S. 
53 (1990).3  In that case the United States Supreme Court 
considered the federal statute addressing withholding funds 
from employees’ wages for purposes of federal income tax 
liability pursuant to 26 U.S.C. § 7501.4  The Supreme Court 
                                                 
3 The federal cases cited by George are not persuasive 
because they were decided before Begier.  
4 26 U.S.C. § 7501(a)(2006) provides that when a person is 
required to withhold “any internal revenue tax” from another 
and to pay such tax to the United States, the amount of the 
 
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first held that the collection of the tax funds occurred at 
the time the employer paid the employee his net wages, even if 
the employer neither placed the taxes it collected in a 
segregated fund nor paid them to the government.  Begier, 496 
U.S. at 60.  The Court also observed that under these 
circumstances the employer “does not own an equitable interest 
in property he holds in trust for another,” id. at 59, and 
that the statutory trust, although “radically different from 
the common-law paradigm, . . . creates a trust in an abstract 
‘amount’ – a dollar figure not tied to any particular assets – 
rather than in the actual dollars withheld.”  Id. at 62. 
The Virginia statute, Code § 58.1-474, is virtually 
identical to the federal statute and, like the federal 
statute, creates a statutory trust imposed on the funds 
withheld from employees’ wages for state income tax liability. 
When such funds are withheld they are no longer the property 
of the employer or the employee.  Consequently the 
relationship between the employer and the Commonwealth with 
regard to the funds withheld from the employees’ wages is not 
a debtor/creditor relationship as George contends. 
George argues further, however, that even if Code § 58.1-
474 imposes a type of trust on the withheld wages, its 
                                                                                                                                                        
 
tax withheld “shall be held to be a special fund in trust for 
the United States.”  
 
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application should be limited to civil matters and should not 
apply in a criminal prosecution.  George contends that if the 
General Assembly had intended to subject an employer to 
prosecution for embezzlement if he failed to withhold or remit 
employees’ wages, it would have specifically stated that such 
actions constituted embezzlement as it did with regard to 
collection of food and beverage taxes, Code § 58.1-3833(C), 
and would not have imposed a misdemeanor penalty for failure 
to withhold or remit wages withheld from employees in Code 
§ 58.1-485.  
We reject George’s contentions.  The fact that the 
General Assembly does not denote a specific course of conduct 
as a particular crime does not preclude prosecution for and 
conviction of that crime if the necessary elements of the 
crime are proven.  Furthermore, the wrongful and fraudulent 
use of withheld funds by the employer, an element of an 
embezzlement prosecution, is far more culpable than the simple 
failure to withhold or remit such funds and accordingly, 
supports a different and more severe criminal sanction.  More 
importantly, nothing in Code § 58.1-474 limits its application 
to civil matters or precludes its use in a criminal 
prosecution.  George’s proposed limitation on the application 
of Code § 58.1-474 requires that we add language not contained 
in the statute.  It is a matter of well-settled law that 
 
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courts do not engage in rewriting statutes.  See Town of 
Leesburg v. Giordano, 276 Va. 318, 323, ___ S.E.2d ___, ___ 
(2008) (citing Jackson v. Fidelity & Deposit Co., 269 Va. 303, 
313, 608 S.E.2d 901, 906 (2005)); Young v. Commonwealth, 273 
Va. 528, 534, 643 S.E.2d 491, 494 (2007). 
In summary, we hold that Code § 58.1-474 imposes a 
statutorily created trust on funds withheld from employees’ 
wages for state income tax liability purposes.  Such funds are 
held in trust for the benefit of the Commonwealth and are not 
the property of the employer.  Because the funds at issue were 
not George’s property but the property of another, the 
evidence was sufficient to sustain the embezzlement 
convictions.5 
II. 
George’s second and third assignments of error relate to 
his contention that his convictions should be vacated because 
there was a fatal variance between the indictments and the 
evidence and jury instructions.  The Court of Appeals did not 
address this issue because it held that the issue was not 
raised before the trial court and therefore would not be 
entertained for the first time on appeal.  George, 51 Va. App. 
at 148, 655 S.E.2d at 48-49.  George challenges this holding, 
                                                 
5 George did not challenge the sufficiency of the evidence 
with regard to the other elements of the crime, such as 
wrongful and fraudulent conversion. 
 
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arguing that the issue was sufficiently raised in the trial 
court and reasserts his contention regarding the fatal 
variance. 
The record shows that George argued to the trial court 
that jury Instruction 3, the finding instruction, defined the 
crime as embezzling funds belonging to the employees, while 
the indictments defined the crime as embezzling funds 
belonging to the Commonwealth.  Although George did not use 
the phrase “fatal variance,” his arguments before the trial 
court were sufficient to put that court on notice of his 
position regarding the inconsistency between the indictments 
and the jury instruction.  Therefore, we hold that the Court 
of Appeals erred in concluding that the issue was not 
presented to the trial court.  Nevertheless, the record also 
demonstrates that there was no such fatal variance. 
Subparagraph (1) of Instruction 3 stated that the funds 
George embezzled were the wages “of his employees withheld by 
him.”  This phrase, George contends, places the ownership of 
the funds at issue in the employees, not in the Commonwealth 
as set out in the indictments.  George misapplies this phrase.  
This phrase does not denote or establish ownership of the 
funds at the time they were withheld; rather the phrase is a 
prepositional phrase identifying the funds which were at 
issue.  Instruction 4, reciting the applicable provision of 
 
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Code § 58.1-474, told the jury that, as a matter of law, the 
funds did not belong to the employees but were held in trust 
for the Commonwealth.  Therefore, the ownership of the funds 
was not a matter for jury determination in this case and there 
was no fatal variance between the indictments and the evidence 
and jury instructions. 
CONCLUSION 
 
We hold that funds withheld by an employer from 
employees’ wages for purposes of state income tax liability 
are not funds belonging to the employer.  From the time such 
funds are withheld they are held in trust for the Commonwealth 
pursuant to Code § 58.1-474.  The wrongful and fraudulent use 
of such funds can be the basis of an embezzlement prosecution 
and the evidence in this case is sufficient to sustain 
George’s convictions for embezzlement.  Finally, there was no 
fatal variance between the crimes charged in the indictments 
and the evidence and jury instructions.  Accordingly, for the 
reasons stated, we will affirm the judgment of the Court of 
Appeals. 
 
Affirmed.