Opinion ID: 2052803
Heading Depth: 2
Heading Rank: 1

Heading: Case Travel and Facts

Text: John M. McKone (defendant) was the president and sole shareholder of M.I.S., Inc. (M.I.S.) a payroll-preparation company. His company was responsible for drafting employee payroll checks, and for making the appropriate state and federal tax deductions therefrom for its various company clients. M.I.S. also paid the state and federal taxes due for each of those clients. In return, M.I.S. was paid an amount by each client, sufficient to cover the payroll checks and taxes, plus a fee for the payroll preparation and tax services furnished. In September 1991, M.I.S. experienced cash-flow problems and informed its clients that the taxes due on their payrolls could not be paid and that M.I.S. was going out of business. M.I.S. went out of business on September 30, 1991. Immediately thereafter, M.I.S.'s clients began encountering not only unpaid tax notices but also bounced [1] payroll checks. The defendant was subsequently charged in five separate informations with six counts of embezzlement. All were consolidated for purposes of trial. The defendant waived jury trial and was tried in December 1993 before a Superior Court trial justice sitting without a jury. Lori Rose (Rose), an employee of M.I.S., was the state's primary trial witness. She had originally worked as an accountant for the defendant's father, Raymond McKone, at McKone, Morris & Company. She left there in October 1990 to work at M.I.S. as its payroll manager. Her responsibilities as payroll manager included calculating the taxes due for each of M.I.S.'s clients. She would also pay the clients' taxes and would write out and cut the checks for each of the payrolls for those clients. Rose also signed the various checks, using a signature stamp with the defendant's name, John M. McKone. On the first or second day after she began her work at M.I.S., she was notified by the Greenwood Credit Union, where M.I.S. maintained its accounts, that M.I.S. did not have sufficient funds on deposit to cover the checks being drawn on the various accounts. Thereafter, Rose was required to deal with the Greenwood Credit Union on an almost daily basis because there was never enough money in the M.I.S. account to cover the payroll checks. Rose testified that she continued in her position as payroll manager until July 1991 when she was demoted by the defendant to data-entry clerk. The defendant told Rose that her demotion was due to the fact that she did not know how to fill out the required tax forms, forms that she had previously filled out without complaint since she began working at McKone, Morris & Company in 1987. She also testified that although she was supposed to be technically just a dataentry clerk, she continued to act, at least part-time, as the payroll manager because the person who had been hired to replace her lacked sufficient payroll managerial experience. Rose testified that on September 17, 1991, a number of envelopes containing the payments for the Rhode Island withholding taxes for all of M.I.S.'s clients were intercepted, at the defendant's request, before being mailed. He informed her that there were insufficient funds to cover the checks. Rose testified that, in her opinion, the reason for the insufficient funds was that she had been ordered by the defendant to make out company checks to pay for what were arguably defendant's personal obligations, including payments to the Warwick Country Club, to the New England Health and Racquet Club, and for defendant's automobile lease payments and doctors' bills. Rose also testified that on September 20, 1991, three days after failing to mail the clients' withholding-tax payments, the defendant directed her to contact his father, Raymond McKone, for permission to withdraw moneys from Raymond McKone's personal line of credit with the Greenwood Credit Union. That procedure had been done several times in the past. However, this time, Raymond McKone balked and would not permit use of his line of credit. He then ordered both Rose and the defendant to each sign a document that would prohibit either of them from withdrawing any further moneys from the personal line of credit. On that same day the defendant told Rose that M.I.S. was going to shut the doors. During the course of that week, Rose was contacted by many of M.I.S.'s clients, who were calling her and inquiring why their payroll checks were bouncing. Rose informed those clients that their taxes had not been paid and that M.I.S., according to what the defendant had told her, was going out of business. Various clients of M.I.S. and an employee of the Greenwood Credit Union also testified for the state. They each essentially corroborated Rose's trial testimony on matters upon which they had personal knowledge. After the state rested its case in chief, the defendant offered no defense except to introduce two documents into evidence. Those documents merely showed the authorized signatures for the various M.I.S.'s clients and for the general accounts at the Greenwood Credit Union. The defendant thereafter rested. The defendant was convicted of all six counts of embezzlement. His motion for judgment of acquittal at the close of the state's case and his subsequent motion for a new trial were both denied. He was sentenced on February 7, 1994, to ten years' imprisonment, with one year to be served and nine years suspended with probation. As a condition of his probation, the defendant was required to make restitution. This appeal followed his judgment of conviction. The defendant asserts five allegations of error on the part of the trial justice. He first contends that the trial justice erred in denying both his motion for judgment of acquittal and his new trial motion.