Court Opinion

ID: 4126620
Source: CourtListenerOpinion
Date Created: 2017-02-16 15:08:39.012051+00
Date Added: 2024-06-11T14:37:34.464810
License: Public Domain

RENDERED: MAY 5,, 2016

               $uprrm C:rturf ofIfirtifuthA                 p
                                                          pilk PUBLISHE3

                                                                               [L
                               2014-SC-000306-DG     ~Q
                                                            L-j                Ai bc
COMMONWEALTH OF KENTUCKY                                            APPELLANT

                    ON REVIEW FROM COURT OF APPEALS
V.                        CASE NO. 2012-CA-001697
                   FAYE'ITE CIRCUIT COURT NO. 12-CR-0136

CATON KAMIL JONES                                                     APPELLEE

            OPINION OF THE COURT BY CHIEF JUSTICE MINTON

                                     REVERSING

      In our popular culture, operation of a criminal syndicate is commonly

associated with the underworld activities of mobsters and crime bosses. This

case involves none of those things. Today we must determine whether

wholesale enlistment of homeless men as tools in a scheme systematically to

defraud cell-phone companies is likewise covered under Kentucky's organized-

crime statute. We hold that it is.

                I. FACTS AND PROCEDURAL BACKGROUND.
      Caton Jones and Salena Anderson were Detroit, Michigan, residents with

a get-rich-quick plan. The plan involved driving to Lexington, Kentucky, and

employing homeless men to sign up for two-year cell-phone service contracts

with no intent to make payments in order to obtain high-end international

smartphones at discounted rates. A particular Blackberry phone with
international service was very popular on the secondary market and could be

purchased at a greatly discounted rate from service providers if the purchaser

agrees to a two-year service contract. Jones and Anderson would pay each

homeless person $20 for his efforts and resell the activated phones on the

secondary market to a great monetary windfall.

      Lexington Police Department Detective Kevin Duane received a phone call

from the loss-prevention manager at an area Best Buy that a homeless man

was attempting to purchase a cell phone. Detective Duane went to the store

and approached the homeless man, ultimately convincing him not to purchase

the phone. He followed the man outside the store and observed him speaking

to another man in a van. Detective. Duane approached the man in the van and

learned he was from Detroit; the man eventually explained to the detective the

entire scheme. The Michigan man believed he was simply exploiting a loophole

in the law. For whatever reason, Detective Duane did not take him in for

questioning.

       Over the course of the next several months, the Lexington Police

Department received reports from a number of cell-phone retailers that the

homeless cell-phone scam continued. But each time law enforcement arrived at

the store, the men (and the van) had already left. Later, Detective Duane finally

apprehended one of the phone purchasers. After reading the man his Miranda

rights, the man informed him he was a resident of a local homeless shelter and

he was recruited by people in a van offering each resident $20 for every cell

phone purchased. To be sure, the man had purchased several cell phones (and

contracts) that day. And he admitted to Detective Duane that he had no

intention of honoring the two-year service contract he signed at each location.
                                        2
      Detective Duane then followed the man outside the store to the van in

the parking lot. Around the same time, Jones was returning to the van from a

similar cell-phone retailer nearby. Detective Duane also found Anderson and a

number of other men sitting in the back of the van. Jones was very cooperative

with Detective Duane, and fully explained the situation. After obtaining

consent to search the van, he also discovered several cell phones, a

handwritten budget detailing the entire operation, and receipts for phones and

service contracts purchased by twelve different people. Jones and Anderson

were then taken to police headquarters and Jones provided a recorded

statement after receiving his Miranda warnings. Detective Duane then seized

all of their equipment and cell phones, leaving them just enough cash to return

to Detroit.

      Jones and Anderson were charged with one count of "Engaging in

Organized Crime: Criminal. Syndicate by managing, supervising, and/or

directing individuals to acquire retail merchandise including cell phones, by

deception and/or fraud, with the intent to resell it." Detective Duane admitted

that though the homeless men could certainly be charged under the organized

crime statute as well, he intentionally chose not to penalize them "so he could

sleep at night." Jones appeared in court and knowingly and voluntarily waived

his right to counsel. He presented no evidence in his defense at trial, and the

jury found him guilty. The jury fixed his punishment at the statutory-minimum

five years' imprisonment.'

       1 Anderson never appeared for trial; a warrant was issued but her charges were
dismissed without prejudice following Jones's conviction.
                                          3
      Jones filed two post-trial motions with the trial court seeking a new trial

and, alternatively, seeking to probate his sentence. The trial court denied a new

trial but agreed to probate his sentence. He was accordingly sentenced to the

minimal five-year sentence, probated for five years. Jones then appealed the

judgment to the Kentucky Court of Appeals, contending that he was entitled to

a directed verdict. The panel majority agreed and reversed his conviction,

concluding that there was insufficient evidence to prove he and his

conspirators collaborated under the "continuing basis" necessary to sustain an

organized-crime conviction.

      We granted discretionary review to determine whether the

Commonwealth presented sufficient evidence for a jury to conclude beyond a

reasonable doubt that Jones engaged in a continuing criminal operation.

Reviewing the plain meaning of the statute's text, today we hold that Jones was

not entitled to a directed verdict. We accordingly reverse the Court of Appeals'

decision and reinstate the trial court's judgment.

                                  II. ANALYSIS.

A. Standard of Review

      For its first and only claim of error, the Commonwealth insists Jones was

not entitled to a directed verdict because the Commonwealth sufficiently proved

he was leading a continued criminal collaboration. At the close of the

Commonwealth's evidence, Jones moved the trial court for directed verdict on

the ground that he had not committed a crime. The trial court denied his

motion. To be sure, the Due Process Clause of the Fourteenth Amendment

certainly "protects the accused against conviction except upon proof beyond a
reasonable doubt of every fact necessary to constitute the crime with which he

is charged." 2 Our standard of review for denial of a directed verdict is whether,

under the evidence as a whole, it would be clearly unreasonable for the jury to

find Jones guilty. 3 We construe all evidence below in a light most favorable to

the Commonwealth. 4

B. Jones was not Entitled to a Directed Verdict.

      The Kentucky Penal Code offers a broad description of precisely what

activity is subject to criminal liability for participation in organized crime.

Kentucky Revised Statutes (KRS) 506.120 establishes nine classes of activities

for which a "person, with the purpose to establish or maintain a criminal

syndicate or to facilitate any of its activities" may be subject to prosecution. 5 Of

these nine activities, six are potentially applicable to this case:

               1. Organize or participate in a criminal syndicate or any of
                  its activities. 6
               2. Provide material aid to a criminal syndicate or any of its
                  activities, whether such aid is in the form of money or
                  other property, or credit.'
               3. Manage, supervise, or direct any of the activities of a
                  criminal syndicate, at any level of responsibility. 8
               4. Commit, or conspire or attempt to commit, or act as an
                  accomplice in the commission of, any offense of a type in
                  which a criminal syndicate engages on a continuing
                  basis. 9
               5. Commit, or conspire or attempt to commit, or act as an
                  accomplice in the commission of more than one (1) theft

      2   In re Winship, 397 U.S. 358, 364 (1970).
      3   See Commonwealth v. Fletcher, 59 S.W.3d 920, 921 (Ky. 2001).
      4   See Commonwealth v. Jones, 283 S.W.3d 665, 668 (Ky. 1991).
      5   KRS 506.120(1).
      6   KRS 506.120(1)(a).
      7   KRS 506.120(1)(b).
      8   KRS 506.120(1)(c).
      9   KRS 506.120(1)(e).
                                             5
                  of retail merchandise with intent to resell the
                  merchandise.'°
               6. Acquire stolen retail merchandise for the purpose of
                  reselling it where the person knew or should have known
                  that the merchandise had been stolen.il

      Specifically, Jones was indicted for "managing, supervising and/or

directing numerous other individuals to acquire retail merchandise including

cell phones, by deception and/or fraud, with the intent to resell it." The

indictment most closely resembles the retail-merchandise-theft component of

the statute, though it also appears to incorporate Jones's culpability as the

leader and organizer of the scheme. Instructions to the jury provide more

clarity. It is unmistakable that the Commonwealth prosecuted Jones under a

theory that he engaged in a criminal syndicate to commit retail-merchandise

theft with the intent to resell the stolen merchandise.

      There is no doubt that Jones organized, managed, and participated in

the scheme, he is the architect of the plan. But the most critical question in

determining Jones's criminal liability is whether his plan may be properly

labeled a "criminal syndicate." In fact, Jones denies any criminality in his

actions; rather, he contends he simply took advantage of the laws and exploited

a loophole, as any successful entrepreneur would. The statute offers

tremendous assistance in this inquiry. A criminal syndicate is defined as either

"five (5) or more persons, or, in cases of merchandise theft from a retail store for

the purpose of reselling the stolen merchandise, two (2) or more persons,

      10   KRS 506.120(1)(h).
      11   KRS 506.120(1)(i).
                                         6
collaborating to promote or engage" 12 the commission of "any theft offense as

defined by KRS Chapter 514." 13

      So in conducting our directed-verdict review, there are four elemental

conclusions that based on the evidence presented at trial a reasonable jury

must be able to reach beyond a reasonable doubt: (1) that a "theft" occurred in

furtherance of Jones's scheme; (2) that two or more persons were involved; (3)

that the persons collaborated in furtherance of the plan; and (4) that the

scheme operated on a continuing basis.

1. A theft occurred.

      The threshold issue we must address is whether sufficient evidence was

presented at trial for the jury reasonably to conclude Jones's scheme was a

"theft." Though the statute's definition of "criminal syndicate" includes any

theft offense in KRS Chapter 514, the jury in this case was instructed on a

theory that Jones and his minions acquired the cell phones by deception—an

allegation Jones strongly denies. Instead, Jones suggests the phones were

legally purchased and he bears no liability from the homeless mens' failures to

perform on their two-year service contracts.

      Under Kentucky law, a person is guilty of theft by deception if "the

person obtains property or services of another by deception with intent to

deprive the person thereof." 14 The statute further defines "deceive," in relevant

part, as intentionally "creat[ing] or reinforce[ing] a false impression, including

      12   KRS 506.120(3)(emphasis added).
      13   KRS 506.120(3)(c).
      14   KRS 514.040(1).
false impressions as to law, value, intention, or other state of mind." 15 So

under the Commonwealth's theory of the case, theft by deception occurred

when Jones's homeless enlistees obtained the phones by signing a service

contract they had no intention of honoring. The Commonwealth presented

testimony from some of the homeless men verifying that they had no intention

of complying with the terms of the various service contracts they signed.

      Jones rebuts the Commonwealth's theory primarily by denying that the

phones were unlawfully obtained. He argues that they were legally purchased

merchandise at the time of his arrest. The Commonwealth rebutted this

allegation with testimony from cell-phone company employees explaining

precisely how scams like Jones's affect their businesses. The employees

explained to the jury that the companies subsidize part of the cost of the phone

in exchange for a two-year service contract and the remaining cost of the phone

is recouped over the course of payment. Individual sales operatives work for

base pay plus commission. If someone cancels the service contract or does not

pay during the first 90 days of service, the lost money is taken from the

employee's paycheck. Moreover, employees testified that they believed that they

may be sued for discrimination if they refuse to sell devices to suspicious-

looking people. So the testimony adequately informed the jury that by

purchasing a phone and service contract with no intention to honor the

contract Jones and his team "deprived" these businesses in an immediate and

quantifiable manner.

      is   KRS 514.040(1)(a).
                                         8
      But Jones counters this testimony in two ways. He first defends the

legality of his activities by criticizing the phone companies' business models. To

him, there was no deprivation of property from the companies—they only made

a foolish business decision. Fortunately, Chapter 514 includes a robust

definition of deprive as applied to theft-related offenses. Under the Kentucky

Penal Code, deprive means either "No withhold property of another

permanently or for so extended a period as to appropriate a major portion of its

economic value or with intent to restore only upon payment of reward or other

compensation," 16 or to "dispose of the property so as to make it unlikely that

the owner will ever recover it." 17 To us, a reasonable jury could conclude that

either definition could apply: Jones intended permanently to withhold the

remaining portion of the subsidized cost of the phone.

      Second, Jones suggests that his plan narrowly invokes a loophole in the

theft-by-deception statute. Specifically, he contends the provision declaring

that "deception as to a person's intention to perform a promise shall not be

inferred from the fact alone that he did not subsequently perform the promise"

categorically exculpates any potential theft offense relating to the service

contracts. But invoking this provision as a defense is logically fallacious; the

provision only stands for the proposition that failure to pay alone is not enough

to establish theft-by-deception. In the immediate case, the Commonwealth

presented ample testimony from Jones's associates affirmatively establishing

intent to deceive. Reliance on this provision as a complete defense is misplaced,

and it is certainly not enough to entitle Jones to a directed verdict.

      16   KRS 514.010(1)(a).
      17   KRS 514.010(1)(b).
                                          9
      There was sufficient evidence for a reasonable jury to find a theft

occurred.

2. There were more than two participants.

      For our next inquiry, we must determine whether statutorily required

number of participants was involved in this scheme to qualify as a criminal

syndicate. As referenced above, the statute mandates either five or more

participants, or, in the case of retail-merchandise theft, two or more

participants.' 8 The Commonwealth charged Jones on the latter qualification,

and the instructions to the jury reflected that theory. In addition to Salena

Anderson, the Commonwealth identified at least a dozen homeless

participants. And some of them testified at trial. It is undisputed that the plan

was executed by a cadre of homeless men. So we can conclude that a

reasonable jury could find that the cell-phone scam was conducted by a group

of two or more participants.

3. The group collaborated in furtherance of the scheme.

      The next element to establishing the existence of a criminal syndicate is

a requirement that participants "collaborated" to engage in theft by deception.

We have previously held that proof of collaboration does not require a showing

"that each participant in the criminal scheme collaborated with or was aware of

the collaboration of the other participants." 19 Similarly, "collaboration in the

statute means simply collaborating in the scheme, and it is not necessary for

the Commonwealth to show that each participant collaborating in the scheme

collaborated with or even was aware of the collaboration of the other

      18   See KRS 506.120(3).
      19   Edmonds v. Commonwealth, 906 S.W.2d 343, 348 (Ky. 1995).
                                         10
participants." 20 So to us, the collaborating element is satisfied if the

Commonwealth can establish enough evidence of two or more participants with

general knowledge of the scheme to acquire fraudulently the international cell

phones. And we conclude the Commonwealth met this burden.

      First and foremost, evidence of Anderson's involvement should be

enough to establish collaboration. From the facts presented in this case, it

would appear that Jones and Anderson are co-architects; at the very least

Anderson could be aptly described as an accomplice to Jones's plan with full

knowledge of what they hoped to achieve. Under the loose understanding of

collaboration that we have previously articulated, proof of Anderson's

involvement should be sufficient to take the charge to the jury. Anderson was

not prominently featured in the Commonwealth's proof, but her involvement

was at least referenced throughout the trial.

      Even if we exclude Anderson from our calculus, the Commonwealth's

evidence of the homeless participants' complicity in the plan meets the

evidentiary burden as well. When Detective Duane received consent to search

Jones's van, he found receipts for two-year service contracts in the name of a

dozen different homeless men. And some of those men testified at Jones's trial

about their roles in the scheme—that Jones would give them $20 for each

phone they obtained by signing a service contract. This general understanding

that Jones asked them to acquire a cell phone by creating a false impression is

sufficient to us for a reasonable jury to determine two or more persons

collaborated to effectuate Jones's theft-by-deception plan.

      20   Commonwealth v. Phillips, 655 S.W.2d 6, 9 (Ky. 1983).
                                            11
4. The group collaborated on a continuing basis.

      The final and most contentious inquiry in determining whether Jones's

plan can be characterized as a criminal syndicate is whether the plan was

intended to operate on a continuing basis. The Court of Appeals majority, in

reversing Jones's convictions, held that he was not guilty of operating a

criminal syndicate because there was insufficient evidence that he collaborated

on a continuing basis with the participants testifying at trial. The panel

majority's ruling misstates our prior interpretations of the statute's command.

      In support of its decision reversing Jones's conviction, the Court of

Appeals majority relied on our recent holding in Parker v. Commonwealth. 21

And to be sure, we vigorously interpreted Kentucky's organized-crime statute in

its most paradigmatic application—gang-related violence and drug trafficking.

In Parker, we reversed a criminal defendant's criminal syndicate conviction

because the Commonwealth provided insufficient evidence to prove he

collaborated with four or more persons 22 on a continuing basis dealing drugs

as part of his association with the Crips gang. But there are critical

discrepancies in the present case that are distinct from Parker.

      In Parker, we held that there was insufficient evidence of a continuing

basis because the Commonwealth's case centered on a "singular drug deal that

resulted in Barnes' death." 23 The Court of Appeals majority reached a similar

result in this case, taking issue that most of the Commonwealth's evidence

      21   291 S.W.3d 647 (Ky. 2009).
      22 Id. Because Parker was not indicted under a merchandise-theft theory, his
case was reviewed under the standard criminal-syndicate definition. So the
Commonwealth needed to prove five or more collaborators, rather than merely two or
more necessary for guilt in Jones's case.
      23   /d. at 675.
                                         12
zeroed-in on Jones's activity on one particular day. But in Parker, we also

reaffirmed that "[t]he Commonwealth is not held to proving any specific

number of incidents or any element of time, but must show by the proof what

the jury could infer from the evidence as intent to collaborate on a continuing

basis."24 Unlike Parker, where the evidence focused on one drug deal, the

Commonwealth in this case presented evidence of multiple purchases in a

single day, repeated criminal acts. Some homeless participants testified to

going to multiple stores in one day. And Jones made multiple trips to Lexington

to effectuate his plan. The Commonwealth did enough to ensure the jury knew

of far more than one instance in furtherance of the scheme, which Parker

strongly condemns as insufficient proof of a continuing basis.

      We also refused to find a continuous collaboration in Parker because one

witness testified that "every man did their own thing." 25 Though the

Commonwealth in Parker pursued a criminal-syndicate theory premised on

drug trafficking, witness testimony stated that "the Crips made their own deals

and sold their own drugs.      " 26   But such autonomy is unquestionably lacking in

this case. Though it is true each participant went into each store alone and

signed every contract individually, it is equally true he did so at Jones's behest.

Jones drove all of the men to each store, directed which store to enter, told

them which phone and plan to purchase, and compensated each man that

successfully returned with the international smartphone. It is clear from the

      24   Id. (quoting Phillips, 655 S.W.2d at 9.).
      25   Id. at 676.
      26   Id.
                                               13
Commonwealth's proof that each participant in Jones's scheme did not, in

contrast to Parker, "do their own thing."

      And finally, as part of its continuing-basis analysis, the Court of Appeals

spent considerable time discussing whether Jones intended to continue his

scheme into the future. But this is an unnecessary inquiry. 27 Even if we

willingly suspend disbelief that Jones did not know he was perpetuating theft

and that after learning of the unlawful nature of his operation he would

abandon his business, there remains ample evidence that he was conducting

this collaboration on a continuing basis at the time of his arrest. At minimum,

the Commonwealth presented enough evidence to allow reasonable jurors to

decide for themselves.

5. Jones intended to form a criminal syndicate.
      Much of the difficulty in this case is derived from the unconventional

nature of this factual application to Kentucky's organized-crime statute. But as

a reviewing body interpreting a statute, it is our duty to give effect to the plain

meaning of the statute's text. And "a person's mistaken belief that his conduct,

as a matter of law, does not constitute an offense does not relieve him of

criminal liability." 28 So it is immaterial to our analysis whether Jones

subjectively knew he was forming a criminal syndicate. The sole guiding factor

is whether the Commonwealth produced enough evidence to show that the text

encompasses his actions. And we hold the Commonwealth met this burden.

       27 See Hill v. Commonwealth, 125 S.W.3d 221, 231 (Ky. 2004) (evidence that a
criminal scheme to smuggle marijuana into prison lasted for two to five months was
sufficient to support finding a criminal syndicate operating on a "continuing basis"
despite testimony that a participant planned to "get out").
      28   KRS 501.070(3).
                                          14
      We have no doubt that Jones is no Mafioso. But the text crafted by the

legislature and 'signed into law by the governor covers more than the gangland

imagery synonymous with organized crime. The statute plainly criminalizes

organized efforts to engage in merchandise theft. And Jones created such an

organization whether he subjectively classified it as criminal or not.

                                 III. CONCLUSION.

      For the foregoing reasons, we reverse the Court of Appeals' decision and

reinstate the trial court's judgment.

      All sitting. All concur.

COUNSEL FOR APPELLANT:

Andy Beshear
Attorney General of Kentucky

Christian Kenneth Ray Miller
Assistant Attorney General of Kentucky

COUNSEL FOR APPELLEE:

Willie Edward Peale Jr.
Peale Law Office

                                         15