Court Opinion

ID: 4684134
Source: CourtListenerOpinion
Date Created: 2021-05-05 15:18:21.138506+00
Date Added: 2024-06-11T08:04:19.480752
License: Public Domain

May 5, 2021

                                                       Supreme Court

                                                       No. 2018-212-Appeal.
                                                       (PC 15-203)

   The Retirement Board of the         :
 Employees’ Retirement System of
    the State of Rhode Island

                  v.                   :

          Fred L. Randall.             :

              NOTICE: This opinion is subject to formal revision
              before publication in the Rhode Island Reporter. Readers
              are requested to notify the Opinion Analyst, Supreme
              Court of Rhode Island, 250 Benefit Street, Providence,
              Rhode Island 02903, at Telephone (401) 222-3258 or
              Email:      opinionanalyst@courts.ri.gov,     of     any
              typographical or other formal errors in order that
              corrections may be made before the opinion is published.
                                                        Supreme Court

                                                        No. 2018-212-Appeal.
                                                        (PC 15-203)

   The Retirement Board of the         :
 Employees’ Retirement System of
    the State of Rhode Island

                 v.                    :

          Fred L. Randall.             :

         Present: Suttell, C.J., Goldberg, Robinson, Lynch Prata, and Long, JJ.

                                  OPINION

      Justice Goldberg, for the Court.        This case came before the Supreme

Court on March 11, 2021, on appeal by the defendant, Fred L. Randall, who seeks

review of a Superior Court judgment that revoked his pension benefits and denied

his request for return of his retirement contributions paid into the Employees’

Retirement System of the State of Rhode Island (the ERSRI), and ordered that

retirement payments made to his spouse, Diane Randall, must be applied towards

his restitution obligations. The defendant contends on appeal to this Court that the

trial justice erred in (1) conditioning Mrs. Randall’s receipt of benefits on her

assignment of those payments to the defendant’s restitution judgment and

(2) refusing to apply the defendant’s pension contributions towards his restitution

                                        -1-
obligations. For the reasons stated in this opinion, we affirm in part and vacate in

part the judgment of the Superior Court.

                                Facts and Travel

      The defendant was an employee of the State of Rhode Island since 1976 and

contributed to the ERSRI for approximately thirty-five years. He held various

positions, including as a fiscal clerk at the Department of Computer Sciences at the

University of Rhode Island (URI); a fiscal clerk in the Department of Chemistry at

URI; and a fiscal clerk and senior teller in the Bursar’s Office at the Providence

Extension Campus of URI. In March 2011, defendant retired from state service

and began receiving retirement benefits of approximately $4,300 per month; the

payments were reduced to approximately $2,500 per month in November 2014,

when defendant became eligible for Social Security benefits.        The defendant

continued to receive retirement benefits until March 2015 and received a total of

$196,007.54 in pension payments during this period.

      On July 13, 2012, defendant was charged by way of criminal information

with felony embezzlement, in violation of G.L. 1956 §§ 11-41-3 and 11-41-5, and

access to a computer for fraudulent purposes, in violation of G.L. 1956 §§ 11-52-2

and 11-52-5. The state alleged that between 2005 and 2011, during the course of

his employment, defendant embezzled a significant amount of money from URI.

On June 10, 2014, defendant entered a plea of nolo contendere to the

                                        -2-
embezzlement charge, and the state dismissed the count charging computer fraud.

The defendant was sentenced to twenty years at the Adult Correctional Institutions,

with eighteen months to serve, twelve months of home confinement, and the

balance suspended, with probation.       The defendant was also ordered to pay

restitution in the amount of $200,000.

      On January 15, 2015, the plaintiff, the Retirement Board of the Employees’

Retirement System of the State of Rhode Island (the Retirement Board), initiated

this action pursuant to the Public Employee Pension Revocation and Reduction

Act, G.L. 1956 chapter 10.1 of title 36 (PEPRRA), seeking a revocation of

defendant’s pension.        The Retirement Board requested a statutory pension

revocation and a declaratory judgment that defendant failed to satisfy the condition

precedent of rendering honorable service in his public employment and, therefore,

that he was not entitled to retirement payments from the ERSRI, or to a return of

retirement contributions.

      The trial justice conducted a bench trial on the Retirement Board’s

revocation and declaratory-judgment claims; defendant and Mrs. Randall testified.

Their testimony revealed that they have been married since 1975 and at all relevant

times resided together at a home in Warwick, Rhode Island.          The defendant

testified that, from around 2005 until 2011, he embezzled student tuition payments

from URI and used the money to feed his gambling addiction at Foxwoods Resort

                                         -3-
Casino and Mohegan Sun Casino. He testified that he never made any of the

converted funds available to Mrs. Randall and that he never disclosed to his wife

that he was stealing money to gamble, but rather that he continuously lied to cover

up his activities. Specifically, defendant testified, when the casinos would send

him free gifts, he would tell Mrs. Randall that a coworker named Barbara “played

big and would use [his] card, so that [is] how [he] got points on [his rewards]

card.”1 The defendant also testified that when he was at the casinos without her, he

lied to his wife about his whereabouts and told her that he was playing bridge.

      During the relevant period, defendant and Mrs. Randall frequented the

casinos together approximately once per week. However, Mrs. Randall testified

that she would normally shop and play the slot machines, spending between $40

and $60 a night on gambling. Although she and defendant frequently separated

while at the casinos, she testified, to her knowledge, defendant was gambling

hundreds of dollars, not thousands. Mrs. Randall testified that she did not know

that defendant was embezzling funds from URI, nor was there any indication that

would have led her to believe he was engaging in inappropriate conduct. Although

1
  The testimony revealed that both defendant and Mrs. Randall had rewards cards
from Foxwoods, which allowed them to earn points each time they gambled. The
defendant testified that he would strategically use his wife’s card if he was “just
playing a couple of dollars” so as to avoid lowering his card’s rating, which was
based on how much was spent. Although Mrs. Randall’s rewards card allegedly
had sums of over $20,000 on it, defendant testified that at least 90 percent of that
money was gambled by him, and that any gambling done by his wife was funded
by personal money and not the embezzled funds.
                                        -4-
Mrs. Randall had access to the family checking account, she testified, she did not

know how much was in that account, defendant was responsible for paying the

bills, and she was unsure of defendant’s salary. Mrs. Randall admitted that she

“would get a little nervous” about the money expended on gambling, but she added

that she “never really questioned him[.]” Rather, she maintained that she only

became aware of defendant’s thievery and lies when the police came calling. The

defendant never admitted to his wife that he was embezzling money from URI.

      In May 2014 Mrs. Randall inherited approximately $600,000 from her

father’s estate. Approximately $200,000 was spent on home improvements, a new

automobile, and debt repayment, including credit-card balances, a home equity

loan, and outstanding bills. Mrs. Randall also used her inheritance to fund a

retirement account, a money market account, and an account for her grandson.

Mrs. Randall testified that she works part-time at a day-care center, earning

approximately $6,500 per year.      The monthly home expenses, such as taxes,

utilities, sewer fees, phone, gas, groceries, water, and car, homeowners, and dental

insurance are approximately $1,680 per month.2

      After the testimony concluded, the state indicated its intention to offer

additional documentary evidence, and both parties rested. Posttrial memoranda

2
  Mrs. Randall testified that she was solely responsible for determining how her
inheritance was spent; at the time of trial she had $180,000 in a savings account
and $100,000 in her retirement account.
                                        -5-
were submitted, and the trial justice issued a written decision. The trial justice

determined that a complete revocation of defendant’s pension was appropriate

pursuant to PEPRRA,3 but that Mrs. Randall was an innocent spouse and was

entitled to “some pension payments[.]” However, the trial justice also found that

“the present financial condition of [defendant] limits the likelihood that [URI] will

ever be made whole[,]” and, therefore, he directed that URI “be timely

compensated as a condition of payments to” Mrs. Randall. Accordingly, Mrs.

Randall was awarded “ongoing pension payments, commencing on January 1,

2017, in the amount of $1,667 per month, on the condition that all of these

payments be forwarded promptly, or assigned in advance,” toward her husband’s

restitution debt. The trial justice ordered that upon full payment of the defendant’s

restitution debt, Mrs. Randall’s pension payments would be “reduced to $500 per

month and paid directly to her.”

      The trial justice also denied defendant’s motion for return of contributions in

an order issued on April 11, 2018, finding that PEPRRA “expressly forbids the

return of contributions to the retiree if restitution is still due” and that the court had

“not been asked to transfer the funds to satisfy restitution.” A single corrected

3
  The defendant has conceded that the complete revocation of his pension benefits
is not at issue on appeal.
                                           -6-
judgment entered on May 24, 2018, reflecting the trial justice’s various rulings.4

This appeal followed.5

                                Standard of Review

      “This Court reviews questions of statutory interpretation de novo.” In re

Estate of Chelo, 209 A.3d 1181, 1184 (R.I. 2019). It is well settled that “[i]n

matters of statutory interpretation our ultimate goal is to give effect to the purpose

of the act as intended by the Legislature.” Alessi v. Bowen Court Condominium, 44

A.3d 736, 740 (R.I. 2012) (quoting Webster v. Perrotta, 774 A.2d 68, 75 (R.I.

2001)). If “the language of a statute is clear and unambiguous, this Court must

4
  On May 23, 2019, this Court remanded this case to the Superior Court after
discovering that the electronic filing system contained two judgments: the first
signed and dated by the trial justice on May 2, 2018, and the second signed and
dated by the trial justice on May 24, 2018. The May 24, 2018 judgment was
captioned as a “Corrected Judgment[,]” and noted that the earlier judgment “was
signed, but oddly not recorded into the [c]ourt’s computer filing and docketing
system.” The remand order directed the Superior Court to develop “a record
containing findings as to the travel of this case, including when and how the first
judgment was filed on the electronic docket.” In accordance with the remand
order, the trial justice held an evidentiary hearing on September 18, 2019, during
which the Superior Court administrative manager testified regarding how the
docket came to reflect two judgments. After reviewing the evidentiary record
developed and the findings of fact made by the trial justice, we are satisfied that
the instant appeal is timely.
5
   The parties jointly petitioned this Court for a stay of enforcement of the
judgment, maintaining that “issuing payments prior to the resolution of the issues
on appeal may have tax implications to [d]efendant’s spouse, and that there may be
an impact on eligibility for health insurance, as well as administrative complexities
associate[d] with the Retirement System issuing the payments.” This Court granted
the joint motion to stay enforcement of the judgment pending resolution of the
issues on appeal on February 8, 2019.
                                         -7-
interpret the statute literally and must give the words of the statute their plain and

ordinary meanings.” Id. (quoting Waterman v. Caprio, 983 A.2d 841, 844 (R.I.

2009)).

           Mrs. Randall’s Obligation to Forward Pension Payments
                   Towards Defendant’s Restitution Debt

      The defendant first contends that the trial justice’s decision to condition Mrs.

Randall’s award of pension payments upon her forwarding those payments to

satisfy her husband’s restitution obligations was erroneous and prohibited by

statute and this Court’s jurisprudence. Specifically, defendant argues, because the

trial justice found Mrs. Randall to be an innocent spouse, PEPRRA does not

envision that an innocent spouse’s pension be applied to satisfy restitution.

      The Retirement Board maintains that the trial justice did not err in

conditioning the payment of pension benefits to Mrs. Randall upon the assignment

of those payments to URI because “PEPRRA clearly establishes the power of the

Superior Court to use its discretion to create a remedy as justice may require.”

Accordingly, the Retirement Board argues that the trial justice’s decision did not

directly order that defendant’s pension payments be made to URI, but rather

“conditioned the spousal payment to Mrs. Randall on her payment to URI,” which,

according to the Retirement Board, accords with the language and intent of

PEPRRA. We disagree.

                                         -8-
      As we have previously noted,

             “[t]he General Assembly enacted PEPRRA in 1992 to
             provide the Retirement Board with a statutory
             mechanism to initiate a civil action to revoke or reduce a
             public official/employee’s retirement benefits whenever
             such person * * * ‘is convicted of or pleads guilty or nolo
             contendere to any crime related to his or her public office
             or public employment.’” Retirement Board of
             Employees’ Retirement System of Rhode Island v.
             DiPrete, 845 A.2d 270, 279-80 (R.I. 2004) (quoting § 36-
             10.1-3(b), as enacted by P.L. 1992, ch. 306, art. 1, § 8).

However, PEPRRA also sets forth the primary purpose of a retirement pension,

which “is ‘to provide for the family in the future.’” Id. at 291 (quoting Thompson

v. Thompson, 642 A.2d 1160, 1164 (R.I. 1994)). Accordingly, § 36-10.1-3(d)

provides that:

             “If the [S]uperior [C]ourt determines that the retirement
             or other benefits or payments of a public official or
             public employee should be revoked or reduced under this
             chapter, it may, in its discretion and after taking into
             consideration the financial needs and resources of any
             innocent spouse or domestic partner, dependents and/or
             designated beneficiaries of the public official or public
             employee, order that some or all of the revoked or
             reduced benefits or payments be paid to any innocent
             spouse or domestic partner, dependent or beneficiary as
             justice may require.”

This provision of PEPRRA—based on principles relative to the equitable

distribution of marital property—recognizes that “an innocent spouse has a

cognizable property interest in a vested pension,” such that the Superior Court

                                        -9-
may, in its discretion, award “some or all of the total benefits to an innocent

spouse.” DiPrete, 845 A.2d at 292.

      However, under the plain language of § 36-10.1-3(d), revoked or reduced

pension benefits or payments can only be paid to an innocent spouse, domestic

partner, dependent, or beneficiary. See Retirement Board of Employees’ Retirement

System of Rhode Island v. Azar, 721 A.2d 872, 877 (R.I. 1998) (“Although

PEPRRA grants the trial justice substantial discretion to determine whether to

revoke or reduce a public employee/official’s public pension after he or she has

been convicted of a crime related to public employment, it authorizes payment of

the revoked or reduced pension funds only to a pensioner’s innocent spouse,

dependents, and/or designated beneficiaries.”). Indeed, we have recognized that

“[b]y specifying only three types of payees who may receive a public

employee/official’s revoked or reduced pension benefits, * * * the General

Assembly manifested its intent to exclude other possible payees from receiving”

that person’s pension benefits. Id.

      The Retirement Board’s argument that the trial justice’s decision was correct

because the pension payments are being made to Mrs. Randall, who must then

forward them to URI—rather than the pension payments being forwarded directly

                                      - 10 -
to URI—presents a distinction without a difference.6 “[I]n deciding whether the

trial justice acted within his or her discretion in fashioning an appropriate PEPRRA

order[,]” “we look to the identity of the final payee of the benefits[.]” Azar, 721

A.2d at 878. Here, the final payee of defendant’s pension payments would be URI,

which does not qualify as an innocent spouse, dependent, or beneficiary as

required by the plain language of PEPRRA.

      The Retirement Board also makes much of the trial justice’s observations

that Mrs. Randall received “some benefit from the illicit scheme, as minor as it

may or may not be[.]” However, the trial justice’s ultimate finding was that Mrs.

Randall is an innocent spouse, and the Retirement Board has not appealed from

that factual determination. There are no degrees of innocence under PEPRRA: a

spouse is either innocent or not. Nor is PEPRRA intended to be punitive in its

application; rather, it is a remedial enactment intended to be equitable in nature.

“If justice is to be done, no court can overlook an innocent spouse’s entitlement to

retirement benefits based on his or her familial contributions and the economic

partnership theory of marriage, which is firmly established in this state.” DiPrete,

845 A.2d at 290. PEPRRA cannot be used to punish Mrs. Randall, the innocent

spouse, for the misdeeds of her husband; she cannot be forced to forward the

payments that she is awarded to the victim of her husband’s crime.

6
  The tax implications for Mrs. Randall and the impact on her eligibility for health
insurance were overlooked by the trial justice.
                                       - 11 -
       While the trial justice seemingly crafted a Solomonic remedy to address the

tension between the award of pension benefits to an innocent spouse while the

restitution owed to the victim of her husband’s crime remains outstanding, the

remedy quite plainly violates PEPRRA. Accordingly, we vacate that portion of the

judgment ordering Mrs. Randall to forward any payments to URI.

                             Return of Contributions

       The defendant also argues that the trial justice erred in failing to apply his

pension contributions to his restitution obligations, and argues that “his pension

contributions of $73,569.84 should be transferred to pay down his restitution

obligations.” Specifically, defendant contends that the trial justice improperly

concluded that the court had “not been asked to transfer the funds to satisfy

restitution.”

       On April 11, 2018, the trial justice entered an order denying defendant’s

motion for return of his pension contributions.7 The trial justice concluded that

defendant was not entitled to return of his pension contributions because restitution

was still due and owing, and that the court had not been asked to direct the

contributions towards defendant’s restitution obligations.

       In accordance with § 36-10.1-4(a), “[a]ny * * * public employee whose

retirement or other benefits or payments are revoked * * * shall be entitled to a

7
 The order indicated that the parties had agreed to submit memoranda on the issue
and forgo further evidentiary hearings or oral argument.
                                        - 12 -
return of his or her contribution paid into the relevant pension fund(s), without

interest.” However, no return of contributions shall be made while the employee

has any unsatisfied judgments or orders “for the payment of restitution for losses

incurred by any person as a result of the subject crime related to the * * * public

employment.” Section 36-10.1-4(c). If there is outstanding restitution due, the

Superior Court “may order that any funds otherwise due to the * * * public

employee as a return of contribution * * * be paid in satisfaction of the judgment

or order.” Id.

      The provisions of § 36-10.1-4 involving the return of contributions after

benefits are revoked and prohibiting return if restitution is due and owing are

mandatory. See Begg v. Alexander-Scott, 242 A.3d 23, 29 (R.I. 2020) (“use of the

word ‘shall’ contemplates something mandatory or the imposition of a duty”)

(quoting In re Estate of Chelo, 209 A.3d at 1184)). However, § 36-10.1-4(c)

provides that the Superior Court “may order” that any return of contributions be

paid to satisfy outstanding restitution. This Court has recognized the “principle of

statutory construction that the use of the term ‘may’ denotes a permissive, rather

than an imperative, condition.” Downey v. Carcieri, 996 A.2d 1144, 1151 (R.I.

2010).

      Here, the trial justice was required to deny a return of contributions to the

defendant, as restitution debt was still outstanding. Although it was within the trial

                                        - 13 -
justice’s discretion to order that any return of contributions be paid to satisfy the

defendant’s outstanding restitution debt, he was not required to do so. The trial

justice concluded that the defendant’s return of contributions would not be applied

to satisfy restitution because “[t]he [c]ourt has not been asked to transfer the funds

to satisfy restitution.” We discern nothing in the statutory language requiring a

public employee to request that his or her return contributions be applied towards

the satisfaction of outstanding restitution. Rather, § 36-10.1-4(c) clearly vests the

Superior Court with discretion to determine whether “funds otherwise due to the

* * * public employee as a return of contribution * * * be paid in satisfaction of

the” outstanding restitution. As such, we are of the opinion that the trial justice

erred in declining to apply the defendant’s pension contributions to his restitution

obligations merely because the defendant failed to make that specific request.

Accordingly, the matter is remanded to the Superior Court with directions to

consider whether the defendant’s return of contributions should be applied towards

his outstanding restitution, in accordance with § 36-10.1-4(c).

                                    Conclusion

      For the reasons set forth in this opinion, we hold as follows:

      (1) We affirm that portion of the judgment that revokes, in full and on

          a permanent basis, the defendant’s pension benefits.

                                        - 14 -
      (2) We affirm that portion of the judgment that declares that Mrs.

          Randall is an innocent spouse and is awarded pension payments.

      (3) We vacate that portion of the judgment that directs Mrs. Randall

          to pay her payments as an innocent spouse towards the

          defendant’s restitution obligations, and remand this case for a

          recalculation of Mrs. Randall’s benefits based on our decision.

      (4) We vacate that portion of the judgment that declined to apply the

          defendant’s pension contributions to his restitution obligations

          merely because a specific request was not made, and we remand

          this case with directions for the Superior Court to consider

          whether the defendant’s return of contributions should be applied

          towards his outstanding restitution.8

The record shall be remanded to the Superior Court with directions to enter a new

judgment consistent with this opinion.

8
  Because we are remanding with respect to the recalculation of benefits Mrs.
Randall is entitled to receive, any return of contribution ordered to be paid in
satisfaction of the defendant’s outstanding restitution—should the trial justice so
direct—must be in an amount inversely proportionate to the amount awarded to
Mrs. Randall. See Retirement Board of Employees’ Retirement System of Rhode
Island v. DiPrete, 845 A.2d 270, 297 (R.I. 2004).
                                         - 15 -
                                               STATE OF RHODE ISLAND
                                        SUPREME COURT – CLERK’S OFFICE
                                              Licht Judicial Complex
                                                250 Benefit Street
                                              Providence, RI 02903

                                 OPINION COVER SHEET

                                     The Retirement Board of the Employees' Retirement
Title of Case
                                     System of the State of R.I. v. Fred Randall.
                                     No. 2018-0212-Appeal.
Case Number
                                     (PC 15-203)

Date Opinion Filed                   May 5, 2021

                                     Suttell, C.J, Goldberg, Robinson, Lynch Prata, and
Justices
                                     Long, JJ.

Written By                           Associate Justice Maureen McKenna Goldberg

Source of Appeal                     Providence County Superior Court

Judicial Officer from Lower Court    Associate Justice Jeffrey A. Lanphear

                                     For Plaintiff:

                                     Michael P. Robinson, Esq.
Attorney(s) on Appeal
                                     For Defendant:

                                     Mark A. Fay, Esq.

SU-CMS-02A (revised June 2020)