Court Opinion

ID: 4079307
Source: CourtListenerOpinion
Date Created: 2016-10-04 15:07:52.34551+00
Date Added: 2024-06-11T07:45:45.675863
License: Public Domain

MAINE	SUPREME	JUDICIAL	COURT	                                       Reporter	of	Decisions	
Decision:	 2016	ME	147	
Docket:	   Cum-15-304	
Argued:	   June	8,	2016	
Decided:	  October	4,	2016	
	
Panel:	    SAUFLEY,	C.J.,	and	ALEXANDER,	MEAD,	GORMAN,	JABAR,	HJELM,	and	HUMPHREY,	JJ.	
	
	
                                  STATE	OF	MAINE	
                                          	
                                         v.	
                                          	
                                   JOHN	KENDALL	
	
	
HJELM,	J.	

      [¶1]	 	 John	 Kendall	 appeals	 from	 a	 judgment	 of	 conviction	 for	 three	

counts	 of	 theft	 by	 misapplication	 of	 property	 (Class	 B),	 17-A	 M.R.S.	

§	358(B)(4)	(2015);	one	count	of	conspiracy	to	commit	intentional	evasion	of	

tax	(Class	D),	17-A	M.R.S.	§	151(1)(D)	(2015)	and	36	M.R.S.	§	184-A(2)	(2015);	

and	three	counts	of	failure	to	collect,	account	for,	or	pay	over	withholding	tax	

(Class	 D),	 36	 M.R.S.	 §	 184	 (2015),	 entered	 in	 the	 Unified	 Criminal	 Docket	

(Cumberland	 County,	 Warren,	 J.)	 after	 a	 jury	 trial.	 	 Kendall	 contends	 that	 on	

the	charges	of	theft	by	misapplication	and	failing	to	collect,	account	for,	or	pay	

over	withholding	taxes,	the	evidence	is	insufficient	to	support	the	convictions	

and	 the	 court	 instructed	 the	 jury	 incorrectly;	 and	 that	 the	 court	 abused	 its	

discretion	by	admitting	evidence	of	country	club	memberships	purchased	by	a	
2	

company	he	owned	and	used	exclusively	by	his	wife	and	him.1		We	affirm	the	

judgment.	

                                             I.		BACKGROUND	

        [¶2]	 	 When	 the	 evidence	 is	 viewed	 in	 the	 light	 most	 favorable	 to	 the	

State,	 the	 jury	 was	 entitled	 to	 find	 the	 following	 facts	 beyond	 a	 reasonable	

doubt.		See	State	v.	Dorweiler,	2016	ME	73,	¶	2,	---	A.3d	---.			

        [¶3]		Kendall	was	the	president	and	owner	of	Chipco	International,	Inc.,	

a	poker	chip	manufacturing	business,	from	1987	to	2013.		In	those	capacities,	

Kendall	oversaw	and	was	integrally	involved	in	Chipco’s	business	operations,	

including	 payroll;	 controlling	 and	 managing	 Chipco’s	 finances,	 including	 the	

business’s	taxes;	and	communicating	and	negotiating	with	the	Maine	Revenue	

Services	 (MRS).	 	 Under	 Maine	 law,	 Chipco	 was	 required	 to	 withhold	 income	

tax	 from	 employee	 wages	 and,	 on	 a	 quarterly	 basis,	 pay	 over	 those	

withholdings	 to	 the	 State	 Tax	 Assessor.	 	 Kendall	 signed	 Chipco’s	 employee	

withholding	tax	returns	when	they	were	filed	with	the	State,	and	he	directed	

another	 member	 of	 Chipco’s	 management	 team	 to	 file	 the	 returns	 without	

submitting	the	required	payment.		On	multiple	occasions	from	2007	to	2012,	

   1	 	 Kendall	 also	 argues	 that	 the	 evidence	 was	 insufficient	 to	 support	 the	 jury’s	 guilty	 verdict	 on	

the	 charge	 of	 conspiracy	 to	 commit	 tax	 evasion.	 	 That	 argument	 is	 unpersuasive,	 see	 State	 v.	
Dorweiler,	2016	ME	73,	¶	6,	---	A.3d	---	(stating	the	standard	of	review	when	the	sufficiency	of	the	
evidence	is	challenged),	and	we	do	not	address	it	further.	
                                                                                                                    3	

Chipco	 failed	 to	 pay	 the	 Assessor	 required	 withholding	 taxes	 totaling	 more	

than	$150,000	as	those	payments	became	due.2			

       [¶4]	 	 During	 that	 period,	 Kendall	 directed	 Chipco	 employees	 to	 pay	

some	of	Chipco’s	business	expenses	with	the	employee	tax	withholdings.		He	

also	 directed	 that	 Chipco	 money	 be	 used	 to	 pay	 for	 some	 of	 his	 personal	

expenses	 such	 as	 mortgage	 payments	 and	 legal	 fees	 arising	 from	 a	 personal	

bankruptcy	 proceeding.	 	 Further,	 at	 Kendall’s	 direction,	 Chipco	 purchased	

corporate	country	club	memberships	used	only	by	Kendall	and	his	wife.			

       [¶5]	 	 In	 2009,	 Kendall	 instructed	 members	 of	 Chipco’s	 management	

team	 to	 apply	 for	 unemployment	 compensation	 benefits.	 	 Four	 of	 those	

employees—all	of	whom	later	pleaded	guilty	to	charges	of	theft	by	deception	

and	 tax	 evasion—received	 unemployment	 benefits	 while	 continuing	 to	 work	

for	Chipco.		Kendall	directed	Chipco’s	finance	manager	to	pay	those	employees	

“off	the	books,”	meaning	that	Chipco	did	not	identify	them	as	employees	and	

did	not	turn	over	withholding	taxes	for	them	to	the	State	Tax	Assessor,	even	

though	 they	 continued	 to	 work	 for	 Chipco,	 which	 paid	 them	 the	 same	 net	

amount	 they	 earned	 previously.	 	 Kendall	 also	 attempted	 to	 evade	 the	 MRS’s	

collection	 efforts	 by	 withdrawing	 funds	 immediately	 after	 they	 were	

  2	 	 A	 portion	 of	 that	 arrearage	 was	 paid	 later	 as	 a	 result	 of	 the	 MRS’s	 collection	 efforts,	 leaving	

approximately	$51,000	due	as	of	the	date	Kendall	was	sentenced.	
4	

deposited	into	Chipco’s	accounts,	and	by	transferring	Chipco	funds	into	bank	

accounts	 owned	 by	 another	 Chipco	 employee,	 by	 his	 wife,	 and	 by	 other	

corporations.	

       [¶6]	 	 Because	 of	 Chipco’s	 failure	 to	 pay	 over	 its	 employee	 withholding	

taxes,	 Kendall	 received	 many	 communications	 from	 the	 MRS.	 	 On	 behalf	 of	

Chipco,	he	was	in	regular	contact	with	the	MRS	for	roughly	five	years,	never	

challenged	the	MRS’s	tax	assessments,	and	entered	into	payment	plans,	which	

Chipco	 did	 not	 fulfill.	 	 As	 he	 directed	 the	 use	 of	 withholding	 funds	 for	 other	

business	obligations	and	the	use	of	corporate	money	for	his	own	expenses,	he	

advised	the	MRS	that	Chipco	did	not	have	enough	money	to	pay	the	overdue	

withholding	amounts	but	promised	to	satisfy	the	debt	as	soon	as	possible.				

       [¶7]		In	August	2013,	Kendall	was	indicted	for	three	counts	of	theft	by	

misapplication	 of	 property	 (Class	 B),	 17-A	 M.R.S.	 §	 358(B)(4)	 (Counts	 1-3);	

one	 count	 of	 conspiracy	 to	 commit	 intentional	 evasion	 of	 tax	 (Class	 D),	

17-A	M.R.S.	 §	 151(1)(D)	 and	 36	 M.R.S.	 §	 184-A(2)	 (Count	 4);	 three	 counts	 of	

failure	to	collect,	account	for,	or	pay	over	withholding	tax	(Class	D),	36	M.R.S.	

§	184	(Counts	5-7);	and	one	count	of	making	and	subscribing	a	false	statement	

in	a	Maine	income	tax	return	(Class	D),	36	M.R.S.	§	5333	(2015)	(Count	8).		He	

entered	pleas	of	not	guilty.			
                                                                                                          5	

        [¶8]		The	court	held	a	seven-day	jury	trial	in	March	2015.		In	a	motion	in	

limine,	 Kendall	 requested	 that	 the	 court	 exclude	 evidence	 about	 the	 country	

club	 memberships	 that	 Chipco	 paid	 for	 and	 that	 he	 and	 his	 wife	 used	

exclusively,	 arguing	 that	 evidence	 of	 affluence	 was	 unfairly	 prejudicial.		

See	M.R.	 Evid.	 403.	 	 The	 court	 denied	 the	 motion	 and	 ruled	 that,	 subject	 to	

limitations,	the	State	could	present	such	evidence.			

        [¶9]	 	 The	 jury	 returned	 guilty	 verdicts	 on	 all	 counts.	 	 Having	 moved	

unsuccessfully	 at	 trial	 for	 a	 judgment	 of	 acquittal,	 Kendall	 filed	 a	 renewed,	

post-trial	motion	for	a	judgment	of	acquittal.		The	court	denied	the	motion	as	

to	 Counts	 1-7,	 but	 granted	 it	 as	 to	 Count	 8.	 	 The	 court	 then	 imposed	 the	

following	 concurrent	 sentences:	 on	 the	 three	 charges	 of	 theft	 by	

misapplication,	forty-two	months	to	the	Department	of	Corrections,	all	but	ten	

months	 suspended,	 three	 years	 of	 probation,	 and	 restitution	 of	 $51,663	

payable	 to	 the	 MRS;3	 on	 the	 charge	 of	 conspiracy	 to	 commit	 tax	 evasion,	

six	months	 of	 incarceration;	 and	 on	 the	 three	 charges	 of	 failure	 to	 collect,	

truthfully	account,	and	pay	over	tax,	three	months	of	incarceration.		Kendall’s	

appeal	followed.	

   3	
    	 This	 was	 the	 amount	 that	 remained	 due	 to	 the	 State	 Tax	 Assessor	 after	 a	 portion	 of	 the	
withholding	taxes	that	were	the	subject	of	this	prosecution	was	paid.	
6	

                                              II.		DISCUSSION	

	         [¶10]		Kendall	challenges	the	convictions	for	theft	by	misapplication	of	

property	(Counts	1-3),	asserting	that	17-A	M.R.S.	§	358(1)(A)	(2015)	does	not	

apply	 to	the	failure	to	pay	over	employee	withholding	taxes	to	the	State	Tax	

Assessor.		Kendall	next	argues	that	he	cannot	properly	be	convicted	for	failing	

to	collect,	truthfully	account	for,	and	pay	over	withholding	taxes	pursuant	to	

36	 M.R.S.	 §	 184	 because	 he	 was	 not	 subject	 to	 a	 statutory	 duty	 to	 do	 so.4		

Finally,	Kendall	contends	that	the	court	erred	by	admitting	certain	“lifestyle”	

evidence	over	his	objection.		We	consider	these	arguments	in	turn.	

A.	       17-A	M.R.S.	§	358(1)(A):	Theft	by	Misapplication	

	         [¶11]	 	 Kendall	 contends	 that	 the	 crime	 of	 theft	 by	 misapplication	 does	

not	 encompass	 his	 alleged	 conduct	 because	 the	 withholding	 taxes	 were	 not	

payable	 to	 a	 “3rd	 person”	 as	 section	 358(1)(A)	 provides,	 and	 therefore	 the	

convictions	for	Counts	1-3	are	erroneous.		

          [¶12]	 	 Although	 Kendall	 frames	 this	 contention	 in	 several	 ways,	

including	 challenges	 to	 the	 court’s	 “jurisdiction”	 and	 the	 adequacy	 of	 the	

indictment,	 it	 is	 essentially	 an	 argument	 that	 the	 evidence	 is	 insufficient	 to	

     4	 	 Kendall	 also	 argues	 that	 for	 the	 same	 reasons	 that	 his	 alleged	 conduct	 is	 not	 encompassed	

within	17-A	M.R.S.	§	358	(2015)	and	36	M.R.S.	§	184,	the	court’s	jury	instructions	on	those	charges	
were	 erroneous.	 	 Because	 we	 conclude	 that	 those	 statutes	 apply	 to	 Kendall’s	 actions,	 the	 court’s	
instructions	 to	 the	 jury	 were	 not	 erroneous,	 and	 we	 do	 not	 separately	 address	 his	 arguments	 as	
framed	in	terms	of	the	instructions.	
                                                                                                                  7	

support	the	guilty	verdicts	on	Counts	1-3.		Kendall	did	not	make	this	argument	

below,5	 but	 we	 nonetheless	 consider	 his	 contention	 under	 the	 standard	 of	

review	 applicable	 to	 preserved	 error.	 	 See	 State	 v.	 Van	 Sickle,	 434	 A.2d	 31,	

34-35	(Me.	1981).		As	we	have	explained,	even	where	an	accused	fails	to	move	

for	entry	of	judgment	of	acquittal	based	on	insufficiency	of	the	evidence,	the	

trial	court	has	an	independent	duty	pursuant	to	M.R.U.	Crim.	P.	29(a)	to	assess	

the	sufficiency	of	the	evidence	at	the	close	of	both	the	State’s	case-in-chief	and	

the	 accused’s	 case.6	 	 Id.	 at	 34.	 	 Therefore,	 the	 sufficiency	 of	 the	 evidence	 to	

support	 a	 guilty	 verdict	 is	 before	 the	 court,	 irrespective	 of	 whether	 the	

defendant	 articulates	 it.	 	 We	 thus	 address	 Kendall’s	 argument	 rooted	 in	 the	

sufficiency	of	the	evidence	under	the	familiar	standard	of	“whether	a	trier	of	

fact	 rationally	 could	 find	 beyond	 a	 reasonable	 doubt	 every	 element	 of	 the	

offense	 charged.”	 	 Dorweiler,	 2016	 ME	 73,	 ¶	 6,	 ---	 A.3d	 ---	 (quotation	 marks	

omitted).			

   5		Although	Kendall	did	argue	at	trial	that	the	legal	obligation	to	pay	the	taxes	was	Chipco’s	and	

not	 his,	 and	 for	 that	 reason	 he	 could	 not	 be	 found	 guilty	 of	 theft	 under	 section	 358,	 he	 does	 not	
advance	this	argument	on	appeal	but	rather	pursues	the	different	argument	addressed	in	the	text.	
   	
   6		In	pertinent	part,	M.R.U.	Crim.	P.	29(a)	provides,		

   	
         The	 court	 on	 motion	 of	 a	 defendant	 or	 on	 its	 own	 motion	 shall	 order	 the	 entry	 of	
         judgment	of	acquittal	of	one	or	more	crimes	charged	in	the	indictment,	information,	
         or	complaint	after	the	evidence	on	either	side	is	closed	if	the	evidence	is	insufficient	
         to	sustain	a	conviction	of	such	crime	or	crimes.	
8	

        [¶13]	 	 We	 reiterate,	 however,	 that	 the	 level	 of	 appellate	 scrutiny	

brought	 to	 bear	 on	 a	 sufficiency	 argument	 is	 not	 consequential:	 no	 matter	

what	standard	of	review	we	apply,	if	the	evidence	is	not	sufficient	to	allow	a	

fact-finder	to	rationally	find	the	defendant’s	guilt	beyond	a	reasonable	doubt,	

then	 the	 resulting	 conviction	 cannot	 be	 deemed	 free	 of	 reversible	 error.		

Van	Sickle,	434	A.2d	at	34	n.4.7		

        [¶14]	 	 Kendall’s	 argument	 requires	 us	 to	 construe	 section	 358.		

“The	interpretation	 of	 a	 statute	 is	 a	 legal	 issue	 we	 review	 de	 novo.”	 	 State	 v.	

Jones,	2012	ME	88,	¶	6,	46	A.3d	1125.		When	interpreting	a	statute,	“we	seek	

to	effectuate	the	intent	of	the	Legislature,	which	is	ordinarily	gleaned	from	the	

plain	 language	 of	 the	 statute.”	 	 Id.	 (quotation	 marks	 omitted).	 	 “We	 will	 not	

look	 beyond	 the	 plain	 language	 of	 the	 statute	 if	 it	 is	 unambiguous.”	 	 State	 v.	

Knight,	2016	ME	123,	¶	9,	---	A.3d	---.		We	examine	statutory	language	in	the	

context	 of	 the	 entire	 statutory	 scheme,	 see	 Jones,	 2012	 ME	 88,	 ¶	 6,	 46	 A.3d	

1125,	 and	 seek	 to	 arrive	 at	 a	 construction	 that	 avoids	 absurd	 or	 illogical	

results,	see	State	v.	Burby,	2003	ME	95,	¶	6,	828	A.2d	796.		

    7		As	we	also	stated	in	Van	Sickle,	however,	“in	the	interest	of	sound	appellate	and	trial	practice,	

defense	 counsel	 should	 move	 for	 acquittal	 or	 for	 a	 new	 trial	 when,	 in	 the	 judgment	 of	 counsel,	
sufficiency	 of	 the	 evidence	 is	 questionable,”	 in	 order	 to	 call	 particular	 claimed	 deficiencies	 to	 the	
trial	court’s	attention	and	to	create	a	more	focused	presentation	for	any	appeal.		Id.	at	35.	
                                                                                              9	

	      [¶15]		Pursuant	to	17-A	M.R.S.	§	358(1)(A),	

    [a]	 person	 is	 guilty	 of	 theft	 [by	 misapplication	 of	 property]	
    if	.	.	.	[t]he	 person	 obtains	 property	 from	 anyone	 or	 personal	
    services	from	an	employee	upon	agreement,	or	subject	to	a	known	
    legal	obligation,	to	make	a	specified	payment	or	other	disposition	
    to	a	3rd	person	or	to	a	fund	administered	by	that	person	.	.	.	if	that	
    person	 intentionally	 or	 recklessly	 fails	 to	 make	 the	 required	
    payment	 or	 disposition	 and	 deals	 with	 the	 property	 obtained	 or	
    withheld	as	that	person’s	own.	
    	
(Emphasis	added.)	
    	
    [¶16]	 	 A	 “person”	 is	 statutorily	 defined,	 in	 part,	 as	 a	 “human	 being.”		

17-A	M.R.S.	 §	 2(20)	 (2015).	 	 Kendall’s	 “legal	 obligation”	 in	 the	 context	 of	

section	 358(1)(A)	 is	 established	 in	 36	 M.R.S.	 §	 177(1)	 (2015):	 “all	 taxes	

collected	 by	 a	 person	 .	 .	 .	 constitute	 a	 special	 fund	 in	 trust	 for	 the	 State	 Tax	

Assessor.”	 	 (Emphasis	 added.)	 	 Kendall,	 as	 the	 person	 collecting	 withholding	

taxes	on	behalf	of	Chipco,	thus	owed	the	legal	obligation	to	pay	those	taxes	to	

a	“3rd	person,”	namely,	the	State	Tax	Assessor.	

       [¶17]		Kendall	asserts	that	the	State	Tax	Assessor	cannot	be	considered	

a	 “person”	 within	 the	 meaning	 of	 17-A	 M.R.S.	 §	 358(1)(A)	 because	 the	 State	

Tax	Assessor	is	also	a	“public	servant”	as	that	phrase	is	used	in	the	Criminal	

Code.		See	17-A	M.R.S.	§	2(21)	(2015)	(defining	“public	servant”	as	“any	official	

officer	or	employee	of	any	branch	of	government”).		Kendall	argues	that	these	

definitions	 are	 mutually	 exclusive	 and	 that	 therefore	 the	 State	 Tax	 Assessor	
10	

cannot	 be	 a	 “person.”	 	 This	 argument	 is	 undermined	 by	 the	 statutory	

definition	 of	 “person,”	 which	 by	 its	 plain	 terms	 includes	 an	 individual	 state	

employee,	 even	 though	 that	 person	 may	 also	 fall	 within	 other	 definitional	

categories.		

        [¶18]	 	 Kendall	 also	 asserts	 that	 an	 employee’s	 tax	 withholdings	 are,	 in	

reality,	held	for	Maine	Revenue	Services	rather	than	for	the	Assessor,	and	that	

because	section	358	criminalizes	the	failure	to	make	a	specified	payment	“to	a	

3rd	person,”	he	cannot	be	guilty	of	charges	brought	under	that	statute.		This	

argument	 fails	 because	 employee	 tax	 withholdings	 are	 held	 in	 trust	 for	 a	

person,	 the	 “State	 Tax	 Assessor,”	 not	 for	 Maine	 Revenue	 Services.	 	 36	 M.R.S.	

§	177(1);	see	also	State	v.	Hopkins,	526	A.2d	945,	949-50	(Me.	1987)	(holding	

that	the	definition	of	“person”	in	section	2(21)	“does	not	exclude	.	.	.	the	State	

of	Maine.”).8			

        [¶19]	 	 Accordingly,	 the	 evidence	 supports	 the	 guilty	 verdicts	 on	

Counts	1-3,	and	the	resulting	convictions	for	those	crimes	are	not	affected	by	

error.	

   8		The	State	does	not	argue	that	withholding	taxes	be	paid	“to	a	fund	administered	by”	the	State	

Tax	 Assessor	 within	 the	 meaning	 of	 section	 358(1)(A),	 and	 so	 we	 confine	 our	 analysis	 to	 the	
question	of	whether	the	State	Tax	Assessor	is	a	“3rd	person”	to	whom	payment	is	to	be	made.	
                                                                                        11	

B.	    36	M.R.S.	§	184:	Failure	to	Collect,	Account	for,	or	Pay	over	Tax	

	      [¶20]	 	 Kendall	 next	 argues	 that	 the	 court	 erred	 by	 denying	 his	 motion	

for	 a	 judgment	 of	 acquittal	 on	 Counts	 5-7,	 which	 charge	 him	 with	 failure	 to	

collect,	account	for,	or	pay	over	tax	in	violation	of	36	M.R.S.	§	184(1).		Kendall	

argues,	as	he	did	at	trial,	that	section	184(1)	applies	only	to	retailers	and	that	

the	statute	therefore	does	not	apply	to	him	as	an	officer	or	agent	of	Chipco,	a	

non-retail	enterprise.		This	argument	calls	for	us	to	construe	section	184.	

	      [¶21]		Section	184(1)	provides:	

      A	 person	 who	 is	 required	 under	 this	 Title	 to	 collect,	 truthfully	
      account	 for	 and	 pay	 over	 any	 tax	 imposed	 by	 this	 Title	 and	 who	
      intentionally	 fails	 to	 collect	 or	 truthfully	 account	 for	 or	 pay	 over	
      that	 tax	 at	 the	 time	 required	 by	 law	 or	 rule,	 in	 addition	 to	 any	
      other	penalties	provided	by	law,	commits	a	Class	D	crime.		
      	
Section	184(3)	then	defines	“person”	to	include:		

    in	addition	to	its	defined	meaning	in	section	111,	subsection	3,	an	
    officer,	 director,	 member,	 agent	 or	 employee	 of	 another	 person	
    who,	 in	 that	 capacity,	 is	 responsible	 for	 the	 control	 or	
    management	 of	 the	 funds	 and	 finances	 of	 that	 person	 or	 is	
    responsible	 for	 either	 the	 collection	 or	 payment	 of	 that	 retailer’s	
    taxes.			
    	
(Emphasis	added.)	

	      [¶22]		Section	184	is	ambiguous	because	it	“is	reasonably	susceptible	of	

different	interpretations.”		See	Furhmann	v.	Staples	the	Office	Superstore	East,	

Inc.,	 2012	 ME	 135,	 ¶	 23,	 58	 A.3d	 1083	 (quotation	 marks	 omitted).	 	 The	
12	

definition	of	“person”	found	in	section	184(3)	can	reasonably	be	read	to	apply	

to	 all	 businesses—retailers	 and	 non-retailers	 alike—that	 are	 required	 to	

collect,	 truthfully	 account	 for,	 and	 pay	 over	 any	 taxes	 under	 Title	 36.		

Alternatively,	 the	 phrase	 “that	 retailer’s	 taxes”	 could	 reasonably	 be	 seen	 to	

restrict	 the	 definition	 of	 a	 “person”	 so	 that	 section	 184	 applies	 only	 to	 retail	

businesses.		To	resolve	this	ambiguity	in	section	184(3),	in	addition	to	using	

the	principles	of	statutory	construction	noted	above,	we	look	beyond	the	plain	

language	of	the	statute	and	the	whole	statutory	scheme	to	consider	“indicia	of	

legislative	 intent	 such	 as	 the	 statute’s	 history	 and	 its	 underlying	 policy.”		

Furhmann,	2012	ME	135,	¶	23,	58	A.3d	1083	(quotation	marks	omitted).	

	      [¶23]		The	legislative	history	for	section	184	does	not	provide	guidance	

to	 resolve	 the	 ambiguity.	 	 See,	 e.g.,	 L.D.	 2381,	 Statement	 of	 Fact,	 §	 6,	 at	 31	

(112th	 Legis.	 1986)	 (stating	 merely	 that	 this	 provision	 “enacts	 a	 standard	

criminal	 provision.”).	 	 We	 therefore	 examine	 the	 larger	 statutory	 scheme	 of	

which	section	184	is	a	part.	

	      [¶24]	 	 Examining	 the	 context	 of	 the	 phrase	 “that	 retailer’s	 taxes,”	 we	

conclude	that	for	two	reasons,	those	words	do	not	limit	the	broad	definition	of	

“person[s]”	who	are	subject	to	the	prohibition	created	in	section	184(1).		First,	

there	is	only	one	reference	in	section	184	to	a	“retailer.”		When	the	Legislature	
                                                                                     13	

referred	 to	 “that	 retailer’s	 taxes,”	 one	 would	 expect	 to	 find	 an	 antecedent	

reference	 to	 a	 retailer,	 which	 would	 assist	 in	 identifying	 “that	 retailer[]”	

whose	taxes	are	at	issue.		There	is	no	such	reference,	which	indicates	that	the	

phrase	 “that	 retailer[]”	 does	 not	 modify	 the	 entire	 definition	 of	 “person”	 in	

section	184(3).	

      [¶25]	 	 More	 fundamentally,	 section	 184	 provides	 the	 State	 with	 a	

criminal	process	to	enforce	tax-related	duties	of	broad	application	imposed	on	

individuals	 and	 entities.	 	 Section	 184	 criminalizes	 the	 failure	 “to	 collect,	

truthfully	account	for	and	pay	over	any	tax	imposed	by	this	Title	.	.	.	.”		36	M.R.S.	

§	184(1)	(emphasis	added).		“[T]his	[t]itle”—namely,	Title	36—encompasses	a	

wide	 swath	 of	 taxes,	 including	 property	 taxes;	 sales	 and	 use	 taxes;	 business	

taxes;	motor	fuel	taxes;	inheritance,	succession,	and	estate	taxes;	income	taxes	

for	 individuals	 and	 various	 forms	 of	 business	 entities;	 and	 special	 taxes	

associated	 with	 particular	 businesses	 and	 activities.	 	 See	 36	 M.R.S.	

§§	201-6902	 (2015).	 	 Some	 of	 these	 tax	 obligations	 are	 borne	 by	 retailers—

but	most	are	borne	by	others.		It	is	also	significant	that	the	Legislature	placed	

section	 184(1)	 in	 the	 chapter	 entitled,	 “Uniform	 Administration	 Provisions,”	

making	it	applicable	as	an	overarching	vehicle	for	the	criminal	enforcement	of	

the	particular	taxation	provisions	that	follow	in	Title	36.		
14	

      [¶26]		Given	the	broad	and	comprehensive	scope	of	Title	36,	we	cannot	

attribute	 to	 the	 Legislature	 an	 intent	 to	 limit	 the	 scope	 of	 criminal	

enforcement	 merely	 to	 a	 retailer’s	 failure	 to	 comply	 with	 its	 tax	 obligations,	

and,	 for	 no	 evident	 reason,	 to	 thereby	 exclude	 from	 section	 184(1)	 all	 other	

categories	of	people	and	entities	that	are	subject	to	Maine’s	tax	laws.	

	     [¶27]	 	 We	 recognize	 the	 principle	 of	 statutory	 construction	 that	 “[a]ll	

words	in	a	statute	are	to	be	given	meaning,	and	no	words	are	to	be	treated	as	

surplusage	if	they	can	be	reasonably	construed.”		Freeman	v.	NewPage	Corp.,	

2016	ME	45,	¶	7,	135	A.3d	340	(quotation	marks	omitted).		Nevertheless,	we	

decline	 to	 give	 section	 184(3)	 the	 limiting	 effect	 that	 Kendall	 argues,	 which	

would	 confine	 the	 application	 of	 section	 184	 to	 retailers	 and	 thereby	

unreasonably	 and	 arbitrarily	 limit	 the	 reach	 of	 the	 criminal	 enforcement	

process	 for	 tax	 violations.	 	 Such	 an	 interpretation	 would	 be	 inimical	 to	 the	

specific	purpose	of	section	184	and	to	the	overall	framework	of	Title	36.	

      [¶28]		We	therefore	conclude	that	the	definition	of	a	“person”	in	section	

184(3)	 is	 not	 restricted	 to	 a	 retailer.	 	 Because	 the	 State	 presented	 evidence	

that	Kendall	was	“responsible	for	the	control	or	management	of	the	funds	and	

finances	of”	Chipco,	and	was	“responsible	for	either	the	collection	or	payment	

of”	Chipco’s	taxes,	he	was	subject	to	prosecution	for	violating	section	184(1).		
                                                                                         15	

The	charges	in	counts	5-7	were	applicable	to	Kendall,	and	the	court	did	not	err	

in	denying	his	motion	for	judgment	on	acquittal	of	those	counts.		

C.	    Rule	403:	Evidence	of	Country	Club	Memberships	

	      [¶29]	 	 Finally,	 Kendall	 argues	 that	 the	 court	 abused	 its	 discretion	 by	

denying	 his	 motion	 in	 limine	 to	 exclude	 evidence	 of	 country	 club	

memberships	purchased	by	Chipco	for	the	benefit	of	his	wife	and	him—what	

Kendall	describes	as	evidence	of	affluence	or	wealth—based	on	his	assertion	

that	the	evidence	was	unfairly	prejudicial.		See	M.R.	Evid.	403.		

       [¶30]		Pursuant	to	Rule	403,	“[t]he	court	may	exclude	relevant	evidence	

if	 its	 probative	 value	 is	 substantially	 outweighed	 by	 a	 danger	 of	 .	 .	 .	 unfair	

prejudice,	confusing	the	issues,	misleading	the	jury.	.	.	or	needlessly	presenting	

cumulative	evidence.”		Id.		Evidence	is	unfairly	prejudicial	if	it	“has	an	undue	

tendency	 to	 move	 the	 tribunal	 to	 decide	 on	 an	 improper	 basis,	 commonly,	

though	 not	 always,	 an	 emotional	 one.”	 	 State	 v.	 Begin,	 2015	 ME	 86,	 ¶	 20,	

120	A.3d	 97	 (quotation	 marks	 omitted).	 	 Our	 review	 of	 the	 trial	 court’s	

determination	 of	 relevance	 under	 Rule	 403	 is	 for	 clear	 error,	 respecting	 the	

court’s	 “broad	 discretion	 to	 weigh	 the	 relevance	 of	 evidence	 against	 the	

danger	 of	 unfair	 prejudice	 to	 the	 defendant.”	 	 State	 v.	 Kimball,	 2016	 ME	 75,	

¶	16,	139	A.3d	914	(quotation	marks	omitted).	
16	

      [¶31]	 	 The	 evidence	 at	 issue	 concerns	 two	 country	 club	 memberships	

purchased	 by	 Chipco,	 which	 were	 used	 only	 by	 Kendall	 and	 his	 wife,	 at	 the	

same	 time	 Chipco	 was	 experiencing	 financial	 difficulties	 and	 failing	 to	 pay	

over	 withholding	 taxes	 due	 to	 the	 State	 Tax	 Assessor.	 	 Kendall	 asserts	 that	

evidence	 about	 the	 details	 of	 the	 country	 club	 memberships	 constituted	

evidence	of	“affluence”	that	was	unfairly	prejudicial	to	him	because	it	invited	

“class	bias”	while	providing	very	little	probative	value.			

      [¶32]	 	 In	 denying	 Kendall’s	 motion	 to	 exclude	 the	 evidence,	 the	 court	

determined	 that	 evidence	 of	 Kendall’s	 use	 of	 the	 country	 club	 memberships	

was	 “highly	 relevant”	 to	 Kendall’s	 underlying	 diversion,	 for	 personal	 benefit,	

of	limited	corporate	funds	that	should	have	been	used	to	pay	withheld	taxes	

over	to	the	State	Tax	Assessor.		Because	violations	of	sections	358(1)(A)	and	

184	 may	 be	 proved	 with	 evidence	 of	 intentional	 conduct,	 evidence	 that	

Kendall	 personally	 benefitted	 from	 the	 use	 of	 Chipco’s	 money	 that,	 pursuant	

to	 section	 177,	 Chipco	 promised	 but	 failed	 to	 pay	 over	 to	 the	 State	 Tax	

Assessor	 was	 relevant	 to	 the	 issues	 in	 the	 case.	 	 36	 M.R.S.	 §	 177	 (2015).		

Further,	 the	 charges	 of	 theft	 pursuant	 to	 section	 358	 required	 the	 State	 to	

prove	 that	 Kendall	 dealt	 with	 the	 withholdings	 as	 his	 own.	 	 The	 court’s	
                                                                                                        17	

determination	 that	 the	 evidence	 carried	 substantial	 probative	 value	 was	 not	

erroneous.9	

        [¶33]	 	 While	 allowing	 the	 State	 to	 present	 this	 evidence,	 the	 court	

displayed	 appropriate	 sensitivity	 to	 any	 concerns	 of	 wealth-based	 prejudice	

by	prohibiting	the	State	from	presenting	evidence	about	whether	the	country	

clubs	 were	 “rich	 or	 exclusive	 or	 anything	 of	 that	 nature,”	 and	 from	 making	

unnecessarily	repetitive	references	to	them.		By	imposing	restrictions	on	the	

manner	and	extent	to	which	the	State	could	present	evidence	of	the	Kendalls’	

use	of	the	country	club	memberships,	the	court	took	effective	steps	to	prevent	

“appeals	 to	 class	 prejudice	 [that]	 are	 highly	 improper	 and	 cannot	 be	

condoned.	 .	 .	 .”	 	 United	 States	 v.	 Socony-Vacuum	 Oil	 Co.,	 310	 U.S.	 150,	 239	

(1940).	 	 By	 doing	 so,	 the	 court	 properly	 and	 thoughtfully	 invoked	 the	

balancing	principles	of	Rule	403.	

        [¶34]	 	 In	 determining	 that	 the	 “highly	 probative”	 evidence	 of	 personal	

benefits	Kendall	gained	from	money	held	by	Chipco	for	the	State	Tax	Assessor	

was	not	substantially	outweighed	by	any	unfair	prejudice,	see	Begin,	2015	ME	

86,	¶	20,	120	A.3d	97,	the	court	acted	well	within	the	bounds	of	its	discretion.	

   9	 	 Although	 not	 expressly	 mentioned	 by	 the	 court,	 evidence	 that	 Kendall	 diverted	 tax	
withholdings	 for	 his	 own	 purposes	 was	 relevant	 also	 because	 of	 evidence	 that	 Kendall	 told	 MRS	
officials	that	Chipco’s	funds	were	exhausted,	and	because	Kendall	argued	at	trial	that	other	Chipco	
employees	 were	 responsible	 for	 the	 diversion	 and	 that	 he	 was	 suffering	 financially	 along	 with	
Chipco.		
18	

         The	entry	is:	

                            Judgment	affirmed.		
	
	     	      	      	       	    	
	
On	the	briefs:	
	
      Thomas	 F.	 Hallett,	 Esq.,	 Hallett,	 Zerillo	 &	 Whipple	 P.A.,	
      Portland,	for	appellant	John	Kendall	
      	
      Janet	 T.	 Mills,	 Attorney	 General,	 Gregg	 D.	 Bernstein,	 Asst.	
      Atty.	 Gen.,	 and	 Elizabeth	 Weyl,	 Stud.	 Atty.,	 Office	 of	 the	
      Attorney	General,	Augusta,	for	appellee	State	of	Maine	
	
	
At	oral	argument:	
	
      Thomas	F.	Hallett,	Esq.,	for	appellant	John	Kendall	
      	
      Gregg	 D.	 Bernstein,	 Asst.	 Atty.	 Gen.,	 for	 appellee	 State	 of	
      Maine	
	
	
	
Cumberland	County	Unified	Criminal	Docket	docket	number	CR-2013-5456	
FOR	CLERK	REFERENCE	ONLY