Court Opinion

ID: 9941805
Source: CourtListenerOpinion
Date Created: 2024-02-17 00:01:46.177816+00
Date Added: 2024-06-11T13:47:03.772146
License: Public Domain

Filed 2/16/24
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                SECOND APPELLATE DISTRICT

                         DIVISION FIVE

THE PEOPLE,                         B331175

       Plaintiff and Respondent,    (Los Angeles County
                                    Super. Ct. No. BA464429)
       v.

CHARLES YEAGER-REIMAN,

       Defendant and Appellant.

      APPEAL from a judgment of the Superior Court of Los
Angeles County, Michael E. Pastor, Judge. Affirmed.
      Hickey & Chung and Brendan M. Hickey for Defendant
and Appellant.
      Rob Bonta, Attorney General, Lance E. Winters, Chief
Assistant Attorney General, James G. Root, Assistant Attorney
General, Michael W. Whitaker and Gregory B. Wagner, Deputy
Attorneys General, for Plaintiff and Respondent.
                     I.     INTRODUCTION

      Defendant Charles Yeager-Reiman pleaded guilty to
misdemeanor grand theft. (Pen. Code, § 487, subd. (a) 1.) The
trial court placed him on probation for two days under certain
terms and conditions. On appeal, defendant contends his
prosecution was preempted by federal law because he was a
veteran and his alleged offenses concerned the theft of benefits
from the United States Department of Veterans Affairs (VA). We
affirm.

                      II.   BACKGROUND

       On April 2, 2018, the California Department of Justice filed
a felony complaint charging defendant and others with
conspiracy to commit grand theft, identity theft, forgery, making
a false and fraudulent claim, and preparing false evidence (§ 182,
subd. (a)) (count 1); grand theft of personal property (§ 487, subd.
(a)) (count 2); and making false and fraudulent claims (§ 550,
subd. (a)(5)) (count 5).
       The complaint alleged that in 2011 and 2012, Amit
Marshall, the owner, president, and director of the Alliance
School of Trucking (Alliance) obtained approval from the
California State Approving Agency for Veterans Education for
Alliance to provide non-college degree trucking programs to
veterans eligible for benefits under the “Post-9/11 GI Bill” (38
U.S.C., Pt. III, Ch. 33). That approval authorized Alliance to
receive tuition and other payments from the VA. Marshall and

1     All further statutory references are to the Penal Code
unless otherwise stated.

                                 2
Alliance director Robert Waggoner falsely certified to the VA that
they would truthfully report veteran students’ enrollment status
and attendance records and maintain current knowledge of VA
rules and benefits.
        Between October 1, 2011, and April 22, 2015, Marshall,
Waggoner, and Alliance employee Aaron Solomona recruited and
caused others to recruit eligible veterans to enroll in the
approved Alliance trucking programs. Solomona told prospective
students that together they could defraud the VA—students
would not have to attend classes, but Alliance would report to the
VA that they did, and each student would receive between $2,000
and $3,000 per month in benefits.
        Between October 1, 2011, and April 22, 2015, Marshall,
Waggoner, and Solomona provided and caused to be provided
enrollment paperwork to veterans, including defendant, to fill
out, and obtained information from the veterans to enable them
to fill out paperwork on the veterans’ behalf. Marshall,
Waggoner, and Solomona submitted or caused to be submitted
the recruited veterans’ enrollment paperwork to the VA.
        Between September 1, 2011, and April 22, 2015, Marshall,
Waggoner, Solomona, and Sandor Greene created and caused to
be created fraudulent student files for the purported students
that contained false attendance records, false grades, and false
certificates of completion. Through the completion of a VA form,
Marshall and Waggoner falsely and fraudulently certified that
defendant and/or other veteran students had attended classes at
Alliance.
        Between December 8, 2011, and April 22, 2015, as a direct
result of their fraudulent scheme, Marshall, Waggoner,
Solomona, Greene, and Ivanova Jimenez caused the VA to pay

                                3
Alliance approximately $2,351,658.19 in tuition and fees and
approximately $1,957,715.89 in education benefits to veteran
students, including defendant, who fraudulently claimed to have
attended Alliance trucking programs.
       Defendant moved to dismiss the complaint, in part on the
ground that the prosecution was barred by federal preemption.
The trial court denied the motion.
       On May 2, 2019, defendant filed a petition for writ of
prohibition in the trial court. The court denied the petition.
       On June 13, 2019, defendant filed a petition for writ of
prohibition in this court challenging the trial court’s jurisdiction
on federal preemption grounds. (See Yeager-Reiman v. Superior
Court of Los Angeles County (July 19, 2019, B298320) [nonpub.
order].) On July 12, 2019, we denied the petition because
defendant had “not met his burden to establish that the People’s
prosecution of him is preempted.” (Ibid.) On December 11, 2019,
after further proceedings in this court and the Supreme Court
(B301606, S257343), the Supreme Court denied defendant’s
petition for review (S259032).
       On August 2, 2021, pursuant to a plea agreement,
defendant pleaded guilty to count 1, a felony. As part of the plea
agreement, the prosecution agreed to reduce the charge to a
misdemeanor if defendant satisfied certain terms and conditions.
On April 28, 2022, defendant, having satisfied those terms and
conditions, pleaded guilty to misdemeanor grand theft.

                                 4
                       III.   DISCUSSION

      Defendant contends his prosecution was preempted by
federal law—“field” and “obstacle” preemption—and the trial
court was thus without jurisdiction to hear his case. 2 We
disagree.

A.    Standard of Review

      Because federal preemption presents a pure question of
law, our standard of review is de novo. (Farm Raised Salmon
Cases (2008) 42 Cal.4th 1077, 1089, fn. 10.)

2     The Attorney General argues we should dismiss
defendant’s appeal because he failed to obtain a certificate of
probable cause as required by section 1237.5. We reject the
argument. (People v. Loera (1984) 159 Cal.App.3d 992, 997–998
[defendant was not precluded from raising his jurisdiction claim
“by his failure to secure a certificate of probable cause ordinarily
required by section 1237.5”].)
      The Attorney General further argues our denial of
defendant’s petition for writ of prohibition in Yeager-Reiman v.
Superior Court of Los Angeles County, supra, B298320, is law of
the case precluding defendant from raising his federal
preemption argument on appeal. We disagree. Our order
denying defendant’s petition stated in full: “The court has read
and considered the petition for writ of mandate filed
June 13, 2019. The petition is denied. Petitioner has not met his
burden to establish that the People’s prosecution of him is
preempted.” “A short statement or citation explaining the basis
for the summary denial [of a writ petition] does not transform the
denial into a decision of a cause entitled to law of the case effect.”
(Kowis v. Howard (1992) 3 Cal.4th 888, 895.)

                                  5
B.    General Preemption Principles

      “‘“The supremacy clause of the United States Constitution
establishes a constitutional choice-of-law rule, makes federal law
paramount, and vests Congress with the power to preempt state
law.” [Citations.] Similarly, federal agencies, acting pursuant to
authorization from Congress, can issue regulations that override
state requirements. [Citations.] Preemption is foremost a
question of congressional intent: did Congress, expressly or
implicitly, seek to displace state law?’ (Quesada v. Herb Thyme
Farms, Inc. (2015) 62 Cal.4th 298, 307–308 (Quesada).)” (Solus
Industrial Innovations, LLC v. Superior Court (2018) 4 Cal.5th
316, 331 (Solus).)
      “Our Supreme Court has ‘“identified several species of
preemption.”’ ([Solus], supra, 4 Cal.5th at p. 332.) ‘Express
preemption occurs when Congress defines the extent to which its
enactments preempt state law. [Citation.] Conflict preemption is
found when it is impossible to comply with both state and federal
law simultaneously. [Citation.] Obstacle preemption occurs
when state law stands as an obstacle to the full accomplishment
and execution of congressional objectives. [Citation.] Field
preemption applies when federal regulation is comprehensive and
leaves no room for state regulation. [Citation.]’ [Citation.]”
(People v. Salcido (2019) 42 Cal.App.5th 529, 537 (Salcido).)
      “Ordinarily, there is a presumption against preemption.
([Solus], supra, 4 Cal.5th at p. 332.) ‘The presumption is founded
on “respect for the States as ‘independent sovereigns in our
federal system’”; that respect requires courts “to assume that
‘Congress does not cavalierly pre-empt state-law causes of
action.’” [Citation.] The strength of the presumption is

                                6
heightened in areas where the subject matter has been the long-
standing subject of state regulation in the first instance; where
federal law touches “a field that ‘“has been traditionally occupied
by the States,”’” the party seeking to show preemption “bear[s]
the considerable burden of overcoming ‘the starting presumption
that Congress does not intend to supplant state law.’”
[Citations.]’ ([Quesada, supra,] 62 Cal.4th [at p.] 313.)” (Salcido,
supra, 42 Cal.App.5th at pp. 537–538.)
       “[T]here is a strong presumption against federal
preemption when it comes to the exercise of historic police powers
of the states. [Citations.] That presumption will not be overcome
absent a clear and manifest congressional purpose. [Citation.]”
(People v. Boultinghouse (2005) 134 Cal.App.4th 619, 625.) The
prosecution of theft and criminal fraud is within the state’s
historic police powers. (People v. Dillard (2018) 21 Cal.App.5th
1205, 1221 (Dillard).)

C.    Field Preemption

       Field preemption exists “when ‘Congress . . . intended “to
foreclose any state regulation in the area,” irrespective of
whether state law is consistent or inconsistent with “federal
standards.” [Citation.] In such situations, Congress has
forbidden the State to take action in the field that the federal
statute pre-empts.’ [Citation.]” (Friends of the Eel River v. North
Coast Railroad Authority (2017) 3 Cal.5th 677, 704–705.)
       Defendant states that in enacting the Post-9/11 GI Bill
Congress declared, “‘Educational assistance for veterans helps
reduce the costs of war, assist veterans in readjusting to civilian
life after wartime service, and boost the United States economy,

                                 7
and has a positive effect on recruitment for the Armed Forces.’”
(Quoting Post-9/11 Veterans Educational Assistance Act of 2008
(Pub.L. No. 110–252, § 5002(3) (June 30, 2008), 122 Stat. 2323.)
He argues field preemption applies because “Congress sought to
‘occupy the field’ by placing the administration of the [Post-9/11
G.I.] Bill within the national security realm, thus preempting any
state from disrupting that federal administration . . . .”
       According to defendant, Congress implemented a statutory
and regulatory framework that addresses false statements,
misrepresentations, and fraud against the VA in the Post-9/11
G.I. Bill, but that also disfavors criminal prosecution of veterans,
reserving the right to pursue such prosecutions to the Attorney
General of the United States. That is, the framework is designed
to meet the need for fraud deterrence and protecting the public
purse while not chilling veterans’ exercise of their legal benefits
or jeopardizing the national defense by reducing military
recruitment or increasing the costs of war.
       In support of his argument, defendant relies on 38 Code of
Federal Regulations (C.F.R.) parts 21.9740(a) (2024) and 21.4006
(2024) and title 38 United States Code (U.S.C.) section 3690(d)
which, he contends, authorize the VA to report potentially
criminal false statements to the Attorney General of the United
States but not to the Attorney General of the state where the
fraud took place.
       38 C.F.R. part 21.9740(a) provides:
       “Eligible individual. Payments may not be based on false
or misleading statements, claims or reports. VA will apply the
provisions of §§ 21.4006 and 21.4007 to any individual who
submits false or misleading claims, statements, or reports in
connection with benefits payable under 38 U.S.C. chapter 33 in

                                 8
the same manner as they are applied to people who make similar
false or misleading claims for benefits payable under 38 U.S.C.
chapter 36.”
       38 C.F.R. part 21.4006(a) provides:
       “Payments may not be based on false statements. Except
as provided in this section payments may not be authorized based
on a claim where it is found that the school or any person has
willfully submitted a false or misleading claim, or that the
veteran or eligible person with the complicity of the school or
other person has submitted such a claim. A complete report of
the facts will be made to the State approving agency, and if in
order to the Attorney General of the United States.” (Italics
added.)
       Title 38 U.S.C. section 3690(d) provides:
       “False or misleading statements. Whenever the
Secretary [of the VA] finds that an educational institution has
willfully submitted a false or misleading claim, or that a veteran
or person, with the complicity of an educational institution, has
submitted such a claim, the Secretary shall make a complete
report of the facts of the case to the appropriate State approving
agency and, where deemed advisable, to the Attorney General of
the United States for appropriate action.” (Italics added.)
       None of these provisions contains language that suggests
exclusivity or supports the assertion that Congress intended to
occupy the field of criminal prosecution of veterans in connection
with the theft of veterans’ education benefits. Instead, those
provisions state that the VA or the Secretary will report
fraudulent statements to “the appropriate State approving
agency,” or to “the Attorney General of the United States.”
Although these provisions do not refer to the relevant state’s

                                9
attorney general, they also do not contain language precluding
the VA or the Secretary from reporting to the state’s attorney
general. In the absence of clear and manifest statutory language
indicating Congress intended federal remedies to occupy the field,
there is no reason to find such exclusivity. (Jevne v. Superior
Court (2005) 35 Cal.4th 935, 949 [“‘Where . . . the field which
Congress is said to have pre-empted’ includes areas that have
‘been traditionally occupied by the States,’ congressional intent to
supersede state laws must be ‘“clear and manifest”’”].)
       Accordingly, field preemption did not deprive the trial court
of jurisdiction to hear defendant’s case.

D.    Obstacle Preemption

       Obstacle preemption “requires proof Congress had
particular purposes and objectives in mind, a demonstration that
leaving state law in place would compromise those objectives, and
reason to discount the possibility the Congress that enacted the
legislation was aware of the background tapestry of state law and
content to let that law remain as it was.” (Quesada, supra, 62
Cal.4th at p. 312.) Defendant contends obstacle preemption
applies because the purpose of the Post-9/11 GI Bill is to help
veterans, and any effort by the state to prosecute veterans for
failing to comply with the bill’s requirements will interfere with
the bill’s purpose.
       Defendant asserts that 38 C.F.R. parts 21.4007 and 3.900
et seq. and title 38 U.S.C. section 6103(d) “authorize the
termination of benefits of a veteran or service member for
committing fraud, but they create strict limitations that protect

                                10
the benefits of veterans who have committed fraud against the VA
so long as they reside in a U.S. State.”
       38 C.F.R. part 21.4007 provides:
       “The rights of a veteran or eligible person to receive
educational assistance allowance or special training allowance
are subject to forfeiture under the provisions of §§ 3.900, 3.901
(except paragraph (c)), 3.902 (except paragraph (c)), 3.903, 3.904,
3.905 and 19.2 of this chapter.”
       38 C.F.R. part 3.901(d) provides, in pertinent part:
       “[F]orfeiture by reason of fraud may be declared only [¶]
(1) Where the person was not residing or domiciled in a State . . .
at the time of commission of the fraudulent act; or [¶] (2) Where
the person ceased to be a resident of or domiciled in a State . . .
before expiration of the period during which criminal prosecution
could be instituted; or [¶] (3) The fraudulent act was committed
in the Philippine Islands. [¶] Where the veteran’s rights have
been forfeited, no part of his or her benefit may be paid to his or
her dependents.”
       Fraud, within the meaning of 38 C.F.R. part 3.901(d), is
defined as:
       “An act committed when a person knowingly makes or
causes to be made or conspires, combines, aids, or assists in,
agrees to, arranges for, or in any way procures the making or
presentation of a false or fraudulent affidavit, declaration,
certificate, statement, voucher, or paper, concerning any claim for
benefits under any of the laws administered by the Department
of Veterans Affairs (except laws relating to insurance benefits).”
(38 C.F.R. § 3.901(a).)

                                11
        Title 38 U.S.C. section 6103(d)(1) provides, in pertinent
part:
       “[N]o forfeiture of benefits may be imposed under this
section or section 6104 of this title upon any individual who was a
resident of, or domiciled in, a State at the time the act or acts
occurred on account of which benefits would, but not for this
subsection, be forfeited unless such individual ceases to be a
resident of, or domiciled in, a State before the expiration of the
period during which criminal prosecution could be instituted.”
       The provisions on which defendant relies show that
Congress intended to limit the forfeiture of veterans’ benefits.
They do not support the assertion that Congress intended that
states be precluded from prosecuting veterans for the theft of
veterans’ education benefits. And, they do not suggest that a
veteran’s forfeiture of benefits is a punishment for a criminal
offense that bars further criminal prosecution. (See, e.g., United
States v. Roberts (7th Cir. 2008) 534 F.3d 560, 568
[administrative VA proceedings are independent of criminal
prosecution].)
       Defendant further asserts that title 38 U.S.C. section 6108
demonstrates “Congress’ clear intent that the authority for
prosecution of fraud against the VA shall exclusively rest with
the U.S. Attorney General and the Federal Courts, and
Congress specifically cautions against criminal punishment of
veterans for benefits fraud by authorizing restitution in lieu of any
other penalty in those cases.” Title 38 U.S.C. section 6108
provides:
       “(a) Any Federal court, when sentencing a defendant
convicted of an offense arising from the misuse of benefits under
this title, may order, in addition to or in lieu of any other penalty

                                  12
authorized by law, that the defendant make restitution to the
Department. [¶] (b) Sections 3612, 3663, and 3664 of title 18
shall apply with respect to the issuance and enforcement of
orders of restitution under subsection (a). In so applying those
sections, the Department shall be considered the victim.”
       Although title 38 U.S.C. section 6108 provides a federal
remedy for the misuse of veterans’ benefits, it does not contain
any language prohibiting states from prosecuting veterans for the
theft of veterans’ education benefits.
       Defendant also contends that 38 C.F.R. part 21.9695(b)(3)
“demonstrates Congress’ intent to place blame (and punishment)
for educational benefits fraud at the feet of unscrupulous
educational institutions rather than the veterans they enlist.”
Part 21.9695(b)(3) provides:
       “The amount of the overpayment of educational assistance
paid to the eligible individual, or paid to the institution of higher
learning on behalf of the eligible individual, constitutes a liability
of the institution of higher learning if VA determines that the
overpayment is the result of willful or negligent— [¶] (i) False
certification by the institution of higher learning; or [¶]
(ii) Failure to certify excessive absences from a course,
discontinuance of a course, or interruption of a course by the
eligible individual.”
       The plain reading of 38 C.F.R. part 21.9695(b)(3) is that if
the VA determines there is an overpayment due to willful or
negligent false certification by an institution of higher learning,
the higher learning institution is liable for the overpayment.
This part does not support the assertion that Congress intended
to preclude state criminal prosecution of veterans for the theft of
veterans’ education benefits. Rather, title 38 U.S.C section

                                 13
3685(e)(2) states that when veterans are liable for overpayment,
neither section 3685 nor “any other provision of this title shall be
construed as . . . precluding the imposition of any civil or criminal
liability under this title or any other law.” (Italics added.)
Section 3685(e)(2) supports the proposition that Congress
recognized that a veteran may be prosecuted under state law.
       Moreover, the assertion that Congress only intended to
impose criminal punishment on educational institutions is
undermined by title 38 U.S.C. section 6102, which provides:
       “(a) Any person entitled to monetary benefits under any of
the laws administered by the Secretary whose right to payment
thereof ceases upon the happening of any contingency, who
thereafter fraudulently accepts any such payment, shall be fined
in accordance with title 18, or imprisoned not more than one
year, or both. [¶] (b) Whoever obtains or receives any money or
check under any of the laws administered by the Secretary
without being entitled to it, and with intent to defraud the
United States or any beneficiary of the United States, shall be
fined in accordance with Title 18, or imprisoned not more than
one year, or both.”
       We also are not persuaded by defendant’s contention that
this case is “indistinguishable” from Dillard, supra, 21
Cal.App.5th 1205, in which the Court of Appeal held that state
law prosecutions based on fraud against a federal agency were
barred by obstacle preemption. In Dillard, the United States
Department of Health and Human Services (HHS) awarded a
grant from its Assets for Independence (AFI) program to the
Associated Community Action Program (ACAP), an anti-poverty
agency. The purpose of such grants was to help low-income
people (savers) build assets. When the defendants, ACAP’s

                                 14
executive director and an administrative assistant, fraudulently
induced HHS to transfer AFI grant funds to ACAP, the state
prosecuted the defendants for state law violations—grand theft
by false pretenses (§ 487, subd. (a)) and making a false account of
public moneys (§ 424, subd. (a)(3)). A jury convicted the
defendants, and they appealed. (Dillard, supra, 21 Cal.App.5th
at pp. 1209–1213.)
        The Court of Appeal reversed the defendants’ convictions,
holding that the state prosecutions were barred by obstacle
preemption. (Dillard, supra, 21 Cal.App.5th at pp. 1223–1228.)
It emphasized, however, the “narrowness” of its holding, limiting
it to “state law liability for grantees’ representations to HHS
made pursuant to the AFI Act.” 3 (Id. at p. 1226.) The court
explained that its holding did “not extend to criminal liability for
conduct by savers participating in the AFI program”—i.e., to the
low-income people the program was designed to aid. (Ibid.)
Here, defendant, a veteran whom the Post-9/11 GI Bill was
designed to aid, is akin to a saver under the AFI program whom
the court in Dillard expressly did not include in its obstacle
preemption holding. Accordingly, Dillard works against and does
not advance defendant’s obstacle preemption contention.
      More instructive is Quesada, supra, 62 Cal.4th 298. There,
the plaintiff brought a class action alleging the defendant
intentionally mislabeled produce as organic. (Id. at p. 304.) At
issue was whether the plaintiff’s action was an obstacle to the
accomplishment of the purposes and objectives of the Organic
Foods Act and therefore preempted. (Id. at p. 315.)

3     The AFI Act, “enacted in 1998 and codified as a note to 42
[U.S.C.] section 604,” was the federal statutory and regulatory
scheme governing the AFI program. (Id. at pp. 1218–1219.)

                                15
        Quoting from the Organic Foods Act, our Supreme Court
identified Congress’s express intentions as follows: “‘It is the
purpose of this chapter— [¶] (1) to establish national standards
governing the marketing of certain agricultural products as
organically produced products; [¶] (2) to assure consumers that
organically produced products meet a consistent standard; and
[¶] (3) to facilitate interstate commerce in fresh and processed
food that is organically produced.’” (Quesada, supra, 62 Cal.4th
at p. 316.) The court explained that a “uniform national standard
for marketing organic produce serves to boost consumer
confidence that an ‘organic’ label guarantees compliance with
particular practices, and also deters intentional mislabeling, ‘so
that consumers are sure to get what they pay for.’ [Citation.] In
turn, uniform standards ‘provide a level playing field’ for organic
growers, allowing them to effectively market their products
across state lines by eliminating conflicting regulatory regimes.
[Citation.] Standards that enhance consumer confidence in
meaningful labels and reduce the distribution network’s
reluctance to carry organic products may increase both supply
and demand and thereby promote organic interstate commerce.
[Citation.]” (Ibid.) The court held that “permitting state
consumer fraud actions would advance, not impair, these goals
. . . [by] deter[ing] mislabeling and enhanc[ing] consumer
confidence.” (Id. at pp. 316–317; see also id. at p. 303 [“a central
purpose behind adopting a clear national definition of organic
production was to permit consumers to rely on organic labels and
curtail fraud [and] state lawsuits alleging intentional organic
mislabeling promote, rather than hinder, Congress’s purposes
and objectives”].)

                                16
       Here, defendant notes that the purpose of the Post-9/11 GI
Bill is to “help veterans.” Rather than hinder that purpose, the
state prosecution of persons who steal veterans’ education
benefits, including veterans, promotes Congress’s purposes and
objectives by preserving funds for veterans benefits through
deterrence. (See Quesada, supra, 62 Cal.4th at pp. 303, 316–
317.)
       Accordingly, obstacle preemption did not deprive the trial
court of jurisdiction to hear defendant’s case.

                      IV.   DISPOSITION

      The judgment is affirmed.

                                          KIM, J.

We concur:

             RUBIN, P. J.

             BAKER, J.

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