Court Opinion

ID: 2746677
Source: CourtListenerOpinion
Date Created: 2014-10-29 22:04:06.178022+00
Date Added: 2024-06-11T13:05:01.796045
License: Public Domain

STATE OF MICHIGAN

                          COURT OF APPEALS

PEOPLE OF THE STATE OF MICHIGAN,                                 UNPUBLISHED
                                                                 October 28, 2014
              Plaintiff-Appellee,

v                                                                No. 317500
                                                                 Houghton Circuit Court
JESSICA LEE GOSTLIN,                                             LC No. 2012-002621-FH

              Defendant-Appellant.

Before: MURPHY, C.J., and SAWYER and M.J. KELLY, JJ.

PER CURIAM.

       Defendant appeals as of right her convictions on two counts of welfare fraud under MCL
400.60(2)(a) (failure to inform about the complete circumstances in regard to income) and MCL
400.60(2)(c) (failure to inform about information concerning changes in circumstances that
would decrease need for relief). She was given two years’ probation and placed on an electronic
monitoring device for four months. Defendant was also ordered to pay restitution in the amount
of $18,054. We affirm.

        This case stems from allegations of welfare fraud occurring from April 2007 to
December 2009. Defendant first applied for public assistance (food and medical) in 2005. At
that time, she was the sole proprietor of two home-based businesses, Superior Counseling and
Arbonne. Defendant, who has a degree in clinical psychology, provided counseling services
through the operation of Superior Counseling. Copper Country Mental Health (CCMH)
contracted annually with Superior Counseling for counseling services in emergency situations,
which were provided by defendant.1 Superior Counseling’s only client or customer was CCMH.
With respect to Arbonne, defendant acted as an independent sales consultant, teaching customers
about skin care and selling health and wellness products. Defendant testified that she was paid
by CCMH, through the conduit of Superior Counseling, on a monthly basis, and that she was
also paid on a monthly basis by Arbonne. On annual welfare applications and semi-annual
contact reports, defendant identified Superior Counseling and Arbonne as sources of income

1
  Defendant had actually been directly employed by CCMH for six weeks back in 2000 before
resigning. Thereafter, she continued to provide services to CCMH on a contractual basis via
Superior Counseling.

                                              -1-
until a point in 2007 when defendant started listing only Arbonne as an income source, even
though she was still operating Superior Counseling and obtaining monthly payments from
CCMH. Defendant testified that she was instructed by a Department of Human Services (DHS)
employee in 2006 to start combining her income when reporting income from Superior
Counseling and Arbonne on future applications and reports. It was defendant’s position that,
thereafter, she began listing only Arbonne as her source of income; however, she was
nevertheless combining her income from both Arbonne and Superior Counseling when reporting
the amount of income, as reduced by alleged costs and expenses associated with running the
businesses.

        A recoupment specialist for DHS testified that, as to the period at issue, defendant failed
to report any income whatsoever from Superior Counseling; none of the CCMH monthly
payments were reported according to the specialist. The recoupment specialist made the
assumption that the reported income identified by defendant as coming from Arbonne was
defendant’s actual Arbonne income, which the specialist never verified or confirmed, and then
added the alleged unreported income from Superior Counseling, as derived through her
investigation, resulting in a finding that defendant was not qualified for all of the public
assistance that she had received. The specialist concluded that defendant was overpaid $20,663
in food assistance.2 She testified that defendant received monthly assistance ranging from a low
of $563 in April 2007 to $817 in December 2009, with the amounts incrementally increasing, for
the most part, from the start of the 33-month period in dispute until its completion. The
recoupment specialist claimed that had defendant’s income been properly reported, she would
not have been entitled to any assistance for 25 of the months in the relevant period. According to
the specialist, with respect to the remaining eight months, defendant was entitled to considerably
less than the amounts received for each of those months given defendant’s actual income.

        In her calculations, the recoupment specialist used the dollar amounts paid by CCMH to
Superior Counseling or defendant, absent consideration of any deductions for costs and
expenses. According to the specialist, had defendant reported income from Superior Counseling
during the pertinent timeframe, it would have been determined whether she was self-employed,
and if so, defendant would have had to verify “her actual expenses . . . or the case worker would
have given her a base allowable deduction of twenty-five percent.”3 She later explained that a
self-employed person would be entitled to a deduction for certain actual expenses or a standard
deduction of twenty-five percent, whichever was greater. The recoupment specialist testified in
regards to the gross income received by defendant through Superior Counseling from CCMH for
each month, beginning with April 2007 and ending with December 2009. The monthly gross

2
  A witness employed by the Office of Inspector General for DHS testified that defendant also
received $7,404 in Medicaid benefits to which she was not entitled based on his calculations that
were predicated on the numbers supplied by the recoupment specialist.
3
  The recoupment specialist testified that one could not deduct monies directed to retirement
accounts or used for meals, and that “you can’t use entertainment, you can’t use depreciation on
some things.”

                                                -2-
income amounts ranged from a low of $1,445 to a high of $4,104. A 1099 tax form reflected that
CCMH paid out $28,648 in 2009 for counseling services provided by defendant.

        The recoupment specialist stated, consistent with our review of the document, that on an
annual public assistance application dated August 30, 2006, Superior Counseling was identified
by defendant, along with Arbonne, but the income amount, $1,700 gross and $1,200 after taxes,
had been lumped together.4 In a semi-annual contact report (six-month review) dated February
2007, defendant indicated that her income came from Arbonne; Superior Counseling was not
mentioned.5 In a March 2007 eligibility notice from DHS, defendant was instructed that “if your
household’s gross income exceeds $2,535 at the end of the month, report this to your specialist
within 10 days of the next month.” (Emphasis added.) The recoupment specialist testified, and
it is undisputed, that defendant’s gross income from Superior Counseling alone for the month of
March 2007 was $2,370, and defendant testified that she received monthly checks from Arbonne
that ranged from a low of $400 to a high of about $3,500. Defendant, however, never alerted
DHS in April 2007 about March’s gross income. We also note that defendant had $3,067 in
gross income from Superior Counseling alone for June 2007, but defendant never reported this
information. Defendant acknowledged that she knew the difference between gross and net
income and that gross income did not take into consideration any deductions.

        With respect to an annual public assistance application dated September 6, 2007, the
recoupment specialist testified, consistent with our review of the document, that defendant had
indicated that she received $2,000 per month in gross income for sales work (self-employment
section of application). And on the next page of the application (earned income section), she
identified Superior Counseling as her employer, but then scribbled it out, though still legible,
while again noting that her monthly pay before taxes was $2,000. Defendant had an average
monthly gross income of $2,274 for the previous three months relative to Superior Counseling
alone. In an eligibility notice from DHS dated September 18, 2007, defendant was instructed
that “if your household’s gross income exceeds $2,535 at the end of the month, report this to
your specialist within 10 days of the next month.” We note that defendant had $3,325 in gross
income from Superior Counseling alone for November 2007, absent any consideration of income
from Arbonne, but defendant never reported this information.

4
  The application form was structured with a self-employment section, where gross monthly
income could be reported, and an earned income section, which was clearly intended to be for
income other than amounts generated through self-employment. In the self-employment section
of the 2006 application, defendant listed herself as self-employed, with the type of business listed
as “Health/Wellness.” It was in the earned income section of the application that defendant
identified Superior Counseling and Arbonne as her employers and reported her income.
5
  The semi-annual contact report form had a section for household income from working, where
defendant reported the information mentioned, and a section for household self-employment
income, which defendant left entirely blank. The self-employment income section had a space to
report average monthly income and stated that proof of income and expenses must be provided;
the general household income section had no space to list income.

                                                -3-
       In a semi-annual contact report for March 2008, defendant indicated that her income
came solely from Arbonne and that her average monthly income was $2,000.6 In an eligibility
notice dated March 24, 2008, defendant was directed that “if your household’s gross income
exceeds $2,615 at the end of the month, report this to your specialist within 10 days of the next
month.” The recoupment specialist testified, and it is undisputed, that defendant’s gross income
from Superior Counseling alone for the month of March 2008 was $1,888, and, once again,
defendant testified that she received monthly checks from Arbonne that ranged from a low of
$400 to a high of about $3,500. Additionally, defendant’s 2008 tax return reflected that she had
$39,269 in gross income from Arbonne for the year, which would average out to $3,272 per
month. Defendant, however, did not report March’s gross income to DHS. Defendant admitted
that she never reported having more than $2,615 in gross monthly income even though there
were months in which she had gross income substantially in excess of $2,615. In an eligibility
notice dated April 30, 2008, defendant was advised that “if your household’s gross income
exceeds $2,992 at the end of the month, report this to your specialist within 10 days of the next
month.” The recoupment specialist testified, and it is undisputed, that defendant’s gross income
from Superior Counseling alone for the month of April 2008 was $2,418 and, when considering
the 2008 tax return and defendant’s testimony regarding Arbonne, it appeared that she easily
exceeded $2,992 in monthly gross income. Defendant, however, did not report April’s gross
income to DHS.

        In an annual public assistance application dated September 9, 2008, defendant reported
self-employment income from Arbonne only, with a gross monthly income of $2,100 and,
contrary to defendant’s general position, “$0” in self-employment expenses.7 In an eligibility
notice dated September 30, 2008, defendant was directed that “if your household’s gross income
exceeds $2,992 at the end of the month, report this to your specialist within 10 days of the next
month.” The recoupment specialist testified, and it is undisputed, that defendant’s gross income
from Superior Counseling alone for the month of September 2008 was $1,823, for the month of
October 2008 was $3,521, and for the month of November 2008 was $3,571, but defendant never
reported this information. In a semi-annual contact report dated February 2009, defendant
indicated that her income came solely from Arbonne but no income amount whatsoever was
reported, given that defendant filled out the general household income section and, as done in the
past, left the household self-employment income section entirely blank. In an eligibility notice
dated March 5, 2009, defendant was directed that “if your household’s gross income exceeds
$3,077 at the end of the month, report this to your specialist within 10 days of the next month.”
The recoupment specialist testified, and it is undisputed, that defendant’s gross income from
Superior Counseling alone for the month of May 2009 was $3,542, but defendant never reported
this information.

6
  This time, defendant reported the information in the household self-employment income
section and not the general household income section.
7
  The previous annual application forms did not have a space to report self-employment
expenses.

                                               -4-
       In a redetermination form dated August 2009, defendant reported Arbonne alone as her
source of income, and a space for gross income before deductions was left blank. The
recoupment specialist testified, and it is undisputed, that defendant’s gross income from Superior
Counseling alone for the finals months of 2009 were as follows: $1,858 in August; $2,623 in
September; $4,104 in October; $2,475 in November; and $2,426 in December.

        The recoupment specialist testified that she treated defendant as an employee of CCMH
and not as self-employed because she did not have information that defendant was self-employed
through Superior Counseling for the period at issue. The recoupment specialist did testify that,
assuming defendant had been self-employed and giving her the benefit of the standard twenty-
five percent deduction, defendant still received $18,054 more in welfare benefits than she was
entitled to receive, which amount evidently formed the basis of the court’s ultimate restitution
order. In a supporting document generated by the recoupment specialist relative to the twenty-
five percent deduction, she noted that defendant should have received zero benefits in 13 of the
33 months at issue and that as to each of the remaining 20 months, defendant was entitled to
some benefits, but never as much as she actually received.

        Defendant’s defense was based on the claim that income amounts reported to DHS
reflected combined income from Superior Counseling and Arbonne, minus deductions for costs
and expenses. Defendant also maintained that changes or increases in monthly income that the
prosecution claimed should have been reported were not necessary to report upon contemplation
of the net income received by defendant after making deductions. In support of her position,
defendant relied on information in her 2007 through 2009 1040 tax returns, focusing mainly on
the 2008 return.8

        A Schedule C from the 2008 tax return revealed $26,369 in gross income from Superior
Counseling, which was consistent with the recoupment specialist’s testimony concerning gross
income from Superior Counseling in 2008. A second Schedule C from the 2008 tax return
revealed, as mentioned earlier, $39,269 in gross income from Arbonne, which averaged out to
over $3,000 per month in gross income. Because defendant had listed gross income of $2,000
and then $2,100 covering the entire span of 2008 (amounts from September 2007 and September
2008 annual applications), which amounts the recoupment specialist had attributed solely to
Arbonne by way of an assumption, the specialist’s calculation of gross income for 2008 was
actually lower than defendant’s true 2008 gross income. But, defendant argued that the $2,000
and $2,100 amounts represented net income after deductions. The 2008 Schedule C relative to
Superior Counseling had $9,881 in total deductions for various expenses, leaving a net profit of
$16,488. The expenses or deductions included $675 for depreciation and $339 for meals and
entertainment, which the recoupment specialist testified could not be considered. There was no
testimony regarding the DHS-applicability of other deductions claimed by defendant in the 2008
Schedule C for Superior Counseling, e.g., car and truck expenses, advertising, repairs and

8
  While the lower court record contains the 2008 and 2009 1040 tax returns, it appears that only
the 2008 tax return was actually admitted into evidence. There was testimony by witnesses
regarding the numbers in the tax returns for 2007 through 2009.

                                               -5-
maintenance. The 2008 Schedule C relative to Arbonne had $26,857 in total deductions for
various expenses, leaving a net profit of $12,412. The expenses or deductions included $2,382
for meals and entertainment, which, again, the recoupment specialist testified could not be
considered. There was no testimony regarding the DHS-applicability of other deductions
claimed by defendant in the 2008 Schedule C for Arbonne. If one takes the total 2008 net profit
for Superior Counseling and Arbonne and adds back in only those deductions that the
recoupment specialist testified could not be considered, thereby assuming that all of the other
Schedule C deductions were permissible relative to calculating benefits, defendant would have
netted in 2008 for purposes of the DHS proceedings $32,296, which averages out to $2,691 per
month and not the $2,000 to $2,100 monthly net income claimed by defendant in the
applications.9 We also note, as reflected above, that in the September 2007 and September 2008
annual applications, which covered the calendar year of 2008, defendant reported the $2,000 and
$2,100 as being her monthly gross income, which was entirely inaccurate, and she made no
mention of or claim for expenses in the 2007 annual application, while expressly stating that she
had zero expenses in the 2008 annual application. Defendant never submitted proofs related to
expenses associated with Superior Counseling when submitting applications and paperwork to
DHS, and the only paperwork she submitted regarding expenses associated with Arbonne
concerned five months in 2009.

        The recoupment specialist acknowledged that DHS had defendant’s tax returns, received
after the tax year covered by the given return, but she explained that DHS relied on the income
statements or reports made by applicants and financial information supplied by employers in
determining welfare eligibility and generally not tax returns.

       MCL 400.60(2) provides in pertinent part:

                There is imposed upon every person receiving relief under this act either
       upon the person's own application or by the person's inclusion, to his or her
       knowledge, in the application of another the continuing obligation to supply to the
       department issuing the relief: (a) the complete circumstances in regard to the
       person's income from employment or from any other source . . . [and] (c)
       information concerning changes in the person's circumstances . . . which would
       decrease the need for relief[.] . . . Any person who shall neglect or refuse to
       submit to the department issuing relief the information required by this section, . .
       . if the amount of relief granted as a result of the neglect or refusal is $500.00 or
       more, is guilty of a felony[.]

        The prosecution’s theory of the case was that, with respect to the period of April 2007 to
December 2009, defendant violated MCL 400.60(2)(a) when she failed to accurately identify the
full amount of her income in the annual public assistance applications and semi-annual contact
reports and violated MCL 400.60(2)(c) when she failed to report to DHS relevant increases in

9
  The 2008 tax return also references a $1,717 net loss for a childcare business operated by
defendant’s husband; they filed a joint return. But even if this amount is taken into
consideration, there still remained an average monthly net profit of $2,548 for 2008.

                                               -6-
her monthly income as demanded in the eligibility notices sent to defendant. The jury convicted
defendant on both counts.

        On appeal, defendant first argues that her two convictions violated the constitutional
prohibition against double jeopardy. We disagree. “Both the United States and Michigan
Constitutions protect an individual ‘from being placed twice in jeopardy for the same offense.’”
People v Franklin, 298 Mich. App. 539, 546; 828 NW2d 61 (2012), citing US Const, Am V and
Const 1963, art 1, § 15. The double jeopardy bar prevents, in part, “multiple punishments for the
same offense.” Franklin, 298 Mich. App. at 546. In People v Smith, 478 Mich. 292, 315; 733
NW2d 351 (2007), the Michigan Supreme Court ruled that the “same elements” test enunciated
in Blockburger v United States, 284 U.S. 299, 304; 52 S. Ct. 180; 76 L. Ed. 2d 306 (1932), is “the
appropriate test to determine whether multiple punishments are barred by Const 1963, art 1,
§ 15.” “The Blockburger test focuses on the statutory elements of the offense, without
considering whether a substantial overlap exists in the proofs offered to establish the offense.”
People v Baker, 288 Mich. App. 378, 382; 792 NW2d 420 (2010), citing Smith, 478 Mich. at 307,
and People v Nutt, 469 Mich. 565, 576; 677 NW2d 1 (2004). “If each offense requires proof of
elements that the other does not, the Blockburger test is satisfied and no double jeopardy
violation is involved.” Baker, 288 Mich. App. at 382; see also Smith, 478 Mich. at 296 (“Because
each of the crimes for which defendant here was convicted, first-degree felony murder and
armed robbery, has an element that the other does not, they are not the ‘same offense’ and,
therefore, defendant may be punished for each.”).

        Here, defendant was convicted of violating MCL 400.60(2)(a), which punishes a failure
to disclose pertinent circumstances regarding income, and MCL 400.60(2)(c), which punishes a
failure to disclose a change in circumstances that would decrease the need for relief. Each
subsection or offense requires proof of an element that the other does not, where only § 60(2)(a)
requires proof that the concealed circumstances specifically pertain to income, while only
§ 60(2)(c) requires proof that the concealed information pertain to a change in circumstances that
would decrease the need for relief. The jury was instructed consistent with these different
elements.10 Defendant’s complaint that the prosecution was able to prove both offenses on the
basis of the same facts is unavailing, considering that the Blockburger test focuses only on “the
abstract legal elements,” People v Ream, 481 Mich. 223, 239-240; 750 NW2d 536 (2008), and
that a substantial overlap as to proofs is irrelevant, Baker, 288 Mich. App. at 382.

          Moreover, given that the offenses concerned separate and distinct criminal transactions,
i.e., failure to report pertinent increases in income after receipt of eligibility notices and failure to
accurately report income in annual applications and semi-annual contact reports, double jeopardy
protections were simply not violated. People v Collins, 298 Mich. App. 458, 464; 828 NW2d 392
(2012). In sum, there was no double jeopardy violation.

       Next, defendant argues that her convictions were against the great weight of the evidence.
A new trial may be granted if a verdict is against the great weight of the evidence. People v
Brantley, 296 Mich. App. 546, 553; 823 NW2d 290 (2012). The determination of whether a

10
     We note that defendant expressed satisfaction with the jury instructions at trial.

                                                   -7-
verdict is against the great weight of the evidence requires review of the whole body of proofs.
People v Herbert, 444 Mich. 466, 475; 511 NW2d 654 (1993), overruled in part on other grounds
People v Lemmon, 456 Mich. 625; 576 NW2d 129 (1998). A verdict is against the great weight
of the evidence if “the evidence preponderates so heavily against the verdict that it would be a
miscarriage of justice to allow the verdict to stand.” People v Lacalamita, 286 Mich. App. 467,
469; 780 NW2d 311 (2009). With respect to whether a new trial is warranted on the basis that
the verdict was against the great weight of the evidence, “[c]onflicting testimony and questions
of witness credibility are generally insufficient grounds for granting a new trial.” People v
Unger, 278 Mich. App. 210, 232; 749 NW2d 272 (2008). Absent exceptional circumstances, the
issue of witness credibility and the weighing of conflicting testimony should be left to the trier of
fact. Lemmon, 456 Mich. at 642-643. The exceptional circumstances recognized in Lemmon are
as follows: (1) the testimony contradicts indisputable physical facts or laws; (2) the testimony is
patently incredible or defies physical realities; (3) the testimony is so inherently implausible that
it could not be believed by a reasonable juror; or (4) the testimony has been seriously impeached
and the case is marked by uncertainties and discrepancies. Id. at 643-644.

        Defendant argues that the evidence presented at trial indisputably established that DHS
knew that she received income from both Superior Counseling and Arbonne and that DHS knew
that she had lumped the income from these businesses together for purposes of reporting income;
indeed, DHS had indisputably instructed her to do so. This argument entirely misses the mark
and does not provide a relevant ground to reverse. Assuming that DHS was fully cognizant of
the fact that the two businesses generated income for defendant and that she combined the two
incomes into a single income amount for purposes of reporting income in the applications and
reports, it did not translate to DHS being aware of the egregious underreporting of total income
and the failure to report pertinent increases in income, as fully set forth above in this opinion.

        Defendant further argues that the prosecution failed to present any witnesses to testify as
to what defendant’s income would have been had DHS utilized the proper deductions, leaving
the jury to speculate.11 It would appear that, in this type of a case generally, the prosecution
would ordinarily have to prove the amount of welfare benefits actually received by a defendant
caused by deceit, as well as proving the amount of benefits that said defendant was legally
entitled to, if any, had there been no deceit, considering the need to establish that the defendant
received at least $500 in benefits beyond that allowable under law. The problem here, however,
with respect to defendant’s entire argument concerning deductions for expenses, is that she did
not claim any such expenses when submitting applications and reports, let alone submit
supporting proofs as directed, with the exception of some ultimately irrelevant 2009 Arbonne
expenses. In the September 2008 annual application, defendant even expressly claimed “$0” in
self-employment expenses. And the income reported in the 2007 and 2008 annual applications
was identified as gross income, not net income. Despite these shortcomings, defendant
nonetheless obtained the benefit of a twenty-five percent deduction; however, the testimony
established that she still received an overpayment of benefits in the amount of $18,054. Finally,
as reflected in our computations above relative to the 2008 tax return and contemplation of the

11
     This appears to be more of a sufficiency argument than a great-weight argument.

                                                -8-
Schedule C deductions for expenses, the net income was still more than that claimed by
defendant in her DHS submissions. The guilty verdict was not against the great weight of the
evidence, nor was the evidence insufficient to support the convictions. Reversal is unwarranted.

       Affirmed.

                                                           /s/ William B. Murphy
                                                           /s/ David H. Sawyer
                                                           /s/ Michael J. Kelly

                                              -9-