Court Opinion

ID: 2688059
Source: CourtListenerOpinion
Date Created: 2014-07-31 21:45:48.317894+00
Date Added: 2024-06-11T13:17:14.774981
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                             No. 3-1192 / 12-1076
                              Filed April 30, 2014

STATE OF IOWA,
     Plaintiff-Appellee,

vs.

DENNIS BROUSE,
     Defendant-Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Scott D. Rosenberg,

Judge.

      A defendant appeals a conviction for fraudulent practice.    REVERSED

AND REMANDED.

      Angela Campbell of Dickey & Campbell Law Firm, P.L.C., Des Moines, for

appellant.

      Thomas J. Miller, Attorney General, Martha E. Trout, Assistant Attorney

General, Thomas H. Miller, Deputy Attorney General, John Sarcone, County

Attorney, and Rob Sand, Assistant County Attorney, for appellee.

      Heard by Danilson, C.J., and Vaitheswaran and Mullins, JJ.
                                          2

MULLINS, J.

       Dennis Brouse appeals from a conviction for fraudulent practice in the first

degree. He argues the conviction must be reversed for four reasons: (1) there is

insufficient evidence for the verdict, (2) the district court permitted irrelevant

testimony, (3) the district court erred in the jury instructions, and (4) the district

court erred in denying Brouse’s motion to dismiss.            We reverse Brouse’s

conviction.

I. BACKGROUND FACTS AND PROCEEDINGS

       In 2007 the Iowa legislature enacted the Iowa Film, Television, and Video

Project Promotion Program (Film Program). The Film Program was created to

bring filmmakers and television producers from other locations to Iowa with the

hope they would spend money in Iowa and grow the economy. The program,

administered by the Iowa Film Office, offered transferable tax credits to

producers and investors for qualified expenditures from Iowa-based businesses.

Tom Wheeler ran the Iowa Film Office and assisted filmmakers and television

producers with tax credits. Filmmakers and producers had to apply to the Iowa

Film Office in order to be approved for the tax credits. After the Iowa Film Office

approved a film project, the filmmaker or producer would provide a list of

expenditures to the Iowa Film Office.         The Office would then review the

expenditures and issue a tax certificate. The tax certificate could be used to

reduce a tax liability owed to the State of Iowa. If the filmmaker or producer did

not owe Iowa taxes, the tax credit could be sold to a third party that did have tax

liability to the State.
                                       3

       Dennis Brouse had developed a television program about horses for

Nebraska Educational Telecommunications (NET). After failing to find enough

cash funding, Brouse and NET parted ways. Brouse contacted Wheeler about

the possibility of his television program obtaining tax credits from the State of

Iowa. Brouse then moved his corporation (Changing Horses) and his television

program (Saddle Up) to Iowa.      Brouse hired Chad Witter, a certified public

accountant, to help with the tax credits. Wheeler believed Witter had a vast

knowledge of the Film Program.

       The Iowa Film Office had preapproved the use of “in-kind” exchanges—

exchanges for services, such as advertising or sponsorships, or goods, but no

cash exchange—as qualified expenditures. Additionally, the Iowa Film Office

allowed a pass-through corporate structure, where an Iowa corporation is created

as the business entity to allow non-Iowa sponsorships to qualify as expenditures

under the Film Program. These expenditures would be submitted to the Iowa

Film Office and the filmmaker or producer would receive tax credits for

approximately half of the expenditures. Changing Horses received $9 million in

tax credits.

       Some of these expenditures were for sponsors of Saddle Up. Sponsors

would support Saddle Up by advertising Saddle Up on their products or websites

and in exchange, the sponsor’s company or product would be featured in a

Saddle Up television spot or other Saddle Up advertisements.             All the

sponsorships were in-kind exchanges—Saddle Up and its sponsors did not

exchange cash—and were submitted to the State for approximately $1 million in
                                         4

expenditures. Even though Changing Horses submitted all sponsorships for $1

million in expenditures to the State, some Saddle Up sponsors required that

Changing Horses remove the $1 million valuation from the sponsorship contract.

Such sponsors believed valuing an in-kind exchange was difficult, and they did

not want to deal with their own possible negative tax implications of a $1 million

exchange. Changing Horses agreed to remove the dollar valuation for those

sponsors concerned with the $1 million and signed the sponsorship agreement

without any valuation.

       Brouse submitted many purchases as qualified expenditures relevant to

this case.   One such expenditure was submitted as a claim of an in-kind

exchange. Brouse purchased a thirty-eight-foot camper from Shirley and Wayne

Weese. The Weeses offered Brouse the trailer for $10,500and he paid them

$10,500 in cash.     The purchase agreement stated the purchase price was

$21,000 and the Changing Horses expenditure sheet, as submitted to the Iowa

Film Office, claimed a $22,500 qualified expenditure. The Weeses testified they

agreed to a $13,000 purchase price, but Brouse asked them to sign the $21,000

purchase agreement to facilitate tax credits. Brouse also asked Shirley Weese to

tell the person calling from the Iowa Film Office that the trailer was purchased for

$21,000. The audit tie-out sheet (a document linking the expenditure claims to

specific records from the production accountant) showed Brouse paid in cash

$10,500 and in services $10,500 to the Weeses. The Weese’s restaurant was

subsequently advertised in Saddle Up. However, the Weeses did not know their
                                          5

restaurant would be advertised and testified that they did not agree to be paid in

advertising.

       The Iowa Attorney General charged Brouse and Witter with fraudulent

practice in the first degree, theft in the first degree, and ongoing criminal conduct.

Brouse moved to sever the defendants and was later tried alone. After receiving

a bill of particulars, Brouse filed a motion to dismiss the charges. The Attorney

General amended the trial information and bill of particulars. The district court

denied Brouse’s motion to dismiss. Before trial, Brouse filed a motion in limine in

order to stop any testimony about Brouse’s purchased home and Changing

Horses profits. The district court denied the motion. The jury returned a general

verdict finding Brouse guilty of first-degree fraudulent practice and not guilty of

theft and ongoing criminal conduct. Brouse filed a motion for new trial, which

was denied. Brouse appealed his conviction.

II. STANDARD OF REVIEW

       Brouse offers four reasons why the court should reverse his conviction.

We need only address one.         The court reviews sufficiency of the evidence

challenges for corrections of errors at law. State v. Keopasaeuth, 645 N.W.2d

637, 639–40 (Iowa 2002). We review jury instructions for corrections of errors at

law. State v. Frei, 831 N.W.2d 70, 73 (Iowa 2013). If there is an error in giving

or refusing to give a particular instruction, we will reverse unless the record

shows there was no prejudice. Id.
                                         6

III. ANALYSIS

       We look at “the evidence in the light most favorable to the State, including

all reasonable inferences that may be fairly drawn from the evidence.” Id. We

will uphold the verdict if it is supported by substantial evidence. Id. “Evidence is

substantial if it would convince a rational fact finder that the defendant is guilty

beyond a reasonable doubt.” State v. Williams, 695 N.W.2d 23, 27 (Iowa 2005).

       The jury in this case returned a general verdict and found Brouse guilty of

fraudulent practice. When a jury returns a general guilty verdict, the court has no

way to determine which theory presented by the State the jury accepted. State v.

Hogrefe, 557 N.W.2d 871, 881 (Iowa 1996). When the jury instructions present

multiple theories to find the defendant guilty, there must be sufficient evidence of

each theory. See id. This is because “the validity of a verdict based on facts

legally supporting one theory for conviction of a defendant does not negate the

possibility of a wrongful conviction of a defendant under a theory containing legal

error.” State v. Martens, 59 N.W.2d 481, 485 (Iowa 1997).

       Here, the jury instructions stated, “Under Count I [fraudulent practice], the

State must prove the defendant committed, or aided and abetted others in the

commission, or acted in joint criminal conduct in the commission, or acted as an

employer knowingly permitting an employee in commission, of all the following

elements.” Because of the general verdict, there must be substantial evidence

that Brouse committed fraudulent practice by all four theories.

       We can dispose of this appeal by addressing one of the legal theories.

Brouse argues his conviction must be overturned because there is not sufficient
                                           7

evidence of joint criminal conduct. The joint criminal conduct jury instruction

stated “[i]f [the jury] find[s] the State has proved all of [the joint criminal conduct]

elements, the defendant is guilty of the crime of Theft and Fraudulent Practice.”

Thus, if the jury had relied upon the joint criminal conduct legal theory, then it

would have found Brouse guilty of both theft and fraudulent practice. Brouse was

found not guilty of theft, so he argues the jury could not possibly have relied upon

joint criminal conduct as a theory of culpability. He then reasons that because

the jury returned a general verdict and one of the theories in the jury instruction

on fraudulent practice was impossible—joint criminal conduct—the conviction

must be reversed. See Hogrefe, 557 N.W.2d at 881. The State concedes the

joint criminal conduct theory could not have been the basis for the jury’s verdict.

Yet, the State argues that since the jury found Brouse not guilty of theft, it clearly

did not rely on joint criminal conduct to convict Brouse of fraudulent practice, and

the State has taken the position it does not need to argue there was sufficient

evidence of this theory upon appeal.

       For us to accept the State’s argument, we must first agree that the jury

rejected the theory of joint criminal conduct when it acquitted Brouse of theft.

The jury is presumed to have followed jury instructions. State v. Becker, 818

N.W.2d 135, 162 (Iowa 2012). When we review a jury verdict, we are not “to

engage in highly speculative inquiry into the nature of the jury deliberations.”

State v. Halstead, 791 N.W.2d 805, 815 (Iowa 2010). Instead, we “focus solely

on the elements of the crime, the jury verdicts, and the instructions in the case.”

Id.
                                         8

      Jury instructions must be written “to give the jury a clear understanding of

what they need to decide.”      Lovick v. Wil-Rich, 588 N.W.2d 688, 695 (Iowa

1999). The district court instructed the jury on the legal theory of joint criminal

conduct as follows:

            When two or more persons act together and knowingly
      commit a crime, each is responsible for the other’s acts during the
      commission of the crime. This is called Joint Criminal Conduct.
      The defendant’s guilt is the same as the other person’s unless the
      acts could not reasonably be expected to be done in aiding the
      commission of the crime.
            The State must prove all of the following elements:
            1. The defendant acted together with at least one other
                 person.
            2. The defendant and the other person or persons
                 knowingly participated in the crime of Theft and
                 Fraudulent Practice, as defined in Instruction No. 13, 15
                 and 16.
            3. While furthering the crime of Theft and Fraudulent
                 Practice, the other person or persons committed a
                 different crime or different crimes of Theft and
                 Fraudulent Practice, as defined in Instruction No. 13, 15
                 and 16.
            4. The defendant could have reasonably expected that the
                 different crime of Theft and Fraudulent Practice would
                 be committed in furtherance of the crimes of Theft and
                 Fraudulent Practice.
            If you find the State has proved all of these elements, the
      defendant is guilty of the crime of Theft and Fraudulent Practice.

(Emphasis added.) Generally under Iowa law, joint criminal conduct requires

four elements. First, the defendant must have acted in concert with another

person.   State v. Smith, 739 N.W.2d 289, 294 (Iowa 2007).            Second, the

defendant must knowingly participate in a public offense. Id. Third, “[a] ‘different

crime’ must be committed by another participant in furtherance of the defendant’s

offense.” Id. Fourth, “[t]he commission of the different crime must be reasonably

foreseen.” Id. “In furtherance of” includes “acts done to promote or advance the
                                          9

underlying crime [and] acts done while furthering that offense.” Id. Comparing

general Iowa law and the jury instructions given in this case, a couple issues

emerge.

       One problem with the instruction is that it inextricably links two separate

crimes—theft and fraudulent practice—consistently throughout the entire

instruction. By linking the two, it is difficult to understand the meaning of element

number 2 of the jury instruction. Element number 2 states that Brouse “and the

other person or persons knowingly participated in the crime of Theft and

Fraudulent Practice.” The instruction is unclear as to whether element number 2

could be satisfied by one factual situation that the jury determined to be both theft

and fraudulent practice or two different factual situations (for example, one

factual situation was theft and another factual situation was fraudulent practice).

The use of the word “crime” is also puzzling. The instruction uses the singular

“crime” but names two separate crimes.         It is not clear whether “crime” was

intended to be singular or plural.1        Linking the crimes together makes it

impossible for this court—and presumably the jurors—to discern what exactly is

meant.

       Elements number 3 and 4 create additional confusion. Element number 4

states that Brouse “could have reasonably expected that the different crime of

Theft and Fraudulent Practice would be committed in furtherance of the crimes of

Theft and Fraudulent Practice.”       This instruction does not identify that the

1
  A simple typographical error would not be prejudicial and therefore not sufficient to
overturn a conviction. However, this jury instruction contained multiple errors, which
together make the instruction confusing and render it prejudicial.
                                         10

“different crime,” committed by another person, is supposed to be furthering

Brouse’s separate, underlying crimes. Id. at 294. As written, the instruction is

not clear as to what theft and fraudulent practice the “different crime” is

furthering.   Also, the “different crime of Theft and Fraudulent Practice” is

apparently referring back to element number 3’s reference to “different crime or

different crimes of Theft and Fraudulent Practice,” but the language fails to

parallel as element number 4 uses a singular while element number 3 allows the

jury to consider either some other crime or different crimes (plural) of theft and

fraudulent practice. Without clearly showing the link between the other person’s

crimes and Brouse’s separate crimes, element number 4 does not adequately

instruct the jury on the joint criminal conduct requirements.

       We cannot agree with the State that the jury obviously rejected the theory

of joint criminal conduct.   The joint criminal conduct jury instruction was so

confusing that we are not confident the jury was able to parse through the

unclear elements and properly assess Brouse’s guilt under that theory. When a

jury instruction is “conflicting and confusing, error is presumed prejudicial and

reversal is required.” Burkhalter v. Burkhalter, 841 N.W.2d 93, 97 (Iowa 2013)

(internal quotation marks omitted).

       Brouse did not specifically challenge the terms of the joint criminal conduct

jury instruction. However, he clearly challenged the ability of the jury to convict

him of fraudulent practice after having acquitted him of theft—in his view having

rejected joint criminal conduct—and he clearly challenged the sufficiency of the

evidence to convict him of fraudulent practice. In this context, we necessarily
                                          11

examined how the jury was instructed in order to determine whether the evidence

was sufficient to convict him under the legal theories presented. After examining

the jury instruction and finding it so confusing, we conclude that it was not

possible for the jury to find sufficient evidence to convict pursuant to a general

verdict that implicated the joint criminal conduct instruction.

       Having determined that the general verdict cannot be supported as to joint

criminal conduct, we must reverse the conviction in this case.

       REVERSED AND REMANDED.

       Danilson, C.J., concurs; Vaitheswaran, J., dissents.
                                        12

VAITHESWARAN, P.J., (dissenting)

      I respectfully dissent.   Brouse does not challenge the district court’s

decision to give an instruction on joint criminal conduct. See State v. Smith, 739

N.W.2d 289, 294 (Iowa 2007) (referring to defendant’s contention that there was

insufficient evidence to submit a joint criminal conduct instruction to the jury);

State v. Jackson, 587 N.W.2d 764, 766 (Iowa 1998) (citing defendant’s argument

that joint criminal conduct instruction had “no application to the facts in the

present case”). Brouse also does not challenge the language of the joint criminal

conduct instruction that was given. These issues are simply not before us.

      Even if Brouse raised these issues in his appellate brief, I would conclude

they were not preserved for our review. Meier v. Senecaut, 641 N.W.2d 532, 537

(Iowa 2002) (“It is a fundamental doctrine of appellate review that issues must

ordinarily be both raised and decided by the district court before we will decide

them on appeal.”). Brouse has not pointed us to any portion of the record where

he argued there was insufficient evidence to give an instruction on joint criminal

conduct or where he contested the language of the instruction. Right or wrong,

the instruction on joint criminal conduct became the law of the case. State v.

Taggert, 430 N.W.2d 423, 425 (Iowa 1988).

      Brouse does challenge the sufficiency of the evidence supporting his

fraudulent practice conviction under a joint criminal conduct theory.      But his

present challenge is not the same as the challenge he raised in the district court.

On appeal, Brouse’s attorney asserts, “[I]t is impossible to pinpoint which crimes

the State argued at trial [he] committed, and which ones he did not commit but
                                        13

Witter committed.” Brouse’s attorney continues, “Having argued that [he] was

the principal in every alleged criminal transaction, it would be inappropriate on

appeal for the State to try to claim that Witter committed one of those crimes and

[he] did not commit it, simply to avoid reversal.” At trial, Brouse’s attorney moved

for judgment of acquittal solely on the basis of the State’s failure to prove the

knowledge and specific intent elements of fraudulent practice.           While he

mentioned the joint criminal conduct theory, his challenge to the evidence

supporting that theory echoed his earlier contention that the State failed to prove

the knowledge element. He stated, “[T]here has not been any evidence that Mr.

Brouse knowingly approved or knowingly agreed with the conduct of Mr. Witter.”

He continued, “The second basis, judge, can be joint criminal conduct. Again,

we are struck with knowingly. I will not go through everything I just said, but

everything applies. . . . There was no knowing joint conduct in this case, for the

same reasons as I just stated.”     This argument had nothing to do with who

committed what crime.      See Smith, 739 N.W.2d at 293 (citing defendant’s

contention that there was no evidence to establish he knowingly participated “in a

previous, underlying public offense that constituted a different crime in

furtherance of [a codefendant’s] offenses”).

       I would conclude Brouse’s present challenge to the sufficiency of the

evidence supporting the joint criminal conduct theory of fraudulent practice was

not preserved for review. See State v. Crone, 545 N.W.2d 267, 270 (Iowa 1996)

(concluding a motion for judgment of acquittal did not preserve error on a specific

argument made on appeal when that ground was not asserted below).