Court Opinion

ID: 9375788
Source: CourtListenerOpinion
Date Created: 2023-02-28 21:02:30.020396+00
Date Added: 2024-06-11T17:17:01.821284
License: Public Domain

Filed 2/28/23 P. v. Mercado CA4/1
                   NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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                 COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                       DIVISION ONE

                                              STATE OF CALIFORNIA

 THE PEOPLE,                                                                  D080238

            Plaintiff and Respondent,

            v.                                                                (Super. Ct. No. JCF004227)

 JOSUE GUADALUPE MERCADO,

            Defendant and Appellant.

          APPEAL from a judgment of the Superior Court of Imperial County,
Poli Flores, Jr., Judge. Affirmed.
          Ava R. Stralla, under appointment by the Court of Appeal, for
Defendant and Appellant.
          Rob Bonta, Attorney General, Lance E. Winters, Chief Assistant
Attorney General, Charles C. Ragland, Assistant Attorney General, Eric A.
Swenson and Heather M. Clark, Deputy Attorneys General, for Plaintiff and
Respondent.

          Josue Guadalupe Mercado, the former Auditor-Controller of Imperial
County, appeals the judgment convicting him of misappropriating public
moneys for stopping the garnishment of his salary to pay spousal support.
He contends the moneys were never “public” because he prevented them from
going into a trust account in which moneys deducted from County employee
paychecks are temporarily held until paid to third parties. We disagree and
affirm.
                                       I.
                               BACKGROUND
A.    The Misappropriation
      Mercado was elected Auditor-Controller of Imperial County in 2018 and

took office in January 2019.1 The Auditor-Controller is the chief accounting
officer of the County and manages its fiscal affairs, including payroll,
payment of other bills, adjustment of taxes, preparation of budgets, and
conduct of audits. (See Gov. Code, §§ 26881-26883.) The Auditor-Controller
is paid a salary established by the County Board of Supervisors. (Gov. Code,
§ 26886; Imperial County Mun. Code, § 2.28.030.)
      In March 2019, Annette Hughes, the payroll coordinator for the
County, received a court order directing garnishment of a portion of
Mercado’s salary for payment of spousal support. When Hughes notified
Mercado of the order, he told her he wanted to delay its implementation and
the Auditor-Controller’s office had the authority to do so. Hughes responded
she could not delay garnishment “[b]ecause it’s against the law” and “we have
a court order.” Hughes began deducting spousal support from Mercado’s
biweekly paychecks on April 2, 2019.

1      The County Board of Supervisors created the Auditor-Controller as an
elective office pursuant to Government Code section 26880 and gave the
Auditor-Controller the duties specified in chapters 3.5 and 4 of Division 2 of
Title 3 of the Government Code. (Imperial County Mun. Code, §§ 2.28.010-
2.28.070.)
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      Garnishments, taxes, and other deductions taken out of County
employees’ paychecks are placed into a trust account on which checks are
drawn to pay the third parties who are owed the deducted funds. Although
employees earn the moneys from which such deductions are taken, the
deducted funds belong to the third parties.
      Between March 2019 and October 2020, Mercado repeatedly told Shelly
Smail, a manager whom Mercado later promoted to Assistant Auditor-
Controller, that he wanted the garnishment for spousal support stopped. On
October 29, 2020, Mercado returned from court upset and again told Smail he
wanted the garnishment stopped. Smail responded they could not stop it
legally and “could get in trouble” if they did. Mercado said “the most he could
get was an abuse of power.” Later that day, Mercado accessed the County’s
electronic payroll system and stopped the deductions from his paychecks for
spousal support. The court order for the deductions was still in effect, and no
other court order authorized their cessation. According to Smail, no spousal
support was deducted from Mercado’s paycheck for the following pay period.
B.    The Criminal Action
      The People charged Mercado with misappropriation of public moneys
by willfully refusing to pay over such moneys upon presentation of an order
for payment by competent authority (count 1; Pen. Code, § 424, subd. (a)(5)),
misappropriation of public moneys by willfully failing to transfer such
moneys when required by law (count 2; Pen. Code, § 424, subd. (a)(6)), and
willful disobedience of a lawful court order (count 3; Pen. Code, § 166, subd.
(a)(4)). In a first trial, a jury found Mercado guilty of count 3 and deadlocked
on the other two counts. In a second trial, a jury found Mercado guilty of
counts 1 and 2. The trial court sentenced Mercado to prison for the lower
term of two years on count 1 (Pen. Code, § 424, subd. (a)), the same term on

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count 2 (ibid.), and a six-month term on count 3 (id., §§ 19, 166, subd. (a)(4)).
The court stayed execution of the terms imposed on counts 2 and 3 pursuant
to Penal Code section 654.
                                       II.
                                 DISCUSSION
      Mercado challenges the sufficiency of the evidence to support his
convictions on counts 1 and 2 for misappropriating public moneys. Mercado
argues that because Smail’s testimony established that after he accessed the
payroll system the portion of his paycheck that was supposed to be garnished
for spousal support never reached the County trust account on which a check
would have been drawn to pay the support to his wife’s law firm, the People
did not prove an essential element of the charged crimes, namely, that the
funds he allegedly misappropriated were “public moneys.” The People
respond it is irrelevant the portion of Mercado’s paycheck that was supposed
to be garnished never made it into the trust account, because the moneys
from which his salary was paid were county funds, and the evidence
established it was the portion of his salary subject to the garnishment order
that he misappropriated. As we shall explain, the People have the better
argument.
      To resolve this appeal, we must determine whether the record, viewed
in the light most favorable to the judgment, contains substantial evidence
(i.e., evidence that is reasonable, credible, and of solid value) from which a
rational jury could find the essential elements of the charged crimes beyond a
reasonable doubt. (Jackson v. Virginia (1979) 443 U.S. 307, 319; People v.
Powell (2018) 5 Cal.5th 921, 944.) As pertinent to this appeal, Penal Code
section 424 prescribes a prison term and disqualification from office for a
county officer “charged with the receipt, safekeeping, transfer, or

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disbursement of public moneys” who either “[w]illfully refuses or omits to pay
over, on demand, any public moneys in his or her hands, upon the
presentation of a draft, order, or warrant drawn upon these moneys by
competent authority” or “[w]illfully omits to transfer the same, when transfer
is required by law.” Penal Code section 426 defines “public moneys” as
including “all bonds and evidence of indebtedness, and all moneys belonging
to the . . . county . . . and all moneys, bonds, and evidences of indebtedness
received or held by . . . county . . . officers in their official capacity.” Mercado
concedes that “as the Auditor-Controller of Imperial County, [he] was a public
officer ‘charged with the receipt, safekeeping, transfer, or disbursement of
public moneys’ pursuant to section 424.” (See People v. Hubbard (2016)
63 Cal.4th 378, 391 (Hubbard) [“for a public officer to be convicted under this
statute, he or she must be ‘charged with the receipt, safekeeping, transfer, or
disbursement of public moneys’ ”].) The only point in dispute is whether, by
stopping the garnishment of his salary to pay spousal support, Mercado
willfully refused to pay over or transfer “public moneys” he was legally
obligated to pay over or transfer.
      The relevant moneys in this case are the portions of Mercado’s salary
the court had ordered be garnished to pay spousal support, for those are the
moneys the People accused him of misappropriating. “The official character
in which moneys are received or held is the proper criterion of whether or not
they are ‘public moneys’ under [Penal Code] section 424.” (People v. Griffin
(1959) 170 Cal.App.2d 358, 363 (Griffin); accord, People v. Johnson (2012)
209 Cal.App.4th 800, 809 (Johnson).) The funds used to pay Mercado his
salary as Auditor-Controller through the County payroll system were moneys
officially “belonging to” the County and “held by” its officers. (Pen. Code,
§ 426; see Gov. Code, § 26881 [auditor-controller manages funds kept in

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county treasury]; Center for Public Interest Law v. Fair Political Practices
Com. (1989) 210 Cal.App.3d 1476, 1483 [payments by controller in official
capacity are public moneys].) Courts have repeatedly recognized public
officials’ salaries are “public moneys” within the meaning of section 424.
(People v. Groat (1993) 19 Cal.App.4th 1228, 1235 (Groat); People v. Battin
(1978) 77 Cal.App.3d 635, 650; People v. Sperl (1976) 54 Cal.App.3d 640, 658.)
Mercado admitted at trial he accessed the County’s electronic payroll system
on October 29, 2020, to stop the court-ordered spousal support deductions
from his salary, and Smail testified the deduction was not taken out of his
next paycheck. From this evidence, a reasonable jury could find Mercado
willfully refused to pay over public moneys when presented with a lawful
order requiring him to do so and willfully omitted to transfer public moneys
when required by law to do so. (Pen. Code, § 424, subd. (a)(5), (6).)
      We are not persuaded to reach a different result by Mercado’s claim he
“stopp[ed] the garnishment prior to the money’s becoming public moneys” by
accessing the County’s electronic payroll system to prevent the spousal
support deductions from his paychecks from going into the trust account.
Placement of the funds deducted from Mercado’s paycheck into the trust
account from which the County pays deductions to third parties to whom they
are owed was not necessary to make such deductions public moneys. Rather,
as we have explained, the funds from which Mercado was paid his salary as
Auditor-Controller were public moneys, and it was the portion of those
moneys the court had ordered garnished for spousal support that he
misappropriated when he accessed the County payroll system to stop the
garnishment. (Cf. Groat, supra, 19 Cal.App.4th at p. 1235 [payment of salary
to public worker is disbursement of public moneys, and fraudulent
authorization of such payment violates Pen. Code, § 424].)

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      We also find unpersuasive Mercado’s related claims his paychecks were
not public moneys because (1) he was owed compensation for his service to
the County, and the paychecks became his money when they were deposited
into his bank account, and (2) the garnishment order evidenced a debt he
owed his wife’s law firm, not a debt owed by the County. These claims focus
on who ultimately owns the funds paid to Mercado as his salary as a public
official. “ ‘Ultimate ownership,’ ” however, “ ‘is not a proper criterion’ ” for
deciding whether funds are public moneys under Penal Code section 424.
(Johnson, supra, 209 Cal.App.4th at p. 809, quoting Griffin, supra,
170 Cal.App.2d at p. 363.) Although Mercado presumably earned his
paychecks and although the funds he refused to pay his wife’s law firm by
stopping the court-ordered deductions from his paychecks might have ended
up in his personal bank account, the funds he diverted from garnishment
were moneys of the County designated to meet its payroll. Applying
section 424 to Mercado’s conduct thus serves the statutory purpose of
“protecting the public fisc and holding accountable those in a position to place
public funds at risk.” (Hubbard, supra, 63 Cal.4th at p. 387.)

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                                III.
                            DISPOSITION
    The judgment is affirmed.

                                          IRION, J.

WE CONCUR:

McCONNELL, P. J.

BUCHANAN, J.

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