P. v. Galliher
Filed
7/12/12 P. v. Galliher
CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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and parties from citing or relying on opinions not certified for publication or
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COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
THE PEOPLE,
Plaintiff and Respondent,
v.
STEVEN JAMES GALLIHER,
Defendant and Appellant.
D058702
(Super.
Ct. Nos. SCD218699,
SCD227235)
APPEAL from
a judgment of the Superior Court
of
County, William H. Kronberger, Jr., Judge. Affirmed.
It is
axiomatic that, as here, the trustee of a trust may be found guilty of
embezzling trust funds or assets. The
law of embezzlement is not so much concerned with who has legal title to money
or property, but with whether the defendant's use of money or property violated
the purposes for which the defendant was entrusted with the money or
property. Here, the record shows the
defendant took large sums of money for his personal use from three family
trusts for which he served as trustee.
Because there is no dispute the defendant acted outside the purposes for
which he was given control over the trusts' assets, there is sufficient
evidence to support his theft convictions.
We reject defendant's argument his convictions for theft from the trusts
must be reversed because in civil proceedings a trust, as opposed to a trustee,
lacks the capacity to sue or be sued.
That circumstance is entirely unrelated to defendant's breach of trust
and hence it has no bearing on defendant's culpability for the crime of
FACTUAL AND
PROCEDURAL BACKGROUND
At all
pertinent times, defendant and appellant Steven James Galliher was a financial
planner. In his role as a financial
planner he advised three married couples with substantial assets, the
Burroughses, the Roons and the Dobans, to create three irrevocable trusts and
provide each trust with funds sufficient to obtain life insurance policies on the
lives of each husband and wife. The
couples' children were the respective beneficiaries of the trusts and Galliher
was the trustee of the trusts.
In addition
to his work as a financial planner, Galliher was also the owner of a company
which was developing and planned to market a hands free technology for use with
mobile telephones.
In 2008 the
Roons' eldest son Steven Roon became aware of $100,000 in unpaid loans his
mother had provided to Galliher in 2007 and asked Galliher to resign as trustee
of the Roon family trust. Steven Roon
then became trustee of the trust and discovered that in addition to borrowing
$100,000 directly from his mother, Galliher had borrowed $442,242 against the
value of the insurance policy held by the trust. Galliher told Steven Roon he had used the
funds from the loans to support his hands free technology business and his
family.
Further
investigation disclosed Galliher had borrowed $130,000 against the value of the
insurance policy held in the Burroughs family trust and $233,222.07 against the
value of the policy held in the Doban family trust.
In addition
to borrowing funds against the value of the respective insurance policies,
Galliher diverted funds which had been provided to him to pay premiums on the
respective policies and thereby caused some of the policies to lapse. Finally, in addition to his misuse of the
life insurance policies and the premiums, Galliher borrowed substantial sums
from other elderly clients on the promise the loans would be repaid when his
hands free company became profitable.
Galliher
was charged with 10 counts of theft and
elder abuse (Pen. Code,
name="_ftnref1" title="">[1]
§§ 368, subd. (d), 487, 12022.6, subd. (a)(2)) and found guilty of most of
them following a court trial. The trial
court sentenced Galliher to a total of 10 years in
DISCUSSION
On appeal
Galliher challenges the sufficiency of evidence with respect to three counts of
theft related to embezzlement from the Burroughs, Roon and Doban family
trusts. Galliher relies on the fact that
by virtue of the irrevocable nature of the trusts the three married couples had
no interest in the trust assets and the beneficiaries were only contingent
beneficiaries. Given those circumstances
and the legal principle that the trusts themselves have no legal identity,
Galliher argues that he did not take property from another person and hence is
not liable for his conceded unauthorized use of the trusts' assets. Galliher's opening brief candidly concedes
"[t]here is no doubt that this is a hard case but it would be error to
allow a hard case to make bad law."
With due respect, this is not a hard case and the law which penalizes
Galliher's conduct is good law—very good law.
We begin by
recognizing that embezzlement is punishable under our statutory scheme as a
species of theft. (§ 490a.) Section 503 defines embezzlement as "the
fraudulent appropriation of property by a person." Section 506 further defines embezzlement: "Every trustee . . . intrusted with or
having in his control property for the
use of any other person, who fraudulently appropriates it to any use or
purpose not in the due and lawful execution of his trust . . . is guilty of
embezzlement." Thus, " '
"The gist of the offense is the appropriation to one's own use of property
held by him for devotion to a specified
purpose other than his own enjoyment of it." [Citation.]'
[Citation.]" (
727, 742; accord People v. Miller
(1961) 188 Cal.App.2d 156, 167; People v.
Hodges (1957) 153 Cal.App.2d 788, 793.)
In
funds from the prospective purchaser of real estate and instead of using the
funds as a down payment as promised, diverted the funds to his own use;
similarly, the defendant in People v.
Hodges took funds which were supposed to be used as a down payment on bulk
newsprint and diverted it to his own pocket.
In both cases at the time of the diversion the payor had given up
ownership of the subject funds and the prospective payee did not yet have any
right to the funds. Nonetheless, the
defendants' violations of the purposes for which the funds had been provided
supported embezzlement convictions in both instances. (See People
v. Miller, supra, 188 Cal.App.2d at p. 167; People v. Hodges, supra, 153 Cal.App.2d at p. 793.)
Here, the
fundamental flaw in Galliher's argument is his assumption that embezzlement
requires an identifiable victim with an unconditional right to the property
which has been stolen. Not so. The focus of embezzlement is not on any
victim's right to property at a particular time but on the defendant's conduct
in violating the purposes—express or implied—for which the defendant was
entrusted with the property. (See
at p. 742.) Thus here, although each
married couple had parted with any ownership of the funds in the trust, they
had done so with the express purpose of benefitting their children under the
terms of the trust. Even though the
children may not have had any right to the trust funds at the time Galliher
stole them, their right to the funds is irrelevant: Galliher clearly violated the purposes for
which he was given control of the funds and for that reason is guilty of
embezzlement.
Because it
is Galliher's deviation from the purposes for which he was given control over
the respective trust assets which makes him liable as an embezzler, the fact
trusts themselves are not legal entities (see Stolenberg v. Newman (2009) 179 Cal.App.4th 287, 293), is of no
consequence here.
DISPOSITION
The
judgment of conviction is affirmed.
BENKE, Acting P. J.
WE CONCUR:
McINTYRE,
J.
O'ROURKE,
J.
name="_ftn1" title="">[1]
All further statutory references
are to the Penal Code unless otherwise specified.
