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Customer Claims Bad Checks Were Loans

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By Richard Weatherington

When confronted with multiple returned checks, customers can come up with some interesting claims to try and avoid a conviction for theft-by-check. Recently, a customer claimed that her returned checks were like loans made by the check casher and the check cashing fees she paid were interest for those loans.

A woman, whose first name was Maria, operated a cafeteria, catering, and vending machine business with her three sisters. Between Aug. 8 and 11, 2006, Maria presented 16 company checks she had signed, totaling $93,520, to a Texas check cashing business.
The check casher cashed the checks, which were later returned as “uncollected” or for “insufficient” funds. Although Maria promised the check casher several times that she would pay the checks, she never did.

D.A. Steps In

The check casher contacted the county district attorney’s office, and a fraud investigator in the hot check division, was assigned to the case. After discussions that included her attorney, Maria signed a notarized “Diversion/Partial Payment Program” agreement dated Sept. 25, 2006. The investigator signed the agreement on behalf of the district attorney’s office.
Maria initialed the paragraph in the diversion agreement acknowledging she would not be indicted or prosecuted if she made full restitution by the due date.
Maria paid $3,000 when she signed the agreement in September. She paid another $16,000 in November.
Although she was given several extensions of time until March 2007 to pay the remainder, she made no further payments and was charged with theft-by-check in May 2007.
The evidence at her trial showed that at the time Maria presented the checks to the check casher in August 2006, he had been cashing her business checks since late 2004.
Between December 2005 and Aug. 6, 2006, the check casher cashed more than 1,000 checks totaling approximately $4.4 million and for which he charged total check cashing fees of approximately $88,000.
The check casher testified he was comfortable cashing the larger checks after physically visiting one of Maria’s job sites and observing the nature of the business.
Maria claimed that her business arrangement with the check casher was like a loan because he would cash her checks knowing there were insufficient funds in the company’s bank account. Maria said he would hold the checks for a day until she could deposit money from other sources to cover the checks.
She claimed the check casher’s check cashing fee was interest for these loans and that this arrangement was necessary because she had a “cash flow problem.”

Claims No Debt

The check casher testified he normally deposited checks the evening of receipt or the next day; he denied having an agreement with Maria to hold her checks for one day. He also testified he believed she had the funds in her account to cover the checks when he cashed them.
The trial court questioned him about why Maria went to him instead of the bank. The court said it sounded like she was short of money, noting that she would put a $10,000 catering job check in the bank, and tell the check casher that she couldn’t wait till it cleared, because she needed the money right then.
The check casher said that was the case most of the time for business customers. The court asked if that was kind of a typical transaction, and he said it was.
Maria claimed she had “no intent of stealing any money.” She told the court that the August 2006 checks bounced because checks from one of her suppliers “started returning,” which caused her bank to “freeze” her account. She also said her checks would not clear because her account balance fell too low when the supplier’s checks bounced.
Maria presented evidence that showed the supplier’s checks were being returned as early as July 2006. She also testified that she “had no problem until they froze the account” and that her checks to the check casher would have cleared “had they not froze the account.” The only evidence, however, that Maria’s account was frozen came from her own testimony.
The state presented evidence that Maria’s account was overdrawn in the amount of approximately $48,000 on Aug. 17, 2006.
Maria claimed the bank “unfroze” her account after two months with a balance remaining of $16,167.33. Her July 2006 bank statement showed deposits being made almost every day through the last day of the month2006. The August 2006 bank statement showed no deposits after the 14th. The September 2006 bank statement showed no activity on the account.
The investigator, who at the time of trial had been the fraud, hot check division supervisor for approximately four years, testified no one presented him with or described any loan agreement or arrangement as had been claimed by Maria. He said he saw nothing that caused him to believe the situation presented anything other than a theft by check case.

Convicted of Theft

Maria was convicted for theft by check in an aggregated amount of at least $20,000 but less than $100,000. The trial court sentenced her to two years in prison, suspended the sentence, placed Maria on 10 years’ community supervision, and ordered her to pay $109,147 in restitution.
Maria appealed her conviction to the Texas Court of Appeals, claiming first that the evidence was legally insufficient to show she had the intent to commit theft at the time she wrote the checks and, second, that the trial court should not have admitted the pre indictment diversion agreement, which she claimed was inadmissible.

Sufficiency of the Evidence

On appeal, Maria first claimed that the evidence was insufficient to support her conviction because the state failed to prove beyond a reasonable doubt that she “had the intent to commit theft at the time she wrote the checks.”
In determining whether the evidence is sufficient to support a conviction, the Appeals Court said it must view all of the evidence in the light most favorable to the verdict and determine whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. The standard recognizes that the trier of fact is the sole judge of the credibility of the witnesses and the weight to be given their testimony.
A person commits the offense of theft if he “unlawfully appropriates property with intent to deprive the owner of property.” As to each check here, said the Appeals Court, the indictment alleged that Maria unlawfully appropriated the check casher’s property (currency) with intent to deprive him, and without the effective consent of the check casher, namely, by issuing and passing a check, when Maria did not have sufficient funds in the bank for the payment in full of the checks.
The issue was whether the evidence supported a finding beyond a reasonable doubt that she unlawfully appropriated the check casher’s property. Appropriation of property is unlawful if, as alleged in this case, it was without the owner’s effective consent.
The Appeals Court noted that the check casher consented to Maria’s appropriation of his property — he cashed her checks. But this consent was not “effective” if it was induced by “deception.”

Definition of Deception

“Deception” is basically defined in the theft provisions of the penal code as failing to correct a false impression of law or fact that is likely to affect the judgment of another in the transaction, that the person previously created or confirmed by words or conduct, and that the person does not now believe to be true.
Measured against this legal standard of “deception,”, said the Appeals Court, a rational trier of fact could have found beyond a reasonable doubt that Maria unlawfully appropriated the check casher’s property.
She knew she had cash flow problems. She not only admitted, but insisted, that she had the check casher cash checks for her at a time when there were insufficient funds in her bank account.
She also knew her checks would not clear when checks from the supplier “started returning.” Those checks were being returned in July 2006.
Maria’s bank records showed the account was overdrawn by approximately $48,000 on Aug. 17, 2006, within a week of the August 11 checks the check casher cashed for her. The checks to him were returned as “uncollected” or for “insufficient” funds, and Maria failed to pay him back despite repeated promises to do so.
The check casher testified he deposited Maria’s checks the day of receipt or the next day and he believed she had funds to cover the checks. The fraud investigator testified based on his experience that he saw nothing in his investigation that caused him to believe the situation presented anything other than a theft by check case.

Cites Evidence

The Appeals Court said that the trial court was the sole judge of the credibility of the witnesses. From this evidence, the trial court could have concluded beyond a reasonable doubt that Maria obtained the funds from the check casher by failing to correct a false impression she had previously created that the funds would be in her account at least by the next day; the impression likely affected the check casher’s judgment, and Maria did not believe that impression to be true.
Maria argued that the key issue in this case was whether deception existed at the time the checks were written, and whether the state proved that on the date she wrote the checks, there were insufficient funds in her account to cover them.
She claimed the evidence was clear that on the dates the checks were written, she had no reason to believe the funds were not in her account, and she therefore did not have the intent to commit theft.

Recent Case

The Appeals Court noted that in 2011, the Texas Court of Criminal Appeals decided in the case of Geick v. State that “if an indictment uses a statutory definition to specify how a theft was committed, the state must prove the offense as charged in the indictment.”
In that case, the court held the state was required to produce evidence of “deception” because the state unnecessarily pleaded that the theft was by deception but provided no proof of deception; the evidence therefore was legally insufficient to support the conviction.
The indictment in Maria’s case, said the Appeals Court, alleged that with each check, that she unlawfully appropriated the check casher’s property with intent to deprive him, and without his effective consent, namely, by issuing and passing a check when she did not have sufficient funds in and on deposit with the bank for the payment in full of the checks.
This allegation, unlike the allegation of “deception” in the Geick case, was not a statutory element or definition of a theft offense that narrowed the manner and means under which Maria could have been convicted of theft.
Therefore, this allegation didn’t, for sufficiency purposes, exclude theft by deception as a manner and means in which the offense could have been committed.

Allegation Supported

The Appeals Court noted that even assuming the state was required to produce evidence to support the allegation of insufficient funds, the evidence supported the allegation.
Maria’s August 2006 bank statement showed she wrote three checks totaling $18,025 on Aug. 8, 2006, with her daily balance on that date being $7,116.31.
The bank statement also showed Maria wrote three checks totaling $15,525 on Aug. 9, 2006, with her daily balance on that date of $928.07. This was some evidence that Maria knew she had insufficient funds in her bank to cover these checks when she wrote them.
The aggregated amount of these checks exceeded $20,000 and was less than $100,000, which was the range alleged in the indictment. This evidence, and evidence the checks were returned as “uncollected” or for “insufficient” funds, supported the indictment allegation that Maria passed the checks when she “did not have sufficient funds in and on deposit with the bank for the payment in full of the checks.”



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