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State v. Farnworth

Court of Appeals of Washington, Division 3

June 1, 2017

STATE OF WASHINGTON, Respondent,
v.
GARY BRUCE FARNWORTH II, Appellant.

          Fearing, C.J.

         Gary Farnworth garnered forty-six payments of Washington Department of Labor and Industries (DLI) worker compensation benefits by certifying he engaged in no employment at a time when he labored at a car sales lot. The State aggregated the many thefts into three counts of first degree theft. Farnworth appeals, on numerous grounds, from two convictions for first degree theft. He argues that the trial court abused its discretion when denying a trial continuance, when admitting hearsay evidence, and when excluding some of his evidence. He also contends that the State lacked authority to aggregate the thefts into more than one first degree theft charge. We agree with Farnworth's aggregation argument and vacate one of his convictions. We disagree with Farnworth's other arguments and affirm the one conviction for first degree theft.

         FACTS

         This prosecution arises from defendant Gary Farnworth's receipt of worker compensation time loss benefits. On September 10, 2007, Gary Farnworth injured his back while working as an apprentice ironworker for Storm Steel, Inc. He filed a claim with DLL DLI commenced paying Farnworth time loss benefits.

         In order for Gary Farnworth to garner time loss benefits, DLI demanded that he complete and sign worker verification forms. Each form read:

Due to my work-related injury/illness, I didn't work and I wasn't able to work from __ to __. This means you didn't perform any type of work-paid or unpaid-such as volunteer work, self-employment, COPES or CHORE Services. . . .
. . . .
By signing below, I certify under penalty of perjury under the laws of the state of Washington that the foregoing is true and correct and further that: I understand that if I make a false statement about my activities or physical condition, I will be required to refund my benefits and I may face civil or criminal penalties. I understand I must immediately notify my claim manager if I perform any work (paid or unpaid), if my doctor releases me for work, if I am incarcerated and under sentence, or if the custody of my children changes.

Ex. P8. Gary Farnworth completed and signed at least ten worker verification forms between September 2010 and July 2012.

         Beginning in April 2010, Gary Farnworth assisted his friend, Terry Smith, at Smith's used car dealership, TCS Auto Wholesale. Farnworth daily opened the car lot gates, unlocked the office front door, accepted loan payments from customers, and received mail. During this time, Farnworth reported to DLI, his physicians, and his vocational counselor that he was unemployed. Farnworth underwent back surgery on November 1, 2010, and January 9, 2012. When recuperating from surgery, he missed work at TCS Auto from November 1 to November 6, 2010, and from January 9 to February 13, 2012.

         Gary Farnworth received and cashed forty-six warrants for time loss payments from DLI between November 2010 and October 2012. A payment order accompanied each warrant and identified the pay rate and time period for the warrant's compensation. Each payment represented two weeks' worth of benefits in the sum of $1, 626.80 $1, 676.92, $1, 662.60, or $1, 739.34. Each payment order admonished its recipient not to cash the warrant if he performed any work during the covered period.

         On August 10, 2012, DLI received a tip that Gary Farnworth worked while receiving time loss benefits. DLI commenced an investigation. On September 25, 2012, DLI recorded Farnworth showing DLI Investigator Matt McCord five vehicles for sale on the TCS Auto Wholesale lot. Department of Licensing sales records confirmed that Farnworth served as general manager for TCS Auto from April 2010 through October 2, 2012.

         On October 9, 2012, DLI confronted Gary Farnworth with evidence of fraud. With his attorney present, Farnworth confessed to investigator Matt McCord that he labored at TCS Auto Wholesale starting in April or May 2010 and that he worked six days a week, Monday through Saturday. Farnworth further conceded that he signed a worker verification form declaring that he had not worked during the period of time he labored at TCS Auto.

         Despite concluding in October 2012 that Gary Farnworth worked at TCS Auto Wholesale, DLI continued to pay Farnworth time loss compensation. DLI ended time loss payments on February 14, 2013, when DLI found Farnworth able to work.

         On February 15, 2013, Gary Farnworth assumed a full-time, paid position as an automobile salesperson with TCS Auto Wholesale. This position paid less than his job as an ironworker at Storm Steel, Inc.. Due to the disparity in income, DLI's Board of Industrial Insurance Appeals ruled that Farnworth incurred a loss of earning power, within the meaning of RCW 51.32.090(3), from February 15 through April 29, 2013. The board also concluded that the industrial injury proximately caused the loss and the loss exceeded more than five percent of his earning power at the time of his back injury.

         PROCEDURE

         The State of Washington charged Gary Farnworth with three counts of first degree theft by color or aid of deception. Each count alleged theft over different time frames: February 15, 2010 to January 4, 2011; November 6, 2010 to January 14, 2012; February 13, 2012 to October 5, 2012. To arrive at first degree theft charges, the State aggregated a series of payments to Farnworth from DLI. In its last information, the second amended information, the State alleged that, for purposes of aggregation of discrete thefts, Farnworth engaged in a "series of transactions which were part of a criminal episode or common scheme or plan." Clerk's Papers (CP) at 463. During the proceeding, Farnworth argued that he volunteered rather than worked at the auto dealership, he never intended to deceive DLI, and DLI did not rely on any deception.

         Before trial, the State filed notice of its intent to offer certified business records as allowed by RCW 10.96.030. Gary Farnworth never responded to the notice. On August 28, 2014, the State filed its witness list, which included "Alan Gruse, LNI Fraud Adjudicator." CP at 31. One month after the court-ordered deadline for filing a witness list, Farnworth filed a witness list that included Jerry Myron, a purported expert witness. The State attempted to interview Myron, but he refused an interview.

         Remember that DLI, beginning in February 2013, paid time loss benefits to Gary Farnworth but at a lower rate than when DLI lacked knowledge of the employment at TCS Auto Wholesale. Farnworth's income as a used car salesperson deceeded his remuneration as an ironworker. The State moved to exclude evidence that DLI could or would have paid time loss benefits to Farnworth from 2010 to 2012 if Farnworth had reported his employment. The trial court granted the motion in limine on the rationale that whether DLI might have paid a lower sum of time loss benefits had Farnworth been honest was irrelevant to charges.

         Trial was scheduled to begin June 1, 2015. According to Gary Farnworth, the prosecution disclosed J.R. Wyatt, a vocational counselor, as an expert witness for the first time on May 22, 2015, and the State did not then disclose Wyatt's opinions. Accordingly, Farnworth argued a motion, on May 27, 2015, to continue the trial. Farnworth maintained that he wished to hire a rebuttal expert witness. The State responded that Wyatt was a fact, not an expert, witness and that the State a half-year earlier provided discovery concerning Wyatt's testimony. On May 27, the trial court denied the motion to postpone the trial date.

         Gary Farnworth renewed his motion to postpone the June 1, 2015 trial date at the commencement of trial on June 1. Farnworth did not then complain about any late disclosure of a State expert witness. Farnworth mentioned the inability to subpoena two witnesses and to interview one witness. The trial court denied the renewed motion to postpone the trial date.

         During trial, the State called as a witness DLI Workers Compensation Fraud Adjudicator Alan Gruse. Through Gruse, the State sought to admit as exhibits payment orders prepared by DLI claims managers. The claims managers who prepared the orders did not testify in the case. Gary Farnworth objected to admission of the payment orders on the grounds of hearsay, lack of authentication, and the confrontation clause. The trial court overruled the objection. When the State moved to admit exhibit PI04, a payment order, the following testimony and colloquy transpired:

MS. MILNOR [Prosecutor]: State would offer Plaintiffs Exhibit 104.
MR. SMITH [Defense Counsel]: Permission to voir dire, Your Honor.
THE COURT: You may.
MR. SMITH: Thank you.
Q (By Mr. Smith) Mr. Gruse, this is a payment order, correct? Document you're referring to is a payment order?
A Yes, it is.
Q Right. You said that's a legal document; is it not?
A It is.
Q All right. And this is a legal document created by the claims manager, correct?
A Yes.
Q All right. And at no time during the period February 15, 2010 through October 5, 2012, were you a claims manager in this case, correct?
A I was not a claims manager in this case, no.
Q All right. And the claims manager in this particular document at the time was Vicky Damora, correct?
A That is correct.
MR. SMITH: Thank you, Your Honor. I have an objection on hearsay. It violates right to confrontation, as well as relevance in any-it is irrelevant, substantially outweighed by the prejudicial effect.
THE COURT: I'll note your objection. The Court is going to admit P104.

Report of Proceedings (RP) (June 9, 2015) at 994-95. Vicky Damora never testified at trial.

         Before the jury, the State asked Alan Gruse whether DLI relied on the worker verification forms signed by Farnworth when paying him time loss compensation benefits. The defense unsuccessfully objected to this question on the basis of hearsay, the confrontation clause, and lack of a foundation. Gruse answered in the affirmative.

         During trial, the State called as a witness Department of Licensing Custodian of Records Richard Letteer. Through Letteer, the trial court admitted as exhibits Department of Licensing sales transaction records from February 15, 2010 to November 20, 2012 purportedly signed by Gary Farnworth as an agent for the dealership, TCS Auto Wholesale. Farnworth objected to the exhibits on grounds of hearsay, lack of authentication, and the confrontation clause. Letteer admitted he never compared all of the Department of Licensing documents introduced as exhibits to the originals on file with the department, he did not know the criteria used to request and select the documents, and he did not gather the documents himself. Letteer testified that Susan Mitchell assembled the exhibits. Mitchell did not testify at trial. A certification accompanying the exhibits stated that Mitchell served as Department of Licensing forms and records analyst, she was the custodian of records, and as part of her duties, she researched and copied the records.

         The State also called as a witness DLI investigator Matt McCord. During McCord's cross-examination, Gary Farnworth attempted to elicit testimony about McCord's involvement in a fraudulent Ponzi scheme. According to Farnworth, McCord resigned from the Simi Valley, California police force in lieu of termination because of participation in the scheme, and McCord, when subpoenaed to testify before a grand jury on the subject, asserted his Fifth Amendment right not to incriminate himself. Out of the presence of the jury, Farnworth moved for dismissal based on the State's purported Brady violations. As part of the motion, Farnworth requested to voir dire McCord concerning his behavior in order to perfect the trial record. The trial court denied the request to voir dire on the basis that McCord's involvement in fraud lacked relevance to Farnworth's prosecution. The trial court denied the motion to dismiss.

         During trial, Gary Farnworth wished his witness, Jerry Myron, to testify that, during some of the charging period, DLI would have paid time loss compensation benefits even if it knew Farnworth worked at TCS Auto Wholesale, since Farnworth's pay before his injury exceeded his pay at the car dealership. The trial court precluded the testimony and commented:

The statute for theft by deception does not focus on the net result of the defendant's benefit based on the amount that he might have legally received.
Instead, theft by deception centers on the deceptive act and the value of the property obtained by that deceptive act, and it's not a defense under the Casey [decision] that he could have gotten benefits [no matter] what happened.
So based on that, the Court is not going to allow him to testify to what he would have gotten.

RP (June 8, 2015) at 935.

         After the State rested, Gary Farnworth moved to dismiss two counts of first degree theft by arguing the State improperly aggregated the small thefts. The State responded that it charged three different counts because of Farnworth's two surgeries respectively on November 1, 2010 and January 9, 2012. Farnworth missed work at TCS Auto Wholesale from November 1 to November 6, 2010 and from January 9 to February 13, 2012. The State maintained that Gary Farnworth was entitled to full time loss payments during those absences. The respective charging periods covered before November 1, 2010, between November 6, 2010 and January 9, 2012, and after February 13, 2012. The trial court denied the motion to dismiss two of the three counts.

         The trial court instructed the jury. Jury instruction 10 read:

Value means the market value of the property or services at the time and in the approximate area of the act.
Whenever any series of transactions that constitutes theft is part of a common scheme or plan, then the sum of the value of all transactions shall be the value considered in determining the amount of value.

CP at 499 (emphasis added). Instructions 15, 16, and 17 constituted the respective to- convict instructions for each count of theft in the first degree. Jury instruction 15 read:

To convict the defendant of the crime of Theft in the First Degree as charged in Count I, each of the following five elements of the crime must be proved beyond a reasonable doubt:
(1) That during the period from February 15, 2010, through January 4, 2011, the defendant, by color or aid of deception, obtained control over property or services of the State of Washington or the value thereof;
(2) That the State of Washington, Department of Labor and Industries, relied on the defendant's deception in paying the benefits;
(3) That the property or services exceeded $5, 000 in value;
(4) That the defendant intended to deprive the State of Washington of the property or services; and
(5) That any of these acts occurred in the State of Washington.
If you find from the evidence that each of these elements has been proved beyond a reasonable doubt, then it will be your duty to return a verdict of guilty.
On the other hand, if, after weighing all of the evidence, you have a reasonable doubt as to anyone of these elements, then it will be your ...

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