Intent, Intent, Intent

jewelry.jpgEvery theft case needs intent. Unfortunately, most loss prevention officers in retail stores just assume someone intends to steal an item simply because they’ve forgotten to pay for it. I’ve seen more than my fair share of shoplifting cases in which the petit theft was based on a few unpaid items at the bottom of a shopping cart. It happens.

But intent isn’t just about shoplifting versus forgetfulness. Conceptually, if you can’t pay your bills, are you stealing from the people you owe? Is it stealing to rack up credit card debt that you know you can’t pay, right before filing for bankruptcy? What about companies, can they borrow money from creditors with the hopes that things will turn around, only to go out of business soon after borrowing the money? What we’re going to review today is a grand theft case under the heading “business deal gone bad”. As you know, everybody who is owed money wants to transform theses debts into some sort of criminal act on the part of the person not able to pay. Of course, if this were really the case, there would be no need for bankruptcy courts, we’d just prosecute everybody who can’t afford to pay their bills. One of my favorite ‘business deal gone bad’ cases is Szilagyi v. State, 564 So. 2d 644 (Fla. 4th DCA 1990).

In Szilagyi, the defendants were convicted of fourteen counts of first degree grand theft, allegedly stealing over $190,000. The defendant’s owned a jewelry manufacturing business, and they fell behind in their payments to 10 creditors. These creditors sent the defendants products to resell that were never paid for, and never returned. Rather than simply sue the company (defendant) for the debt owed, the creditors prompted the Fort Lauderdale Police Department to initiate a criminal investigation. As usual, the police department and criminal justice system was just being used as a collection agency, rather than fighting real crime. Yes, your taxpayer dollars hard at work, fighting for large companies that extend credit to businesses. Anyway, the detective investigating this case decided that the defendants were running a ‘bust out’ operation. Now, there are several different types of bust out operations, but the basic principle is that the company’s intent is not really to be a company at all, but rather, to use their credit to obtain as much revenue and merchandise from creditors as possible–then skip town. The defendants were in business for over a year, possibly two.

The jury convicted the defendants and they were sentenced to three years prison. However, the 4th District Court of Appeals reversed the conviction and sentence, explaining that the State must prove that the felonious intent required existed at the time of the taking. In this case that would be the time that the order was placed for the merchandise and merchandise received. Furthermore, while the appeals court acknowledged that evidence of intent is very often circumstantial, the circumstantial evidence of intent must exclude every reasonable hypothesis but that of guilt. A reasonable hypothesis in a bad business deal case is that the defendants were, actually, trying to run a business. To that effect, the defendants presented at trial that the business was initially capitalized with as much as $30,000.00. Why dump 30G into an operation that was ongoing for years, just in some scheming attempt to rip off creditors years down the road? Sure, as business deteriorated, the company stopped paying its bills, but this happens all the time. And, the appeals court saw this for what it was, a failing business with no intent to defraud anyone, reasoning that “the conduct for which appellants were prosecuted in connection with their operation of Goldex, Inc., is in most respects identical to the conduct of a legitimate business enterprise that tries and fails.” Id. at 646. As such, the judge should have dismissed this case before it ever reached the jury.

Now, why write about such an old case? This case is important to most petit theft and grand theft cases for three reasons. First, it stands for the proposition that there must be a felonious intent at the time of the original taking. Second, and of equal importance, the case stands for the proposition that a court does have the authority to dismiss charges based upon an intent issue. And lastly, it also reminds prosecutors and law enforcement that just because a business fails to pay its debt obligations does not mean that the business owners should be arrested for grand theft.