People v. Hubbard

Filed 6/16/16

IN THE SUPREME COURT OF CALIFORNIA

THE PEOPLE, )

)

Plaintiff and Respondent, )

) S216444

v. )

) Ct.App. 2/1 B239519

JEFFREY HUBBARD, )

) Los Angeles County

Defendant and Appellant. ) Super. Ct. Nos. SA075027,

____________________________________) BA382926

In this case we must determine the scope of liability under a criminal

statute enacted in 1872 proscribing the misuse of public funds. Penal Code section

424 applies to ―[e]ach officer of this state, or of any county, city, town, or district

of this state, and every other person charged with the receipt, safekeeping, transfer,

or disbursement of public moneys.‖ (Pen. Code, § 424, subd. (a) (section

424(a)).)1 Before us are two questions arising from this provision. The first is

whether the statute applies to all public officers, or only to those ―charged with the

receipt, safekeeping, transfer, or disbursement of public moneys.‖ Because we

hold that section 424 applies only to those public officers imbued with such

responsibility over public moneys, we must answer a second question: whether

sufficient evidence supported the jury‘s verdict finding that defendant Jeffrey

1 Unless otherwise stated, all statutory references are to the Penal Code. In

addition, we will refer to the various provisions of section 424(a) in the following

form: section 424(a) 1, section 424(a) 3, etc.

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Hubbard, who served as superintendent of the Beverly Hills Unified School

District (the District), was charged with the ―receipt, safekeeping, transfer, or

disbursement‖ of public funds. In light of Hubbard‘s explicit contractual

responsibilities to oversee the ―budget and business affairs‖ of the District,

testimony that superintendents like Hubbard owe a duty to safeguard school

district funds, and Hubbard‘s responsibility to ensure such public funds were spent

in accordance with the law, we hold the evidence was sufficient.

Accordingly, we reverse the judgment of the Court of Appeal and remand

the case for further proceedings consistent with this opinion.

I. BACKGROUND

In a consolidated information and indictment filed on January 3, 2012, the

District Attorney of the County of Los Angeles charged Hubbard with three counts

of misappropriating public funds in violation of section 424(a) 1. The charges

were tried to a jury, which found Hubbard guilty on the first two counts and not

guilty on the third. The following facts emerged at trial.

Hubbard served as superintendent of the District from July 1, 2003, to June

30, 2006. In that role, Hubbard was chief executive officer of the District,

overseeing the various departments therein. Those departments included human

resources, business, and accounting. Among the duties listed in Hubbard‘s

employment contract was the responsibility to provide leadership and direction

ensuring successful policy implementation in the area of ―budget and business

affairs.‖ Hubbard was also explicitly responsible under his employment contract

for taking the lead on financing for school facilities. Joseph Jones, assistant

executive director for the Association of California School Administrators

(ACSA), testified that superintendents need to know the business side of running a

school district, including ―where all the finances come through and the revenues

come through so [superintendents] can expend those revenues on behalf of

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schoolchildren.‖ Through courses taught by ACSA, superintendents learn about

how state budgeting affects their districts, how to expend public funds, and how to

use those funds on behalf of the students they serve.

In those same courses, superintendents are instructed that ―they have a

fiduciary responsibility to protect the funds of the school district in which they

serve.‖ Hubbard, who taught some of these courses, testified that he had

discussions with his student administrators –– who were training for careers in

education administration –– about their ethical and legal obligations with respect

to public funds. Hubbard testified further that, pursuant to his duty under the law,

he had familiarized himself with the rules governing superintendents.

During Hubbard‘s tenure as superintendent, Karen Christiansen worked for

the District as the director of planning and facilities. Christiansen‘s contract

provided for an annual salary of $113,000 and a monthly automobile allowance of

$150. In late 2005 and early 2006, Hubbard wrote two memoranda regarding

Christiansen‘s compensation. These directives, written on District letterhead and

in Hubbard‘s official capacity as ―Superintendent of Schools,‖ proved central to

the prosecution‘s case against him.

The first memorandum, dated September 29, 2005, included only two short

sentences. Hubbard wrote: ―Please note that effective September 1, 2005, Ms.

Christiansen is to receive a $500.00 auto allowance per month. Thank you.‖ This

memorandum, which Hubbard initialed, was addressed to Melody Voyles, who

worked in payroll. Copied on the memorandum were Sal Gumina, the assistant

superintendent for human resources, and Nora Roque, the human resources

coordinator. The recipients interpreted the memorandum as a directive, which

they were expected to follow. Hubbard testified that Christiansen‘s monthly auto

allowance was augmented to reflect an increase in her travel responsibilities after

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she took on additional work previously performed by a construction management

firm up until fall 2005.

In the second memorandum, dated February 6, 2006, Hubbard wrote:

―Please note that Ms. Christiansen is to receive a $20,000 stipend. Thank you.‖

This memorandum, which Hubbard also initialed, was addressed to Roque and

copied Voyles, both of whom interpreted it as a directive. No assistant

superintendent was included on this memorandum. Hubbard testified that the

stipend was intended to compensate Christiansen for additional work she had

performed following the construction management firm‘s termination.

Voyles indicated that ―from time to time‖ she received direction from the

superintendent to change an employee‘s pay. When she did, she sought to comply

with her superior‘s instruction. Roque also testified that she had received similar

requests for providing or adjusting employee stipends. Accordingly, memoranda

in this case did not raise any red flags in the minds of Voyles and Roque; they

were simply following Hubbard‘s orders –– orders that, according to Hubbard‘s

testimony, the superintendent expected his subordinates to carry out. There was

no indication that Hubbard considered the content of the memoranda, or the fact

he had written them, to be unusual.

The parties do not dispute that both the increased auto allowance and the

stipend required approval by the District‘s Board of Education (the Board), a five-

member body that held meetings twice a month. Although Hubbard was

responsible for preparing an agenda for the Board in advance of each meeting and

for implementing the Board‘s decisions, he lacked the unilateral authority to order

either payment. The Board would discuss confidential matters, including

employee compensation, in closed session prior to the open, public portion of the

meeting, but any decision on such matters had to be ratified by a Board vote in

open session. Hubbard was responsible for ensuring that minutes were taken and

4

that those minutes accurately reflected what was approved during Board meetings,

including any public expenditures. As superintendent, Hubbard attended both the

closed and open sessions of the regular Board meetings.

In order for the Board to approve a change in an employee‘s compensation,

the change had to be included in a personnel report. The superintendent would

direct the human resources department to prepare such personnel reports. Once

the human resources department had compiled the necessary paperwork, the

reports would be submitted to the superintendent for review. It was the

superintendent‘s responsibility to ensure all personnel reports were then included

in the packet of materials the Board would receive prior to each meeting.

Christiansen received both the $500 monthly auto allowance and the

$20,000 stipend. A central point of contention at trial was whether or not the

Board ever approved either payment. Two Board members testified that the Board

never discussed or approved either the auto allowance or the stipend. Other

personnel from the District — including Gumina, Roque, and Voyles — either had

no memory of the payments or the procedure that had led to Christiansen‘s

receiving them, or had no knowledge whether the payments had been approved by

the Board. The District‘s assistant superintendent of business services testified

that District personnel had searched the Board minutes from meetings ―in and

around‖ the time of the auto allowance and stipend and did not find the payments

mentioned in the minutes from those meetings. The prosecution introduced

exhibits containing agendas, minutes, and personnel reports from a number of the

Board meetings that occurred around the time Hubbard prepared the memoranda

regarding the payments to Christiansen. These materials contained no mention of

either the auto allowance or the stipend.

Hubbard testified that the Board had discussed both the auto allowance and

the stipend in closed session. According to Hubbard, there were no objections to

5

either payment, so he prepared the September 29 and February 6 memoranda

directing that the payments be made. The memoranda were either addressed or

copied to individuals in the human resources department, which would have been

responsible for preparing the personnel reports had any been submitted to Hubbard

for presentation to the Board. Hubbard admitted there was no documentation

indicating that the Board had ever approved these payments.

The trial led to Hubbard‘s convictions, which he appealed. The Court of

Appeal reversed, vacating all penalties and directing the superior court to enter an

order dismissing all charges. The appellate court concluded that Hubbard could

not have violated section 424 because, in its view, Hubbard was not a ―person

charged with the receipt, safekeeping, transfer, or disbursement of public

moneys.‖ The Court of Appeal so held because Hubbard lacked the formal

authority to approve the payments to Christiansen — such authority lay solely

with the Board. Instead, the court found, he ―was merely ‗the first step in a

process that results in the expenditure of public funds.‘ ‖ As Hubbard lacked the

unilateral authority to approve the payments to Christiansen, the Court of Appeal

found that he ―[could not] be criminally liable under section 424.‖

To reach this conclusion, the Court of Appeal rejected the Attorney

General‘s alternative argument that section 424 applied to Hubbard because, as

superintendent, he was an ―officer‖ of the District2 irrespective of whether he was

also a ―person charged with the receipt, safekeeping, transfer, or disbursement of

public moneys.‖ The Court of Appeal noted that it could find no case that had

adopted this construction of section 424. The court concluded further that such a

construction was foreclosed by People v. Dillon (1926) 199 Cal. 1, 5 (Dillon), in

2 The parties agree that Hubbard was a public ―officer‖ for purposes of

section 424.

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which we stated that section 424 ―has to do solely with the protection and

safekeeping of public moneys . . . and with the duties of the public officer charged

with its custody or control,‖ and that it addresses ―the single subject of the duties

of an officer charged with the receipt, safekeeping, transfer, and disbursement of

public moneys.‖

We granted review.

II. DISCUSSION

The Attorney General maintains that Hubbard is an individual covered by

section 424 under either of two interpretations. Initially, the Attorney General

contends that, as a public ―officer,‖ Hubbard may be liable for violating section

424 regardless of whether he is a ―person charged with the receipt, safekeeping,

transfer, or disbursement of public moneys.‖ In the alternative, the Attorney

General asserts that even if a public officer must also be charged with the receipt,

safekeeping, transfer, or disbursement of public moneys in order to violate section

424, Hubbard satisfies this requirement because the evidence showed he had

―some degree of control over public funds‖ in his role as superintendent.

For the reasons discussed below, we hold that section 424 applies only to

those public officers ―charged with the receipt, safekeeping, transfer, or

disbursement of public moneys.‖ Substantial evidence, we hold further, supports

the conclusion that Hubbard was so charged.

A. Scope of Section 424

To determine the proper scope of section 424, we must resolve a question

of statutory interpretation. As with all such questions, our primary task is to give

effect to the Legislature‘s intended purpose in enacting the law. (See People v.

Zambia (2011) 51 Cal.4th 965, 976-977.) We begin with the statute‘s text,

assigning the relevant terms their ordinary meaning, while also taking account of

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any related provisions and the overall structure of the statutory scheme. (See

People v. Cottle (2006) 39 Cal.4th 246, 254.) Essential is whether our

interpretation, as well as the consequences flowing therefrom, advances the

Legislature‘s intended purpose. (See People v. Zambia, supra, 51 Cal.4th at

p. 977.) Where the statutory text admits of more than one reasonable

interpretation, we may consider various extrinsic aids — including the legislative

history — to the extent they are helpful in illuminating that purpose. (See Fluor

Corp. v. Superior Court (2015) 61 Cal.4th 1175, 1198.)

Section 424(a) 1 is the particular provision under which Hubbard was

convicted. It provides: ―Each officer of this state, or of any county, city, town, or

district of this state, and every other person charged with the receipt, safekeeping,

transfer, or disbursement of public moneys, who . . . [¶] . . . [w]ithout authority of

law, appropriates the same, or any portion thereof, to his or her own use, or to the

use of another‖ is guilty of a crime. Pivotal in determining this provision‘s

applicability to Hubbard is whether it applies to all public officers, as the Attorney

General contends, or only to those officers ―charged with the receipt, safekeeping,

transfer, or disbursement of public moneys,‖ as Hubbard contends. Section 424

could be read, in short, as applying to (1) all state, county, city, town, or district

officers, and (2) any person ―charged with the receipt, safekeeping, transfer, or

disbursement of public moneys.‖ Or it could apply instead to (1) state, county,

city, town, or district officers ―charged with the receipt, safekeeping, transfer, or

disbursement of public moneys,‖ and (2) every other person so charged.

Each interpretation settles but also raises textual questions. To accomplish

what Hubbard takes to be the statute‘s function, section 424 could have been

written far more parsimoniously to cover ―any person charged with the receipt,

safekeeping, transfer, or disbursement of public moneys.‖ No separate ―officer

clause‖ would be needed because an officer is, of course, a person. By giving

8

independent meaning to the public ―officer‖ clause, the Attorney General‘s

approach avoids rendering that clause surplusage — a problem that Hubbard‘s

reading leaves unresolved.

What Hubbard‘s reading is better at resolving, in contrast, is how to give

independent meaning to the word ―other‖ — a word that, under the Attorney

General‘s reading, would be rendered devoid of any meaning. Indeed, the

Attorney General‘s reading of section 424 suggests the statute could have been

more clearly written to cover ―each officer of this state, or of any county, city,

town, or district of this state, or any person charged with the receipt, safekeeping,

transfer, or disbursement of public moneys.‖ Instead, section 424 uses the phrase

―and every other person‖ (italics added), which is inherently relational. The use

of ―other‖ suggests that the previously referenced public ―officer[s]‖ share the

same characteristic as the ―person[s]‖ mentioned immediately thereafter —

namely, that the public officers must also be ―charged with the receipt,

safekeeping, transfer, or disbursement of public moneys.‖ Under Hubbard‘s

reading, then, the word ―other‖ refers back to — and limits — the class of public

officers subject to section 424.

Though the text does not rule out either interpretation, we conclude that

Hubbard‘s is the one most closely aligned with what we reasonably can discern

about the Legislature‘s purpose in enacting section 424: protecting the public fisc

and holding accountable those in a position to place public funds at risk. (See

Dillon, supra, 199 Cal. at p. 6 [explaining that ―the subject matter and the

language of section 424 clearly indicate that the legislative mind was intently

concerned with the single, specific subject of the safekeeping and protection of

public moneys‖].) As indicated at the outset, the Legislature enacted section 424

9

as part of its 1872 adoption of the Penal Code. The commissioners who drafted

the code explained in an accompanying note3 that section 424 was ―founded upon‖

several existing laws ―peculiarly and especially applicable to the collection, safe

keeping, and disbursement of the public revenue.‖ (Code commrs. note foll. Ann.

Pen. Code, § 424 (1st ed. 1872, Haymond & Burch, commrs.-annotators) p. 167

(Commissioners‘ Note).) Hubbard‘s interpretation is wholly consistent with that

purpose.

In reaching our conclusion, we find the statutory context illuminating.

Section 424(a) 1 punishes a person who, without legal authority, ―appropriates the

same, or any portion thereof,‖ to his or her own use or the use of another. It is

clear that ―the same, or any portion thereof,‖ refers to ―public moneys,‖ which

appears immediately above and at the end of the critical phrase ―charged with the

receipt, safekeeping, transfer, or disbursement of public moneys.‖ (Italics added.)

The Legislature‘s express reference to ―appropriat[ing]‖ public moneys suggests

that for defendants to come within the provision‘s ambit, they must have some

measure of responsibility over the public funds at issue. The suggestion, in other

words, is that it is not enough that one simply be a public officer. (See Stark v.

Superior Court (2011) 52 Cal.4th 368, 400 (Stark) [explaining that § 424 ―applies

to ‗every . . . person‘ with some control over public funds‖].)

Section 424(a)‘s remaining provisions support this conclusion. At present,

these punish a person who: ―2. Loans the same or any portion thereof; makes any

profit out of, or uses the same for any purpose not authorized by law; or, [¶] 3.

Knowingly keeps any false account, or makes any false entry or erasure in any

3 We accord the Commissioners‘ Note ―substantial weight‖ in divining the

Legislature‘s intended purpose. (People v. Sarun Chun (2009) 45 Cal.4th 1172,

1187.)

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account of or relating to the same; or, [¶] 4. Fraudulently alters, falsifies,

conceals, destroys, or obliterates any account; or, [¶] 5. Willfully 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, [¶] 6. Willfully omits to transfer the same, when transfer is required

by law; or, [¶] 7. Willfully omits or refuses to pay over to any officer or person

authorized by law to receive the same, any money received by him or her under

any duty imposed by law so to pay over the same.‖ (§ 424(a).) Any person guilty

of the foregoing is quite likely to have been ―charged with the receipt,

safekeeping, transfer, or disbursement of public moneys.‖ Indeed, it is difficult to

imagine the Legislature intended otherwise, especially since several of the

provisions closely track the words ―receipt,‖ ―safekeeping,‖ and ―transfer.‖4

The content of these remaining provisions allows us to draw some

inferences about the Legislature‘s purpose in enacting section 424. (See People v.

Garcia (2016) 62 Cal.4th 1116, 1124 [―Canons of construction — such as the

noscitur a sociis canon underscoring the value of considering terms in a list in

their statutory context — are not mechanical devices, but instead tools that can

help us do what we always aspire to do when construing a statute: avoid

redundancies, reach a reasonable conclusion about the meaning of terms, and give

effect to the Legislature‘s purpose‖].) That content, as shown above, evinces an

almost singular concern for individuals charged with some measure of

responsibility over public funds. It would be unusual for a statute drafted in this

fashion to focus on such individuals in every other provision, but then reach more

broadly to all public officers in section 424(a) 1 only. What we reasonably can

4 None of the provisions of section 424(a) has changed materially since they

were enacted in 1872.

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glean from these surrounding provisions therefore cuts in favor of Hubbard‘s

interpretation of section 424‘s prefatory language. (See Dyna-Med, Inc. v. Fair

Employment & Housing Com. (1987) 43 Cal.3d 1379, 1391 [explaining that

canons of statutory construction such as noscitur a sociis act as a ―guide[]‖ that

may be useful in elucidating the Legislature‘s intended purpose].)

Nor do we find it implausible that the Legislature, in crafting section 424,

could have decided to underscore the importance of public officers by listing them

in a separate clause, while at the same time intending the statute to cover only

those officers charged with some responsibility for public funds. (See TMW

Enterprises, Inc. v. Federal Ins. Co. (6th Cir. 2010) 619 F.3d 574, 578 [explaining

that ―lawyers frequently say two (or more) things when one will do or say two

things as a way of emphasizing one point‖]; see also Scalia & Garner, Reading

Law: The Interpretation of Legal Texts (2012) p. 176 [―Sometimes drafters do

repeat themselves and do include words that add nothing of substance . . .‖].) That

such text commanded lawmakers‘ ultimate support could have reflected the extent

to which — at the time section 424 was enacted in 1872 — the far more limited

number of public officers in existence were perhaps assumed to exercise some

degree of responsibility over public funds.

Hubbard‘s interpretation is also in accord with how we have long

characterized section 424‘s scope in our previous decisions. In Dillon, decided in

1926, we rejected a city commissioner of finance‘s argument that, instead of being

prosecuted under section 424, a general intent statute, he should have been

prosecuted under section 504, which requires specific intent to defraud. (Dillon,

supra, 199 Cal. at pp. 5-11.) Arriving at this conclusion, we suggested repeatedly

that section 424 applies only to those public officers charged with some

responsibility for public funds. (See Dillon, at p. 5 [―It is clear that [section 424]

has to do solely with the protection and safekeeping of public moneys as defined

12

by section 426 of the Penal Code, and with the duties of the public officer charged

with its custody or control‖ (italics added)]; id. at p. 6 [―the subject matter and the

language of section 424 clearly indicate that the legislative mind was intently

concerned with the single, specific subject of the safekeeping and protection of

public moneys and the duties of public officers in charge of the same‖ (italics

added)]; id. at p. 10 [―To again state the situation more succinctly, section 424 has

to do solely with the receipt, safekeeping, transfer, and disbursement of public

moneys by official custodians‖ (italics added and omitted)].)

A half-century later, in Stanson v. Mott (1976) 17 Cal.3d 206, we addressed

the liability of a public official to repay public funds that were improperly

expended. Citing section 424 and Dillon, we recognized that ―public officials who

either retain custody of public funds or are authorized to direct the expenditure of

such funds bear a peculiar and very grave public responsibility, and that courts and

legislatures, mindful of the need to protect the public treasury, have traditionally

imposed stringent standards upon such officials. [Citations.]‖ (Mott, at p. 225,

italics added.) We therefore concluded that ―such public officials must use ‗due

care,‘ i.e., reasonable diligence, in authorizing the expenditure of public funds, and

may be subject to personal liability for improper expenditures made in the absence

of such due care.‖ (Id. at pp. 226-227, italics added.)

And most recently, in Stark, supra, 52 Cal.4th 368, we held that individuals

could be convicted under section 424(a) 1 if they were criminally negligent in

failing to know that their actions were not legally authorized. In so holding, we

presumed that section 424 applies only to those public officers charged with some

responsibility for public funds. (See Stark, at p. 402 [explaining that section 424

applies to ―those charged with control of public funds‖ (italics added)].) We did

so because ―those who transfer and disburse public money bear significant public

responsibility,‖ and, consequently, ―they may be held to a standard of criminal

13

negligence.‖ (Id. at p. 403, italics added.) In fact, no case of ours — or of any

lower court, for that matter — has ever upheld a conviction under section 424 of a

public officer who was not charged with the financial oversight responsibility that

section 424 references. Even in this case, the prosecution‘s theory was premised

on Hubbard‘s being a public officer ―charged with the receipt, safekeeping,

transfer, or disbursement of public moneys.‖5

We note further that Hubbard‘s interpretation of section 424 is not

inconsistent with the statute‘s legislative history. That history, as indicated above,

suggests that section 424 was ―founded upon‖ four laws: sections 66 and 67 of an

act concerning ―Crimes and Punishments‖ (Stats. 1850, ch. 99, pp. 229, 236 (the

1850 Act));6, 7 section 1 of an act to provide for the ―Punishment of

Embezzlement of Public Money‖ (Stats. 1851, ch. 111, p. 425 (the 1851 Act);8

5 At trial, the prosecution argued that Hubbard was guilty under section 424

because he was ―charged with the receipt, safekeeping, transfer, or disbursement

of public moneys‖; not simply because he was a public officer. In the charging

document, for example, the prosecution alleged that Hubbard was ―a person

described in Penal Code section 424 charged with the receipt, safekeeping,

transfer, and distribution of public moneys,‖ and that he misappropriated said

moneys. The charging document did not allege that Hubbard was an officer.

6 Section 66 of the 1850 Act provided: ―Every servant, officer, or person

employed in any public department, station, or office of the government of this

State, or of any county of this State, or in any office of a corporate body, who shall

embezzle, steal, secrete, or fraudulently take and carry away any money . . . being

the property of said State, county, or Corporate body‖ is guilty of a crime. (Stats.

1850, ch. 99, § 66, p. 236.)

7 Section 67 of the 1850 Act provided: ―any officer or person‖ who is

―intrusted by law to collect, disburse, receive, or safely keep any money or

moneys . . . belonging to this State‖ and who ―shall fail or refuse to pay over all

moneys . . . when such officer or person shall be thereto required by law‖ is guilty

of a crime. (Stats. 1850, ch. 99, § 67, p. 236.)

8 Section 1 of the 1851 Act provided: ―if any officer of the State, or of any

County, City or Town in this State, charged with the safe keeping, transfer, or

(Footnote continued on next page.)

14

and sections 1-3 of an act to provide for the better keeping, protection, and

disbursement of ―Public Moneys‖ (Stats. 1863, ch. 88, p. 97 (the 1863 Act)).9

(See Commissioners‘ Note, supra, foll. Ann. Pen. Code, § 424, at p. 167.) Of

those four laws, the 1851 Act, section 1, which applied to ―[public] officer[s] . . .

charged with the safe keeping, transfer, or disbursement of public moneys,‖ most

closely resembles the relevant portion of section 424. And Hubbard‘s

interpretation yields a plausible explanation for why the words ―and every other

person‖ were added — namely, to expand the reach of the 1851 Act to include

persons other than public officers who happened to be charged with some

responsibility for public funds.

In fact, among the forerunners to section 424, only one — section 66 of the

1850 Act — was not expressly aimed at officers ―charged with‖ handling, or

―intrusted by law‖ to handle, public funds. Section 66 applied instead to all public

officers (as well as corporate officers) regardless of whether they were charged

with some responsibility for public funds. That three of the four laws on which

section 424 was based applied to officers charged with some responsibility for

public funds lends additional support to our adoption of Hubbard‘s interpretation.

By the same token, however, the Commissioners‘ Note suggests that section 424

(Footnote continued from previous page.)

disbursement of public moneys shall convert to his own use in any way whatever

. . . every such act shall be deemed and adjudged to be an embezzlement of so

much of said moneys as shall be thus taken, converted, invested, used or loaned

. . . .‖ (Stats. 1851, ch. 111, § 1, p. 425.)

9 Sections 1-3 of the 1863 Act described the duties of public officers

entrusted ―with the collection of any of the public moneys of this State‖ (§ 1) and

―with the custody and disbursement of any of the public moneys‖ (§ 2), including

the duty ―to keep all public moneys, while the same are in their custody or under

their control, in their own possession‖ (§ 3). (Stats. 1863, ch. 88, p. 97.)

15

was ―founded upon‖ section 66 no less than the other three, so we decline to infer

too much from this fact. Either way, the legislative history is not inconsistent with

the interpretation we adopt.

Because that interpretation is firmly rooted in section 424‘s text and

purpose, as well as in our own precedent, we hold that 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.‖ We will therefore

uphold Hubbard‘s conviction so long as there was substantial evidence presented

to the jury that he was so charged.

B. Sufficiency of the Evidence

The jury found Hubbard guilty of two counts of misappropriating public

funds in violation of section 424(a) 1. In reaching its verdict, the jury accepted the

prosecution‘s theory of the case that Hubbard was ―charged with the receipt,

safekeeping, transfer, or disbursement of public moneys.‖ The core of Hubbard‘s

argument before us — an argument the Court of Appeal accepted — is that the

evidence failed to establish that he was so charged. We disagree.

Where, as here, a defendant challenges the sufficiency of the evidence on

appeal, we review the whole record in the light most favorable to the judgment

below to determine whether it discloses substantial evidence — evidence that is

reasonable, credible, and of solid value — such that a reasonable trier of fact could

find the defendant guilty beyond a reasonable doubt. (People v. Johnson (1980)

26 Cal.3d 557, 578; see In re Jorge M. (2000) 23 Cal.4th 866, 888 [reversing

Court of Appeal‘s judgment when, ―[v]iewed in a light favorable to the trial

court‘s judgment [citation], the evidence was sufficient for a reasonable trier of

fact to find [guilt] beyond a reasonable doubt‖].) A reviewing court must reverse

a conviction where the record provides no discernible support for the verdict even

16

when viewed in the light most favorable to the judgment below. (See People v.

Rolon (2008) 160 Cal.App.4th 1206, 1221.) Nonetheless, it is the jury, not the

reviewing court, that must weigh the evidence, resolve conflicting inferences, and

determine whether the prosecution established guilt beyond a reasonable doubt.

(People v. Yeoman (2003) 31 Cal.4th 93, 128.) And if the circumstances

reasonably justify the trier of fact‘s findings, the reviewing court‘s view that the

circumstances might also reasonably be reconciled with a contrary finding does

not warrant reversal of the judgment. (People v. Abilez (2007) 41 Cal.4th 472,

504.)

We begin our analysis of whether such justification is present by

emphasizing what the text makes plain: section 424 applies not only to those

persons responsible for disbursing public moneys, but also to those responsible for

their ―receipt,‖ ―safekeeping,‖ or ―transfer.‖ (See Black‘s Law Dict. (10th ed.

2014) p. 282, col. 2 [defining ―charge‖ as, inter alia, to ―entrust with

responsibilities or duties‖].) Given the range of duties within the ambit of section

424 –– and considering the ― ‗essential public interest‘ ‖ the statute serves –– we

have previously indicated the law applies broadly, ―to ‗every . . . person‘ with

some control over public funds.‖ (Stark, supra, 52 Cal.4th at p. 400, italics

added.)

That control need not be the defendant‘s primary responsibility. (See

People v. Aldana (2012) 206 Cal.App.4th 1247, 1253 (Aldana) [― ‗ ―to be charged

with the receipt, safekeeping, transfer, or disbursement of public moneys‖ within

the meaning of section 424 requires only that the defendant have some degree of

control over public funds and that control need not be the primary function of

defendant in his or her job‘ ‖].) Nor must the defendant physically possess the

public funds. (See People v. Groat (1993) 19 Cal.App.4th 1228, 1232 (Groat) [―A

defendant need not ever have actual possession of public moneys‖].) And,

17

critically, the exclusive legal authority to spend public moneys need not be vested

with the defendant. (See People v. Qui Mei Lee (1975) 48 Cal.App.3d 516, 523

[whether a public officer is ―charged with‖ handling public funds turns on

practical control, not statutory duties alone].)

Nonetheless, where an individual merely plays a role in the first step of a

process that results in the expenditure of public funds, that role is generally

insufficient to establish criminal liability under section 424. (See Aldana, supra,

206 Cal.App.4th at p. 1254.) The defendants in Aldana were the administrator of

a public hospital and a physician the administrator had hired to be a liaison for risk

assessment. (Id. at pp. 1250-1251.) The physician was paid by the hour for this

work, and the government program that funded his position required him to report

the hours worked during each pay period on a timesheet certified by his

supervisor. (Id. at p. 1251.) The physician signed blank timesheets that the

administrator later filled in and signed herself. (Ibid.) Both defendants

acknowledged that the hours on the timesheets did not accurately reflect the

number of hours the physician had actually worked on any given day. (Ibid.)

The physician was convicted of keeping a false account under section

424(a) 3. (Aldana, supra, 206 Cal.App.4th at p. 1252.) But the Court of Appeal

reversed, finding that the physician was not a person charged with the receipt,

safekeeping, transfer, or disbursement of public moneys. (Id. at p. 1255.) Relying

on Groat for the proposition that an individual is so charged as long as he or she

has some degree of control over public funds, the Aldana court reasoned that

merely signing one‘s own timesheets does not, without more, demonstrate that a

defendant has any degree of control over public funds. (Id. at pp. 1253-1254.)

The physician, the Aldana court noted, was not able to authorize his own pay;

approval authority for his timesheet lay elsewhere. (Id. at p. 1254.) Because there

was no evidence the physician exercised any control over public funds beyond

18

having signed his own blank timesheets, the Aldana court found there was

insufficient evidence to sustain the conviction under section 424. (Id. at p. 1255;

cf. Groat, supra, 19 Cal.App.4th at p. 1234 [―Because she had the authority to

certify her own time card, appellant had control over those public funds eventually

paid to her as salary and therefore is a person charged with their disbursement for

purposes of section 424‖].)

What the Aldana court correctly concluded is that the statute was not

intended to punish every individual whose action or inaction could conceivably

have consequences for the public fisc. Some individuals, such as the physician in

Aldana, may not be punishable under section 424 because their conduct and

position indicate they bear too tenuous a relationship to the receipt, safekeeping,

transfer, or disbursement of public funds. To account for this circumstance, we

hold that an individual is ―charged with the receipt, safekeeping, transfer, or

disbursement of public moneys‖ under the meaning of section 424 so long as he or

she exercises a degree of material control over public funds that amounts to being

―charged with‖ such authority. (See Stark, supra, 52 Cal.4th at p. 400.)

Whether someone exercises this degree of material control over public

funds depends on actual function as much as — if not more than — formal title.

(See Webb v. Superior Court (1988) 202 Cal.App.3d 872, 887 [―The fact that

petitioner was not directly, in his job description or the common responsibilities of

his position, charged with receipt, safekeeping, transfer or disbursement of public

funds does not necessarily preclude a prosecution under section 424. It is

sufficient if the public official controls public funds so as to cause their

expenditure for nonpublic purposes‖].) In this regard, it is possible to distinguish

a person‘s leadership of an organization in a general sense from the person‘s

bureaucratic responsibilities within that organization. The former may be

reflected merely in someone‘s title, symbolic role, and de facto influence; the

19

latter, on the other hand, concerns the explicit responsibilities someone typically

undertakes within the organization –– and the extent to which those

responsibilities encompass some degree of supervisory authority over the actions

of subordinate employees. (Cf. Henry J. Kaiser Co. v. Industrial Accident Com.

(1947) 81 Cal.App.2d 818, 823 [―it is not the name applied to an officer or

employee, such as vice-president, foreman, etc., but rather the actual duty and

authority bestowed upon such person that determines the question‖].) That

someone with a formal title and influence often also has specific powers does not

mean that these two kinds of power are necessarily coextensive. And, of course,

even if someone has considerable bureaucratic responsibility, that person may still

lack the unilateral authority to lawfully direct the ultimate disposition of public

funds. (See People v. Honig (1996) 48 Cal.App.4th 289, 352 [state superintendent

of public instruction convicted of making official contracts in which he had a

financial interest could not evade liability by arguing the transactions at issue were

―grants‖ rather than contracts because, in any event, he ―has pointed to no legal

authority which would permit him to make a unilateral decision to bestow grant

money in this fashion‖].) Scrutinizing a person‘s actual and formal

responsibilities as they pertain to public funds is therefore essential to the

factfinder‘s determination whether the person has the degree of material control

over public funds that will satisfy the standard we have articulated.

We find that standard was met in this case. The evidence showed that,

during the relevant time period, Hubbard was the chief executive officer of the

District. In his capacity as superintendent, Hubbard oversaw various departments

related to the expenditure of public funds, including human resources, business,

and accounting. His employment contract made clear that he was responsible for

implementing policies in the realm of budgeting and business affairs, and for

taking the lead in raising money for school facilities. Hubbard‘s actual

20

responsibilities mapped onto those prescribed by law. Those statutory duties

included: preparing and submitting a budget for the school district, preparing a

―local control and accountability plan,‖ assigning and transferring teachers,

entering into contracts for and on behalf of the school district, and submitting

financial and budgetary reports to the school district‘s governing board. (Ed.

Code, § 35035, subds. (a)-(i).) Hubbard testified that, pursuant to his duty under

the law, he had familiarized himself with the rules governing superintendents.

Reflected in the scope of such rules — according to the trial testimony of

an executive at ACSA, an organization that teaches school administrators about

their responsibilities — is every superintendent‘s ―fiduciary responsibility to

protect the funds of the school district in which they serve.‖ Indeed, the ACSA

executive testified that superintendents like Hubbard are instructed on their

responsibility to protect public funds. Superintendents also need to know the

―business side‖ of running a school district, including ―where all the finances

come through and the revenues come through so [superintendents] can expend

those revenues on behalf of schoolchildren.‖ Through courses taught by ACSA,

superintendents learn how to expend public funds on behalf of the students they

serve. And Hubbard, who taught some of these courses, acknowledged that he had

had discussions with his student administrators about their ethical and legal

obligations with respect to public funds.

But there is more. The evidence also showed Hubbard was entrusted with

the responsibility of bringing expenditures to the Board for approval and then

ensuring District funds were spent according to the Board‘s instructions. These

duties entail a material degree of discretion and control over how public funds are

allocated. For instance, Hubbard could select an employee for a compensation

increase and direct the human resources department to prepare a personnel report

on the matter. Hubbard, who set the agenda for Board meetings, could then

21

submit that report — along with the proposed compensation increase — to the

Board for an up-or-down vote. From the evidence, the jury could reasonably infer

that the Board would at times defer to Hubbard on such matters. As Hubbard

explained it, obtaining Board approval could be as simple as his presenting the

request in closed session and asking if there were any objections. Seeing none,

Hubbard would steer the Board onward to the next item. Once formal approval

was obtained by a Board vote in open session — the evidence here, of course, was

that no such approval was obtained — Hubbard could then direct the expenditure

of public funds.

Indeed, the evidence indicates that Hubbard secured the improper payments

to Christiansen by submitting two memoranda to the human resources and payroll

departments he oversaw. The memoranda, which read like directives, included

specific dollar amounts, chosen by Hubbard, to be paid to a specific District

employee. Hubbard‘s commands, written on District letterhead and in Hubbard‘s

official capacity as ―Superintendent of Schools,‖ were carried out by his

subordinates and resulted in the misappropriation of public funds. It was not

uncommon for these subordinates to receive direction from their superintendent to

change an employee‘s pay. Hubbard himself testified that he expected his

subordinates to carry out these directives. There was no evidence that Hubbard

considered the content of the memoranda, or the fact he had written them, to be

out of the ordinary. At core, then, Hubbard abused his position of power to

arrange for these payments — payments that almost certainly would not have

happened but for Hubbard‘s actions. Based on the foregoing, we conclude there

was substantial evidence that Hubbard exercised a degree of material control over

public funds that amounted to being charged with those funds‘ safekeeping or

disbursement.

22

The Court of Appeal relied on Aldana to reach a different conclusion. But

plainly, Aldana is distinguishable. A physician who signs blank timesheets for his

supervisor to complete is a far cry from a superintendent with a fiduciary

responsibility to safekeep school district funds. The physician in Aldana had no

formal or informal duty delegated to him regarding public funds, and he had no

power over the payment or disbursal of such funds. The physician did not even

enter the information upon which disbursement decisions would be made.

Hubbard, by contrast, selected specific amounts of public money to be paid to a

specific employee, and he directed those payments be made using his authority as

District superintendent.

The Aldana court‘s statement regarding the physician‘s inability to

authorize his own pay was merely one basis for finding the evidence insufficient

to support a section 424 conviction under the facts of that case. Aldana did not

purport to create a more stringent standard than the one we cited with approval in

Stark — a standard we clarify today. (See Stark, supra, 52 Cal.4th at p. 400.)

And for good reason. It would make little sense to adopt a formal requirement of

approval authority in this case. For one, a requirement that section 424 reach only

those persons who exercise unilateral spending authority would seem to exclude

most people in financial controller positions, and it is hard to imagine the

Legislature would have intended such a result. For another, it is not clear that

anyone in the state –– not the Controller, not the Governor, not anyone else –– has

the unilateral authority to effect public spending without any constraints. If

essentially all government officials are constrained to some extent, the question is

whether a person has sufficient bureaucratic responsibility over public finance,

budgeting, and accounts to come within the statute‘s broad language. By

emphasizing the extent of actual authority over the receipt, safekeeping, transfer,

and disbursement of public funds without concluding that only individuals with

23

unfettered control over such funds should be subject to liability under section 424,

our holding is consistent with the statute‘s text and purpose, as well as the

practical realities of governance that properly inform the standard we adopt.

Given such realities, individuals charged with the receipt, safekeeping,

transfer, or disbursement of public funds may rarely if ever possess exclusive legal

authority or unfettered control over the funds‘ disposition. What Hubbard was

instead endowed with was a considerable degree of actual managerial authority

over the supervision of the District‘s funds –– authority that explains why

Hubbard‘s subordinates did not consider it unusual to receive a financial directive

from him. Whether or not a school superintendent is also a leader in a more

general sense, the relevance of section 424 to the conduct at issue does not turn on

the official‘s symbolic role or title. Far from it. Whether that title enabled an

individual to seek influence over coworkers through persuasion or artifice is

immaterial.

The standard we adopt today must also be considered in the broader

statutory context. That context, we emphasize, imposes additional limitations on

who exactly may be prosecuted under section 424. For instance, to be found

guilty under section 424(a) 1, a defendant must act without lawful authority; must

know or be criminally negligent in failing to know that he or she lacks legal

authority; must act with respect to public moneys; and must take sufficiently

affirmative action with respect to those moneys that he or she can be said to have

―appropriate[d]‖ them. Section 424, thus, does not punish innocent mistakes by

those in positions of public trust. (See Stark, supra, 52 Cal.4th at p. 400 [―Public

officials and others should not be criminally liable for a reasonable, good faith

mistake regarding their legal responsibilities. Nor is section 424 intended to

criminalize ordinary negligence or good faith errors in judgment‖].) Rather, it

punishes those like Hubbard who, aware of the wrongfulness of their conduct or

24

criminally negligent of that fact, nonetheless misappropriate the public funds they

have a fiduciary responsibility to safeguard. Such conduct is properly punishable

under section 424.

III. CONCLUSION

Public officers face criminal liability under section 424 when they

misappropriate public funds and when their control over such funds amounts to

being charged with the funds‘ ―receipt, safekeeping, transfer, or disbursement.‖

The statute does not make liability conditional on a public officer‘s possessing

exclusive control over public funds, or unfettered discretion to decide on their

disposition. Instead, it requires that the public officer have the sort of actual

authority that confers some degree of material control over the funds‘ disposition.

The evidence here supports the jury‘s conclusion that Hubbard had such control

and was therefore ―charged with the receipt, safekeeping, transfer, or disbursement

of public moneys‖ — Hubbard owed a general and widely recognized duty to

safeguard school district funds, his contract charged him with overseeing the

―budget and business affairs‖ of the District, and he exercised his formal authority

in explicitly directing his subordinates to make the payments at issue in this case

on his behalf. As a result, we reverse the Court of Appeal‘s judgment and remand

for further proceedings consistent with this opinion.

CUÉLLAR, J.

WE CONCUR:

CANTIL-SAKAUYE, C. J.

WERDEGAR, J.

CHIN, J.

CORRIGAN, J.

LIU, J.

KRUGER, J.

25

See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion People v. Hubbard

__________________________________________________________________________________

Unpublished Opinion XXX NP opn. filed 12/31/13 – 2d Dist., Div. 1

Original Appeal

Original Proceeding

Review Granted

Rehearing Granted

__________________________________________________________________________________

Opinion No. S216444

Date Filed: June 16, 2016

__________________________________________________________________________________

Court: Superior

County: Los Angeles

Judge: Stephen A. Marcus

__________________________________________________________________________________

Counsel:

Hillel Chodos and Philip Kaufler for Defendant and Appellant.

Kamala D. Harris, Attorney General, Dane R. Gillette and Gerald A. Engler, Chief Assistant Attorneys

General, Lance E. Winters, Assistant Attorney General, Lawrence M. Daniels, Margaret E. Maxwell, Eric

E. Reynolds and Dana Muhammad Ali, Deputy Attorneys General, for Plaintiff and Respondent.

Counsel who argued in Supreme Court (not intended for publication with opinion):

Philip Kaufler

1559 S. Sepulveda Boulevard

Los Angeles, CA 90025

(310) 473-8666

Dana Muhammad Ali

Deputy Attorney General

300 South Spring Street, Suite 1702

Los Angeles, CA 90013

(213) 897-2868