People v. Selivanov

Filed 11/17/16

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

THE PEOPLE, B252894 consolidated with

B255166

Plaintiff and Respondent,

(Los Angeles County

v. Super. Ct. No. BA372244)

YEVGENY SELIVANOV et al.,

Defendants and Appellants.

THE PEOPLE, B255166

Plaintiff and Appellant,

v.

YEVGENY SELIVANOV et al.,

Defendants and Respondents.

APPEALS from judgments of the Superior Court of Los Angeles County, Stephen

A. Marcus, Judge. Affirmed as modified, with directions.

Kaplan Marino, Nina Marino and Allen G. Weinberg for Defendant, Appellant

and Respondent Tatyana Berkovich.

Crowell & Moring, Jeffrey H. Rutherford and Nimrod Haim Aviad for Defendant,

Appellant and Respondent Yevgeny Selivanov.

Young, Minney & Corr, Paul C. Minney, William J. Trinke and Kevin M. Troy;

California Charter Schools Association, Ricardo J. Soto, Julie Ashby Umansky and

Phillipa L. Altman as Amicus Curiae on behalf of California Charter Schools Association

in support of Defendants, Appellants and Respondents.

Jackie Lacey, District Attorney, Roberta Schwartz, Serena R. Murillo and

Matthew Brown, Deputy District Attorneys for Plaintiff and Appellant The People of the

State of California.

Kamala D. Harris, Attorney General, Gerald A. Engler, Chief Assistant Attorney

General, Lance E. Winters, Assistant Attorney General, Michael C. Keller and Eric J.

Kohm, Deputy Attorneys General, for Plaintiff and Respondent The People of the State

of California.

________________________________

Spouses Yevgeny “Eugene” Selivanov and Tatyana Berkovich founded a charter

school, Ivy Academia, in 2003. In 2006, the Los Angeles Unified School District

(LAUSD), which issued Ivy Academia’s charter, conducted a random audit of the

school’s finances. The audit revealed several irregularities, prompting a further

investigation that ultimately resulted in the filing of a 33-count information charging

Selivanov and Berkovich with numerous financial crimes. After a five-week trial, a jury

convicted Selivanov and Berkovich of felony embezzlement (Pen. Code, § 504)1 and

felony misappropriation of public moneys (§ 424, subd. (a)). The jury further convicted

Selivanov of felony false accounting of public moneys (§ 424, subd. (a), money

laundering (§ 186.10) and filing false tax returns (Rev. & Tax. Code, § 19705, subd. (a)).

In addition, as to Selivanov, the jury found true the allegation that the total losses

associated with six of the embezzlement counts exceeded $65,000. (§ 12022.6, subd.

(a)(1).)

Selivanov and Berkovich each moved for a new trial. The trial court granted the

motions as to all of their convictions for misappropriation and false accounting of public

moneys under section 424, subdivision (a), on the ground that it improperly had

instructed the jury that the funds involved were public moneys. The court sentenced

1

All further statutory references are to the Penal Code unless otherwise indicated.

2

Selivanov to a total of four years, eight months in state prison, and sentenced Berkovich

to formal probation on the condition that she serve 45 days in county jail. Both

defendants were ordered to pay fines, fees, and restitution.

Selivanov and Berkovich appeal. They jointly challenge one of their

embezzlement convictions on several grounds, including sufficiency of the evidence and

the trial court’s failure to give a unanimity instruction. They also seek reversal based on

the court’s failure to instruct the jury to determine whether the amount embezzled

exceeded $950, and whether the embezzled funds were public funds within the meaning

of section 514. Both defendants also contend the court erred by failing to consider

proffered juror declarations when setting their restitution. Selivanov separately

challenges the sufficiency of the evidence underlying his other convictions. He also

challenges the court’s failure to instruct the jury on the claim-of-right defense, the

admission of certain accounting documents, and several aspects of the restitution order.

As we explain more fully below, we conclude the trial court erred in making the

public funds finding but affirm defendants’ convictions because the error was harmless.

We do, however, direct the trial court to strike from Selivanov’s restitution order the joint

and several obligation to pay $22,396.60 in restitution to Ivy Academia in connection

with his embezzlement conviction in count 2, and strike from Berkovich’s restitution

order any language making Selivanov jointly and severally liable for it. As modified, the

judgments of the trial court are otherwise affirmed in full.

The Los Angeles County District Attorney (“the People”) filed a cross-appeal

challenging the trial court’s grant of defendants’ motions for new trial of the section 424

counts. In their opening brief, the People contend the trial court relied on outdated case

law to conclude that the jury was required to determine whether a charter school is a

district; they do not challenge the validity of the actual basis for the court’s ruling, its jury

instruction on “public moneys.” In their reply, however, the People argue that the trial

court’s actual basis for granting the motion was erroneous. They urge us to excuse their

oversight, reverse the trial court’s rulings on the motions for new trial, and reinstate the

guilty verdicts on all of the section 424, subdivision (a) counts affected by the motions.

3

We decline their invitation to do so and affirm the trial court’s order granting defendants’

new trial motions.

PROCEDURAL HISTORY

On May 4, 2011, the People filed a 33-count information charging defendants with

various financial crimes.2 Counts 1, 3, 5, 7, and 39 charged both defendants with

misappropriating public moneys. (§ 424, subd. (a).) Each of those misappropriation

counts was paired with a charge of embezzlement in excess of $950. (§ 504, counts 2, 4,

6, 8, and 40, respectively.) The information also charged both defendants with filing

false personal income tax returns in violation of Revenue and Taxation Code section

19705, subdivision (a) (counts 27-31).

Selivanov alone was charged with five additional counts of misappropriating and

falsely accounting for public moneys. (§ 424, subd. (a), counts 9, 11, 18, 21, and 24.)

Four of those counts (9, 18, 21, and 24) were paired with a count of embezzlement in

excess of $950 stemming from the same conduct. (§ 504, counts 10, 19, 22, and 25,

respectively.) Three of those misappropriation-embezzlement count pairs—18-19, 21-22,

and 24-25— were further supplemented with a related count of money laundering (§

186.10, subd. (a), counts 20, 23, and 26.) The information also alleged that Selivanov

alone filed false business income tax returns. (Rev. & Tax. Code, § 19705, subd. (a),

counts 32-36.) Berkovich alone was charged with one count of conflict of interest. (Gov.

Code, §§ 87100 and 91000, count 38).

The information further alleged, with respect to the misappropriation,

embezzlement, and money laundering charges in counts 1-8, 18-26, and 39-40, that

defendants took, damaged, and destroyed property of a value exceeding $65,000 within

the meaning of section 12022.6, subdivision (a)(1). With respect to most of the

embezzlement counts, including all of those sounding against Berkovich, namely counts

2

Following the parties’ practice, we refer to the counts by the numbers used in the

information and not the renumbered counts used at trial. The original criminal complaint

against defendants had 40 counts, which is why some of the counts discussed herein have

a number higher than 33.

4

2, 4, 6, 8, 10, 19, and 40, the information alleged that the funds embezzled were “public

funds” within the meaning of section 514.

Embezzlement and misappropriation counts 3-6 and 9-10 were dismissed pursuant

to defendants’ section 995 motions following the preliminary hearing. The court later

dismissed the conflict of interest charge against Berkovich (count 38) pursuant to the

People’s motion under section 1385. Defendants pleaded not guilty to the remaining

charges and denied all of the special allegations.

Defendants were tried jointly before a jury in February and March 2013. On April

5, 2013, the jury found Selivanov guilty of seven counts of misappropriating or falsely

accounting for public moneys (counts 1, 7, 11, 18, 21, 24, and 39), six counts of

embezzling in excess of $950 (counts 2, 8, 19, 22, 25, and 40), two counts of money

laundering (counts 23 and 26), and 10 counts of filing false tax returns (counts 27-36).

The jury acquitted Selivanov of a third money laundering charge (count 20) but found

true the special allegation that, as to counts 2, 8, 19, 22, 25, and 40, Selivanov in the

aggregate took money exceeding $65,000 within the meaning of section 12022.6,

subdivision (a)(1).

The jury found Berkovich guilty of two counts of misappropriating public moneys

(counts 1 and 39), one count of embezzling in excess of $950 (count 2), and five

misdemeanor tax counts that were lesser included offenses of the charged felony tax

violations (counts 27-31). The jury acquitted Berkovich of one additional count of

misappropriation (count 7) and two additional counts of embezzlement in excess of $950

(counts 8 and 40). It also found not true the special allegation that she embezzled in

excess of $65,000 within the meaning of section 12022.6, subdivision (a)(1). The court

later dismissed Berkovich’s misdemeanor tax convictions at the People’s request,

pursuant to section 1382.

Selivanov and Berkovich each moved for a new trial. The court granted the

motions as to the misappropriation and false accounting counts charged under section

424, subdivision (a) (counts 1, 7, 11, 18, 21, 24, and 39) and denied the motions in all

other respects.

5

At sentencing, at the People’s request and over defendants’ objections, the court

found that “this case involved public funds” within the meaning of section 514, the

statute setting out the punishment scheme for embezzlement offenses. The court later

denied defendants’ motions to strike the finding.

The court sentenced Selivanov to a total of four years, eight months in state prison,

calculated as the high term of three years on one of the embezzlement counts (§ 504,

count 8); an additional year for the enhancement on that count (§ 12022.6, subd. (a)); and

eight months, one-third the midterm, on one of the money laundering counts (§ 186.10,

subd. (a), count 26). The court imposed concurrent terms on all other counts of

conviction. After a contested restitution hearing, the court ordered Selivanov to pay a

total of $271,795.11 in restitution. Of that amount, $227,896.11 was payable to Ivy

Academia: $126,654.73 was assessed in connection with count 40; $66,795.96 was

assessed in connection with counts 8, 19, 22, and 25; and a total of $34,445.42 was

assessed in connection with count 2. The remaining $43,899 of Selivanov’s restitution

was payable to the Franchise Tax Board in connection with the tax convictions in counts

27-36. The court also ordered Selivanov to pay a restitution fine of $5,000 and imposed

and suspended a $5,000 parole revocation restitution fine.

The court sentenced Berkovich to five years’ formal probation, on the condition

that she serve the first 45 days in county jail. The court also ordered her to perform 320

hours of community service. The court found Berkovich jointly and severally liable with

Selivanov for $22,396.60 in restitution in connection with her sole conviction for

embezzlement (count 2). The court ordered Berkovich to pay a $1,000 restitution fine.

Both defendants timely appealed. The People also timely appealed the court’s

grant of defendants’ new trial motions. The appeals were consolidated for oral argument

and decision.

FACTUAL BACKGROUND

This case concerns obfuscatory and complex financial transactions and accounting

procedures. In the interest of clarity and brevity, we recite immediately below the facts

underlying the charged conduct, organized topically. Additional facts pertinent to the

6

legal issues raised on appeal will be discussed as necessary in connection with those

issues.

I. Ivy Academia

This case centers on defendants’ conduct in their capacities as the founders and

operators of a charter school, Ivy Academia. Charter schools are “public schools funded

with public money but run by private individuals or entities rather than traditional public

school districts.” (Today’s Fresh Start, Inc. v. Los Angeles County Office of Education

(2013) 57 Cal.4th 197, 205.) Though operated independently, charter schools are subject

to public oversight. (Id. at p. 206.)

Selivanov was the executive director of Ivy Academia. Berkovich initially served

as the school’s principal and later became its president. Both defendants continuously

served on Ivy Academia’s governing board of directors.

A. Founding and Corporate Organization

In October 2003, defendants filed a petition to establish Ivy Academia with the

Charter School Division of the Los Angeles Unified School District (LAUSD), which

oversees charter schools. LAUSD approved the petition, authorizing Ivy Academia to

begin operations the next fiscal year, July 1, 2004 through June 30, 2005. After the

charter was approved, Selivanov incorporated Alternative Schools, Inc., a nonprofit

public benefit corporation, to operate and do business as Ivy Academia. Selivanov also

filed a fictitious business name statement identifying Ivy Academia as a fictitious name

of Alternative Schools, Inc.

Defendants also owned another business entity, Academy Just for Kids, LLC

(“AJFK”). Selivanov changed the name of that business to EGeneration, LLC in April

2005.

B. Funding and Finances

1. Charter School Funding Generally

According to prosecution witness Aaron Eairleywine, the central business advisor

for LAUSD’s Charter School Division, Ivy Academia was considered a public school

entitled to receive state funds and federal funds that flow through the state. Eairleywine

7

and Patricia Smith, a representative of the Los Angeles County Office of Education’s

finance department, testified that the allocations from the state are “designed to fund the

educational activities,” “instructional program,” and general operation of charter schools.

Funding is based on charter schools’ average daily attendance and is distributed primarily

in the form of categorical and general purpose block grants. According to Eairleywine

and Smith, categorical and general purpose block grants are considered unrestricted funds

that may be spent “for the overall operation of the agency and its purpose” – i.e., for

school or educational purposes. Eairleywine and Smith further testified that charter

schools also receive restricted grants and other funds that must be spent for particular

purposes, such as purchasing supplies, reducing class sizes, or paying for standardized

testing. They both noted that LAUSD does not train charter school operators on the

proper use of categorical or general purpose block grant funds.

According to Eairleywine, money usually does not begin flowing from the state to

a new charter school until after the school begins operating. But new charter schools

need funds at their inception to secure facilities, pay staff, and prepare the school for

students. For that reason, Eairleywine explained, LAUSD requires charter schools to

demonstrate access to funding in their initial petitions. Some charter schools obtain these

initial funds through grants or philanthropic gifts. Others, like Ivy Academia, use loans.

2. The Start-Up Loan

Ivy Academia obtained a $250,000 loan from the California Department of

Education. Ivy Academia also obtained a loan from Selivanov and Berkovich, referred to

at trial as the “start-up loan.” Ivy Academia’s governing board approved the start-up loan

in August 2004. It documented receipt of the start-up loan by issuing a three-year,

unsecured promissory note payable to Selivanov in the amount of $250,000, plus nine

percent interest.

Despite the personal nature of the loan and language in the promissory note

making it payable to Selivanov personally, the start-up loan was booked in the “Due to

Academy” account in Ivy Academia’s QuickBooks accounting software. “Academy”

referred to defendants’ business entity AJFK, Academy Just for Kids. The Due to

8

Academy account was one of three QuickBooks accounts recording amounts owed to

Selivanov, Berkovich, and their business entities. The other two, Due to Management

and Due to EGeneration, will be addressed below.

The amount initially entered in the Due to Academy account on September 30,

2004 was approximately $397,000, though both the promissory note approved by the

board and the audited financial statements Ivy Academia submitted to LAUSD reflected a

loan of only $250,000. A few weeks later, on October 19, 2004, Ivy Academia made a

$300,000 payment to AJFK, reducing the amount owed in the Due to Academy account

to approximately $97,000. However, this payment appeared on Ivy Academia’s audited

financial statements as a payment of only approximately $74,000. The only people with

access to Ivy Academia’s QuickBooks accounting software were Selivanov and the

school’s bookkeeper, Marina Pilyavskaya. Pilyavskaya, who testified under a grant of

immunity, testified that she did not do the books for defendants’ other business entities.

The People charged Selivanov with falsifying the accounting of public moneys in

connection with the discrepancies in the documentation of the start-up loan and its

repayment (§ 424, subd. (a); count 11)).

3. Deferred Salaries

During the first year of Ivy Academia’s operation, the school did not have funds

available to pay salaries to Selivanov and Berkovich. Ivy Academia’s governing board

voted to defer payment of the salaries, plus nine percent interest, until the school’s

finances improved. Pilyavskaya entered the deferred salaries owed—$100,000 to

Selivanov and $80,000 to Berkovich—into another QuickBooks account, “Due to

Management.” The amount owing in the Due to Management account increased to

$230,000 after the board approved bonuses for both Selivanov and Berkovich. Ivy

Academia regularly made payments to defendants to offset the interest accruing on the

Due to Management account, but did not make formal salary payments against this

account until April 2008, when it issued Selivanov a check for $18,000. The Due to

Management account reflected two additional salary payments to defendants in 2008

(another $18,000 to Selivanov and $10,000 to Berkovich) and two to each defendant in

9

2009. Each defendant received a check for $11,000 in April 2009, and the Due to

Management account reflected that. The other salary payment each defendant received in

2009—a check for $7,000—was documented in the Due to Management account as a

payment of only $1,727.80. No further salary payments were documented in the Due to

Management account until early 2011, after the board voted to pay down the salary still

owed to defendants in regular increments. The balance of the Due to Management

account reached zero in July 2011.

4. Financial Oversight

Like other charter schools authorized by LAUSD, Ivy Academia was subject to

examination and audits by the LAUSD Charter School Division. Eairleywine testified

that charter schools are required to submit preliminary budgets, interim reports, and

annual audits to the Charter School Division in addition to undergoing on-site reviews.

Charter schools also are required to hire independent auditors, selected from a list

approved by the state controller’s office, to prepare annual audited financial statements.

Although it complied with these requirements, Ivy Academia was the subject of a random

audit in 2006. That audit led to a lengthy investigation that resulted in the criminal

charges at issue here. While the investigation was ongoing, in 2008, LAUSD approved

Ivy Academia’s petition to renew its charter.

II. American Express Charges and Expenditure of Public Funds

Selivanov and Berkovich each had an Ivy Academia American Express credit

card. The People alleged that defendants’ use of their American Express cards

constituted misappropriation of public moneys (§ 424, subd. (a); count 1) and

embezzlement of public funds (§§ 504, 514; count 2).

Pilyavskaya testified that she was responsible for processing the defendants’

charges. When she received the monthly American Express bill, she would prepare

expense reports and request receipts supporting defendants’ purchases. Pilyavskaya

attached the receipts to the expense reports and gave them to board member Arthur

10

Sarkisian for approval.3 Sarkisian approved the expense reports and then returned the

reports and accompanying receipts to Pilyavskaya, who kept them in her office.

During LAUSD’s investigation of Ivy Academia, LAUSD financial analyst and

forensic accountant Connie Delos Santos4 reviewed Pilyavskaya’s American Express

records. Delos Santos prepared a spreadsheet showing all charges made to the Ivy

Academia American Express account from January 2005 through January 2010. She

highlighted each charge she deemed “questionable” or “disallowed” based on her online

research into public school spending, her general understanding of the types of purchases

that have school purposes versus those that are “personal in nature,” and a LAUSD meal

policy. The charges Delos Santos deemed “questionable” totaled $34,445.42.

According to Delos Santos, the “questionable” charges made on Selivanov’s

American Express card totaled $12,048.82. These charges included $48.71 for flowers

purchased on Valentine’s Day and booked into the “Office Supply” account in Ivy

Academia’s QuickBooks; $59.94 for a business meeting at Crazy Tokyo on a Friday

night at 9:48 p.m., booked as utilities and housekeeping; and $135.89 at Cheesecake

Factory on a Saturday afternoon for a business meeting. The “questionable” charges on

Berkovich’s American Express card totaled $22,396.60. They included $67.38 for two

“Welcome Baby” floral arrangements, booked as other office supplies; two $42.45 floral

arrangements for councilman Jack Weiss, booked as teacher appreciation; $631.38 at

Things Remembered, booked as maintenance supplies; $100 for a Crate and Barrel gift

card, also booked as maintenance supplies; $995 for a “Tax secrets seminar by Patrick

James,” booked as other professional development; and various items purchased at

Costco, including a Speedo bathing suit, shrimp scampi, and Pull-Ups training pants.

Both defendants also repeatedly charged hundreds of dollars at bowling alleys and

3

At trial, Sarkisian and two other members of the board, Alex Kauffman and

Marci Adams, each invoked the Fifth Amendment right against self-incrimination.

Kauffman previously had testified at the preliminary hearing, however, and that

testimony was read into the record at trial.

4

The Deputy District Attorney confirmed this spelling of Delos Santos’s name at

oral argument.

11

restaurants for “teacher appreciation” events, at least one of which included the purchase

of alcohol.

Defendants did not reimburse Ivy Academia for any of these charges, though

Pilyavskaya testified that Berkovich sometimes wrote “no” or “mine” on receipts to

indicate items that were not purchased for the school. Defendants did not reduce the

amount owed to them in the Due to Management account by documenting their

“questionable” purchases there, and they did not report the purchases as income on their

personal income taxes. According to former Ivy Academia principal Christina Desiderio,

however, Berkovich boasted that her Ivy Academia credit card was “unlimited” and

stated that she wanted to open more charter schools because “it could make you a

millionaire.”

The independent auditors who prepared financial statements for Ivy Academia

included a note in their 2006 report that “there was a problem with the credit card use,”

including inadequate explanations for charges, and expenditures that “appeared to be

personal in nature.” Prosecution witness Michael Atkinson, a senior investigator with

LAUSD’s Office of the Inspector General, testified that the audit paperwork included a

notation that “Selivanov had fought with them about having that information removed

from the audit report” and another reminding the auditors to “closely review their use of

credit cards to see if these deficiencies have been corrected.”

Both the prosecution and the defense presented witnesses who testified about the

standards governing spending by charter schools. All of the witnesses generally agreed

that public moneys or funds received by charter schools must be spent on educational or

school purposes. The witnesses differed, however, on whether or under what conditions

certain expenditures met that standard. Prosecution witnesses Eairleywine and Smith

testified that gifts for teachers and staff, “activities for the pleasure of faculty and

teachers and staff such as bowling,” and “after hours dinners off campus” would not be

permissible under any circumstances. Defense witnesses Caprice Young, founder of the

12

California Charter Schools Association5; Eric Premack, executive director of the Charter

Schools Development Center; and Roger Lowenstein, the founder and director of a

charter school; all testified that such expenditures could be appropriate. Premack added

that a charter school would need to have “reason to believe that it helps the school

achieve its instructional goals,” and Lowenstein agreed that charter schools have a duty to

guard public funds.

III. Rent Increase

In June 2004, defendants’ other business entity, AJFK, entered into a 10-year

sublease agreement with J & N Amoroso Family Investments, LLC for a property to use

as Ivy Academia’s campus. Under the sublease, which Selivanov and Berkovich

personally guaranteed, AJFK agreed to pay rent of $18,390 per month for a 24,520-

square-foot building on De Soto Avenue in Woodland Hills. The rent was adjustable, but

increases were pegged to the Consumer Price Index and capped at five percent per year.

Without the knowledge of landlord J & N Amoroso Family Investments, AJFK

assigned the sublease to Alternative Schools, Inc. (Ivy Academia) on September 1, 2004,

for a period of two years. Ivy Academia moved into the De Soto Avenue building shortly

thereafter. Under the terms of the sublease assignment, Ivy Academia became jointly and

severally liable for AJFK’s obligations under the sublease, including the monthly rent of

$18,390 per month.

On October 2, 2008, more than two years after the original sublease assignment

expired, Selivanov presented the Ivy Academia board with a proposal to approve another

assignment and assumption of the sublease. The new “Assignment Assumption of

Lease” would be “made as of July 1st, 2007 by and between Academy Just For Kids

(EGeneration LLC) . . . and Alternative Schools Inc. . . for a period of seven years.”

Under the terms of Selivanov’s proposed Assignment Assumption of Lease, Alternative

Schools, Inc. (Ivy Academia) would agree “to make a monthly payment to

[AJFK/EGeneration], or its designee, in the amount of $43,870.05 for the use of the

5

The California Charter Schools Association filed an amicus curiae brief

supporting defendants on appeal.

13

facility and lease guarantees.”6 The monthly rent was scheduled to increase five percent

each year on July 1. Selivanov presented to the board a “Broker Opinion of Value”

prepared by real estate brokerage firm Lee & Associates. That opinion stated that the

reasonable fair market value of monthly rent for the approximately 27,000-square-foot

building “in its current condition and existing use” as of October 28, 2007 was

approximately $1.75 per square foot, triple net, or $47,250.

Defendants recused themselves from voting on the Assignment Assumption of

Lease. The remaining two board members who were present decided the substantial rent

increase it contained “was an appropriate risk that the school was taking” and approved

the Assignment Assumption of Lease. However, one of them, Alex Kauffman, testified

at the preliminary hearing that he never reviewed the original sublease. Selivanov signed

the undated Assignment Assumption of Lease on behalf of AJFK/EGeneration, and board

treasurer Arthur Sarkisian—who had been absent from the meeting at which the proposal

was presented and approved—signed on behalf of Ivy Academia.

According to Kauffman’s preliminary hearing testimony as read at trial, the board

discussed “the fact that Ivy’s monthly payment is only 90% of the fair market value of

the facilities as determined by Lee & Associates and the school has just rented [a] new

high school facility at $1.75 per square foot in tremendous competition with another

6

The full text of the pertinent paragraph provided: “Assigner

[AJFK/EGeneration] was the original Sublessee under the Sublease. Assigner assigned

the Sublease to Assignee [Alternative Schools, Inc.] for period [sic] of seven years.

Assignee desires to accept the assignment of the Sublease. Both Assigner and Assignee

agree as follows: (a) each of them hereby ratifies all the terms and conditions of the

Sublease, (b) each of them is, and shall hereafter forever remain, jointly and severally

liable for all Sublessee’s obligations under the Sublease, (c) to the extent necessary

Assigner approves the assignment of the Sublease to Assignee, and Assignee accepts

such assignment for period [sic] of seven years, (d) Assignee agrees to sell Assigner

$520,000 of tenant improvements, in return Assignor [sic] agrees to assume $520,000 of

Assignee’s bank loan from Western Commercial bank [sic], and (e) Assignee agrees to

make a monthly payment to the Assigner, or its designee, in the amount of $43,870.05 for

the use of the facility and lease guarantees; this payment will increase 5% every July

1st[.]”

14

charter school.”7 Kauffman further testified that the board also viewed the rent increase

as the fair market value of the “constant risk” defendants assumed when they obtained a

loan from Western Commercial Bank to improve the premises. (See IV. Western

Commercial Bank Loan, post at pp. 16-18.)

LAUSD investigator Michael Atkinson testified that the effect of the board’s

approval of the Assignment and Assumption of Lease was an increase in the monthly

“rent that Ivy Academia has to pay from [$]18,390 per month to $43,870.05 per month,”

an increase of approximately $25,480 per month, or nearly 139 percent. The total net

amount of increased rent owed from the agreement’s effective date of July 1, 2007

through June 2, 2008 was approximately $237,000. This amount—$237,000— was

entered into Ivy Academia’s Due to EGeneration QuickBooks account as a liability to

EGeneration on June 30, 2008, roughly three months before the board was apprised of

and approved the Assignment and Assumption of Lease on October 2, 2008.

Jason Amoroso, a real estate attorney involved with the original sublease between

J & N Amoroso Family Investments and AJFK, testified that the fair market value of the

De Soto Avenue property was that originally agreed upon: $18,390 per month,

increasing each year in step with inflation. He also testified that he was not aware that

AJFK ever assigned the lease to Ivy Academia. QuickBooks printouts introduced by

defendants showed that Ivy Academia continued to pay J & N Amoroso Family

Investments the originally agreed upon rent even after the increase was approved by the

board and booked into Ivy Academia’s QuickBooks. Amoroso, however, testified that

“we received checks from Ivy Academia[,] EGeneration, various entities . . . and they

stated they were involved with the school.”

Prosecution witness James Balbin, a certified public accountant, opined that the

rent increase was a “sham transaction” that was “just absurd.” He further testified that

there was “no business purpose to increase the lease payment due on this rent.” Defense

7

The increased monthly rent of $43,870.05 approved by the board was

approximately 93 percent of the fair market value stated in the Lee & Associates opinion.

15

expert Jan Goren, a certified public accountant, countered that the rent increase reflected

various business risks: the risk that defendants would need to satisfy their guarantee on

the original sublease, the risk that they would have to remove various leasehold

improvements from the premises, and the risk that Ivy Academia could lose its charter.

Selivanov presented testimony from Robert Gutzman, a real estate appraiser.

Gutzman conducted a historical appraisal of the property, which he determined to be

27,854 square feet. Gutzman testified that the property was worth $1.66 per square foot,

or $46,125 per month, as of July 1, 2007 and $1.70 per square foot, or $47,250 per month

as of October 1, 2008.

The People alleged that certain payments made to EGeneration after the rent

increase constituted both misappropriation of public funds (§ 424, subd. (a); count 7) and

embezzlement of public funds (§§ 504, 514; count 8).

IV. Western Commercial Bank Loan

In June 2006, Alternative Schools, Inc. (Ivy Academia) obtained a five-year,

$500,000 loan from Western Commercial Bank to finance “phase two remodeling” of the

De Soto Avenue premises from a warehouse into a school. In August 2006, the loan

amount was increased to $600,000.

In March 2009, when the outstanding balance of the loan stood at $390,000,

Selivanov asked Western Commercial Bank to change the borrowing entity on the loan

from Alternative Schools, Inc. to EGeneration, LLC. According to former Western

Commercial Bank underwriter Jennifer Irrizary, Selivanov made the request because he

needed some additional write-offs. The bank effectuated the change on March 20, 2009.

Both defendants signed in their capacity as managers of EGeneration, and Selivanov

personally guaranteed the loan.

Just as the rent increase was documented in the Ivy Academia’s QuickBooks

months before it was presented to and approved by the board, changes to the loan were

entered into Ivy Academia’s QuickBooks long before Western Commercial Bank

formally transferred the loan to EGeneration. According to prosecution witnesses

Atkinson, Delos Santos, and Balbin, Ivy Academia’s QuickBooks documented an “asset

16

sale” on July 1, 2007, when the loan had an outstanding balance of $520,000. According

to those witnesses, the asset sale consisted of EGeneration’s assumption of responsibility

for the $520,000 loan balance in exchange for Ivy Academia’s transfer of $520,000 worth

of improvements on the De Soto Avenue property to EGeneration. The property

improvements were not physically transferred to EGeneration, because Ivy Academia

was using them on its campus. However, the property improvement assets were removed

from Ivy Academia’s balance sheet and transferred to EGeneration’s along with the loan

liability. Delos Santos and Franchise Tax Board special agent Rigoberto Salazar both

testified that EGeneration claimed a depreciation deduction for the assets on its 2007

Limited Liability Company Return of Income taxation form.

The asset sale transaction was presented to and approved by the Ivy Academia

board on October 2, 2008, concurrently with the rent increase. The board minutes, which

the parties stipulated were admissible as business records, state that the board “noticed

that the sale of assets is beneficial to Ivy as it allows the school to strengthen its balance

sheet, while EGeneration LLC will only be able to recognize about 30c on $1 benefit

from this purchase through the depreciation of assets.” The board accordingly approved

the transaction, which was documented in the same Assignment Assumption of Lease

that effectuated the rent increase. As noted above (ante, fn. 6), a single sentence in the

one-page Assignment Assumption of Lease contained both provisions. That sentence

stated that Ivy Academia “agrees to sell to [EGeneration] $520,000 of tenant

improvements, in return [EGeneration] agrees to assume $520,000 of [Ivy Academia’s]

bank loan from Western Commercial bank, and . . . [Ivy Academia] agrees to make a

monthly payment to [EGeneration], or its designee, in the amount of $43,870.05 for the

use of the facility and lease guarantees; this payment will increase 5% every July 1st.”

After liability for the loan was transferred from Ivy Academia to EGeneration, Ivy

Academia continued to make loan payments directly to Western Commercial Bank.

According to Delos Santos and Pilyavskaya, these payments—totaling $126,654.73—

were recorded in Ivy Academia’s QuickBooks as rent payments. Pilyavskaya agreed on

cross-examination that payments on the loan were recorded as rent payments “as of at

17

least August 16th of 2008,” predating both board approval of the asset sale transaction

(October 2, 2008) and the formal transfer of the loan to EGeneration (March 2, 2009), but

post-dating the putative effective date of the asset sale transaction (July 1, 2007).

After the rent increase, Ivy Academia owed $43,870.05 in rent per month. That

amount, less that month’s payment to J & N Amoroso Family Investments and loan

payment to Western Commercial Bank, was documented in the Due to EGeneration

account each month as a liability Ivy Academia owed to EGeneration. According to

defense expert Goren, this arrangement was a consequence of the “or its designee” clause

in the Assignment Assumption of Lease the board approved on October 2, 2008: “[Ivy

Academia] agrees to make a monthly payment to [EGeneration], or its designee, in the

amount of $43,870.05 for the use of the facility and lease guarantees . . . .” Goren

explained that, after the rent increase, Ivy Academia owed $43,870.05 in rent to

EGeneration each month. However, EGeneration named J & N Amoroso Family

Investments and Western Commercial Bank as its designees to which Ivy Academia

should make monthly payments in partial satisfaction of the total increased rent. In other

words, Ivy Academia would pay some portion of the $43,870.05 rent to J & N Amoroso

Family Investments, and another portion to Western Commercial Bank, at EGeneration’s

behest. Any remaining amount owed beyond those two payments each month was

booked as a liability in the Due to EGeneration account. There is no documentary

evidence formalizing these designations.

The People alleged that the loan payments Ivy Academia made after transferring

the loan to EGeneration constituted both misappropriation of public moneys (§ 424, subd.

(a); count 39) and embezzlement of public funds (§§ 504, 514; count 40).

V. Transfers of Funds to EGeneration

As noted above, Ivy Academia had three QuickBooks accounts recording amounts

owed to Selivanov, Berkovich, and their business entities: Due to Management, Due to

Academy, and Due to EGeneration. The latter two accounts, which documented debts to

both the former (AJFK) and current (EGeneration) names of defendants’ other business

18

entity, were consolidated in Ivy Academia’s QuickBooks in June 2008. After that point,

the Due to Academy account was zeroed out.

Because the Due to Academy and Due to EGeneration accounts were eventually

consolidated, and because AJFK and EGeneration were the same entity, prosecution

witnesses treated these two accounts as one for purposes of determining the balance Ivy

Academia owed to AJFK/EGeneration and, ultimately, Selivanov and Berkovich, the

owners of that entity. Even though the Due to Management account also reflected money

owed to defendants (their deferred salaries), neither the Ivy Academia QuickBooks nor

the prosecution combined the Due to Management account with the Due to Academy or

Due to EGeneration accounts. Defense expert Jan Goren opined that all three accounts

should have been considered together because the amounts owed to defendants’ business

entities ultimately were owed to defendants personally.

Prosecution witnesses Atkinson and Delos Santos testified that the combined

balance of the Due to Academy and Due to EGeneration accounts reached zero on

August 1, 2007, meaning that, at that point, Ivy Academia no longer owed money to

AJFK and/or EGeneration. Ivy Academia subsequently made three large monetary

transfers to EGeneration, however: $25,000 on August 1, 2007, $20,000 on November

19, 2007, and $20,000 on December 1, 2007. Shortly after the $25,000 transfer,

EGeneration issued a $24,000 check to Selivanov, leaving EGeneration with a total of

$1,540.65 in its bank account. Before the first $20,000 transfer in November 2007,

EGeneration’s bank account balance dipped to $46.80. Following that transfer,

EGeneration wrote a $7,000 check to Selivanov. Atkinson testified that absent the

$20,000 transfer from Ivy Academia, EGeneration would not have had enough money to

make the $7,000 payment. EGeneration’s bank account balance slipped to $3,386.53

before the final $20,000 transfer in December 2007; shortly after that payment was

deposited into its bank account, EGeneration issued two checks totaling $15,300.

On April 1, 2008, the balance in the Due to EGeneration account was negative,

meaning that EGeneration owed money to Ivy Academia. Ivy Academia nevertheless

issued a $5,000 check to EGeneration that day.

19

The Due to EGeneration account balance was still negative on June 30, 2008. On

that date, however, a liability of $237,000 was added to the account, turning its balance

positive; now, the account showed that Ivy Academia owed $208,623 to EGeneration.

The $237,000 liability was the total net amount of increased rent Ivy Academia owed

from the effective date of the rent increase, July 1, 2007, through June 30, 2008. This

additional liability was added to Ivy Academia’s QuickBooks three months before the

rent increase was presented to and approved by the board.

After the balance of the Due to EGeneration account was bolstered by the addition

of the retroactive rent liability, Ivy issued a series of small checks to EGeneration. On

September 24, 2008, Ivy Academia issued a $5,000 check to EGeneration. It

subsequently issued three additional checks to EGeneration: a $5,000 check on October

1, 2008, a $3,000 check on December 20, 2008, and a $5,000 check on March 16, 2009.

While all of the aforementioned transfers to EGeneration were being made, the

amount owed to defendants as reflected in the Due to Management account remained

unchanged at approximately $230,000. Prosecution witnesses Atkinson, Delos Santos,

and Balbin and defense witness Goren all agreed that the amount due to defendants as

documented in the Due to Management account exceeded the total amounts Ivy

Academia transferred to EGeneration in 2007 and 2008. The balance of the Due to

Management account was not reduced when any of the transfers to EGeneration were

made, however, or at any time prior to 2008 and 2009, when Ivy Academia made several

deferred salary payments directly to both defendants. Defendants ultimately directly

received the full $230,000 in deferred salaries that the Due to Management account

indicated they were owed.

The People alleged that Selivanov embezzled public funds by making the series of

$5,000 and $3,000 transfers to EGeneration after the rent increase was added to the Due

to EGeneration account (§§ 504, 514; count 8). They further alleged that each of the

three larger transfers in 2007 constituted misappropriation of public moneys (§424, subd.

(a); counts 18, 21, 24), embezzlement of public funds (§§ 504, 514; counts 19, 22, 25),

and money laundering (§ 186.10, subd. (a); counts 20, 23, 26).

20

VI. Taxes

Defendants were charged with filing false personal and corporate income tax

returns for the years 2004 through 2008. Prosecution witnesses Salazar and Delos Santos

testified that defendants failed to report on their personal income tax returns the personal

expenses they charged to their American Express cards from 2005 to 2008. Salazar and

defense witness Goren both testified that any American Express charges constituting

embezzlement or personal expenses should have been reported as taxable income, but

proper school expenditures were not required to be reported. Delos Santos testified that

defendants would have to report as personal income even those charges that did not

benefit them personally, such as teacher appreciation dinners, because “they are in

control of the credit card.” Salazar testified that defendants improperly reported $46,000

they received as payment of their deferred salaries on their 2008 EGeneration tax return

rather than on their personal income tax return. Salazar further testified that defendants’

personal tax returns would be affected by improprieties on the corporate tax returns filed

by AJFK/EGeneration, because “any income or losses would flow in to the individual

return” since defendants were AJFK/EGeneration’s only members.

Salazar testified that AJFK/EGeneration’s tax returns for the years 2004 through

2008 contained numerous improprieties. In 2004, he testified, expenses shown in

AJFK’s accounting books were both deducted on the AJFK tax return and recorded as

amounts owing to AJFK in Ivy Academia’s Due to Academy account. Salazar opined the

deductions taken by AJFK were improper because the expenses were double-booked. He

also testified that the 2004 AJFK return contained $30,697.35 of deductions for “rent

expenses,” even though the AJFK QuickBooks showed the amount claimed was spent on

other items such as “Office Depot expense, Dominoes [sic] Pizza, car insurance, Coffee

Bean items, [El] Pollo Loco.” According to Salazar, the 2004 AJFK tax return also

overreported AJFK’s income because it included the October 19, 2004 $300,000 loan

repayment from Ivy Academia as income, even though loan repayments are not income.

According to Salazar, the 2005 EGeneration return deducted $11,930 worth of

“supplies expenses,” which Salazar testified consisted of “items like cheesecake, the car

21

insurance, Victoria [sic] Secret, you know, the pretzel charges, pediatric care, and

restaurant.” Salazar testified that the 2006, 2007, and 2008 returns contained similarly

improper deductions for supplies. According to Salazar, the improperly deducted

amounts in those years were, respectively, $11,461, $9,125, and $9,367. Salazar also

testified that the 2007 EGeneration tax return failed to report as income $43,795.96 that

Ivy Academia paid in excess of the amount it owed to EGeneration that year.

The People alleged that both Selivanov and Berkovich filed personal income tax

returns that they did not believe to be true and correct as to every material matter in tax

years 2004, 2005, 2006, 2007, and 2008 (Rev. & Tax. Code, § 19705, subd. (a); counts

27-31). They further alleged that Selivanov filed tax returns for AJFK/EGeneration that

he did not believe to be true and correct as to every material matter in tax years 2004,

2005, 2006, 2007, and 2008 (Rev. & Tax. Code, § 19705, subd. (a); counts 32-36).

DISCUSSION

I. American Express Charges Embezzlement Conviction (Count 2)

Both defendants challenge the section 504 embezzlement convictions stemming

from their use of Ivy Academia American Express cards (count 2). Jointly, they contend

there was insufficient evidence to establish that their use of the cards was fraudulent.

They further contend that the court erred by failing to give a unanimity instruction and by

failing to require the jury to find the amount taken exceeded $950. They argue that the

cumulative effect of these two instructional errors deprived them of a fair trial.

Defendants finally contend the court erred by finding at sentencing that the case involved

“public funds” within the meaning of section 514. We address these contentions in turn.

A. Sufficiency of the Evidence

“When a defendant challenges the sufficiency of the evidence, ‘“[t]he court must

review the whole record in the light most favorable to the judgment below to determine

whether it discloses substantial evidence—that is, evidence which is reasonable, credible,

and of solid value—such that a reasonable trier of fact could find the defendant guilty

beyond a reasonable doubt.” [Citation.]’ [Citations.] ‘Substantial evidence includes

circumstantial evidence and any reasonable inferences drawn from that evidence.

22

[Citation.]’ [Citation.] We ‘“‘presume in support of the judgment the existence of every

fact the trier could reasonably deduce from the evidence.’” [Citation.]’ [Citation.]”

(People v. Clark (2011) 52 Cal.4th 856, 943.)

The jury found defendants’ use of the Ivy Academia American Express cards

constituted embezzlement within the meaning of section 504. That statute provides:

“Every officer of this state, or of any county, city, city and county, or other municipal

corporation or subdivision thereof, and every deputy, clerk, or servant of that officer, and

every officer, director, trustee, clerk, servant, or agent of any association, society, or

corporation (public or private), who fraudulently appropriates to any use or purpose not

in the due and lawful execution of that person’s trust, any property in his or her

possession or under his or her control by virtue of that trust, or secretes it with a

fraudulent intent to appropriate it to that use or purpose, is guilty of embezzlement.”

(§ 504.) As the language of the statute makes plain, “[t]he offense of embezzlement

contemplates a principal’s entrustment of property to an agent for certain purposes and

the agent’s breach of that trust by acting outside his authority in his use of the property.”

(People v. Sisuphan (2010) 181 Cal.App.4th 800, 813-814.) It further contemplates a

relationship of trust and confidence between the perpetrator and the victim (People v.

Wooten (1996) 44 Cal.App.4th 1834, 1845) and a breach of that trust and confidence by

“conversion of trusted funds coupled with the intent to defraud” (In re Basinger (1988)

45 Cal.3d 1348, 1363).

Defendants contend there was insufficient evidence from which the jury could

conclude they acted with fraudulent intent or acted outside of their authority when using

the American Express cards. We disagree.

“‘The intent essential to embezzlement is the intent to fraudulently appropriate the

property to a use and purpose other than that for which it was entrusted, in other words,

the intent to deprive the owner of his property . . . .’” (People v. McClain (1956) 140

Cal.App.2d 899, 900.) “It is well established that intent to defraud may be inferred from

the circumstances surrounding the transaction in question.” (People v. Eddington (1962)

201 Cal.App.2d 574, 579; 2 Witkin & Epstein, Cal. Crim. Law 4th (2012) Crimes

23

Against Property, § 35, pp. 59-60.) The circumstances surrounding the credit card

transactions identified as “questionable” provided a sufficient basis from which the jury

could infer defendants acted with fraudulent intent. The People presented evidence that

defendants used their Ivy Academia credit cards at restaurants to purchase meals for

“business meetings” that occurred late at night and on weekend afternoons, and that these

purchases were recorded in Ivy Academia’s accounting books in categories including

“utilities and housekeeping,” “school supplies,” and “dues and subscriptions.” They also

presented evidence that defendants charged large sums at bowling alleys and restaurants

for “teacher appreciation” events, and that such events were not proper “educational

purposes” for which a charter school permissibly could spend money. Even though

Pilyavskaya, not defendants, prepared the expense reports and QuickBooks entries

documenting these charges, she reported to Selivanov, who also had access to the

QuickBooks, and the reports she prepared bear defendants’ signatures. Additionally, the

People presented evidence that Berkovich boasted about her “unlimited” credit card and

her aspirations of becoming a millionaire by opening more charter schools, and that

Selivanov sought to have Ivy Academia’s independent auditors remove negative

comments about defendants’ credit card usage from their 2006 report. The jury readily

could conclude from all of this evidence that defendants acted with fraudulent intent

when using the American Express cards.

The jury likewise reasonably could conclude defendants acted outside the scope of

their authority as Ivy Academia’s operators when making the challenged charges.

Defendants assert (without citation to authority) that board member Sarkisian’s review

and approval of the expense reports constituted express authority for the challenged

charges. Defendants further suggest that LAUSD’s failure to inform them of its concerns

about the credit card charges, and the People’s failure to call Ivy Academia’s auditors as

witnesses at trial demonstrate defendants’ authority to make the charges. We are not

persuaded. The People adduced evidence that charter schools operate under the authority

not only of their own charters and governing boards but also the broader umbrella of the

LAUSD Charter School Division. According to prosecution witnesses Eairleywine and

24

Smith, LAUSD and the Los Angeles County Office of Education did not classify

“activities for the pleasure of faculty and teachers and staff such as bowling,” and “after

hours dinners off campus” as expenses that charter schools and their operators were

authorized to make. The jury was entitled to credit this substantial evidence and infer

from it that defendants lacked the authority to use the credit cards as they did, whether

the board signed off on the expenditures or not. The jury was not, as defendants suggest,

required to draw the opposite inference from LAUSD’s silence about its concerns or the

People’s failure to call Ivy Academia’s auditors as witnesses.

B. Unanimity Instruction

Defendants contend the trial court’s failure to give a unanimity instruction on

count 2 constituted prejudicial error. We review assertions of instructional error de novo.

(People v. Shaw (2002) 97 Cal. App.4th 833, 838.) Whether the trial court should have

given a “particular instruction in any particular case entails the resolution of a mixed

question of law and fact,” which is “predominantly legal.” (People v. Waidla (2000) 22

Cal.4th 690, 733.) Accordingly, we examine the issue without deference. (Ibid.)

In a criminal case, a jury verdict must be unanimous. (People v. Collins (1976) 17

Cal.3d 687, 693; Cal. Const., art. I, § 16.) This means that each individual juror must

agree the defendant committed a specific offense. (People v. Russo (2001) 25 Cal.4th

1124, 1132.) Thus, “when the evidence suggests more than one discrete crime, either the

prosecution must elect among the crimes or the court must require the jury to agree on the

same criminal act.” (Ibid.) The court generally has a sua sponte duty to give a unanimity

instruction where, as here, the prosecution did not elect among the criminal acts alleged.

(People v. Melhado (1998) 60 Cal.App.4th 1529, 1534; People v. Jennings (2010) 50

Cal.4th 616, 679.) There are several exceptions to this rule, however. “For example, no

unanimity instruction is required if the case falls within the continuous-course-of-conduct

exception, which arises ‘when the acts are so closely connected in time as to form part of

one transaction’ [citation], or ‘when . . . the statute contemplates a continuous course of

conduct or a series of acts over a period of time.’ [Citation.] There also is no need for a

unanimity instruction if the defendant offers the same defense or defenses to the various

25

acts constituting the charged crime. [Citation.]” (People v. Jennings, supra, 50 Cal.4th

at p. 679.)

Defendants contend “the way the case was presented to the jury showed [a

unanimity] instruction was appropriate and required.” They further assert, without

citation to the record, that they “never defended the case as if the transactions were part

of a single course of conduct.” We disagree.

From the outset of the trial, all parties characterized the American Express charges

as a single, continuing course of conduct. The People told the jury in their opening

statement that the credit card charges constituted “basically one series of incidents, one

course of conduct,” and that they would ask the jury to make “the determination” that the

expenditures were for “personal purchases that did not benefit the school and were not for

school purpose.” Defendants similarly characterized the numerous charges

monolithically in their opening statements. Thus, Selivanov told the jury the evidence

would show “that he acted in good faith, in the best interest of the school,” and that no

one—not the board, the independent auditors, or LAUSD—ever informed him “those

types of purchases were prohibited.” Berkovich took a different tack, but it too was a

unified one. She asserted that “Everything was a school purpose, and if mistakes were

made, . . . [t]he evidence is going to show that, but that is not criminal.”

Opening statements are not argument. But they do ‘“prepare the minds of the jury

to follow the evidence and to more readily discern its materiality, force, and effect.”’

(People v. Harris (1989) 47 Cal.3d 1047, 1080.) And here, defendants continued to urge

the jury to find all of the credit card charges permissible under a single theory.

Berkovich told the court at sidebar that her sole defense was “that everything Miss

Berkovich bought had a school purpose. And if it didn’t have a school purpose, it was a

recognized mistake that was reimbursed and that is the defense.” She told the jury the

same thing during her closing argument, arguing that “all these expenses, teacher

appreciation that the prosecution thinks should not happen, meals, community outreach,

networking, they are all expenses that are common in the industry.”

26

Selivanov likewise presented a single defense to all of the credit card charges

during his closing. He argued that the sole issue was “whether or not Mr. Selivanov

intended to defraud Ivy Academia with respect to purchasing things on the American

Express card,” and that “there is no evidence of an intent to defraud.” Both defendants

emphasized that all of the charges, not merely some subset of them, were reviewed and

approved by other individuals and entities. In short, they offered essentially the same

defense to all of the acts. (See People v. Jennings, supra, 50 Cal.4th at p. 679; People v.

Thompson (1995) 36 Cal.App.4th 843, 851.)

Defendants claim that the People deviated from the single course-of-conduct

theory during rebuttal argument, thereby rendering a unanimity instruction necessary. In

support, they point to four comments, three of which suggested that defense witnesses

with ties to the charter school movement were biased. We are not persuaded. An

attorney is permitted “to remind the jurors that a paid witness may accordingly be biased

and is also allowed to argue, from the evidence, that a witness’s testimony is

unbelievable, unsound, or even a patent ‘lie.’” (People v. Arias (1996) 13 Cal.4th 92,

162.) In attempting to characterize defense witnesses as biased, the People were asking

the jurors to reject their testimony, not presenting multiple arguments as to why the credit

card charges constituted embezzlement.

Defendants similarly take out of context the fourth comment, a remark by the

prosecutor that the $995 Tax Secrets seminar Berkovich purchased with the credit card

was “an embezzlement in itself.” The People made this statement as part of an apparent

effort to distinguish between the section 424 misappropriation and section 504

embezzlement counts stemming from defendants’ usage of the credit cards. The People

informed the jury that “the embezzlement charge does carry a minimum of $950. So, as

such, one would have to find that the theft was $950 or more. Which, in this case, we the

People would submit it is heavily substantiated just in terms of the charges. Now, in

terms of a misappropriation of funds, there is no minimum limit on that. There is no

$950 minimum, but we would submit, ladies and gentlemen, in terms of this case here

that even the Tax Secret, even the Tax Secret item that was bought for $950 [sic], that is

27

an embezzlement in itself.” These comments do not undermine the People’s general

approach to the charges, nor do they persuade us a unanimity instruction was necessary.8

C. Value of Embezzled Property

Defendants contend their convictions for felony embezzlement in count 2 must be

reversed or reduced to misdemeanors because the jury failed to specify a loss greater than

$950 on the verdict forms. Defendants argue that because the verdict form simply stated

that the embezzlement was a felony, it “created a de facto directed verdict on an element

of the offense in violation of [their] equal protection and due process rights.” This error,

they contend, lessened the People’s burden of proof and therefore requires reversal. In

the alternative, they contend that the jury’s failure to find that the embezzlement in count

2 was grand or petty theft, or to determine that the value of the property embezzled

exceeded $950, requires that their convictions be deemed to be for petty theft and

reduced to misdemeanors. For this argument they rely on section 1157, which states:

“Whenever a defendant is convicted of a crime . . . which is distinguished into degrees,

the jury . . . must find the degree of the crime or attempted crime of which he is guilty.

Upon the failure of the jury . . . to so determine, the degree of the crime . . . of which the

defendant is guilty, shall be deemed to be of the lesser degree.” (§ 1157) We do not find

either argument persuasive.

Section 490a provides that the term embezzlement “shall hereafter be read and

interpreted as if the word ‘theft’ were substituted therefor.” (§ 490a.) “Theft is divided

into two degrees, the first of which is termed grand theft; the second, petty theft.”

(§ 486.) Since embezzlement is theft and theft is divided into two degrees, it follows that

embezzlement likewise is divided into two degrees. As the court explained in People v.

8

We also find unpersuasive Berkovich’s suggestion that “[t]he fact that appellant

was acquitted of the vast majority of the charges against her speaks volumes as to

whether the prosecution’s arguments were given full credit by this jury.” The jury found

Berkovich guilty of misappropriating public moneys in connection with the same

conduct, strongly suggesting it found her use of the American Express card improper.

The numerous counts on which she was acquitted pertained to other instances of

misappropriation and embezzlement that were factually distinct from her use of the

American Express card.

28

Stanfill (1999) 76 Cal.App.4th 1137, 1143, “Embezzlement is a form of ‘theft’ (§ 490a)

and, with exceptions not pertinent here, is made punishable with state prison time only if

the use value of the subject property exceeds [$ 950].”9

Count 2 of the information alleged that defendants committed felony

embezzlement in violation of section 504 and that the property embezzled had a “value

exceeding Nine Hundred Fifty Dollars ($950) to wit: credit card charges made to Ivy

Academia’s American Express account.” In keeping with the felony allegation, the court

instructed the jury with a modified version of CALCRIM No. 1806 that effectively

equated “felony” embezzlement with “grand theft by embezzlement.” That instruction

read in pertinent part: “The defendant is charged in Counts [sic] with grand theft by

embezzlement in violation of Penal Code section 504.”10 The court also defined grand

theft both orally and in writing with CALCRIM No. 1801, which provided in pertinent

part: “If you conclude that the defendant committed a theft, you must decide whether the

crime was grand theft or petty theft. The defendant committed grand theft if he or she

stole property worth more than $950. [¶] . . . [¶] All other theft is petty theft. The

People have the burden of proving beyond a reasonable doubt that the theft was grand

theft rather than a lesser crime. If the People have not met this burden, you must find the

defendant not guilty of grand theft.”

For each defendant, the court provided two verdict forms for count 2: a guilty

verdict form and a not guilty verdict form. None of the forms mentioned “grand theft,”

“petty theft,” or the dollar value $950, or asked the jury to make findings regarding those

9

When Stanfill was decided, the value threshold separating petty theft and grand

theft was $400. (See former § 487, subd. (a) (1997).) In 2011, the threshold was raised

to its current level, $950. (See § 487, subd. (a).) One of the “exceptions” not pertinent in

Stanfill but pertinent here is when the embezzlement is of public funds. (See discussion,

at pp. 31-34, post.)

10

The written version of CALCRIM No. 1806 did not include count numbers

despite the court’s statement to counsel that it had handwritten them in. However, while

orally instructing the jury, the court said, “I should have written in everybody’s thing, let

me see, 2 [8, 19, 22, 25, and 40] with grand theft by embezzlement violation of Penal

Code section 504, does everybody have the numbers written in 2, [8, 19, 22, 25, and 40]

good cause I personally did that [sic].”

29

terms. Instead, the verdict forms read “We, the jury in the above-entitled action, find the

defendant . . ., guilty [or not guilty] of the crime of EMBEZZLEMENT BY PUBLIC

OR PRIVATE OFFICER, in violation of Penal Code Section 504, a felony, as charged

in Count 2 of the Information.” The jury returned verdicts of guilty as to both

defendants.

This combination of instructions and verdict forms did not relieve the prosecution

of its burden of proof. The People alleged and sought to prove only that defendants

committed felony embezzlement. The court instructed the jury accordingly, stating that

defendants were charged in count 2 with “grand theft by embezzlement,” defining grand

theft as theft of property exceeding $950 in value, and explaining that the jury “must find

the defendant not guilty of grand theft” if the People failed to prove beyond a reasonable

doubt that a grand theft occurred. We presume the jury understood and correlated these

instructions (People v. Martin (2000) 78 Cal.App.4th 1107, 1111), which appeared on a

single page of the instructions packet and squarely placed on the People the burden of

proving the charged crime. The verdict forms’ use of the word “felony” did not reduce

this burden. The verdict forms expressly referred to the information, which also

described the charged conduct only as a felony. The information also alleged that that the

property at issue was “credit card charges made to Ivy Academia’s American Express

account” and that those charges were “of a value exceeding Nine Hundred Fifty Dollars

($950).”11 These documents did not give the jury an option to convict defendants of

anything less than grand theft by embezzlement. If the jury determined the People failed

11

The prosecutor also argued to the jury that “the embezzlement charge does carry

a minimum of $950. So, as such, one would have to find that the theft was $950 or

more.” These comments underscored the People’s burden and the importance of the

$950 threshold to a conviction on count 2. Defendants point out that this statement was

imprecise, for a grand theft conviction requires the value of the property to exceed (rather

than merely equal) $950. However, the court instructed the jury to follow the court’s

instructions rather than “anything concerning the law said by the attorneys in their

arguments.” The court’s instructions correctly articulated the distinction between grand

and petty theft.

30

to prove the amount embezzled exceeded $950, the instructions and verdict form properly

required the jury to find the defendants not guilty on count 2.

Moreover, the instructions and verdict form did not violate section 1157 such that

reduction of the convictions to a misdemeanor is required. The purpose of section 1157

is to ensure that the jury’s determination of degree is clear when a verdict of varying

degrees is permissible (People v. Mendoza (2000) 23 Cal.4th 896, 910), so that the

defendant is protected from the risk that the degree of the crime could be increased after

the judgment (People v. Goodwin (1988) 202 Cal.App.3d 940, 947). Just as applying

section 1157 “where jury verdicts correctly permit only a first-degree felony murder

conviction would do nothing to further this statutory purpose” (People v. Mendoza,

supra, 23 Cal.4th at p. 910), applying section 1157 here, where the information,

instructions, and verdict form permitted a conviction only for felony embezzlement,

would not serve this purpose. “[W]here the trial court properly instructs the jury to find a

defendant either not guilty or guilty” of felony embezzlement by grand theft, “there is

simply no degree determination for the jury to make.” (Id. at p. 911.) For that reason,

requiring application of section 1157 here “would be both absurd and unreasonable, for it

would require courts to deem a conviction to be of a degree that was never at issue and

that the jury was neither asked nor permitted to consider.” (Ibid.) Had the information

alleged, or the verdict form stated, simply “embezzlement,” with no indication of value or

felony designation, the result might be different. Here, however, the jury’s verdict

specifically found defendants guilty of embezzlement “as charged in Count 2 of the

Information,” which required the jury to find that the property exceeded $950 in value to

return a conviction. The jury implicitly—and necessarily—made the required factual

findings to support the defendants’ convictions for felony embezzlement.

D. Cumulative Instructional Error

Because we have rejected defendants’ claims of instructional error on count 2,

there can be no cumulative error stemming from the same claims. (People v. Tully

(2012) 54 Cal.4th 952, 1020.)

31

E. The Court’s Public Funds Finding

1. Background

The information alleged in count 2 that the charged felonious “embezzlement and

defalcation was of the public funds within the meaning of Penal Code Section 514.” It

similarly alleged that public funds were defalcated in embezzlement counts 4, 6, 8, 10,

19, and 40, but not in embezzlement counts 22 and 25. It is unclear why the allegation

was not made as to counts 22 and 25, as both were paired with charges of

misappropriation of public moneys stemming from the same conduct. 12

“Section 514 defines the punishment for one convicted of embezzlement.”

(Redondo, supra, 19 Cal.App.4th at p. 1434.) It provides in relevant part: ‘“Every

person guilty of embezzlement is punishable in the manner prescribed for theft of

property of the value or kind embezzled; . . . if the embezzlement or defalcation is of the

public funds of the United States, or of this state, or of any county or municipality within

this state, the offense is a felony, and is punishable by imprisonment in the state prison;

and the person so convicted is ineligible thereafter to any office of honor, trust, or profit

in this state.”’

The first clause of section 514 clarifies that embezzlement generally is to be

punished like its analogues, petty and grand theft. Thus, embezzlement of money or

12

“The term ‘public funds’ is not defined in section 514” or anywhere else in the

Penal Code. (People v. Redondo (1993) 19 Cal.App.4th 1428, 1434 (Redondo).)

However, section 426 defines “public moneys” for the purposes of section 424, which

criminalizes the misappropriation and false accounting of public moneys, as “all bonds

and evidence of indebtedness, and all moneys belonging to the state, or any city, county,

town, district, or public agency therein, and all moneys, bonds, and evidences of

indebtedness received or held by state, county, district, city, town, or public agency

officers in their official capacity.” Whether the terms “public funds” and “public

moneys” were intended to have the same or similar meanings is not entirely clear.

(Redondo, supra, 19 Cal.App.4th at p. 1435.) The Redondo court appeared to equate

“funds” with “money,” however, holding that a “defendant is not culpable for a felony

based on embezzlement of public funds under section 504 if what was stolen was not an

available pecuniary resource of the public.” (Id. at p. 1437.) The parties in this case

likewise have treated the terms “public moneys” and “public funds” as synonyms and

used them interchangeably.

32

property valued at $950 or less is punished like misdemeanor petty theft, “by fine not

exceeding one thousand dollars ($1,000), or by imprisonment in the county jail not

exceeding six months, or both.” (§ 490.) Embezzlement of money or property valued at

more than $950, is, like its grand theft counterpart, a “wobbler”—a crime that “in the trial

court’s discretion, may be sentenced alternately as [a] felon[y] or misdemeanor[].”

(People v. Superior Court (Alvarez) (1997) 14 Cal.4th 968, 974; see also People v.

Stanfill, supra, 76 Cal.App.4th at pp. 1144-1145 [embezzlement of property valued

beyond threshold for grand theft is a “true wobbler for which the court had discretion to

choose between misdemeanor and felony punishment”].) Section 489, subdivision (c) is

the source of this discretion. It provides that grand theft, with narrow exceptions not

applicable here, is punishable “by imprisonment in a county jail not exceeding one year

or pursuant to subdivision (h) of Section 1170.” (See also 2 Witkin & Epstein, Cal. Crim.

Law 4th (2012) Crimes Against Property, § 8, p. 30 [“Grand theft is generally a felony-

misdemeanor punishable by imprisonment in a county jail for not more than 1 year

(misdemeanor), or under P.C. 1170(h) . . . .”].)

The second portion of section 514 significantly curtails the trial court’s sentencing

discretion where the property embezzled is “public funds.” Under section 514, the

embezzlement of public funds “is a felony, and is punishable by imprisonment in the

state prison” (§ 514), “regardless of the value of the property embezzled” (Redondo,

supra, 19 Cal.App.4th at p. 1434). The felony-misdemeanor distinction based on value is

thus eliminated, as is the trial court’s ability to choose misdemeanor punishment

regardless of the amount embezzled. Additionally, section 514 bars those convicted of

embezzling public funds from holding certain offices in the future.

The jury was not given an opportunity to find that the property embezzled in count

2 (or any of the other embezzlement counts) was public funds. Neither the instructions

nor verdict forms pertaining to count 2 (or the other embezzlement counts) mentioned

public funds. At the sentencing hearing, the People asked the court to make “a Penal

Code section 514 finding . . . in light of them being public officials” and noted that such a

finding “would have an impact in terms of the sentencing.” The People reiterated their

33

request later in the hearing, when the court had almost concluded sentencing Selivanov,

explaining that such a finding “would render the defendants ineligible to hold public

office.” Over defendants’ “strenuous objection,” the court found “that these were public

funds and that he embezzled public funds, and the public funds being from the school,

Ivy Academia, which is a public school.”

Defendants now contend that the court’s finding violated Apprendi v. New Jersey

(2000) 530 U.S. 466 (Apprendi) and Alleyne v. United States (2013) 133 S.Ct. 2151

(Alleyne), which require any fact that increases the statutory maximum (Apprendi) or

mandatory minimum (Alleyne) punishment to be found by a jury beyond a reasonable

doubt. They argue that by making the contested finding, the court impermissibly

increased their penalties “in four distinct ways . . . (1) removal of Penal Code § 504 from

‘wobbler’ status; (2) mandatory state prison incarceration where probation is denied; (3)

post-state prison parole; and (4) imposition of a parole revocation restitution fine.”13 We

need reach only the first of defendants’ alternative arguments as it is correct. The public

funds finding had the effect of eliminating the court’s discretion to sentence them to a

misdemeanor sentence to be served in county jail. The finding accordingly should have

been made by the jury. The error was harmless in this case, however, because the record

reveals beyond a reasonable doubt that the jury would have made the same finding had it

been asked to do so.

2. Applicable Legal Principles

In Apprendi, the United States Supreme Court held that “[o]ther than the fact of a

prior conviction, any fact that increases the penalty for a crime beyond the prescribed

statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt.”

(Apprendi, supra, 530 U.S. at p. 490.) The Court explained in a footnote that “facts that

expose a defendant to a punishment greater than the one otherwise legally prescribed

13

Defendants do not argue in their opening brief and only make a cursory

suggestion in reply that the court’s finding increased their penalties by making them

ineligible to hold public office. They accordingly have forfeited this contention, and we

do not consider it here. (People v. Bryant (2014) 60 Cal.4th 335, 408.)

34

were by definition ‘elements’ of a separate legal offense.” (Id. at p. 483, fn. 10.) A few

years later, in Blakely v. Washington (2004) 542 U.S. 296, the Court further clarified that

“the ‘statutory maximum’ for Apprendi purposes is the maximum sentence a judge may

impose solely on the basis of the facts reflected in the jury verdict or admitted by the

defendant. [Citations.] In other words, the relevant ‘statutory maximum is not the

maximum sentence a judge may impose after finding additional facts, but the maximum

he may impose without any additional findings.” (Blakely, supra, 542 U.S. at p. 303

[emphases omitted].)

The Supreme Court initially treated statutory minimums differently. In Harris v.

United States (2002) 536 U.S. 545 (Harris) the Court held that judicial factfinding that

increased the mandatory minimum sentence was permissible under the Sixth

Amendment. However, the Supreme Court extended the reasoning of Apprendi in

Alleyne, supra, 133 S.Ct. 2151, which overruled Harris and held that any fact that

increases a defendant’s mandatory minimum sentence must be found by a jury beyond a

reasonable doubt. (Alleyne, supra, 133 S.Ct. at pp. 2155, 2162-2163.)

In Alleyne, the defendant was convicted of robbery affecting interstate commerce

(18 U.S.C. § 1951(a)), a crime that carried a penalty of five years to life. A defendant

who brandished a firearm during that crime was subject to a heightened penalty of seven

years to life. (Alleyne, supra, 133 S.Ct. at pp. 2155-2156.) Although the jury did not find

that defendant brandished a firearm, the probation report recommended a sentence of

seven years based on brandishing. The trial court found brandishing based on a

preponderance of the evidence and sentenced defendant to seven years in prison. (Id. at

p. 2156.) The Court of Appeal affirmed based on Harris. (Ibid.) The Supreme Court

reversed and overruled Harris. It held that “Apprendi’s definition of ‘elements’

necessarily includes not only facts that increase the ceiling [of available punishment], but

also those that increase the floor. Both kinds of facts alter the prescribed range of

sentences to which a defendant is exposed and do so in a manner that aggravates the

punishment.” (Id. at p. 2158.) Under Alleyne, “[f]acts that increase the mandatory

minimum sentence are therefore elements and must be submitted to the jury and found

35

beyond a reasonable doubt.” (Ibid.) “It is no answer to say that the defendant could have

received the same sentence with or without that fact.” (Id. at p. 2162.) If a fact increases

either the punishment floor or ceiling, it must be found by a jury beyond a reasonable

doubt.

Alleyne also made clear, however, that “broad sentencing discretion, informed by

judicial factfinding, does not violate the Sixth Amendment.” (Alleyne, supra, 133 S.Ct.

at p. 2163.) “‘[E]stablishing what punishment is available by law and setting a specific

punishment within the bounds that the law has prescribed are two different things.’

[Citation.]” (Ibid.) Accordingly, a judge may make factual findings that influence his or

her sentencing discretion, but may not make factual findings that aggravate the legally

prescribed punishment. (See id. at pp. 2162-2163.) For instance, “[t]rial judges often

find facts about the nature of the offense or the character of the defendant in determining,

for example, the length of supervised release following service of a prison sentence;

required attendance at drug rehabilitation programs or terms of community service; and

the imposition of statutorily prescribed fines and orders of restitution. [Citation.]

Intruding Apprendi’s rule into these decisions on sentencing choices or accoutrements

surely would cut the rule loose from its moorings.” (Oregon v. Ice (2009) 555 U.S. 160,

171-172.)

3. Analysis

Defendants contend that the court’s public funds finding violated Alleyne by

mandating that the embezzlement be treated as a felony rather than a wobbler. We agree.

However, we conclude that the error was harmless beyond a reasonable doubt.

The information charged defendants in count 2 with felony embezzlement. This

wobbler offense, like all others, properly was regarded as a felony throughout trial “for

all purposes until imposition of sentence or judgment.” (People v. McElroy (2005) 126

Cal.App.4th 874, 880 [emphasis added].) From the outset of the case, then, defendants

were subject to punishment for a felony—a custodial term of 16 months, two years, or

three years—by virtue of the People’s allegation that they embezzled “property being of a

value exceeding Nine Hundred Fifty Dollars ($950) to wit: credit card charges made to

36

Ivy Academia’s American Express account.” However, the felony sentencing triad

represented only the punishment ceiling defendants faced. Because embezzlement is a

wobbler, the felony designation was applicable only “until imposition of sentence or

judgment.” At that point, the trial court had the discretion to choose whether defendants

should be subject to felony or misdemeanor punishment. Thus, the punishment floor

defendants faced was that provided in section 489, subdivision (c), “imprisonment in a

county jail not exceeding one year.” Even if it was unlikely that the trial court would

exercise its discretion to sentence defendants as if they were convicted for misdemeanor

embezzlement, it had that option.

After the public funds finding was made, however, the trial court lost its discretion

to sentence defendants to a misdemeanor punishment. Under section 514, the

embezzlement of public funds “is a felony, and is punishable by imprisonment in the

state prison.” (§ 514.) The minimum punishment to which defendants were subject

accordingly rose to the low term of the felony triad, 16 months, based on the trial court’s

finding. The finding increased the mandatory minimum punishment and therefore under

Alleyne must be considered an element of the crime required to be submitted to the jury

and found beyond a reasonable doubt.14

The People argue that “[b]ecause nothing about the section 514 finding exposes a

defendant to a longer sentence than the one available absent the finding, there is nothing

14

We note that the crime of “embezzlement of public money” has a different

statute of limitations than embezzlement of non-public money, which lends support to the

conclusion that a “public funds” finding is an element of a separate crime. (Compare §

799 [“Prosecution for an offense punishable by death or by imprisonment in the state

prison for life or without the possibility of parole, or for the embezzlement of public

money, may be commenced at any time.”] with § 801 [“Except as provided in Sections

799 and 800, prosecution for an offense punishable by imprisonment in the state prison or

pursuant to subdivision (h) of Section 1170 shall be commenced within three years after

commission of the offense.”] and § 801.5 [“Notwithstanding Section 801 or any other

provision of law, prosecution for any offense described in subdivision (c) of Section 803

[including grand theft] shall be commenced within four years after discovery of the

commission of the offense, or within four years after the completion of the offense,

whichever is later.”].)

37

inconsistent about the trial court’s rejection of this very argument and the principles

stated in Alleyne.” This argument ignores express language in Alleyne, which states that

“It is no answer to say that the defendant could have received the same sentence with or

without that fact.” (Alleyne, supra, 133 S.Ct. at p. 2162.) It is true that defendants were

subject to felony punishment with or without the finding. With the finding, however,

defendants were subject only to felony punishment. “The essential point is that the

aggravating fact produced a higher range, which, in turn, conclusively indicates that the

fact is an element of a distinct and aggravated crime. It must, therefore, be submitted to

the jury and found beyond a reasonable doubt.” (Id. at pp. 2162-2163.)

The People’s analogy to People v. Benitez (2005) 127 Cal.App.4th 1274 also is not

persuasive. In Benitez, a jury found the defendant guilty of 30 lewd and lascivious acts

upon victims under the age of 14 and further found that the offenses involved more than

one victim. Through a series of statutory cross-references, these findings made the

defendant ineligible for probation. The jury did not separately find the defendant

ineligible for probation, however, and defendant argued the absence of such a finding

violated Blakely. (See Benitez, supra, 127 Cal.App.4th at p. 1277-1278.) The Court of

Appeal rejected defendant’s argument. It held that the proviso in former section 667.61,

subdivision (c)(7) disqualifying certain sex offenders from probation “is not an element

of the enhancement to be negated upon proof to a jury.” (Id. at p. 1278.) It reasoned that

eligibility for probation was not subject to Blakely because “[f]inding a defendant

ineligible for probation is not a form of punishment, because probation itself is an act of

clemency on the part of the trial court,” and “a defendant’s eligibility for probation

results in a reduction rather than an increase in the sentence prescribed for his offenses.”

(Ibid. [emphasis in original])

Here, the public funds finding increased rather than deceased the range of

punishments to which defendants were subject. Although the potential for misdemeanor

sentencing was, like probation, within the trial court’s discretion, it was still a form of

punishment. The elimination of that possibility raised the sentence prescribed for

defendants’ offenses. And even if the situations were analogous, the jury in Benitez made

38

factual findings that eliminated the possibility of probation. Those findings were made

by the court here.

Defendants and the People both correctly recognize that Apprendi error is subject

to harmless error review under Chapman v. California (1967) 386 U.S. 18, 24. (People

v. Davis (2005) 36 Cal.4th 510, 564.) Thus, “if a reviewing court concludes, beyond a

reasonable doubt, that the jury, applying the beyond-a-reasonable-doubt standard,

unquestionably would have found true” the finding in question, “the Sixth Amendment

error properly may be found harmless.” (People v. Sandoval (2007) 41 Cal.4th 825,

839.) That standard is met here.

Regardless of whether all funds Ivy Academia possessed were public funds as a

matter of law there is no question that, had it been presented with the question, the jury

would have found the money defendants embezzled in count 2 to be public funds as a

matter of fact. Throughout trial, everyone, including defense counsel and defense

witnesses, spoke almost exclusively in terms of “public moneys” and “public funds.”

The only disputes relevant to the American Express charges at issue in count 2 concerned

whether they were made to advance an educational purpose, a requirement for the

expenditure of public funds. Defendants did not contest the threshold issue of the

provenance of the funds used to pay for the American Express charges. As Selivanov

argued in closing, “[w]e know from the evidence that the funds that were coming to Ivy

Academia were from two sources primarily, categorical block grant funding and general

purpose funding, and the evidence was that money that was categorical block grant

money or general purpose money essentially needed to be spent for school related

purposes in connection with the operation of the school.” Berkovich put it even more

explicitly: “[t]his is a private entity receiving public funds.” We are convinced beyond a

reasonable doubt the jury would have agreed and made the public funds finding had it

been given the opportunity to do so. Accordingly, any Apprendi error the court may have

introduced by making the public funds finding was harmless.

39

II. Other Embezzlement Convictions (counts 8, 19, 22, 25 & 40)

Selivanov challenges his other embezzlement convictions—those stemming from

the series of $5,000 and $3,000 transfers made to EGeneration in 2008 after the $237,000

rent liability was booked into the Due to EGeneration account (count 8), the three

transfers of $25,000, $20,000, and $20,000 made to EGeneration in 2007 (counts 19, 22,

and 25, respectively), and the approximately $126,000 in loan payments Ivy Academia

made to Western Commercial Bank after transferring liability for the Western

Commercial Bank loan to EGeneration (count 40).15 First, he argues that none of the

embezzlement convictions was supported by substantial evidence because “all of the

funds transferred to his account were his own” and he had authority to transfer them. As

to count 40 specifically, Selivanov argues that the loan payments were made pursuant to

a legitimate contract and funds never were entrusted to him. Second, he contends that the

trial court erred by failing to provide the jury with an instruction on the claim-of-right

defense, thereby precluding him from presenting a defense and violating his right to a fair

trial. We do not find these contentions persuasive.

A. Sufficiency of the Evidence

Selivanov contends that none of his embezzlement convictions was supported by

substantial evidence. After reviewing the entire record in the light most favorable to the

verdict (People v. Clark, supra, 52 Cal.4th at p. 943), we conclude that ample evidence

supports the convictions.

“‘Embezzlement is the fraudulent appropriation of property by a person to whom

it has been [e]ntrusted.’ (§ 503.) The elements of embezzlement are: ‘1. An owner

entrusted his/her property to the defendant; 2. The owner did so because he/she trusted

the defendant; 3. The defendant fraudulently converted that property for his/her own

15

Selivanov also contends that his money laundering convictions on counts 23 and

26 (§ 186.10, subd. (a)) are predicated upon the same conduct as the embezzlement

convictions in counts 22 and 25 and therefore cannot stand if those convictions are

reversed. Because we affirm the embezzlement convictions, we affirm the money

laundering convictions as well.

40

benefit; [and] 4. When the defendant converted the property, he/she intended to deprive

the owner of its use.’ (CALCRIM No. 1806.)” (People v. Fenderson (2010) 188

Cal.App.4th 625, 636-637.)

Selivanov contends that counts 8, 19, 22, and 25—the counts involving Ivy

Academia’s monetary transfers to EGeneration—fail at the first element because one

cannot be guilty of embezzling his or her own property. According to Selivanov, the Due

to Management account demonstrated at all relevant times that Ivy Academia owed him

more than he transferred to his business entity EGeneration, and “[f]or this reason alone,”

his embezzlement convictions cannot stand. We do not agree. Even if Ivy Academia had

a legitimate debt to Selivanov as reflected in the Due to Management account, the money

that Selivanov caused Ivy Academia to transfer to EGeneration did not become his

property simply by virtue of that indebtedness. It remained the property of Ivy

Academia, which entrusted Selivanov to allocate the money for the benefit of the school

rather than for his own personal benefit. The jury readily could have concluded from

Selivanov’s failure to document these withdrawals as reductions in the amount owing in

the Due to Management account, his failure to document them as income for tax

purposes, and his failure to transfer his purported salary to his personal account that

Selivanov was not in fact recouping the deferred salary he was owed. The People also

presented evidence that several of the contested transfers were made only after the rent

increase (which Balbin described as a “sham transaction”) inflated the amounts Ivy

Academia purportedly owed to EGeneration, and that EGeneration in other instances

used the transferred funds almost immediately to make payments it otherwise would not

have been able to afford. The jury could have concluded from this evidence that

Selivanov was not owed the money he took, and that he took the money with fraudulent

intent.

Selivanov also contends there can be no embezzlement because he was authorized

to repay himself from the funds with which he was entrusted. While it is true that

Selivanov’s position as the executive director of Ivy Academia vested him with authority

to handle financial matters, the People presented evidence that the board approved the

41

final series of salary payments to Selivanov and Berkovich in 2010. The jury could

conclude from this evidence that board approval was required for such payments, and

further could conclude from the absence of evidence of any such approval that the board

did not authorize Selivanov’s previous withdrawals. The People also introduced

evidence that the board-approved salary payments Ivy Academia made to defendants in

2008 were documented on 1099 tax forms. The jury could infer from the absence of tax

forms for the transfers alleged in counts 8, 19, 22, and 25 that these earlier transactions

were not made via authorized channels.

As to count 40, Selivanov contends that any funds he “supposedly took from Ivy

Academia” to pay the Western Commercial Bank loan “were taken under a valid

contract,” and “one cannot be guilty of embezzling money when he has acquired title to it

by contract or sale. (People v. Parker (1965) 235 Cal.App.2d 100, 109.)” This is too

broad a read of People v. Parker, which affirmed the embezzlement conviction of a

building contractor who used down payments given to him for his own purposes rather

than depositing them into accounts at a title company as he had promised. (People v.

Parker, supra, 235 Cal.App.2d at p. 109.) The proposition for which Selivanov cites

Parker comes from People v. Holder (1921) 53 Cal.App.45, in which the Court of

Appeal reversed the embezzlement conviction of a building contractor. The contractor in

Holder used the money his customers paid him for his own purposes rather than to buy

materials for the homes he was building. The Court of Appeal concluded that the

contracts governing the contractor’s relationship with his customers were such that the

money the customers gave to the contractor became his upon receipt. Therefore, the

money could not be embezzled because it was the defendant’s own property, not the

property of another that had been entrusted to him. (See People v. Holder, supra, 53

Cal.App.45 at p. 48.)

This case is different. The Assignment Assumption of Lease was an agreement

between Ivy Academia and EGeneration, not between Ivy Academia and Selivanov, or

between Ivy Academia and Western Commercial Bank. Under the Assignment

Assumption of Lease, the money in Ivy Academia’s accounts remained the property of

42

Ivy Academia, which entrusted Selivanov to oversee it. Neither Selivanov nor

EGeneration nor Western Commercial Bank acquired title to Ivy Academia’s money

under the contract. Moreover, the People presented substantial evidence that the rent

increase that purportedly prompted the payments to Western Commercial Bank was a

sham transaction despite the board’s approval. The jury reasonably could have

concluded that Ivy Academia had no obligation to continue to make the loan payments it

was making to EGeneration’s purported “designees,” J & N Amoroso Family

Investments and Western Commercial Bank, particularly since Amoroso knew nothing of

the rent arrangement, the board was not informed of the loan transfer until more than a

year after its effective date, and Western Commercial Bank was not informed about the

loan transfer for at least five months after the board approved it.

B. Claim-of-Right Defense Instruction

1. Background

Selivanov’s theory at trial was that the payments Ivy Academia made to

EGeneration at his direction could not constitute embezzlement as alleged in counts 8,

19, 22, and 25, because Ivy Academia owed him deferred salary, as reflected in the Due

to Management account.16 That is, the “transfer of that money was justified because that

belonged to us.” The court told him it had “no problem with [him] making that

argument,” but denied his request to instruct the jury on the claim-of-right defense, which

“provides that a defendant’s good faith belief, even if mistakenly held, that he has a right

or claim to property he takes from another negates the felonious intent necessary for

conviction of theft or robbery.” (People v. Tufunga (1999) 21 Cal.4th 935, 938

16

Selivanov quotes liberally in his briefing the trial court’s discussion of the

claim-of-right defense as it applied to count 2, the embezzlement count involving the

American Express charges. However, Selivanov explicitly stated, both in his briefs and

at oral argument, that he “did not associate the claim-of-right defense with his AMEX

Card charges” and is not claiming this particular instructional error on that count.

Although Berkovich requested a claim-of-right instruction as to count 2, she does not

now argue that she was entitled to a claim-of-right instruction on count 2 or any other

embezzlement count, nor does she join Selivanov’s argument to the extent it may be

applicable to count 2, the only embezzlement count on which she was convicted.

43

(Tufunga).) Citing People v. Barnett (1998) 17 Cal.4th 1044, the court explained that it

understood the claim-of-right defense to be applicable only where a defendant claimed

ownership of specific, identifiable money or property. In the court’s view, “claim of

right requires you to be able to identify and say this money exactly is my money,” and

“all this money was flown all over the place, and there is no identifiable money that you

can point to and say that was the money that I was owed for my salary Due to

Management account that was the money that I was owed for my loan.”

Selivanov also asked the court to provide a claim-of-right instruction on count 40,

the embezzlement count stemming from Ivy Academia’s continued payments on the

Western Commercial Bank loan. He contended that claim-of-right should be a “slam

dunk” on that count because “it’s the most open and transparent thing we did,” going

through the board and the bank and making the payments “openly and validly under a

claim of right.” The court disagreed, stating, “if you do it openly and validly you usually

do it before you actually do the transaction.”

The court gave the jury an instruction regarding good faith. Using the CALCRIM

instruction for embezzlement, CALCRIM No. 1806, the court told jurors that “A good

faith belief in acting with authorization to use the property is a defense. [¶] In deciding

whether the defendant believed that he or she had a right to the property and whether he

or she held that belief in good faith, consider all the facts known to him or her at the time

he or she obtained the property, along with all the other evidence in the case. The

defendant may hold a belief in good faith even if the belief is mistaken or unreasonable.

But if the defendant was aware of facts that made that belief completely unreasonable,

you may conclude that the belief was not held in good faith.” The court separately

instructed the jury on mistake of fact: “An act committed or an omission made in

ignorance or by reason of a mistake of fact which disproves any criminal intent is not a

crime. [¶] Thus a person is not guilty of a specific intent crime which includes the

crimes charging Theft by Embezzlement and Money laundering if he or she commits an

act or omits to act under an actual belief in the existence of certain facts and

44

circumstances which, if true, would make the act or omission lawful.” (CALJIC No.

4.35.)

During his closing argument, Selivanov told the jury that although “much of the

conduct at issue here is not in dispute,” “there will be a question about what was Mr.

Selivanov thinking when he entered into certain transactions.” He emphasized that the

board approved both the rent increase and lease transactions, and that the transactions

were reviewed by Ivy Academia’s outside auditors. With respect to the transfers of

money to EGeneration, Selivanov argued that “a debt to EGeneration and AJFK is a debt

to Mr. Selivanov and Miss Berkovich,” and that because the Due to Management account

at all relevant times had a balance “easily in excess of the transfers at issue here,” “he

could take the money back as repayment.”

The jury found Selivanov guilty on all of the embezzlement counts. It further

found that Selivanov, “with the intent to do so, took money exceeding $65,000.00, within

the meaning of Penal Code section 12022.6(a)(1).”

2. Analysis

The claim-of-right defense originated in the common law as a defense to larceny

or robbery (Tufunga, supra, 21 Cal.4th at p. 945), which, like embezzlement, require the

specific intent to permanently deprive another of property. “‘It has long been the rule in

this state and generally throughout the country that a bona fide belief, even though

mistakenly held, that one has a right or claim to the property negates felonious intent.

[Citations.] A belief that the property taken belongs to the taker [citation], or that he had

a right to retake goods sold [citation] is sufficient to preclude felonious intent. Felonious

intent exists only if the actor intends to take the property of another without believing in

good faith that he has a right or claim to it. [Citation.]’ [Citation.]” (People v. Barnett,

supra, 17 Cal.4th at p. 1143.)

The Legislature codified the claim-of-right defense in 1872. Unchanged since,

section 511 provides: “Upon any indictment for embezzlement, it is a sufficient defense

that the property was appropriated openly and avowedly, and under a claim of title

preferred in good faith, even though such claim is untenable. But this provision does not

45

excuse the unlawful retention of the property of another to offset or pay demands held

against him.” (§ 511.) The good-faith nature of a defendant’s belief in his or her right to

the property taken is a crucial element; the claim-of-right defense is not available if a

defendant was aware of contrary facts that rendered his or her belief wholly

unreasonable. (People v. Stewart (1976) 16 Cal.3d 133, 140.) The claim-of-right defense

also is inapplicable where a defendant attempts to conceal the taking (id. at p. 141),

where the claim of right to the property arises from “notoriously illegal” activity (People

v. Hendricks (1988) 44 Cal.3d 635, 642), or “where an employee unilaterally determines

that he or she is entitled to certain wages and thereafter, without authorization,

appropriates the property of the employer in purported payment of such wages” (People

v. Creath (1995) 31 Cal.App.4th 312, 318).

“‘[A] trial court is not required to instruct on a claim of-right defense unless there

is evidence to support an inference that [the defendant] acted with a subjective belief he

or she had a lawful claim on the property.’ [Citations.]” (Tufunga, supra, 21 Cal.4th at

p. 944.) “‘“In evaluating the evidence to determine whether a requested instruction

should be given, the trial court should not measure its substantiality by weighing the

credibility [of the witnesses]. . . . Doubts as to the sufficiency of the evidence to warrant

instructions should be resolved in favor of the accused. [Citations.]”’ [Citation.]” (Ibid.)

Selivanov contends the evidence was sufficient to support the requisite inference here.

We agree.

Selivanov presented testimony supporting his theory that he had a good faith claim

of right to the funds at issue. Defense expert Jan Goren testified that the Due to

Management account could be bundled together with the Due to Academy and Due to

EGeneration accounts, and the evidence showed that the Due to Management account

reflected a large amount owed to defendants at all relevant times. Of course, other

evidence showed that Selivanov made the payments to his business rather than to himself,

did not document the transfers in the Due to Management account (though he did

document them elsewhere in Ivy Academia’s QuickBooks), and did not prepare tax forms

indicating he received salary payments. However, these conflicts in the evidence were

46

for the jury to resolve; we cannot, as the People suggest, dismiss Selivanov’s evidence as

“entirely implausible.” We likewise cannot disregard Selivanov’s evidence that the loan

payments were made in good faith, pursuant to a legitimate contract, despite the ample

evidence in the record suggesting otherwise. Nor can we embrace the trial court’s

rationale that the defense was inapplicable because the money secreted was not

identifiable as Selivanov’s or Western Commercial Bank’s. The cases it relied upon for

that principle addressed the defense’s application in the robbery context, where strong

policy concerns disfavoring self-help through force or violence necessitate a narrow

construction of the defense. (See Tufunga, supra, 21 Cal.4th at pp. 938, 948-950; People

v. Barnett, supra, 17 Cal.4th at pp. 1143-1146.)

We disagree with Selivanov, however, to the extent he contends that “the jury was

left unequipped to consider the ample evidence at trial pointing to [his] lack of guilt”

under a claim-of-right theory. “[A] failure to instruct where there is a duty to do so can

be cured if it is shown that ‘the factual question posed by the omitted instruction was

necessarily resolved adversely to the defendant under other, properly given instructions.’

[Citation.]” (People v. Stewart, supra, 16 Cal.3d at p. 141.)17 That showing was made

here. The court instructed the jury on good faith, a necessary element of the claim-of-

right defense, and the jury nonetheless returned guilty verdicts on all of the

embezzlement counts. By making these findings, the jury demonstrated that it

necessarily rejected one of the key elements of the claim-of-right defense.

Selivanov asserts that the court’s instruction on good faith was too narrow,

because it “only told the jury that acting with authorization could serve as a defense,”

rather than informing the jury that claim of title was at issue. He relies on People v.

17

“It is not clear what standard applies to cases involving error in instructing on

the claim-of-right defense. In cases involving other kinds of defenses, courts have

applied the [People v.]Watson [(1956) 46 Cal.2d 818, 836] standard.” (People v. Russell

(2006) 144 Cal.App.4th 1415, 1431, overruled in part by People v. Covarrubias (2016) 1

Cal.5th 838, 874; see also People v. Sojka (2011) 196 Cal.App.4th 733, 738.) We find

the error harmless even under the more stringent standard set forth in Chapman v.

California, supra, 386 U.S. at p. 24.)

47

Threestar (1985) 167 Cal.App.3d 747 (Threestar). There, the defendant was accused of

embezzlement in connection with his retention and sale of audio speaker stands after the

business for which he worked disbanded. The prosecution theorized that the defendant

and the owner of the business agreed that defendant would sell the business’s current

inventory of stands on a commission basis. Contrary to this arrangement, defendant

ordered additional stands and sold them without informing the business owner or

distributing her full share of the profits to her. Defendant claimed that no agreement

existed. According to his theory, he owned the patent rights to the stands and made

voluntary payments to the business owner “to help her recoup her losses in the

corporation.” (See Threestar, supra, 167 Cal.App.3d at pp. 751-752.) He claimed he had

a good faith belief that he could lawfully sell the speaker stands, and that the trial court

had a sua sponte duty to instruct the jury on the claim-of-right defense. (Id. at p. 753.)

We agreed. (Ibid.) We further concluded that the instruction the court delivered could

have misled the jury. We held that the pertinent part of the instruction, “if one takes

business proceeds in the good faith belief he has permission to keep such proceeds he is

not guilty of theft,” did not “address the defense theory of the evidence that no such sales

agreement existed.” (Id. at p. 756.) We found the error prejudicial because, under the

instructions given, “the jury did not necessarily find that appellant lacked a good faith

belief that he was acting pursuant to a lawful ‘claim of title’ based on his patent rights.”

(Id. at pp. 756-757.) We also noted that the instructions given omitted mention of the

“open and avowed” element of the claim-of-right defense. (Id. at p. 756.)

Threestar is distinguishable. There, the instruction the court gave did not “address

the defense theory of the evidence that no such sales agreement existed.” (Threestar,

supra, at p. 756.) That is, it “did not advise the jury that [defendant’s] good faith belief

based on his patent rights could constitute a defense to embezzlement.” (Ibid.) Even if

the jury credited defendant’s evidence to that effect, the jury instructions did not inform

the jurors that they could find defendant not guilty. Here, the jury instructions the court

gave reflected defendant’s theory of the case. The good faith instruction the court

delivered here, part of the CALCRIM instruction on embezzlement (to which Selivanov

48

did not object), informed the jury not only that “A good faith belief in acting with

authorization to use the property is a defense,” but also that a defendant’s belief “that he

or she had a right to the property” is a defense. Thus, it accurately informed the jury that

a defendant could negate his or her felonious intent by demonstrating a good faith belief

that he or she was authorized to use or legally possess the property. Unlike Threestar,

where the jury instruction was misleading because it did not comport with the

defendant’s alleged justification for selling the goods and keeping the profits, the good

faith instruction here aligned with Selivanov’s theory of the case, namely that he had a

right to the money he transferred to EGeneration because he was owed deferred salary

payments.

Selivanov also points to our observation in Threestar that the trial court in that

case failed to instruct on the “openly and avowedly” element of the claim-of-right

defense. (See Threestar, supra, 167 Cal.App.3d at p. 756.) This dicta does not compel

the conclusion that Selivanov was prejudiced here. Even if the omission of the openly

and avowedly element was the deciding factor in Threestar, which it plainly was not, the

omission of such an instruction here was not prejudicial to Selivanov. The jury’s

findings that Selivanov acted with the intent to deprive Ivy Academia of the funds it had

entrusted to him demonstrate that the jury necessarily would have rejected the claim-of-

right defense even if it had concluded Selivanov took the property openly and avowedly.

III. Corporate Tax Convictions (counts 32-36)

The jury found Selivanov guilty of filing false corporate tax returns for AJFK and

EGeneration for the years 2004-2008. (Rev. & Tax. Code, § 19705, subd. (a).)

Selivanov contends those convictions must be reversed because the trial court admitted

QuickBooks records for AJFK and EGeneration absent a proper foundation or exception

to the hearsay rule. He further argues that the People failed to prove an essential element

of the crime, namely that he did not believe the statements in the returns were true and

correct as to every material matter. We do not find either of these contentions persuasive.

49

A. Admission of AJFK/EGeneration QuickBooks Printouts (Exhibit 105)

1. Background

While LAUSD forensic accountant Delos Santos was on the stand, the People

identified as Exhibit 105 a collection of AJFK/EGeneration QuickBooks printouts.

Selivanov objected to the People’s attempt to discuss the printouts with Delos Santos on

the grounds of “foundation on the business records.” The court overruled the objection,

stating that expert witnesses “can rely on hearsay in order to reach their opinion.” The

court explained to the jury that, “at this moment,” Exhibit 105 was “not necessarily

coming in for the truth of the matter, but it is coming in to help explain what her opinion

is and you may consider it as such.” Delos Santos proceeded to testify that she was

familiar with the QuickBook documents, which had been obtained “[f]rom the search

warrant” of Ivy Academia. Delos Santos also testified that Selivanov told her in 2007

that there were no accounting books or electronic records for EGeneration. Prosecution

witness Michael Atkinson previously had testified to the same thing.

Selivanov objected again when the prosecutor asked Delos Santos if the

QuickBooks documents appeared to have been produced in the ordinary course of

business. At sidebar, Selivanov acknowledged that an electronic copy of the QuickBooks

had been found on an Ivy Academia server but argued that there had been no testimony

about who prepared them or whether they were kept in the ordinary course of business.18

The People told the court “we want it to come in for the truth” and explicitly invoked the

business records exception to the hearsay rule as a basis to achieve that aim. The

prosecutor argued that someone like Delos Santos, who was “eminently qualified on

QuickBooks,” could “testify that all QuickBooks are kept according to the way the

software directs them to be kept.” The court ruled, “I am allowing them at this moment

for the expert relied on them and reached their opinions, and it is coming in [for] the truth

of the matter.” The court deferred ruling on the admissibility of the QuickBook printouts

18

Ivy Academia bookkeeper Pilyavskaya testified that she did not do accounting

for defendants’ other business entities.

50

under the business records exception to the hearsay rule and asked the parties to research

the issue further.

During the lunch recess, the court and counsel discussed two cases the court

located that addressed the business records exception, People v. Dean (2009) 174

Cal.App.4th 186 and People v. Hovarter (2008) 44 Cal.4th 983. The court opined that

both cases “seem to speak that you have to have people that can lay a foundation that

they have some familiarity with the records, not just some person who is an auditor

looking at records and then laying a foundation based on that.” The court accordingly

expressed “grave doubts” as to whether the QuickBooks printouts were admissible for

their truth pursuant to the business records exception. It noted, however, that “one of the

ways to get around that” might be by arguing that “those are admissions or you know or

adoptive [admissions] or something like that.”

Two days later, outside the presence of the jury, the parties again addressed the

admissibility of the QuickBooks printouts for their truth as business records. Neither side

presented the court with any case authority, and the People did not accept the court’s

invitation to argue that the printouts were admissions. Instead, the People suggested that

the printouts were not in accordance with AJFK/EGeneration’s actual expenditures, as

reflected by a collection of checks and credit card statements identified as Exhibit 106.

The People contended, without citing any authority, that “the fact that these books are

going to be shown to be false, meaning they don’t match up to what was filed in the

return shows they are not being offered for their truth. They are being offered as

circumstantial evidence that the defendant [Selivanov] knew he was lying on his tax

returns. It will be tied circumstantially.” The court agreed with “this last argument,”

ruling, “[i]t comes in for non-hearsay to show there is another set of books and whether

they are true or not. I will allow them in.”

51

The People subsequently used the QuickBooks printouts,19 Exhibit 106, and

various AJFK/EGeneration tax returns with Franchise Tax Board witness Rigoberto

Salazar. He testified that numerous items booked as rent or supplies expenses in the

QuickBooks and deducted as such on AJFK/EGeneration’s tax returns were not in fact

rent or supplies expenses but rather payments on a credit card used to purchase items

from businesses including Domino’s, El Pollo Loco, Albertsons, and Victoria’s Secret.

According to Salazar, the information on the tax returns “was based on the QuickBooks.”

The admissibility of the QuickBooks printouts arose for a third time at the close of

the People’s case-in-chief. Again, the court ruled the documents were admissible. It

explained: “I am allowing the records in. I am treating this just like you would receive a

letter or another item. I had a series of cases on a piece of paper, but basically it is

coming in for a non-hearsay purpose to show not only that the fact that the records [sic]

but these kind of records were found in a location and the school run by these people and

their indicia they knew about these records and had some familiarity or some connection

with these records cause of the location they were found just like if you found a telephone

bill or a letter addressed to someone you could then jump from that to the fact that that

person exercised dominion and control over that location, and I think that the fact that

they were found on a server at the school, that these people were running, he was the

executive director, the wife was the president, I will allow it for that reason. . . .” The

court further stated that it was admitting Exhibit 105 “basically for all purposes because I

think there is some indicia that this is connected to the defendants,” and explained that if

it had come in only to support an expert’s opinion, “I might not admit it for the jury to

look at, and you would just have to rely and argue from the testimony of the witness.”

19

They actually used Exhibit 94, a spreadsheet Franchise Tax Board special agent

Rigoberto Salazar prepared using data from Exhibit 105. Selivanov objected to Exhibit

94 “on the basis of the discussion that we had at side-bar earlier,” and the court overruled

the objection.

52

2. Analysis

Hearsay is “evidence of a statement that was made other than by a witness while

testifying at the hearing and that is offered to prove the truth of the matter stated.” (Evid.

Code, § 1200, subd. (a).) Hearsay is not admissible unless it meets the requirements of

one of the exceptions set forth in Evidence Code sections 1220-1390. (Evid. Code, §

1200, subd. (b); see also People v. DeHoyos (2013) 57 Cal.4th 79, 132.) A trial court’s

ultimate ruling on admissibility “implies whatever finding of fact is prerequisite thereto; a

separate or formal finding is unnecessary unless required by statute.” (Evid. Code, § 402,

subd. (c).) We review the trial court’s conclusions regarding foundational facts for

substantial evidence and its decision to admit or exclude a hearsay statement for abuse of

discretion. (People v. DeHoyos, supra, 57 Cal.4th at p. 132.) We review the ruling, not

the rationale; “[t]he ruling must be upheld if the evidence was admissible under any

hearsay exception.” (People v. Karis (1988) 46 Cal.3d 612, 635.)

Our review is complicated by the People’s shifting explanations as to the purpose

for which the QuickBooks printouts were being offered. Initially, they told the trial court,

“we want it to come in for the truth” and invoked the business records exception to the

hearsay rule as the vehicle to accomplish that end. After the court expressed “grave

doubts” about the applicability of that particular hearsay exception, the People changed

course and claimed that the QuickBooks printouts “are not being offered for their truth”

but instead were being offered for their falsity, “as circumstantial evidence that the

defendant [Selivanov] knew he was lying on his tax returns.” For the sake of

completeness, we consider both possibilities.

To the extent the QuickBooks documents were offered to prove their falsity, we

agree with the People that they were not hearsay. “A statement is not hearsay when

offered to show the statement is false.” (People v. Ogg (2013) 219 Cal.App.4th 173, 184,

citing People v. Mendoza (1987) 192 Cal.App.3d 667, 672-673; see also People v.

Sanchez (2016) 63 Cal.4th 665, 674 [“a hearsay statement is one in which a person makes

a factual assertion out of court and the proponent seeks to rely on the statement to prove

that assertion is true”].) The QuickBooks printouts accordingly were admissible for this

53

purpose so long as they were relevant and not unduly prejudicial (see Evid. Code, §§

350-352), points defendants never contested.

To the extent the QuickBooks documents were being offered for their truth, we

agree with Selivanov that they were inadmissible hearsay unless they satisfied the

requirements of one of the exceptions to the hearsay rule. At trial (and now on appeal),

the People argued that the business records exception was applicable. That exception is

codified in Evidence Code section 1271, which provides: “Evidence of a writing made as

a record of an act, condition, or event is not made inadmissible by the hearsay rule when

offered to prove the act, condition, or event if: [¶] (a) The writing was made in the

regular course of a business; [¶] (b) The writing was made at or near the time of the act,

condition, or event; [¶] (c) The custodian or other qualified witness testifies to its identity

and the mode of its preparation; and [¶] (d) The sources of information and method and

time of preparation were such as to indicate its trustworthiness.” The business records

exception is based on the premise that records made and relied upon in the regular course

of business may be regarded as trustworthy without the verification of all persons who

contributed to them. (See People v. Crosslin (1967) 251 Cal.App.2d 968, 975 (discussing

predecessor to current Evidence Code section 1271).) It eliminates the need to call each

witness by simply substituting the record of the transaction instead. (Ibid.)

“The key to establishing the admissibility of a document made in the regular

course of business is proof that the person who wrote the information or provided it had

knowledge of the facts from personal observation.” (Jazayeri v. Mao (2009) 174

Cal.App.4th 301, 322.) The witness called to present this proof “need not have been

present at every transaction to establish the business records exception; he or she need

only be familiar with the procedures followed.” (Ibid.) Here, neither of the two

witnesses with whom the People discussed Exhibit 105—Delos Santos and Salazar—had

the requisite knowledge of AJFK’s or EGeneration’s accounting or recordkeeping

procedures. Though these witnesses may have been knowledgeable about QuickBooks

and accounting generally, they could not offer the jury any information about the

“identity and the mode of . . . preparation” (Evid. Code, § 1271, subd. (c)) of the

54

particular QuickBooks documents offered as Exhibit 105. The closely analogous case of

Sierra Managed Asset Plan, LLC v. Hale (2015) 240 Cal.App.4th Supp. 1 is instructive.

There, a debt collector acquired the rights to a delinquent credit card account and sued the

card holder in a limited civil collection case. (Id. at pp. 3-4.) The debt collector

submitted as evidence a declaration by one of its employees, Mr. Roberts, which included

as attachments copies of the card holder’s credit card statements. (Id. at p. 4.) The card

holder challenged the admissibility of the statements on appeal, and the Court of Appeal

concluded that the trial court abused its discretion in admitting the statements under the

business records exception. (See id. at pp. 7-9.) The court noted that Mr. Roberts had

never worked at the credit card company that created the documents, was not a custodian

of the documents, and lacked personal knowledge about the account and charges in

question beyond what he learned upon acquiring the documents from the credit card

company. (Id. at p. 8.) The court ruled that “Mr. Roberts’s declaration and testimony at

trial simply do not meet the necessary foundation” for the business records exception,

because “[a]t best” all they established was that the debt collector, “as assignee from the

creditor, received records originating from Citibank concerning the account in question.”

(Id. at p. 9.) Delos Santos and Salazar are no different from Mr. Roberts, the

QuickBooks printouts are analogous to the credit card statements, and the business

records exception is equally inapplicable in this case.

However, the AJFK/EGeneration QuickBooks printouts fit within the “authorized

statements” hearsay exception codified in Evidence Code section 1222. That section

provides that “Evidence of a statement offered against a party is not made inadmissible

by the hearsay rule if: [¶] (a) The statement was made by a person authorized by the

party to make the statement or statements for him concerning the subject matter of the

statement; and [¶] (b) The evidence is offered either after admission of evidence

sufficient to sustain a finding of such authority or, in the court’s discretion, as to the order

of proof, subject to the admission of such evidence.” The People presented evidence that

AJFK/EGeneration was a business owned and operated by Selivanov and Berkovich, and

that Selivanov was personally involved in the day-to-day financial affairs of

55

AJFK/EGeneration. They also presented evidence that Selivanov, with assistance from

Pilyavskaya, was exclusively responsible for preparing and maintaining similar

QuickBooks accounts at Ivy Academia; that Pilyavskaya had nothing to do with the

AJFK/EGeneration QuickBooks; that the AJFK/EGeneration QuickBooks were found on

an Ivy Academia server after Selivanov denied their existence to both Atkinson and

Delos Santos; that an accountant prepared EGeneration’s taxes in accordance with the

QuickBooks; and that the accountant had no contact with Berkovich. Collectively, this

evidence was sufficient to satisfy the authorized statements exception: the jury readily

could infer that Selivanov either prepared the AJFK/EGeneration QuickBooks himself or

directed someone else affiliated with AJFK/EGeneration to do so. (See O’Mary v.

Mitsubishi Electronics America, Inc. (1997) 59 Cal.App.4th 563, 570.)

Although the People did not invoke this hearsay exception below, the trial court

appears to have considered it. In its ultimate ruling, the court emphasized that it was

admitting the QuickBooks printouts because they bore indicia that Selivanov had a

connection with the QuickBooks: he served as executive director of Ivy Academia, and

the records were recovered from the school’s server after Selivanov denied their

existence. Whether the QuickBooks printouts were offered for their truth or falsity, we

are satisfied that the trial court did not abuse its discretion in admitting them for all

purposes.

B. Sufficiency of the Evidence

Selivanov argues that the corporate tax convictions must be reversed for an

additional reason: the evidence failed to establish that he “did not believe the statements

made in the relevant corporate tax returns were true and correct.” We disagree.

The People charged Selivanov with violating Revenue and Taxation Code section

19705, subdivision (a)(1), which criminalizes as a felony the willful making and

subscribing of “any return, statement, or other document, that contains or is verified by a

written declaration that it is made under penalty of perjury” that the defendant “does not

believe to be true and correct as to every material matter.” (Rev. & Tax. Code, § 19705,

subd. (a)(1).) Selivanov contends the record contains no direct evidence that he knew or

56

believed the AJFK/EGeneration tax returns included false information, and no

circumstantial evidence that he knowingly misclassified AJFK/EGeneration’s expenses.

He points out that his accountant and tax preparer was not called to testify, and argues

that “no attempt was made to show whether Mr. Selivanov provided accurate information

to his certified public accountant.” He also reiterates that evidence was lacking as to the

preparation and maintenance of the AJFK/EGeneration QuickBooks.

These arguments miss the mark in light of the whole record, which we view in the

light most favorable to the verdict. (People v. Clark, supra, 52 Cal.4th at p. 943.) The

People presented a 194-page exhibit containing checks and credit card statements that

illustrated the nature of AJFK/EGeneration’s expenditures and cash flow, and testimony

from Salazar interpreting those documents. All of the checks were signed by Selivanov,

and all of the credit card statements were addressed to him. The jury could conclude

from this evidence that Selivanov was either directly involved in day-to-day financial

matters at AJFK/EGeneration or had knowledge of them. The People also introduced the

QuickBooks accounting records for AJFK/EGeneration, along with testimony that the

entries in those books diverged from the expenditures documented in AJFK

EGeneration’s checks and credit card statements. As discussed above, the jury could

infer from all of the circumstances that Selivanov prepared or authorized the preparation

of the QuickBooks accounts, and therefore was aware that they falsely represented the

nature of numerous AJFK/EGeneration transactions. Finally, the People introduced the

tax returns at issue, which Selivanov signed under penalty of perjury and which aligned

with the QuickBooks rather than the documentary evidence of AJFK/EGeneration’s

finances. The jury also learned, via stipulation, that the accountant who prepared the

taxes for EGeneration, a business owned by both Selivanov and Berkovich, never had

any contact with Berkovich. This evidence is substantial and supports the jury’s

conclusion that Selivanov knew that AJFK/EGeneration’s tax returns, which tracked the

AJFK/EGeneration QuickBooks stored on Ivy Academia’s server, contained information

that was not true and correct.

57

IV. Personal Tax Convictions (counts 27-31)

The jury convicted Selivanov of violating Revenue and Taxation Code section

19705, subdivision (a)(1) with respect to his personal income taxes for the years 2004-

2008. Selivanov contends these convictions cannot stand because they were “follow-on

charges that were wholly dependent on liability for” other substantive charges, the

embezzlement convictions in counts 2, 19, 22, and 25. That is, the People alleged that

Selivanov failed to report as income the money he embezzled in counts 2, 19, 22, and 25.

(See People v. Hagen (1998) 19 Cal.4th 652, 671 [“it has long been settled law that

embezzled funds are taxable income”].) Selivanov argues that reversal of the

embezzlement convictions also must result in reversal of the convictions for willfully

filing false or fraudulent personal tax returns. This argument cannot succeed in light of

our rulings above sustaining the embezzlement counts.

Selivanov makes an additional argument pertaining to count 27 only. That count

alleged that Selivanov filed a false personal income tax return in 2004. There is no

dispute, however, that all of the embezzlement conduct alleged and proven in counts 2,

19, 22, and 25 post-dates 2004: the American Express charges began in 2005, and the

other pertinent embezzlements occurred in 2007. Selivanov accordingly contends that

there is no evidence supporting his conviction for filing a false personal income tax return

in 2004. In his reply brief and a footnote in his opening brief, Selivanov claims that the

People failed to present evidence that he underreported income on either his personal or

corporate income tax returns in 2004. Therefore, he contends, the People failed to prove

any violation of Revenue and Taxation Code section 19705, subdivision (a)(1) by virtue

of false statements on the 2004 EGeneration tax return “flowing through” to his personal

tax return.

This argument is not persuasive. Our Supreme Court has explained that a false

statement is “material” for purposes of section 19705 when it has “some objective

potential for interference with the calculation or monitoring of income or tax liability.”

(People v. Hagen, supra, 19 Cal.4th at pp. 667-668 (emphasis omitted); see also Stark v.

Superior Court (2011) 52 Cal.4th 368, 401.) Whether it results in the over- or

58

underreporting of a taxpayer’s income or liabilities, a purposeful false statement on a tax

return plainly carries the objective potential to interfere with the Franchise Tax Board’s

ability to calculate and monitor income and tax liability.

Although Selivanov is correct that the People did not present evidence that he

failed to report embezzled funds as income in 2004, he overlooks their evidence that

falsehoods in the form of overstated deductions on the 2004 EGeneration tax return

flowed through to his personal tax return. Salazar testified that losses or gains reported

on EGeneration’s tax returns “passed through” or “flow[ed] over into” the personal tax

returns of its members, Selivanov and Berkovich. Salazar further testified that

EGeneration falsely reported $59,707 in deductions in 2004, thereby affecting its income

and that of Selivanov. As discussed above, the record contained substantial evidence

from which the jury could conclude that Selivanov knowingly subscribed to false

information on the corporate tax returns; therefore, the jury could conclude he equally

had knowledge that the same information remained false when carried through to his

personal returns.

V. Restitution

The trial court found Berkovich and Selivanov jointly and severally liable for

$22,396.60 in restitution to Ivy Academia in connection with the fraudulent American

Express charges, and further ordered Selivanov alone to pay an additional $205,499.48 to

Ivy Academia and $43,899 to the Franchise Tax Board. Both defendants contest these

orders. Berkovich contends the court abused its discretion at the restitution hearing by

declining to accept and consider juror statements and declarations she submitted.

Selivanov joins this argument. He also argues that he should not be jointly and severally

liable for the $22,396.60 because he had nothing to do with the charges on Berkovich’s

American Express card, and there was no evidence that the expenses he charged could be

considered an economic loss to Ivy Academia.

Selivanov raises several additional challenges to his restitution order. First, he

contends that the court erred in ordering him to pay any restitution to Ivy Academia

because Ivy Academia never made a claim of actual economic loss. Second, he contends

59

that the court erred in ordering him to pay $126,654.73 in connection with count 40 (Ivy

Academia’s continued loan payments to Western Commercial Bank). He argues that the

loan payments Ivy Academia made did not cause it economic loss because they were

deducted from the increased rent it owed to EGeneration. Finally, Selivanov contends

there was no factual or rational basis underlying the court’s order that he pay $43,899 in

restitution to the Franchise Tax Board. We find persuasive only Selivanov’s argument

regarding his joint and several liability.

A. Standard of Review

“Generally speaking, restitution awards are vested in the trial court’s discretion

and will be disturbed on appeal only when the appellant has shown an abuse of

discretion. [Citation.] ‘“[E]ven though the trial court has broad discretion in making a

restitution award, that discretion is not unlimited. While it is not required to make an

order in keeping with the exact amount of loss, the trial court must use a rational method

that could reasonably be said to make the victim whole, and may not make an order

which is arbitrary or capricious.”’ [Citation.] ‘“When there is a factual and rational basis

for the amount of restitution ordered by the trial court, no abuse of discretion will be

found by the reviewing court.”’ [Citation.]” (People v. Holmberg (2011) 195

Cal.App.4th 1310, 1320.) “To facilitate appellate review of the trial court’s restitution

order, the trial court must take care to make a record of the restitution hearing, analyze

the evidence presented, and make a clear statement of the calculation method used and

how that method justifies the amount ordered.” (People v. Giordano (2007) 42 Cal.4th

644, 664.)

B. Juror Statements and Declarations

1. Background

In connection with her sentencing memorandum, Berkovich’s counsel submitted a

declaration in which she relayed the contents of post-trial conversations she had with

three jurors. According to counsel’s declaration, one juror reported that the jury as a

whole made its own evaluation of which charges on the American Express cards were

impermissible. The juror further stated that he personally found permissible the various

60

meals and teacher appreciation events and concluded that less than $1500 of the charges

were disallowable. Another juror told Berkovich’s counsel that the jury as a whole

concluded the meals and teacher appreciation events were not criminal and that he

personally thought the disallowable charges did not exceed $1500-$2000. A third juror

told Berkovich’s counsel that the jury as a whole agreed the restaurants and teacher

appreciation events were not takings. This juror also stated that she personally concluded

that clothing, diapers, and bowling were personal expenses.

Berkovich’s counsel spoke with three additional jurors and attached their sworn

declarations for the court. Two of those jurors stated that the jury “ultimately accepted

all meals, teacher appreciation events, and gifts to teachers and students, and did not

consider those items “takings” for counts one and two,” while the third stated that the

jury only accepted “all meals” and “most teacher appreciation events.” All three of these

jurors elaborated on what they personally considered to be improper personal expenses.

Berkovich’s counsel referred to the juror statements and declarations at the

sentencing hearing, prompting the court to state that “None of that is considered by the

court. Under [Evidence Code section] 1150, you’re not to consider anything that jurors

say about their deliberations, so I don’t know why you did that.” Berkovich’s counsel

explained that she did not read Evidence Code section 1150 to preclude the consideration

of such statements at sentencing. The court reiterated, “I don’t view that as something

the court should consider, their thinking and thoughts about jury deliberations; otherwise,

we would have everybody doing that in every case, and they have a specific statute that

says you are not supposed to do that, so I would prefer that you not address that.”

Berkovich’s counsel raised the issue of the juror statements and declarations at the

restitution hearing several weeks later. She again urged the court to consider the

statements and declarations, which she argued supported her view that Berkovich did not

61

personally benefit from many of the items charged to the American Express card and

therefore should owe a lesser amount of restitution.20

The court declined. It explained: “First of all, I would not be inclined to accept

any various affidavits filed by jurors and separate amounts of what they decided the

restitution was. If courts were to go that route, I would have 12 different amounts of

restitution, depending upon what the juror thought was the amount. In addition, I don’t

have a situation where the jurors have testified in court, they’ve been examined and

cross-examined. I have no idea why they reached whatever conclusions they reached.

And, finally, I’m absolutely convinced that 1150 prevents any consideration - - even

though the court has wide latitude when it comes to restitution, I am certain that we are

not supposed to take a poll of the jury and find out what they thought the amount of

restitution should be. I have never seen that done. I’ve never heard of it being done, and

it just does not seem to me to be a reasonable thing to do. I am, rather, more influenced -

- and I did see and hear the evidence in this case, and I’m more influenced by the fact of

the testimony of the auditors in this case who did conduct an audit and who did prepare

these records, which have been submitted by the People, but which were also submitted

as evidence in the case. I think this is an example of having some very strong

recordations of AmEx charges and other things that were spent that were not for

educational purposes; they were for the benefit of the defendants.”

2. Analysis

Both defendants contend the court erred as a matter of law and therefore abused its

discretion by citing Evidence Code section 1150 as a basis for excluding the juror

statements and declarations. They argue that Evidence Code section 1150 was not

applicable at their restitution hearing because they were not seeking to invalidate or

attack the verdict but rather were submitting the statements and declarations “to give the

20

Selivanov likewise argued that the juror statements and declarations established

that he should be liable only for $367.27 in restitution on count 2, the total of the charges

on his credit card for “non-business meals, non-teacher appreciation events and non-

teacher gifts.”

62

trial court relevant and useful information as to the jurors’ perceptions of amount of loss

in question.” They further contend that the court’s refusal to consider the juror

statements and declarations deprived them of a full and fair opportunity to test the basis

for the restitution order. The People recognize that “it is doubtful that the provisions of

Evidence Code section 1150, prohibiting the use of juror declarations concerning their

mental processes, were triggered.” They argue that the court’s ruling was supported by

legitimate policy reasons and therefore did not constitute an abuse of discretion.

Evidence Code section 1150 provides “(a) Upon an inquiry as to the validity of

any verdict, any otherwise admissible evidence may be received as to statements made,

or conduct, conditions, or events occurring, either within or without the jury room, of

such a character as is likely to have influenced the verdict improperly. No evidence is

admissible to show the effect of such statement, conduct, condition, or event upon a juror

either in influencing him to assent to or dissent from the verdict or concerning the mental

processes by which it was determined. [¶] (b) Nothing in this code affects the law

relating to the competence of a juror to give evidence to impeach or support a verdict.”

As the parties all recognize, this statute by its terms “applies only to postverdict inquiries

into how error or misconduct had affected the juror in reaching the verdict.” (People v.

Cooper (1991) 53 Cal.3d 771, 838.) Because defendants were not challenging the

verdict, and were not alleging juror misconduct, Evidence Code section 1150 did not

prevent the court from considering the proffered juror statements and declarations.

That does not mean the court was required to consider this evidence, however.

“[T]rial courts have discretion regarding the formalities they follow and the evidence they

consider at such hearings.” (People v. Millard (2009) 175 Cal.App.4th 7, 42.)

Defendants fail to recognize that such discretion cuts both ways. Just because a court is

permitted to consider certain evidence does not mean it is required to do so. Here, the

court offered at least one valid reason for its refusal to consider the juror statements and

declarations: it did not want to open the door to the bombardment of sentencing courts

with up to 12 potentially conflicting juror declarations in every case involving restitution.

(Cf. People v. Arbuckle (1978) 22 Cal.3d 749, 755 [“We cannot be oblivious to the drain

63

on time and public resources the demands of defendant would impose.”].) This was a

reasonable, rational basis on which to exclude the declarations, which in this case

provided varying accounts of the expenditures the jury as whole viewed as criminal.

Moreover, the divergent nature of the declarations and the inability of the court and the

People to question the jurors further could have led to the consideration of unreliable or

even inaccurate information, which itself would have rendered the proceedings

fundamentally unfair. (People v. Goulart (1990) 224 Cal.App.3d 71, 83.)

We find unpersuasive defendants’ suggestion that the court’s exclusion of the

juror statements and declarations deprived them of “the full and fair opportunity to test

the basis for the restitution order as mandated by law.” “The scope of a criminal

defendant’s due process rights at a hearing to determine the amount of restitution is very

limited: ““‘A defendant’s due process rights are protected when the probation report

gives notice of the amount of restitution claimed . . ., and the defendant has an

opportunity to challenge the figures in the probation report at the sentencing hearing.’”

[Citations.]” (People v. Cain (2000) 82 Cal.App.4th 81, 86.) A trial court violates these

rights if the hearing procedures are fundamentally unfair. (Id. at p. 87.)

The procedures the court used in this case were not fundamentally unfair. The

People submitted a sentencing memorandum requesting certain amounts of restitution,

which they supported with trial exhibits. The court afforded defendants the opportunity

to submit their own sentencing and restitution memoranda and to contest the People’s

restitution figures in open court. The court’s reasonable refusal to consider the juror

statements and declarations did not render this process unfair, particularly where the trial

court presided over the five-week trial and “did see and hear the evidence in this case.”

Defendants were not precluded from obtaining or submitting alternative evidence in

support of their positions at the restitution hearing after they learned at the sentencing

hearing that the court was disinclined to consider the juror declarations and statements.

In short, they received the process to which they were entitled.

64

C. Lack of Victim Request for Restitution

Selivanov contends that his entire restitution order as to Ivy Academia must be

reversed because “Ivy Academia, the purported victim of Mr. Selivanov’s conduct[,] has

made no claim for victim restitution.” In his view, a victim is entitled to restitution only

if he or she initiates and participates in the restitution process by identifying the type of

loss sustained and its monetary value.21 This view is not in accordance with the law.

Article I, section 28, subdivision (b)(13)(A) of the California Constitution vests in

“all persons who suffer losses as a result of criminal activity . . . the right to seek and

secure restitution from the persons convicted of the crimes causing the losses they

suffer.” By its very terms, this provision expresses the “unequivocal intention of the

People of the State of California” (Cal. Const., art. I, § 28, subd. (b)(13)(A)) that “every

victim who suffers a loss shall have the right to restitution from those convicted of the

crime giving rise to that loss” (People v. Phelps (1996) 41 Cal.App.4th 946, 950

(emphasis added)). “The only qualification is that the loss must be ‘the result of criminal

activity.’ [Citation.]” (Ibid.)

The broad constitutional right to restitution is implemented in section 1202.4,

which provides in subdivision (a)(1) that “It is the intent of the Legislature that a victim

21

Selivanov asserts that “[r]epresentatives of Ivy Academia were summoned to

testify in court,” regarding a settlement between the board of directors and defendants,

“but the trial court refused to hear them.” The court’s refusal to consider such evidence

was not improper. “[T]he settlement of a civil action and release of the defendant by the

crime victim does not discharge the defendant’s responsibility to satisfy the restitution

order: ‘Even when a victim obtains a settlement from a company that insured the

defendant for civil liability, the court in a criminal action may order the defendant to pay

victim restitution. This is so because the victim “might rationally chose to accept an

insurance settlement for substantially less than his or her losses rather than risk the

uncertain . . . possibility that the defendant will pay the entire restitution amount”

[citation], and the “victim’s willingness to accept the [insurance settlement] in full

satisfaction for all civil liability, . . . does not reflect the willingness of the People to

accept that sum in satisfaction of the defendant’s rehabilitative and deterrent debt to

society.”’ [Citation.]” (People v. Vasquez (2010) 190 Cal.App.4th 1126, 1133.) “[A]

release by the victim cannot act to release a defendant from his financial debt to the state

any more than it could terminate his prison sentence.” (People v. Bernal (2002) 101

Cal.App.4th 155, 162.)

65

of crime who incurs an economic loss as a result of the commission of a crime shall

receive restitution directly from a defendant convicted of that crime.” Subdivision

(a)(3)(B) of section 1202.4 requires the trial court to order restitution to the victim(s) of a

defendant’s crime “in accordance with subdivision (f),” which in turn states in pertinent

part that “in every case in which a victim has suffered economic loss as a result of the

defendant’s conduct, the court shall require that the defendant make restitution to the

victim or victims in an amount established by court order, based on the amount of loss

claimed by the victim or victims or any other showing to the court.” (§ 1202.4, subd. (f)

(emphasis added).) Like the constitutional provision, these statutory provisions are

devoid of any language limiting the class of compensable victims to those who

affirmatively request restitution and must be broadly and liberally construed. (People v.

Mearns (2002) 97 Cal.App.4th 493, 500-501.) Moreover, section 1202.4, subdivision (f)

uses disjunctive language to indicate that the amount of restitution may be based either on

the “amount of loss claimed by the victim or victims” or “any other showing to the

court,” suggesting that a claim by the victim is not, as Selivanov argues, a “primary

predicate condition” for the issuance of a restitution order.

Selivanov looks primarily to People v. Fulton (2003) 109 Cal.App.4th 876, 885-

886 to support his position. In that case, which addressed whether and to what extent

attorneys’ fees incurred by crime victims are recoverable as restitution, the Court of

Appeal stated: “At the core of the victim restitution statutory scheme is the mandate that

a victim who suffers economic loss is entitled to restitution and that the restitution is to be

‘based on the amount of loss claimed by the victim.’ Thus, a victim seeking restitution

(or someone on his or her behalf) initiates the process by identifying the type of loss

[citation] he or she has sustained and its monetary value.” Selivanov reads this language

to require victims to make a claim for restitution before they are entitled to receive it. We

do not. The excerpt from People v. Fulton quotes only the first portion of the disjunctive

language in section 1202.4, subdivision (f), and omits the second portion that permits the

amount of restitution to be based on “any other showing to the court.” We further note

that the parenthetical language in the People v. Fulton excerpt—“or someone on his or

66

her behalf”—clarifies that a crime victim need not personally act on his or her own

behalf. Instead, “someone,” such as the People, may initiate the restitution process on

behalf of a victim.

Selivanov also cites People v. Lai (2006) 138 Cal.App.4th 1227, 1246-1249 and

People v. Woods (2008) 161 Cal.App.4th 1045, 1049-1053. Those cases are not on point.

In People v. Lai, we held that “when a defendant is sentenced to state prison, section

1202.4 limits restitution to losses caused by the criminal conduct for which the defendant

was convicted.” (People v. Lai, supra, 138 Cal.App.4th at p. 1246.) In doing so, we

discussed the constitutional and statutory rights to restitution in a manner similar to that

above (see id. at pp. 1246-1247) and addressed the distinction between restitution orders

made when a defendant is sentenced to probation and those made when a defendant is

sentenced to prison (see id. at pp. 1247-1249). Nowhere did we state or suggest that a

court may order restitution only upon receiving a claim from a victim. The same can be

said for People v. Woods. There, the Court of Appeal considered whether a defendant

convicted of being an accessory after the fact to murder lawfully could be ordered to pay

victim restitution for economic losses stemming from the murder. (See People v. Woods,

supra, 161 Cal.App.4th at pp. 1049-1053.) Relying heavily on People v. Lai, the court

concluded that such a restitution order would be improper. (Ibid.) The court did not

discuss or consider the form of the request for restitution; the case accordingly is

inapposite to Selivanov’s argument here.

D. Joint and Several Liability

1. Background

The trial court ordered defendants to pay a total of $34,445.42 in restitution in

connection with count 2, embezzlement via improper use of Ivy Academia’s American

Express cards. The court ordered Selivanov solely responsible for the $12,048.82 in

improper charges made on his card, and jointly and severally responsible

This text is long and has been trimmed here. Open the source document for the complete record.