People v. Stark
26 Cal. App. 4th 1179, 31 Cal. Rptr. 2d 887, 94 Cal. Daily Op. Serv. 5515 (1994)
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Rule of Law:
The crime of willful diversion of construction funds under California Penal Code § 484b is a general intent crime. A conviction only requires proof that the defendant wrongfully diverted funds, not that the defendant specifically intended to fail to complete the project or fail to pay for services or materials.
Facts:
- In 1989, Doctors Steven Johnson and Douglas Martin contracted with defendant, doing business as Stark Construction, to build a medical facility.
- As the project progressed, defendant received partial payments from a construction loan obtained by the doctors, which were intended to pay subcontractors and material suppliers.
- By February 15, 1990, defendant had received three payments totaling approximately $245,000.
- On March 1, 1990, the doctors were informed by several subcontractors and material suppliers that they had not been paid for their work or materials.
- When confronted, defendant admitted to the doctors that he had been experiencing financial difficulties on other jobs and had used the money from their project to cover costs on those other jobs.
- Defendant promised to repay the money but failed to do so over the following months.
- At trial, defendant admitted using the funds for other jobs but testified that he always intended to pay the money back.
Procedural Posture:
- Defendant was charged in a California trial court with willful diversion of construction funds under Penal Code § 484b.
- A jury convicted the defendant as charged, also finding that the amount taken exceeded $25,000.
- The trial court suspended the imposition of sentence and granted the defendant five years of probation.
- Defendant (appellant) appealed the conviction to the Court of Appeal of California, Third Appellate District.
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Issue:
Does a conviction for willful diversion of construction funds under Penal Code section 484b require proof of a specific intent to fail to pay for services or materials?
Opinions:
Majority - Puglia, P. J.
No. The offense defined by Penal Code section 484b is one of general criminal intent. The court differentiates between general and specific intent crimes using the standard from People v. Hood: a crime is one of general intent when its definition consists only of a description of a particular act, without reference to an intent to do a further act or achieve a future consequence. The only act described in § 484b is the wrongful diversion of funds. The statute does not require an additional intent to cause the failure to pay suppliers or complete the project; the offense is complete if the wrongful diversion is the cause of such a failure. Therefore, it is immaterial whether the defendant intended to eventually pay the suppliers back. The court distinguished People v. Dollar, which involved a statute that explicitly required an additional mental state (the intent to cause fear), making it a specific intent crime.
Analysis:
This decision solidifies the mental state required for willful diversion of construction funds as general intent, thereby lowering the prosecution's burden of proof. Prosecutors need only prove the defendant intended to perform the act of diversion, not that they harbored a specific intent to permanently deprive suppliers of payment. This ruling effectively eliminates the common defense that the defendant intended to repay the funds later, focusing the legal inquiry on the act of misuse itself and its consequences. This precedent strengthens protections for clients and subcontractors against contractors who improperly commingle or 'borrow' from project funds.
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