STATE v. COLBERT, 705 N.W.2d 506 (Iowa App. 2005)

No. 5-522 / 04-1059Court of Appeals of Iowa.
Filed August 31, 2005

Appeal from the Iowa District Court for Polk County, Don Nickerson, Judge.

Rickey Colbert appeals from the restitution order of the district court. REVERSED AND REMANDED WITH INSTRUCTIONS.

Brian D. Bentler, Ames, for appellant.

Thomas J. Miller, Attorney General, Martha Boesen, Assistant Attorney General, John P. Sarcone, County Attorney, and Ralph Marasco, Assistant County Attorney, for appellee.

Considered by Vogel, P.J., and Miller and Hecht, JJ.

HECHT, J.

Rickey Colbert appeals from the restitution order of the district court. We reverse and remand.

I. Background Facts and Proceedings.
Rickey Colbert operated American Scrap, a business located within the same building as the Silver Crest Recycling Center (Silver Crest) in Des Moines. Silver Crest is a secure recycling facility that held a contract with the Dr. Pepper/7-Up Bottling Group (Bottling Group) to receive all Dr. Pepper and 7-Up aluminum cans redeemed at the Patterson Redemption Center (Patterson) in Des Moines. Under the terms of the contract, Silver Crest agreed to crush and bale all aluminum cans it received, and after selling the scrap aluminum, to pay the Bottling Group forty-two cents per pound for the scrap it sells.

At some point in time, Colbert entered into an agreement with Clay Rodgers to defraud the Bottling Group through a double-redemption scheme. Colbert, having access to Silver Crest, opened the recycling center so that Rodgers could remove bags of uncrushed, previously redeemed cans that Rodgers would then re-redeem at Patterson. The redemption deposits received by Rodgers were then divided between himself and Colbert.

In late July of 2003, an employee of the Bottling Group was driving by Silver Crest when he noticed Rodgers loading the bags of uncrushed cans into a vehicle and thereafter redeeming the cans at Patterson. Des Moines Police were promptly notified and proceeded to mark with a UV marker approximately one-thousand bags of Bottling Group aluminum cans that had been processed at Patterson. The police also observed Colbert give Rodgers access to Silver Crest and allow Rodgers the use of his vehicle to carry out the scheme. When two of the marked bags that had been delivered to Silver Crest were subsequently returned to Patterson, Colbert and Rodgers were arrested. The trial information later filed by the State was limited to acts occurring “on or about the period of May 1, 2003 through August 7, 2003.”

On January 29, 2004, Colbert entered an “Alford” plea of guilty to the charge of fraudulent practices in the first degree in exchange for the dismissal of two counts of theft arising from this same double-redemption scheme. In accordance with Iowa Code section 910.2 (2003), a hearing was held on May 7, 2004, to determine the appropriate amount of restitution. The deposition testimony of Rodgers indicated the double-redemption scheme was instituted after Silver Crest lost a very lucrative recycling contract with the Coca-Cola bottler in January of 2002. The State accordingly argued the double redemption scheme for which restitution was sought had been in operation for approximately twenty months rather than slightly more than three months as charged in the information. Receipts from the most recent transactions between Patterson and Rodgers indicated the scheme netted approximately $5,000.00 per month. The State extrapolated from those receipts that the fraud would have generated approximately $100,000.00 if it continued for twenty months.[1] The State thus argued for restitution of at least $100,000.00 despite the fact receipts from Patterson indicated Rodgers was only paid $9,406.00 for the cans he redeemed during a two-month period occurring within the three months alleged in the trial information.[2]

Additional testimony from a controller for the Bottling Group noted monthly redemption rates for the “entire division of Des Moines”[3] increased by approximately 2.3% during the time the Bottling Group employed Silver Crest as its recycler. Assuming this increase in can redemptions for the entire Des Moines area was directly attributable to the double-redemption scheme hatched by Colbert, the State alternatively calculated that the victims lost $94,200.00 during the twenty-month period.

The district court indicated some reservation as to the quality of proof advanced by the State. In particular the court noted only two of the one-thousand UV-marked bags of cans were recovered by police. The court nonetheless found that when Patterson’s receipts to Rodgers were extrapolated over the claimed twenty-month duration of the entire scheme, the value roughly matched the estimate of loss derived from the increase in the Bottling Group’s average redemption rate. Thus, despite its reservations, the district court found the correlation between the two independent methods of calculating the restitution amount served as a reasonable basis to order restitution in the amount of $92,891.00 in this case. Colbert and Rodgers were held jointly and severally liable for this restitution amount. Colbert now appeals claiming the amount of restitution ordered is not supported by a reasonable basis in the record.

II. Scope and Standard of Review.
Decisions regarding restitution are reviewed for errors of law and are only reversed for abuse of discretion. State v. Bradley, 637 N.W.2d 206, 210 (Iowa Ct.App. 2001). The district court is afforded broad discretion to determine the amount of damages flowing from the criminal acts found to have been committed, and may set the amount of restitution where the record contains “proof of a reasonable basis from which the amount may be inferred.” State v. Watts, 587 N.W.2d 750, 752 (Iowa 1998). The amount of damage, however, may not be either speculative or imaginary. Id. A restitution order is not excessive if it bears a reasonable relationship to the damage caused by the defendant’s criminal act.

State v. Bonstetter, 637 N.W.2d 161, 165 (Iowa 2001).

III. Discussion.
The State relies heavily on Rodgers’ deposition testimony to advance the inference that the scheme was continuous over a period of approximately twenty months, beginning in January of 2002 when Silver Crest lost a very lucrative recycling contract with Coca-Cola. The district court relied upon the twenty-month duration in setting the amount of restitution at $92,891.00 despite the fact Colbert agreed to plead guilty only for fraudulent acts occurring between May 1 and August 7, 2003 as charged in the trial information.

A district court ordering restitution exercises considerable discretion in setting the amount of restitution a defendant will be required to pay as compensation for their criminal acts, so long as a reasonable causal connection between the amount of damage and the acts committed is established on the record State v. Holmberg, 449 N.W.2d 376, 377 (Iowa 1989). The State cites the causal connection rule in Holmberg as the theoretical basis for upholding the district court’s decision to order restitution outside the relevant period of criminal activity charged in the trial information, and to which Colbert pled guilty. The State argues there is no other rational explanation for the 2.3% increase in redemption rates experienced by the Bottling Group over the twenty-month period in which Silver Crest held the recycling contract, and thus this 2.3% increase evidences the full measure of losses the Bottling Group suffered as a result of Colbert’s double-redemption scheme.[4]

Even if the State could, on this record, establish that the double-redemption scheme (1) continued for the full twenty months now alleged, (2) proceeded with regularity throughout that twenty-month period so as to allow a reasonable extrapolation of the receipts placed in evidence, and/or (3) was the only such fraudulent redemption scheme perpetrated upon the Bottling Group during the relevant period so as to allow the reasonable inference that the entire increase in area redemptions over the twenty-month period were solely attributable to Colbert’s scheme, we nonetheless believe the holding in State v. Ihde, 532 N.W.2d 827, 830 (Iowa Ct.App. 1995), would require the reversal of the restitution ordered in this case.

In Ihde, the defendant pled guilty to taking money from December 1, 1991, to April 30, 1992. Id. A panel of this court concluded the plea agreement reached in the case required defendant to pay restitution only for the money and goods taken during the period for which he was charged. Id. at 829. Nothing in the plea agreement in Ihde suggested the defendant admitted involvement beyond the time period alleged in the trial information or otherwise agreed to pay restitution for any alleged losses incurred beyond that relevant timeframe. Id. at 830. Thus the panel of this court reversed the restitution order and remanded the case with instructions to the district court for entry of a restitution order calculated with reference to the dates of the criminal activities alleged in the trial information. Id.

Here, Colbert was permitted to plead guilty by entering an “Alford” plea, and therefore was not required to provide a factual basis for the crime to which he pled. He clearly did not, through his plea, admit participation in a fraudulent scheme extending beyond the dates of the criminal activity alleged in the trial information. The record does not evidence an agreement between Colbert and the State in the form of a plea agreement requiring Colbert to pay restitution for any losses claimed by the Bottling Group as a consequence of criminal acts occurring during other intervals. We find no reasonable basis for the amount of restitution ordered in this case and therefore conclude the district court abused its discretion. Accordingly, the restitution order is reversed and we remand this case to the district court for a determination of the amount of loss incurred as a result of the Colbert’s fraudulent acts committed between May 1 and August 7, 2003.[5]
REVERSED AND REMANDED WITH INSTRUCTIONS.