Court of Criminal Appeals of Tennessee, Nashville
Session Date January 13, 2015.
Appeal from the Circuit Court for Marion County No. 9397-A Thomas W. Graham, Judge.
Jerry H. Summers (on appeal) and Benjamin McGowan (at trial), Chattanooga, Tennessee, for the appellant, Jay Herman Sanders.
Herbert H. Slatery, III, Attorney General and Reporter; Sophia S. Lee, Senior Counsel; J. Michael Taylor, District Attorney General; and Sherry Shelton, Assistant District Attorney General, for the appellee, State of Tennessee.
Robert L. Holloway, Jr., J., delivered the opinion of the Court, in which Thomas T. Woodall, P.J., and Robert W. Wedemeyer, J., joined.
ROBERT L. HOLLOWAY, JR., JUDGE.
I. Factual and Procedural Background
The Defendant was indicted for theft of property valued at $250, 000 or more and conspiracy to commit theft of property valued at $250, 000 or more. Pending adjudication of the charges, the Defendant was released on bond in the amount of $20, 000. While on bond, the Defendant was arrested and charged with (1) possession of a Schedule II controlled substance (methamphetamine), (2) unlawful possession of a weapon, (3) possession of legend drugs (Oxycodone and additional pills), and (4) possession of drug paraphernalia. The trial court subsequently ordered that the Defendant be furloughed into Council for Alcohol and Drug Abuse Services ("CADAS"), an inpatient treatment program. Upon completion of the program, the trial court would reinstate the Defendant's original bond with the added conditions that he be drug tested on a weekly basis at his own cost, not possess any firearms, and not engage in any additional criminal conduct.
After completion of the CADAS program, the Defendant entered into a plea agreement for the theft charges, pleading guilty to theft of property valued at $60, 000 or more but less than $250, 000, a Class B felony. The Defendant also agreed to a 10-year sentence and restitution between $60, 000 and $250, 000. The manner of service and amount of restitution was left to the trial court's discretion following a sentencing hearing.
At the sentencing hearing, Sergeant Matthew Minter of the Tennessee Highway Patrol explained the complex theft conspiracy. The Defendant was employed by SCS Trucking ("SCS"), which was contracted to haul bushling scrap metal from A.O. Smith Water Heater Services ("A.O. Smith") in Ashland City, Tennessee, to the victim's, Progressive Rail Services ("PRS"), facility in New Hope, Tennessee. The Defendant, along with an individual named Gary Alto, would drive two truck loads of bushling steel from Ashland City to the PRS facility in New Hope. When they reached New Hope, they would drive one of the trucks onto the scale and weigh it twice. The truck that had been weighed would stay at the PRS facility, but the Defendant would drive the second truck to Dodson's Scrap Yard ("Dodson's") in Whitewell, Tennessee where the bushling was unloaded. From there, Dodson's would sell the bushling to Thornton Iron & Metal ("Thornton") in Rogersville, Alabama. Thornton would pay the Dodson's driver with a check, and the driver would cash the check at a bank, usually on the same day. The cash was then delivered to Dodson's and divided equally between Dodson's and the Defendant. Sergeant Minter's investigation revealed that this scheme had been going on three to four times a week from at least September 2010 through August 2012–possibly starting as early as 2009.
Dodson's did not keep records of their transactions with the Defendant or with Thornton. However, Sergeant Minter obtained the cancelled checks written by Thornton for scrap metal purchased from Dodson's as well as a spreadsheet, prepared by Thornton, documenting the transactions in which Dodson's had sold bushling to Thornton. In total, the spreadsheets indicated that Thornton had paid Dodson's $1, 830, 216.56 for bushling. An additional spreadsheet, covering August 1, 2012, through August 9, 2012, showed that Thornton had paid Dodson's $37, 901.70 for bushling. Sergeant Minter's investigation revealed that Thornton was paying comparatively fair market value for the bushling. He also confirmed that Dodson's was Thornton's sole supplier of bushling, and Dodson's only received bushling from the Defendant.
As part of his investigation, Sergeant Minter interviewed the Defendant on August 13, 2012. During that interview, the Defendant voluntarily admitted his involvement in the scheme and explained how it worked. The Defendant also admitted that the scheme was his idea and that he was "the mastermind." He explained that he split the money paid by Thornton equally with Dodson's. Then, from the money he received in the transaction, the Defendant would pay $50-$100 to security guards at the various scrap yards and a "small piece" to Mr. Alto for their participation in the scheme. The Defendant would also put some additional gasoline into the SCS truck so that it would not be apparent that he drove the truck off route to reach Dodson's in Whitewell.
In his interview with Sergeant Minter, the Defendant stated SCS paid him around $30, 000 or $32, 000 per year, and in a good year, he would be paid up to $43, 000. He also stated that he "blended" the money he received from the scheme into his income, but he was unable to explain how he had spent the money he received through the scheme. The Defendant denied using drugs.
Bobbie Lambert testified that she was the North American district security manager for Caterpillar, Inc. ("Caterpillar"). PRS is a wholly-own subsidiary of Caterpillar. Caterpillar had a contract with SCS to transport steel, primarily bushling, from A.O. Smith in Ashland City, Tennessee to the PRS facility in New Hope, Tennessee. A.O. Smith is PRS's sole supplier of bushling. In 2011, PRS discovered that its inventory was "short, " and they were concerned that they had a theft problem. To ensure that the shortage was not caused by a measurement error, the PRS scales were recalibrated. Then, in 2012, PRS learned that the Defendant had been seen at Dodson's with a load of bushling. Ms. Lambert explained that Dodson's was not on the route from A.O. Smith to PRS and there was no reason for the Defendant to take the bushling to Dodson's. The PRS yard manager traveled to Dodson's and was able to identify material there as bushling. He "felt certain" that the bushling came from PRS, so he reported it to management. Management then decided to start an investigation. They conducted surveillance on the Defendant and, on two occasions, followed the Defendant as he drove a load of bushling from A.O. Smith to Dodson's. Also during the surveillance, Mr. Alto was observed weighing the same truck twice to produce two scale tickets. To avoid suspicion, after weighing the truck once, Mr. Alto would move the truck slightly off the scale so that the weights would vary. Then Mr. Alto assigned one ticket to his truck and one ticket to the Defendant's. Ms. Lambert explained that, during business hours, PRS would have someone on site weigh the trucks that came in. However, certain drivers who had established trust with PRS were given keys to the facility so that they could weigh their trucks and fill out the scale tickets on their own after hours.
Ms. Lambert testified that, based on an examination of the documentation, Caterpillar estimated that PRS would have been able to get $2.2 million for the bushling that the Defendant stole. She explained that, while Thornton paid fair market rate for the bushling, PRS would have been able to get a higher price because of "negotiated rates that [they] had and fluctuations in the market." However, she noted that the company wrote off the loss at $1.2 million.
On cross-examination, Ms. Lambert testified that she did not know the net revenues for PRS for the years covering the Defendant's scheme. She also did not know how the loss caused by the Defendant's scheme compared to Caterpillar's profits for those years.
Special Agent Mark Wilson of the Tennessee Bureau of Investigation ("TBI") testified that he was assigned to Marion and Sequatchie counties and that he has investigated several embezzlement cases over the past four or five years. He explained that embezzlement cases can be challenging investigations because they are very time-consuming and require a significant amount of resources to parse through the paper trail left by the defendants. These types of cases have been a particular problem in Marion County, and they often involve thefts over $10, 000. On cross-examination, Special Agent Wilson explained that embezzlement cases were up statewide by approximately 2.2 percent in 2012. He also admitted that it helps the investigation when the defendant is forthcoming about his or her involvement in the offense.
Amanda Phillips, the Defendant's sister, testified that she was previously employed as an ombudsmen with the Fleet and Family Services while her husband was in the Navy. In that capacity, she received training relating to substance abuse. She stated that she had a close relationship with her brother. She noted that the Defendant began working immediately after he graduated from high school and he had continued to maintain employment since then. She also noted that the Defendant had a very close relationship with his daughter.
Ms. Phillips explained that the Defendant had used methamphetamine for many years, but his experience with the CADAS drug program had been "life changing" for both the Defendant and their family. She stated that their family saw "immediate changes" in the Defendant. CADAS was able to treat the Defendant's drug problem with behavior therapy and address the Defendant's struggle with depression. Ms. Phillips and the Defendant's wife also attended a weekly family program offered by CADAS. After being released from CADAS, the Defendant attended support group meetings regularly, and he was asked to lead some of the meetings. Also, through his recovery program, the Defendant had found many community members willing to support his recovery–many of whom attended the sentencing hearing. Ms. Phillips noted that the Defendant had tried to control his drug addiction before with little success. However, Ms. Phillips believed the Defendant's current sobriety had a better chance of success because CADAS had given him strategies to help control his addiction and he continued to go to CADAS for follow-up therapy.
Ms. Phillips stated that she and the Defendant both lived in very close proximity to each other and their parents. Their father was in poor health, and he depended on the Defendant "quite a bit." Because the Defendant lived next door to his parents, he would be the first person to respond if there was an emergency.
On cross-examination, Ms. Phillips stated that she did not know whether the Defendant owed money to anyone. However, she noted that both the Defendant's and her homes are in their father's name. She explained that, if the Defendant's situation was similar to her own, he did not have a mortgage on the home, he did not owe money to their parents for the home, and he did not pay taxes on the home. On redirect examination, Ms. Phillips stated that the Defendant indicated that he would be willing to sell his assets to make restitution payments. She further stated that, to her knowledge, the Defendant was not concealing any of his property.
Brent Basham of SETHRA Community Corrections testified that, since July 2013, he had been conducting weekly drug screens of the Defendant as a condition of his release on bond. Additionally, the Defendant had been reporting to Mr. Basham weekly since his release from the CADAS program. The Defendant told Mr. Basham that he was attending Alcoholics Anonymous ("AA") and Narcotics Anonymous ("NA") meetings almost every night, and each week the Defendant gave Mr. Basham logs of his meeting attendance to be included in his file. The Defendant ...