Opinion
No. 3D03-2719.
September 15, 2004. Rehearing Denied December 2, 2004.
Appeal from an order of the Board of Trustees of the City of Miami Firefighters' and Police Officers' Retirement Trust.
Ivy R. Ginsberg, for appellant.
Ruden, McClosky, Smith, Schuster Russell and Bruce L. Udolf (Ft.Lauderdale), for appellee.
Karen S. Warshaw, in proper person.
Before SCHWARTZ, C.J., and COPE and FLETCHER, JJ.
Donald H. Warshaw, a former police chief of the City of Miami, appeals from an order of the Board of Trustees of the City of Miami Firefighters' and Police Officers' Retirement Trust [Board], which order directs the forfeiture of Warshaw's city retirement benefits. We affirm.
Because of her interest in the outcome, Karen S. Warshaw has been permitted to intervene.
The forfeiture came about because of Warshaw's conviction of one count of mail fraud in violation of Title 18, United States Code, § 1341. This federal conviction led to the Board's application of section 112.3173(3), Florida Statutes (2001), which reads:
"Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both."
"(3) FORFEITURE. — Any public officer or employee who is convicted of a specified offense committed prior to retirement, or whose office or employment is terminated by reason of his or her admitted commission, aid, or abetment of a specified offense, shall forfeit all rights and benefits under any public retirement system of which he or she is a member, except for the return of his or her accumulated contributions as of the date of termination."
"Specified offense" is defined in section 112.3173(2)(e), Florida Statutes (2001) to include the embezzlement of public funds, or any theft by a public employee or officer from his or her employer.
It also includes:
"The committing of any felony by a public officer or employee who, willfully and with intent to defraud the public or the public agency for which the public officer or employee acts or in which he or she is employed of the right to receive the faithful performance of his or her duty as a public officer or employee, realizes or obtains, or attempts to realize or obtain, a profit, gain, or advantage for himself or herself or for some other person through the use or attempted use of the power, rights, privileges, duties, or position of his or her public office or employment position."
§ 112.3173(2)(e)(6), Fla. Stat. (2001).
Pursuant to section 112.3173(5), the Board held a hearing for the purpose of determining whether Warshaw's pension rights and privileges should be forfeited. The Board concluded that Warshaw had been convicted of a specified offense as provided in section 112.3173, and ordered the forfeiture.
The testimony at the Board hearing revealed the following. Do The Right Thing [DTRT] is a not-for-profit corporation whose mission, as stated in its articles of incorporation, is to assist the city in recognizing and rewarding young adults and children for their contributions to the community. It was financed principally by the city and based its operations at the physical plant of the Miami Police Department, where it utilized those facilities, including conducting meetings at that location. It used the uncompensated services of at least one employee of the police department in its operations. By the terms of DTRT's articles of incorporation, then police chief Warshaw was designated as its registered agent for service of process (at the same address as the Miami Police Department). As we observed previously the purposes of DTRT are to expand the City of Miami's municipal practices of recognizing individuals who have made significant contributions to the community, and to form an alliance between the Police Department and area businesses for the benefit of children in high crime, disadvantaged segments of the community. The financing of DTRT has been 80 to 90 percent from the city's criminal forfeiture proceeds contained in the city's law enforcement trust fund. Warshaw used the powers of his public office as police chief to arrange through the Miami City Commission for the city funds to be transferred to DTRT bank accounts, preparatory for use by DTRT for the city's purposes. Warshaw, however, used part of those transferred funds to pay for personal, unauthorized matters over a period of years.
Warshaw argues that he did not embezzle or commit a theft of public funds (thus there was no "specified offense") as he embezzled or committed a theft only of DTRT funds. He further argues that as DTRT was a private not-for-profit corporation and not a public entity, no provision of section 112.3173 is applicable, and therefore his federal conviction was not of a specified offense, thus his pension cannot be ordered forfeited. As his support for this proposition Warshaw points out that his federal conviction was for mail fraud in violation of 18 U.S.C. § 1341 for defrauding DTRT. In simple parlance, Warshaw argues, no city public funds were embezzled or stolen by him, just DTRT's private funds.
We reject this thoroughly disingenuous argument. Warshaw, as city police chief, arranged through the city commission for public city funds to be transferred to DTRT, which was mandated to use these city funds to carry out city functions, effectively as an alter ego of the city, and certainly as its agent. The funds never lost their character as public funds. Warshaw simply took two steps in order to have access to the public funds by (1) arranging to have the city funds transferred to DTRT, then (2) arranging for the city funds to be transferred from DTRT to him. Whether the funds remained with the city's law enforcement trust fund or were transferred to DTRT, the funds always were slotted for public uses.
This includes any privately contributed funds as upon contribution they became funds to be used solely for the city's public purposes.
The Board also found that Warshaw had violated section 112.3173(2)(e)(6), Florida Statutes, which section is set out in footnote 3. We find it unnecessary to discuss or pass on this issue in light of our foregoing conclusions.
For discussions of section 112.3173(2)(e)(6), see DeSoto v. Hialeah Police Pension Fund Bd. of Trustees, 870 So.2d 844 (Fla. 3d DCA 2003), and Jacobo v. Board of Trustees of the Miami Police, 788 So.2d 362 (Fla. 3d DCA 2001).
Affirmed.
SCHWARTZ, C.J., and FLETCHER, J., concur.
The majority opinion is contrary to decisions of the Florida Supreme Court, other district courts of appeal and this court which mandate a strict construction of forfeiture statutes. The majority opinion fails to address, much less apply, the correct legal standard.
I.
The appellee Pension Board has ordered the forfeiture of the pension of the former City of Miami Police Chief, Donald H. Warshaw. Warshaw pled guilty in federal court to one count of mail fraud in violation of 18 U.S.C. § 1341.
The Board of Trustees of the City of Miami Firefighters' and Police Officers' Retirement Trust ("the Pension Board").
Under Florida law, a public employee's pension may be forfeited if the public employee is convicted of an offense specified in paragraph 112.3173(2)(e), Florida Statutes (1993). The question presented by this appeal is whether the crime of which Warshaw was convicted falls within the scope of the statute.
The applicable version of the pension forfeiture statute is the one in effect on the date of the criminal acts. See Busbee v. State Division of Retirement, 685 So.2d 914, 916-17 (Fla. 1st DCA 1996). The criminal charge to which Warshaw pled guilty was set forth in a Superseding Information filed April 27, 2001. The Superseding Information charged that the criminal scheme occurred between May 1993 and October 1995. Thus, the 1993 version of the statute is applicable. As relates to the issue now before us, there is no material difference between the 1993 statute and the present version.
When the possibility of a forfeiture of Warshaw's pension was first presented to the Pension Board, the Board's attorney advised the Board that Warshaw's conviction did not fall within the scope of the statute and that the pension could not be forfeited. The Board appointed outside counsel to serve as special prosecutor. The special prosecutor concluded that Warshaw's crime fell within the scope of the statute. The Board accepted the special prosecutor's view of the statute and, after a hearing, declared (by a 5-3 vote) that Warshaw's pension would be forfeited.
Warshaw has appealed.
II.
The threshold question is what rule of construction to apply in interpreting this statute. The majority opinion completely ignores this point.
The Florida Supreme Court has said that "forfeitures are considered harsh exactions, and as a general rule they are not favored either in law or equity. Therefore, this court has long followed a policy that it must strictly construe forfeiture statutes." Department of Law Enforcement v. Real Property, 588 So.2d 957, 961 (Fla. 1991) ( citing General Motors Acceptance Corp. v. State, 152 Fla. 297, 11 So.2d 482, 484 (1943); City of Miami v. Miller, 148 Fla. 349, 4 So.2d 369, 370 (1941)) (emphasis added); see also Byrom v. Gallagher, 609 So.2d 24, 26 (Fla. 1992) (same).
"Forfeiture statutes are not favored and are strictly construed in favor of the party against whom the penalty is sought to be imposed." Cabrera v. Department of Natural Resources, 478 So.2d 454, 455-56 (Fla. 3d DCA 1985) (citing inter alia, Boyle v. State, 47 So.2d 693 (Fla. 1950)).
Writing about the statute now before us, the pension forfeiture statute, the First District said:
No citation of authority is required to support the rule that forfeitures are not favored in law. They are considered harsh exactions, odious, and to be avoided when possible. Statutes imposing forfeiture will be strictly construed in a manner such as to avoid the forfeiture and will be liberally construed so as to avoid and relieve from forfeiture.
Williams v. Christian, 335 So.2d 358, 361 (Fla. 1st DCA 1976) (footnote omitted; emphasis added); see Mulligan v. City of Hollywood, 871 So.2d 249, 252-53 (Fla. 4th DCA 2003) (citing Williams v. Christian).
Thus, "[t]he determinative analysis of the question before us begins, proceeds and ends with the particular terms of the authorizing statute which, because the law is said to abhor forfeitures, must be strictly construed." Flam v. City of Miami Beach 449 So.2d 367, 368 (Fla. 3d DCA 1984) (citations omitted) (Schwartz, C.J.).
III.
The question to be decided is whether Warshaw's crime falls within the terms of the forfeiture statute. It is not enough that Warshaw was convicted of a crime while he was public employee, nor is it enough that the crime bears some relationship to his public duties.
In order to exact a forfeiture of Warshaw's pension, the conviction must be a "specified offense" within the terms of the forfeiture statute, section 112.3173, Florida Statutes. Further, to the extent that there is any doubt about whether Warshaw's crime is a statutorily "specified offense," that doubt must be resolved in favor of Warshaw and against the forfeiture.
Under the statute, a "specified offense" includes "1. The committing, aiding, or abetting of an embezzlement of public funds[.]" § 112.3173(2)(e)1., Fla. Stat. The statute does not contain a definition of "public funds."
Public funds means "[t]he revenue or money of a governmental body." Black's Law Dictionary 682 (7th ed. 1999). Plainly put, it means money in the City public treasury.
In this case, however, Warshaw was not convicted of embezzling city funds. He was instead convicted (pursuant to a plea bargain) of embezzling funds belonging to a private nonprofit corporation called (ironically) Do The Right Thing ("DTRT"). Warshaw was the treasurer of DTRT and misused his position to steal money from the DTRT account.
There is no dispute that the embezzled funds were in the bank account of DTRT when Warshaw took them. The federal Superseding Information set forth a list of cash amounts which Warshaw withdrew from the DTRT account and deposited in his personal account. Superseding Information at 3-4. The Superseding Information also listed eight checks which Warshaw wrote on the DTRT bank account, which were used to pay Warshaw's personal expenses. Id. at 4. Warshaw committed mail fraud because the United States mail was used to transmit one of the checks written to carry out the fraud.
Since the funds were within DTRT's bank account when Warshaw embezzled them, they were clearly not public funds. And if there were any doubt about the matter, the doubt would have to be resolved in favor of Warshaw. See Williams v. Christian, 335 So.2d at 361. That is so because, as this court has previously held, "Forfeiture statutes are not favored and are strictly construed in favor of the party against whom the penalty is sought to be imposed." Cabrera, 478 So.2d at 456.
The majority contends, however, that in deciding whether Warshaw should forfeit his pension, the Pension Board may consider the fact that in his capacity as police chief, Warshaw initiated funding requests to the Miami City Commission for grants to be made from the City of Miami Law Enforcement Trust Fund ("the Trust Fund") to DTRT. Grants from the Trust Fund were the primary source of funding for DTRT.
The remainder of DTRT's funding came from corporate donations and DTRT's own fund-raising efforts.
The majority opinion reasons that Warshaw was involved in a two-step process. In the first step, he requested grants from the Trust Fund to DTRT. These were public funds that were granted to DTRT. In the second step, Warshaw embezzled funds from the DTRT account. The majority argues that if the scheme is examined as a whole, it included acts which Warshaw carried out in his capacity as police chief (step one). According to the majority, it makes no difference that Warshaw's conviction was solely for acts he committed at DTRT in step two.
If we were not dealing with a forfeiture statute, I would agree with the majority. However, under well established forfeiture law, the forfeiture statute must be "strictly construed in favor of the party against whom the penalty is sought to be imposed." Cabrera, 478 So.2d at 456; see Williams v. Christian, 335 So.2d at 361.
Applying that legal standard to the facts of this case, the forfeiture cannot be upheld on the theory that Warshaw embezzled public funds. The funds lost their status as public funds when they left the City treasury. Further, the DTRT bank account included corporate donations and gifts as well as the City's donations.
Those donors would likely be surprised to find that their donations were converted into "public funds" by virtue of being commingled with City donations. See Majority Opinion at 895 n. 4.
The Superseding Information only charged Warshaw with embezzling the funds of DTRT, a nonprofit corporation. That is the crime of which Warshaw was convicted. The Superseding Information does not mention, or charge Warshaw with any crime involving, the Trust Fund.
Warshaw was originally charged by an Indictment which included other criminal charges. The Indictment included allegations that funding for DTRT came primarily from the Trust Fund. It did not, however, allege that Warshaw arranged those transfers.
Warshaw entered into a plea bargain with the United States Attorney. The Government filed a Superseding Information, which omitted any reference to the Trust Fund. It is the final conviction under the Superseding Information, not the earlier (withdrawn) Indictment that is relevant for purposes of the forfeiture statute. See Williams v. Christian, 335 So.2d at 360-61.
Even under the original Indictment, Warshaw was not charged with criminal conduct in arranging the transfers from the Trust Fund to DTRT. The Indictment charged Warshaw with multiple crimes ( 18 U.S.C. §§ 371, 1341, 1346, 2) relating to the Pension Fund itself and DTRT.
The majority opinion takes the position that it makes no difference whether the trust funds remained within the City treasury or were transferred to DTRT. The majority states that "the funds always were slotted for public uses." Majority opinion at 6 (footnote omitted).
The majority analysis is contrary to law. The statute authorizes forfeiture of the pension if — and only if — the employee committed "an embezzlement of public funds." § 112.3173(2)(e)1. (emphasis added). The grant funds were undoubtedly intended to be used by DTRT for public benefit, but that does not transform their character into being public funds. The majority opinion attempts to construe the statutory definition of "public funds" broadly, but under the applicable rule of construction we are obliged to construe that definition narrowly. Under the required strict construction, they were no longer "public funds" when they left the public treasury.
IV.
The Pension Board argues alternatively that the forfeiture may be justified under other provisions of the forfeiture statute. The definition of "specified offense" includes "[t]he committing, aiding, or abetting of any theft by a public officer or employee from his or her employer[.]" § 112.3173(2)(e) 2., Fla. Stat.
This claim fails as well. The charge in the Superseding Information was theft from DTRT, not theft from the City of Miami.
The Pension Board also relies on another portion of the definition of "specified offense" which states:
6. The committing of any felony by a public officer or employee who, willfully and with intent to defraud the public or the public agency for which the public officer or employee acts or in which he or she is employed of the right to receive the faithful performance of his or her duty as a public officer or employee, realizes or obtains, or attempts to realize or obtain, a profit, gain, or advantage for himself or herself or for some other person through the use or attempted use of the power, rights, privileges, duties, or position of his or her public office or employment position.
Id. § 112.3173(2)(e)6.
This provision is likewise unavailable. Under the Superseding Information Warshaw was charged with embezzlement from DTRT. He was not charged with, or convicted of, committing criminal acts as police chief.
V.
In conclusion, the majority opinion reads the forfeiture statute broadly in favor of the government, instead of construing it strictly against the government. The majority does that by saying that the embezzled funds were "public funds" even though they had been granted to DTRT and were no longer in the City treasury.
In dealing with other legal disputes, the majority opinion might be perfectly permissible — but here we construe a forfeiture statute. When the statute is construed in the required light, it is clear that the forfeiture order must be reversed.