PEOPLE OF MI V DAVID M SCHUHARDTAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
PEOPLE OF THE STATE OF MICHIGAN,
June 13, 2000
Wayne Circuit Court
LC No. 97-501607
DAVID M. SCHUHARDT,
Before: Gribbs, P.J., and Hoekstra and Markey, JJ.
Following a bench trial, defendant was convicted of fraudulent retention or use of building
contract funds, MCL 570.152; MSA 26.332. Defendant was sentenced to a term of eighteen months’
probation and ordered to pay restitution. We affirm and remand for further proceedings.
Defendant, a licensed builder, was known to Howard Dow and Lori Dow as the sole owner of
Consolidated Building Contractor and Designers, Inc. In 1995, the Dows entered into a contract with
Consolidated for the design and construction of a residential home. Pursuant to the contract, the Dows
paid defendant by checks, made out to and endorsed by Consolidated, totaling $127,000 as
construction deposits. By the end of 1995, the Dows were concerned that defendant was misusing their
construction funds; little work had been performed, and that one of the subcontractors, Faust
Corporation, had not received payment from Consolidated.
In December 1995, the Dows and defendant entered into an agreement indicating that
defendant had “restructured” his corporate organization, and that defendant was now “agent and
principle [sic] owner of Barrington Home Corporation.” The agreement provided that, “until and
subsequent to” Barrington’s procurement of a building license, “[defendant], individually will be
responsible for all building management and all funds received to date” by the Dows. The agreement
further required defendant to “provide satisfactory evidence of payment to all suppliers” and to “pay
from [the Dows’] deposits all suppliers for work performed to date, including but not limited to, Faust
for piling work.”
When Faust eventually put a lien on the Dows’ house, the Dows paid Faust $12,500 for the
release of the lien. The Dows also paid another subcontractor, Charter Building Group, $8,500 that
was owing from Consolidated. In September 1996, the Dows gave defendant another “advance”
which was never returned or accounted for. When the Dows confronted defendant about his
management of the construction funds, he told them that he had “used [their] money someplace else,”
and that all the money was “gone.” The Dows then terminated defendant’s involvement in the
construction project and hired Charter to proceed as the general contractor. Defendant was
subsequently charged with and convicted of violating the Michigan builders’ trust fund act (MBTFA),
MCL 570.151 et seq.; MSA 26.331 et seq.
On appeal, defendant argues that the evidence presented both at the preliminary examination
and at trial was insufficient to establish that he was a “contractor” under the MBTFA. There is no merit
to this claim.
The MBTFA provides for both a civil and a criminal remedy. People v Whipple, 202 Mich
App 428, 432; 509 NW2d 837 (1993); Weathervane Window, Inc v White Lake Construction Co,
192 Mich App 316, 325; 480 NW2d 337 (1991). Because it is a remedial statute, the MBTFA is
construed liberally for the advancement of the remedy. Whipple, supra at 433; Miller, supra at 343.
We review bindover challenges, in general, to determine whether the district court abused its
discretion in finding probable cause that the defendant committed the charged offense. People v
Brown, ___ Mich App ___; ___ NW2d ___ (Docket No. 208355, issued 2/25/00), slip op p 2;
People v Carlin (On Remand), 239 Mich App 49, 63; ___ NW2d ___ (1999). When reviewing a
challenge to the sufficiency of the evidence to support a conviction, this Court examines the evidence in
a light most favorable to the prosecution to determine whether a rational trier of fact could find that the
essential elements of the crime were proven beyond a reasonable doubt. People v Wolfe, 440 Mich
508, 515-516; 489 NW2d 748 (1992); People v Marsack, 231 Mich App 364, 370; 586 NW2d
234 (1998). Questions of statutory construction are reviewed de novo. Brown, supra, slip op p 2.
Defendant contends that the corporate entities Consolidated and Barrington were the
“contractors” in the instant case, and that defendant cannot be held criminally liable for the acts of the
corporations. Accordingly, defendant argues that he should not have been bound over for trial or
convicted under the MBTFA.
There is no merit to this claim. Regardless of the existence of either Consolidated or Barrington
as corporate entities, and regardless of whether defendant acted on behalf of these corporations as an
officer, director, agent or employee, he was a “contractor” under the MBTFA and was therefore
subject to criminal penalties under the Act. While no definition of contractor is provided in t e
MBTFA, the term is defined in § 103 of the Michigan Construction Lien Act, MCL 570.1101 et seq.;
MSA 26.316(101) et seq., as “a person who, pursuant to a contract with the owner or lessee of real
property, provides an improvement to real property.” MCL 570.1103(5); MSA 26.316(103)(5).
Defendant clearly meets this definition of contractor. Defendant signed all of the relevant contracts, he
held himself out to the Dows as a licensed builder, and he contracted with the Dows to provide an
improvement to their property. Moreover, the December 1995 contract clearly identifies defendant as
“the Builder,” and states that he is to be “individually . . . responsible” for the Dow construction project.
The evidence was sufficient to support a finding that defendant was, in his individual capacity, a
contractor under the MBTFA at the time he signed the December 1995, agreement.
Moreover, even if Consolidated and Barrington were, in fact, corporations, for which defendant
acted in a merely representative capacity, he was nevertheless properly held criminally accountable for
the misappropriation of the Dows’ funds under the MBTFA. See Brown, supra, slip op at 2-3.
Accordingly, “ ‘regardless of whether [defendant was] acting on [his] own behalf or on behalf of a
corporation,’ ” Id., quoting Joy Management Co v City of Detroit, 183 Mich App 334, 340; 455
NW2d 55 (1990), he was properly bound over and tried on criminal charges under the MBTFA.
Defendant also argues that insufficient evidence was presented at trial to support a finding that
he acted with “intent to defraud” under § 2 of the MBTFA, and that his conviction must therefore be
reversed. We disagree.
Intent generally may be inferred from the facts and circumstances of a case. In re People v
Jory, 443 Mich 403, 419; 505 NW2d 228 (1993); People v Phillips, 385 Mich 30, 37; 187 NW2d
211 (1971). Additionally, §3 of the MBTFA provides that a contractor’s appropriation “of any
moneys paid to him for building operations before the payment by him of all moneys due or so to
become due laborers, subcontractors, materialmen or others entitled to payment, shall be evidence of
intent to defraud.” MCL 570.153; MSA 26.333 (emphasis supplied). Here, there was evidence
established that, throughout the two years that defendant acted as general contractor of the project, he
mismanaged the Dows’ deposits to such an extent that he did not have sufficient funds to pay for
completed work or to make further progress on the project. Additionally, there was testimony that
defendant admitted that he spent the Dows’ money on things other than on the Dow construction
project. There was ample evidence to support the trial court’s conclusion that defendant’s sworn
statement regarding how he spent the Dows’ money was “misstated intentionally, and that the defendant
did intend to cheat the Dows out of their money, or at least the temporary use of their money, while the
building was going to go on.”
Moreover, defendant’s sworn statement indicates that he used some of the Dows’ deposits to
pay Barrington for “supervision,” “processing” and “general administration” fees before first paying all
of the costs of the construction. Pursuant to MCL 570.153; MSA 26.333, these payments, made
before subcontractors had been paid, are “evidence of intent to defraud.” Furthermore, the evidence
demonstrated that, at the time defendant appropriated the Dows’ funds, he had knowledge that he
and/or his corporation were experiencing financial difficulties. See Brown, supra, slip op pp 4-5.
Viewing all the evidence in a light most favorable to the prosecution, we find that a rational trier of fact
could find that the prosecution proved beyond a reasonable doubt that defendant acted with the intent
to defraud. Wolfe, supra at 515-516; Marsack, supra at 370.
Defendant also contends that the Legislature did not intend the MBTFA to be applied in a case
such as the one at bar, and that the prosecution utilized the MBTFA in this case to avoid application of
the Bankruptcy Code. We find this argument to be meritless. The decision whether to initiate criminal
charges is within the discretion of the prosecutor, People v Gilmore, 222 Mich App 442, 457; 564
NW2d 158 (1997); People v Phillips, 219 Mich App 159, 164; 555 NW2d 742 (1996), and any
motivation the Dows might have had for failing to institute civil proceedings against defendant is simply
immaterial to the propriety of the prosecutor’s charging defendant with a crime. Moreover, the
MBTFA clearly provides for both a civil and a criminal remedy. Whipple, supra at 432;
Weathervane, supra at 325. The MBTFA was designed “to prevent contractors from juggling funds
between unrelated projects” and to “ensure that funds for a particular project will be used for that
project alone.” Miller, supra at 342. It is a remedial statute which is construed liberally for the
advancement of the remedy. Whipple, supra at 433; Miller, supra at 343. Accordingly, there is no
merit to defendant’s claim that the MBTFA does not contemplate the type of conduct he exhibited in his
dealings with the Dows’ construction money.
Finally, defendant argues that the trial court failed to comply with the statutory procedure in
determining the amount of restitution to which the Dows were entitled. We disagree. A defendant
serving a probationary sentence must pay restitution to the victim of the defendant’s illegal conduct.
MCL 771.3(1)(e); MSA 28.1133(1)(e); People v Collins, 239 Mich App 125, 135; ___NW2d
___(1999). If a defendant’s offense causes the victim loss of property, the trial court must order the
defendant to “make full restitution to any victim” of the defendant’s crime. MCL 769.1a(2); MSA
28.1073(2); MCL 780.766(2); MSA 28.1287(766)(2); Collins, supra; People v Ho, 231 Mich App
178, 192; 585 NW2d 357 (1998).
To the extent that defendant argues that the trial court erred in failing to hold a separate
evidentiary hearing concerning the proper amount of restitution to be ordered, this issue is not preserved
for appellate review. Although defendant disputed the amount of loss claimed by the Dows, he did not
request an evidentiary hearing to resolve the issue. Therefore, he waived his right to such a hearing.
See People v Gahan, 456 Mich 264, 276 n17; 571 NW2d 503 (1997).
Nevertheless, because defendant objected to the amount of loss claimed by the Dows, the trial
court was required to resolve the dispute by a preponderance of the evidence. MCL 780.767(4);
MSA 28.1287(767)(4); People v Grant, 455 Mich 221, 243; 565 NW2d 389 (1997). We find that
the trial court properly considered the evidence received at trial and the arguments presented at the
sentencing hearing and determined that the prosecution had proven, by a preponderance of the
evidence, that the Dows were entitled to restitution in the amount of $60,000. Although the court did
not make explicit findings concerning this amount, nothing in the language of MCL 780.767; MSA
28.1287(767) requires a sentencing court to state on the record explicit findings. Rather, the court is
required to “consider the amount of the loss sustained” by the victims and to resolve any dispute
concerning the amount of loss “by a preponderance of the evidence.” MCL 780.767(1), (4); MSA
28.1287(767)(1), (4). It is apparent from the record that the court complied with the statutory
Affirmed and remanded for further proceedings. While this matter was pending, the lower court
granted defendant’s motion to stay execution of the ordered restitution. On remand, the trial court is
ordered to lift the stay and prepare a n schedule for defendant’s restitution. We do not retain
/s/ Roman S. Gribbs
/s/ Joel P. Hoekstra
/s/ Jane E. Markey