PEOPLE OF MI V JOSEPH P GIACALONE & DANIEL ROBIN
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STATE OF MICHIGAN
COURT OF APPEALS
PEOPLE OF THE STATE OF MICHIGAN,
UNPUBLISHED
November 1, 2007
Plaintiff-Appellant,
v
JOSEPH P. GIACALONE and DANIEL ROBIN,
Defendants-Appellees.
No. 277600
Genesee Circuit Court
LC Nos. 2006-018001-FC &
2006-018002-FC
ON RECONSIDERATION
Before: O’Connell, P.J., and Murphy and Fitzgerald, JJ.
PER CURIAM.
Defendants were bound over to the circuit court on two counts each of larceny by
conversion, MCL 750.362, for conversion of a $225,000 Flint Area Investment Fund (FAIF)
loan and conversion of a $877,600 city of Flint Section 108 loan. Defendants moved to quash
the information, arguing that title to the funds passed to them along with possession, and
therefore, they could not have violated MCL 750.362. The circuit court granted defendants’
motion and dismissed the larceny by conversion charges, but also granted the prosecution’s
motion to add charges of embezzlement. This Court denied the prosecution’s application for
leave to appeal; however, our Supreme Court remanded the case for consideration as on leave
granted. People v Giacalone, 477 Mich 1110; 729 NW2d 861 (2007). We reverse on
reconsideration.
The prosecution argues that the circuit court erred by dismissing the two counts of
larceny by conversion against each defendant. We agree. This Court reviews “‘a circuit court’s
decision to grant or deny a motion to quash a felony information de novo to determine if the
district court abused its discretion in ordering bindover.’” People v Mason, 247 Mich App 64,
70-71; 634 NW2d 382 (2001), quoting People v Northey, 231 Mich App 568, 574; 591 NW2d
227 (1998).
A district court must bind a defendant over for trial if, after a preliminary examination,
there exists probable cause to believe the defendant committed a felony. MCL 766.13; People v
Yost, 468 Mich 122, 125-126; 659 NW2d 604 (2003). Probable cause requires a quantum of
evidence sufficient to cause a person of ordinary prudence and caution to conscientiously
entertain a reasonable belief of the accused’s guilt. Id. at 126. The circuit court must consider
the entire record of the preliminary examination when reviewing the magistrate’s bindover
decision. People v Crippen, 242 Mich App 278, 281; 617 NW2d 760 (2000). The circuit court,
however, may not substitute its judgment for that of the magistrate. Id. at 281-282.
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Larceny by conversion occurs “where a person obtains possession of another’s property
with lawful intent, but subsequently converts the other’s property to his own use.” Mason, supra
at 72, quoting People v Christenson, 412 Mich 81, 86; 312 NW2d 618 (1981); MCL 750.362.
“[L]arceny by conversion is a crime against possession and not against title; one cannot convert
his own funds. Thus, if an owner intends to part with title as well as possession, there can be no
crime of larceny.” Christenson, supra at 87. Therefore, when loaning Section 108 and FAIF
funds to OK Industries (defendants’ company), if the evidence shows that the city of Flint did
not intend to pass title along with possession of the funds, and that defendants subsequently
converted the funds to their own use with the intent to permanently deprive the city of the funds,
probable cause would exist to bind defendants over on the charge of larceny by conversion. See
Mason, supra at 72.
To find whether title passed, it is not necessary for the complainants to require the
recipient of the funds “to keep the money separate from . . . personal accounts in order to infer
that they intended to retain title to the money until and unless they received” their bargained-for
consideration. Id. at 79. Additionally, the title owner of the funds need not require that the
identical funds be returned; rather, “the money’s original owner need only entrust the defendant
with the money expecting that the same amount be returned . . . .” Id. at 77. The following
passage from Mason, id. at 76-77, is instructive for our purposes:
The Supreme Court in Christenson, adopting language from People v
Bayer[, 352 Mich 564; 90 NW2d 656 (1958),] to describe the circumstances
under which a court may infer that a money transfer included a transfer of legal
title, explained that it was reversing the defendant's conviction because the
homeowners and the defendant did not have an agreement concerning “specific
funds.” In other words, had the defendant agreed to take the money the
homeowners gave him only to pay the debts at issue, then he would have been
guilty of larceny by conversion because he would have had possession of the
money only for the purpose of giving it to these creditors, but used it for other
purposes. The defendant, though in actual possession of the money, never would
have obtained legal title to the money under those facts because he could not do
with it as he wished, a limitation that generally does not exist for title owners of
property. [Citations omitted; emphasis in original.]
In Mason, the complainants had given the defendant money as down payments for mobile
homes, and defendant permanently retained the payments, placing them in his personal bank
account, without ever delivering the mobile homes to the complainants. This Court found that a
prosecution for larceny by conversion could proceed, stating “each complainant intended to
retain legal title to the down payment money, though not possession of it, until each complainant
received the home each sought to purchase.” Id. at 75.
In the instant case, defendants initially argue that title to the funds passed because the
prosecutor admitted at the preliminary examination that title passed.1 However, read in context,
1
On appeal, defendants do not distinguish between the two counts of larceny by conversion.
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the prosecutor’s statement at issue was not made with the intent to dispose of the formal proof of
whether title passed. See Ortega v Lenderink, 382 Mich 218, 222-223; 169 NW2d 470 (1969).
Rather, the prosecutor merely misspoke.
Next, with respect to the central focus of this appeal, there is a dispute concerning
whether the facts showed that title to the funds passed when the loans were dispersed. Regarding
the city of Flint’s Section 108 loan, testimony indicates that there was an agreement that the loan
was earmarked for the specific purpose of operating OK Industries in the city of Flint. Glenda
Dunlap, the city’s project manager relative to the loan, Marguerite Sykes, a community planning
and development representative for HUD, Tamar Lewis, a grant administrator for the city, and
Captain Chris Swanson of the Genesee County Sheriff’s Department, all testified that the Section
108 loan was made with the specific purpose of providing economic development within the city
of Flint and to provide jobs to city residents. The loan proceeds were to be used as working
capital and to purchase machinery and equipment relative to the operation of the business within
the city. Furthermore, Dunlap, Sykes, and Swanson testified that the city was to monitor the
Section 108 loan and that the loan disbursements were to be made based on specific
documentation of how OK Industries was going to spend the loan proceeds. Thus, defendants
were not free to spend the Section 108 loan funds in any way they chose or wished. Defendants
were limited in how the funds could be utilized, and, as noted in Mason, supra at 77, limits on
use do not generally exist for title owners of property. Moreover, consistent with Mason, the
loan was primarily provided to defendants in exchange for the city receiving the benefits of
economic growth and employment opportunities for its residents via the operation of OK
Industries, and unless and until defendants used the funds in compliance with the loan agreement
that would hopefully further the city’s goals and objectives, it would make little sense for the city
to have intended to give title of the funds to defendants irrespective of how the funds would be
used.2 We hold that, based on the testimony, there is probable cause to believe that the city of
Flint retained title to the Section 108 funds. Additionally, there was evidence presented at the
preliminary examination that the $225,000 loan from FAIF was also earmarked for the specific
purpose of starting and operating OK Industries, including the purchase of equipment.
Therefore, there is probable cause to believe that FAIF retained title to the $225,000.
Defendants also argue that there was no evidence of larcenous intent. Intent can be
proved by inferences that arise from any facts in evidence, and because of the difficulty in
proving an actor’s state of mind, minimal circumstantial evidence is sufficient. People v
McRunels, 237 Mich App 168, 181; 603 NW2d 95 (1999). The prosecution presented
substantial testimony that defendants used the loan funds for their own personal purposes and
benefits. The evidence also showed that the purpose of the loans was for defendants to operate a
business in the city of Flint and hire city residents, and although defendants spent the proceeds,
they did not operate their business in the city or hire city residents. Further, defendants failed to
make any repayments on the outstanding loan. Hence, we hold that there is probable cause to
believe that defendants converted the funds with larcenous intent. Therefore, we reverse the
2
As stated in Mason, supra at 75, “[i]t would make little sense for each of these complainants to
intend to give their hard-earned money to Mason to keep irrespective of whether they ever
received the home for which they bargained[.]”
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order dismissing the charges of larceny by conversion in regard to both the city of Flint’s Section
108 funds and the FAIF funds.
Reversed and remanded for proceedings consistent with this opinion. We do not retain
jurisdiction.
/s/ Peter D. O’ Connell
/s/ William B. Murphy
/s/ E. Thomas Fitzgerald
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