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Mathis Court Rules on Sufficiency of Fraud Charges Based on Bondsman’s Duty to Report

Published for NC Criminal Law on September 05, 2018.

The court of appeals in State v. Mathis, ___ N.C. App. ___ (2018), decided yesterday, considered whether a licensed bail bondsman could be convicted of obtaining property by false pretenses and unlawfully accessing a government computer for submitting false monthly reports to the NC Department of Insurance that omitted some of the outstanding bonds he had issued. The court upheld one conviction but found the evidence insufficient to support the other. Hazard a guess as to which conviction met which fate. Then read on to see how the court ruled and why.

Facts. Mathis was first licensed as a bail bondsman in February 1998 and his license was renewed each year thereafter up to the time of his trial in 2017. To retain his license, Mathis was required to submit monthly reports to the North Carolina Department of Insurance (DOI) listing the outstanding bonds he had issued. Mathis submitted reports from 2009 to 2014 that failed to list several of the bonds he had outstanding. This omission inured to Mathis’s benefit in two ways. First, it allowed Mathis to write bonds that, in the aggregate, exceeded the sum of eight times the amount he maintained on deposit in his security account. Writing bonds in excess of this amount violated DOI rules. Second, it allowed Mathis to write individual bonds that exceeded one quarter of the amount he had on deposit, again a violation of DOI rules. For many of the bonds issued in violation of DOI rules, Mathis received a percentage of the total bond amount in premium fees.

The charges. Based on this activity, the State charged Mathis with obtaining property by false pretenses, falsification of a monthly bond report, and unlawfully accessing a government computer. Mathis, who represented himself at trial, was convicted of all the charges and was sentenced to 13 to 25 months imprisonment. Mathis appealed, arguing in part that the trial court erred when it denied his motions to dismiss the charges for accessing a government computer and obtaining property by false pretenses. (Mathis raised other arguments on appeal that were not considered by or were not persuasive to the appellate court and are not discussed in this post.)

Accessing a government computer. G.S. 14-454.1 makes it a Class F felony to willfully, directly or indirectly, access or cause to be accessed a government computer for the purpose of (1) committing fraud or (2) obtaining property by means of false pretenses. The indictment in Mathis charged that the defendant willfully accessed the government computer system operated and maintained by DOI by means of inputting false information on monthly bond reports. The indictment further alleged that Mathis submitted the false reports to commit fraud and to obtain property, namely his bail bondsman’s license as well as premiums charged in connection with bonds, and to maintain a lower balance in his securities account.

Mathis argued that the State failed to prove he acted willfully because he was required by law to complete and submit monthly bond reports and his inadvertent failure to accurately report his transactions could not be considered intentional. The court rejected Mathis’s contention. The court in State v. Barr, 218 N.C. App. 329 (2012) had previously evaluated proof of willfulness under G.S. 14-454.1(a)(2) by considering whether the defendant acted “purposely and deliberately, indicating a purpose to do it without authority—careless whether [s]he has the right or not—in violation of the law.” The Barr court concluded that the State proved willfulness by demonstrating that, while the defendant was authorized to access the State’s motor vehicle titling and registration system, she was not authorized to enter fraudulent information into that system. Similarly, the Mathis court concluded that Mathis was authorized to access DOI’s reporting system and that he exceeded that authorization by purposely inputting fraudulent information.

Mathis also argued that the State failed to prove that he directly or indirectly accessed or caused to be accessed a government computer. The State offered evidence that some of the false monthly reports were submitted through the State’s on-line reporting system (SBS) using Mathis’s user name and password and that others were submitted from Mathis’s email account.

Mathis argued that transmitting information through SBS or email did not constitute accessing a government computer as DOI personnel and not Mathis personally uploaded the information into DOI’s system. The court rejected that argument, concluding that even if Mathis was correct, causing DOI personnel to access the database to upload his fraudulent reports was causing a government computer to be accessed within the meaning of G.S. 14-415.1(a). The court rejected Mathis’s assertion that the General Assembly’s intent in adopting G.S. 14-415.1(a) was to criminalize actual interaction with a government computer and not the mere submission of information. Mathis’s argument was dispelled, in the court’s view, by the statute’s inclusion of causing a government computer to be accessed, be it directly or indirectly.

Obtaining property by false pretenses. G.S. 14-100 makes it a felony to intentionally make a false and deceptive representation that is calculated and intended to deceive, and which does in fact deceive, and by which the defendant obtains or attempts to obtain anything of value from another person. If the property or thing of value is $100,000 or more, the offense is a Class C felony. If the value is less than $100,000, the offense is a Class H felony.

Mathis was indicted for a Class H felony violation of G.S. 14-100 by making a false representation through which he obtained a professional bail bondsman’s license issued by DOI. Mathis pointed out, however, that he was licensed as a bail bondsman in 1998, a decade before any of the fraudulent reports were submitted. Thus, he argued, he did not obtain licensure as a result of the alleged false pretenses. The State contended that the fraudulent reports enabled Mathis to retain his license, which, it argued, was the same as obtaining the license through a false pretense. The court of appeals rejected the State’s argument, reasoning that obtaining is the process of procuring something, while retaining is keeping something already acquired. Retain is not, therefore, included within the definition of obtain under G.S. 14-100. While submitting the fraudulent reports enabled Mathis to retain his license, it did not enable him to obtain it, and the trial court erred by denying the defendant’s motion to dismiss.

Mathis argued that the insufficiency of proof on this charge also required dismissal of the unlawfully accessing a government computer charge. The court of appeals said it did not. That charge was based not only on an allegation that Mathis fraudulently obtained his bail bondsman’s license through the false reports (something the State failed to prove at trial) but also that he obtained the premiums charged in connection with the bonds he was not authorized to issue—something the State did prove.

The post Mathis Court Rules on Sufficiency of Fraud Charges Based on Bondsman’s Duty to Report appeared first on North Carolina Criminal Law.