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State v. Brouse

Court of Appeals of Iowa

December 21, 2016

STATE OF IOWA, Plaintiff-Appellee,
DENNIS BROUSE, Defendant-Appellant.

         Appeal from the Iowa District Court for Polk County, Jeffrey D. Farrell, Judge.

         Dennis Brouse appeals his conviction for fraudulent practice in the first degree on retrial. REVERSED AND REMANDED.

          Angela L. Campbell of Dickey & Campbell Law Firm, P.L.C., Des Moines, for appellant.

          Thomas J. Miller, Attorney General, and Martha E. Trout, Assistant Attorney General, for appellee.

          Heard by Vogel, P.J., and Tabor and Mullins, JJ.

          MULLINS, Judge.

         Dennis Brouse appeals his conviction for fraudulent practice in the first degree. This appeal is from Brouse's second trial on this same charge. He argues his conviction must be reversed because: (1) it violates double jeopardy, (2) it was barred by the statute of limitations, (3) the district court improperly instructed the jury, and (4) the district court abused its discretion in making various evidentiary rulings. For the reasons stated below, we reverse the conviction and remand for a new trial.

         I. Background Facts and Proceedings

         This court already established the background facts relevant to this case in Brouse's prior appeal:

In 2007 the Iowa legislature enacted the Iowa Film, Television, and Video Project Promotion Program (Film Program). The Film Program was created to bring filmmakers and television producers from other locations to Iowa with the hope they would spend money in Iowa and grow the economy. The program, administered by the Iowa Film Office, offered transferable tax credits to producers and investors for qualified expenditures from Iowa-based businesses. Tom Wheeler ran the Iowa Film Office and assisted filmmakers and television producers with tax credits. Filmmakers and producers had to apply to the Iowa Film Office in order to be approved for the tax credits. After the Iowa Film Office approved a film project, the filmmaker or producer would provide a list of expenditures to the Iowa Film Office. The Office would then review the expenditures and issue a tax certificate. The tax certificate could be used to reduce a tax liability owed to the State of Iowa. If the filmmaker or producer did not owe Iowa taxes, the tax credit could be sold to a third party that did have tax liability to the State.
Dennis Brouse had developed a television program about horses for Nebraska Educational Telecommunications (NET). After failing to find enough cash funding, Brouse and NET parted ways. Brouse contacted Wheeler about the possibility of his television program obtaining tax credits from the State of Iowa. Brouse then moved his corporation (Changing Horses) and his television program (Saddle Up) to Iowa. Brouse hired Chad Witter, a certified public accountant, to help with the tax credits. Wheeler believed Witter had a vast knowledge of the Film Program.
The Iowa Film Office had preapproved the use of "in-kind" exchanges-exchanges for services, such as advertising or sponsorships, or goods, but no cash exchange-as qualified expenditures. Additionally, the Iowa Film Office allowed a pass-through corporate structure, where an Iowa corporation is created as the business entity to allow non-Iowa sponsorships to qualify as expenditures under the Film Program. These expenditures would be submitted to the Iowa Film Office and the filmmaker or producer would receive tax credits for approximately half of the expenditures. . . .
. . . .
Brouse submitted many purchases as qualified expenditures relevant to this case. One such expenditure was submitted as a claim of an in-kind exchange. Brouse purchased a . . . camper from Shirley and Wayne Weese. The Weeses offered Brouse the trailer for $10, 500 and he paid them $10, 500 in cash. The purchase agreement stated the purchase price was $21, 000 and the Changing Horses expenditure sheet, as submitted to the Iowa Film Office, claimed a $22, 500 qualified expenditure. The Weeses testified . . . Brouse asked them to sign the $21, 000 purchase agreement to facilitate tax credits. Brouse also asked Shirley Weese to tell the person calling from the Iowa Film Office that the trailer was purchased for $21, 000. The audit tie-out sheet (a document linking the expenditure claims to specific records from the production accountant) showed Brouse paid in cash $10, 500 and in services $10, 500 to the Weeses. The Weeses' restaurant was subsequently advertised in Saddle Up. However, the Weeses did not know their restaurant would be advertised and testified that they did not agree to be paid in advertising.
The Iowa Attorney General charged Brouse and Witter with fraudulent practice in the first degree, theft in the first degree, and ongoing criminal conduct. Brouse moved to sever the defendants and was later tried alone. After receiving a bill of particulars, Brouse filed a motion to dismiss the charges. The Attorney General amended the trial information and bill of particulars. The district court denied Brouse's motion to dismiss. . . . The jury returned a general verdict finding Brouse guilty of first-degree fraudulent practice and not guilty of theft and ongoing criminal conduct. Brouse filed a motion for new trial, which was denied. Brouse appealed his conviction.

State v. Brouse, No. 12-1076, 2014 WL 1714969, at *1-2 (Iowa Ct. App. Apr. 30, 2014).

         In Brouse's previous appeal, he argued, among other things, there was insufficient evidence to convict him of joint criminal conduct, an alternative theory of fraudulent practice charged by the State. Id. at *3. On appeal, the State conceded the joint criminal conduct theory could not have been the basis for the jury's verdict. Id. We examined the joint criminal conduct jury instruction and found it "was so confusing that we are not confident the jury was able to parse through the unclear elements and properly assess Brouse's guilt under that theory." Id. at *5. Thus, we reversed Brouse's conviction for fraudulent practice in the first degree, concluding "it was not possible for the jury to find sufficient evidence to convict pursuant to a general verdict that implicated [an erroneous] joint criminal conduct instruction." Id. The State filed an application for further review, which our supreme court denied.

         On August 18, 2014, Brouse filed a motion for entry of judgment of acquittal, which the district court denied, concluding "a new trial is permitted when a conviction is reversed due to error at trial in instructing the jury" and, alternatively, "retrial is permitted because the verdict is general and other theories of guilt were presented that could have supported the verdict (or that, at least, the court of appeals did not say could not have supported it)." Brouse sought discretionary review of the court's order, which our supreme court denied.

         On November 10, the State amended the trial information, charging Brouse with one count of fraudulent practice in the first degree, in violation of Iowa Code section 15A.3 (2007), specifically alleging "the defendant requested Wayne and/or Shirley Weese to sign a 'Bill of Sale' stating that the price of the trailer he bought from them was twice the actual price, in order to double the value of tax credits he received for it."

         On January 14, 2015, Brouse filed a renewed motion for entry of judgment of acquittal and motion to dismiss, which was denied. On January 23, the State filed a motion to amend the trial information. In its motion, the State sought to "add[] aiding and abetting as an alternative theory" and to "remove[] fact-specific language following the statutory language of the charge, " that is, to remove the language quoted above regarding the bill of sale for the used trailer. The district court allowed the State to amend the trial information to remove the above-quoted language but refused to allow the State to add an alternative aiding-and-abetting theory.

         The case proceeded to retrial on January 26. At retrial, Brouse testified his company, Changing Horses, paid $10, 500 cash to the Weeses for the purchase of their used trailer and also agreed to provide $12, 000 in advertising on his television show titled Saddle Up for the Weeses' restaurant as a services-in-kind exchange. A rolling credit for the restaurant appeared in the "Special Thanks" section at the end of all thirteen episodes of Saddle Up's first season. Brouse introduced an expenditure report Witter had sent him that split the Weese trailer transaction into $10, 500 in cash outlay and $12, 000 in an in-kind exchange, for a total qualifying amount of $22, 500. This expenditure report was not the same report Witter submitted to Wheeler on behalf of Changing Horses for approval for tax credits, which also listed the expense of the trailer as $22, 500 but did not divide the expenditure into separate payment categories.

         Shirley Weese testified she did not enter into an additional deal with Brouse beyond the $10, 500 cash for the trailer and she did not enter into an agreement with Brouse for the remainder of the price of the trailer to be exchanged for advertising on Saddle Up. Shirley testified she and her husband signed a bill of sale for the trailer in the amount of $21, 000 because Brouse asked her to do so, even though they had a deal to sell the trailer to Brouse for $10, 500 cash.

         The State introduced the bill of sale at trial, signed by both of the Weeses but unsigned by Brouse. Brouse submitted a phone log Wheeler kept when he contacted vendors to "spot audit" various purchases. The log shows Shirley confirmed on the phone with Wheeler that Brouse had purchased the trailer from the Weeses for $22, 000 and that she had received payment in full. Brouse also submitted an exchange of e-mails between Shirley and Wheeler in which Shirley confirmed the purchase price of the trailer was $22, 000. The audit tie-out sheet submitted by the State shows the trailer was paid for in two transactions: $10, 500 in cash and $10, 500 in services. This sheet and the bill of sale were never shown to Wheeler and were not used to issue tax credits to Brouse.

         Following the close of evidence, the district court granted Brouse's motion for judgment of acquittal as to the bill of sale as a false statement in writing but denied his motion as it pertained to the expenditure report.

         On January 30, a jury found Brouse guilty of fraudulent practice in the first degree. Brouse timely filed a motion in arrest of judgment and motion for new trial, arguing his conviction violated the statute of limitations and the double-jeopardy clause of the federal and state constitutions, there was insufficient evidence to support his conviction, the verdict was contrary to law and contrary to the weight of evidence, and the district court ...

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