Demond, Walter
PD-1636-14
| Tex. App. | Feb 6, 2015Background
- Walter Demond (petitioner), an attorney for Pedernales Electric Cooperative (PEC), was convicted as a party to misapplication of fiduciary property for participating in a scheme with PEC GM Bennie Fuelberg to funnel PEC funds to Fuelberg’s brother and a board member’s son through sham hires/retainers.
- The Ninth-day trial included testimony from ~40 witnesses; State alleged the hires provided little or no benefit while PEC paid over $200,000.
- Statute: misapplication of fiduciary property criminalizes misapplying property held as a fiduciary in a way that involves substantial risk of loss to the owner. Texas Penal Code §§ 32.45, 7.01, 7.02.
- The court of appeals affirmed Demond’s conviction, finding legally sufficient evidence that Fuelberg held PEC property as a fiduciary, that Fuelberg and Demond intentionally exposed PEC property to substantial risk of loss by funneling payments to Curtis and Bill Price, and that Demond, via his law firm, aided Fuelberg and was criminally responsible as a party.
- The State’s reply asks the Court of Criminal Appeals to deny discretionary review, arguing the court of appeals correctly applied Jackson v. Virginia standard and that Demond’s public-policy arguments (broad managerial authority, business-judgment rule, impact on attorney-client relations) do not negate criminal intent or party liability.
Issues
| Issue | Petitioner’s Argument | State’s Argument | Held |
|---|---|---|---|
| Whether evidence was legally sufficient to support conviction for misapplication of fiduciary property | Demond argued evidence was insufficient; contended Fuelberg’s broad authority and business judgment shield conduct and that jury improperly second-guessed business decisions | Evidence (circumstantial and direct) showed fiduciary status, concealment, sham hires, intentional exposure of PEC funds to risk, and Demond’s active participation via billing/hiding; law of parties applies | Court of appeals: evidence legally sufficient under Jackson; conviction affirmed |
| Whether Fuelberg’s managerial authority authorized the payments | Demond: Fuelberg had power to hire/fire; acts were within authority, so not criminal | State: authority not unfettered; employment contract and policy limited misconduct; fiduciary duty remains and concealment indicates contrary intent | Court of appeals: managerial authority did not excuse misapplication when acts were contrary to fiduciary duty |
| Whether the verdict impermissibly substitutes jury business judgment for corporate decisionmaking | Demond: jury improperly evaluated value of services; urged a business-judgment rule to protect corporate decisionmaking and attorneys | State: jury found sham hires and intent to deprive PEC of value, not merely differing valuation; juries routinely assess such issues under Penal Code | Court of appeals: conviction rests on intent and concealment, not simple reassessment of business choices |
| Whether party liability depends on principal’s conviction | Demond: suggested his party liability should turn on Fuelberg’s conviction | State: Penal Code § 7.03(2) makes acquittal of principal no defense; separate prosecutions are independent | Court of appeals / State: Demond’s conviction stands irrespective of Fuelberg’s separate outcome |
Key Cases Cited
- Jackson v. Virginia, 443 U.S. 307 (1979) (legal-sufficiency standard: whether any rational trier of fact could find guilt beyond a reasonable doubt)
- Clayton v. State, 235 S.W.3d 772 (Tex. Crim. App. 2007) (applying Jackson standard in Texas criminal sufficiency review)
- Matchett v. State, 941 S.W.2d 922 (Tex. Crim. App. 1996) (courts must not reweigh evidence or act as a thirteenth juror on sufficiency review)
- Cotton v. Rand, 51 S.W. 838 (Tex. 1899) (discussing limits on agent/attorney actions when acting contrary to client’s interests)