United States of America v Dwayne Lequire
2012 U.S. App. LEXIS 4482
| 9th Cir. | 2012Background
- Patriot Insurance Agency collected premiums for Spirit Mountain Insurance and deposited them into Patriot's general operating account under a Program Administrator Agreement.
- The Agreement required Patriot to transfer all amounts due to Spirit monthly and to remit even if premiums were not collected, with a 1.5% monthly interest if late.
- Lequire, Patriot's treasurer, transferred over $750,000 to Renzi's personal account over two years while Patriot was delinquent paying Spirit.
- Patriot commingled funds in a single account and lacked a separate trust account; the rubber stamp mislabeling funds as a trust account did not create a true trust.
- Arizona law defined the relationship as debtor-creditor, not a trust, because of commingling and the obligation to remit regardless of collection, undermining a basis for embezzlement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Patriot held funds in trust for Spirit | Lequire's embezzlement claim rests on a trust. | Arizona law creates a debtor-creditor relationship due to commingling and payment duty. | No trust; embezzlement requires trust; acquittal appropriate. |
| Whether commingling negates a trust relationship | Fiduciary duties and commingling support trust status. | Commingling plus fixed payment obligation creates debtor-creditor relationship, not a trust. | Debt relationship; no trust; supports acquittal. |
| Whether the contract created a fiduciary/trust relationship controlling embezzlement analysis | Fiduciary clause implies trust and ownership of funds by Spirit. | Fiduciary status alone does not prove a trust; contract terms control. | Contract terms show no trust; Chicago Fire controls. |
| Application of Chicago Fire and related cases to establish ownership of funds | These cases support trust-like behavior through fiduciary obligations. | Chicago Fire and similar cases support debtor-creditor relation when commingling and guaranteed payments exist. | Chicago Fire applies; no trust; acquittal warranted. |
Key Cases Cited
- United States v. Eriksen, 639 F.3d 1138 (9th Cir. 2011) (defines embezzlement as fraudulent appropriation by one entrusted with property)
- United States v. Dupree, 569 F.2d 1061 (9th Cir. 1978) (property must belong to defendant or be held in trust for embezzlement)
- United States v. Lawson, 925 F.2d 1207 (9th Cir. 1991) (state property law governs ownership concepts for embezzlement analysis)
- Chicago Fire & Marine Ins. Co. v. Fidelity & Deposit Co. of Md., 18 P.2d 260 (Ariz. 1933) (commingling plus obligation to pay regardless of collection destroys trust)
- In re Coupon Service, 113 F.3d 1091 (9th Cir. 1997) (clearinghouse not a trust where funds commingled and payments fixed by schedule)
- Joseph Rosenbaum, M.D., Inc. v. Hartford Ins. Co., 104 F.3d 258 (9th Cir. 1996) (distinguishes fiduciary from trustee and emphasizes breach of trust essential to embezzlement)
- Stokes v. Stokes, 694 P.2d 1204 (Ariz. App. 1984) (identification of embezzlement despite commingling depends on ability to segregate funds)