Walter Demond v. State, 452 S.W.3d 435

Background

Defendant Walter Demond, a partner at Clark, Thomas & Winters, represented Pedernales Electric Cooperative (PEC); PEC general manager Bennie Fuelberg allegedly funneled PEC funds through Demond’s firm to hire Fuelberg’s brother Curtis and William Price.
State contended payments (≈ $630,000 for Curtis; $86,000 for Price) were sham hires: Curtis was not registered as a PEC lobbyist and Price did little or no PEC work; bills were disguised as legal/regulatory fees.
Demond claimed Fuelberg had authority to hire outside consultants, that the board knew/approved, and that the hires had legitimate value.
A jury convicted Demond of misapplication of fiduciary property (second-degree), theft by deception (first-degree), and money laundering (second-degree); sentencing was ten years on each count but suspended with community supervision and 500 days jail as a supervision condition.
On appeal the court addressed eight issues; it affirmed convictions for misapplication and money laundering, reversed and vacated the theft-by-deception conviction, and modified supervision to remove the 180-day jail condition tied to the vacated theft conviction.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Sufficiency — misapplication/party liability	State: Demond aided Fuelberg’s misapplication by concealing payments and mislabeling bills; circumstantial evidence shows intent and concealment.	Demond: Fuelberg had authority to hire consultants; any benefit to PEC defeats theft/misapplication; jury merely disagreed on valuation.	Held: Evidence sufficient to convict Demond as party to misapplication; jury could infer intentional overpayment and concealment.
Material variance between indictment and proof	State: party liability need not be alleged; indictment alleging fiduciary misapplication gave notice of offense.	Demond: Indictment alleged he misapplied funds he held as fiduciary, not that he aided Fuelberg who was fiduciary, creating variance.	Held: No material variance; indictment need not expressly notify party theory.
Theft by deception — induced consent	State: billing deception induced PEC to reimburse Clark Thomas for payments to Curtis/Price.	Demond: PEC’s grant of authority predated scheme; no proof PEC’s consent was actually induced by deception.	Held: Evidence insufficient to prove PEC’s consent was materially induced by deception; theft conviction vacated.
Money laundering — timing of proceeds	State: funds became proceeds when PEC lost control (transferred to Clark Thomas); later transfers to Curtis/Price were laundering.	Demond: Proceeds didn’t exist until money reached Curtis/Price, so his transfers could not be laundering.	Held: Assuming predicate needed to be complete, Texas law and precedent permit proceeds characterization when funds leave owner; evidence sufficient for laundering conviction.
Jail-time stacking on community supervision	State: court may set up to 180 days per felony conviction.	Demond: Article 42.12 limits jail condition to 180 days total per case.	Held: Binding precedent permits 180 days per felony; but vacatur of theft conviction required removal of that 180-day condition.
Judicial disqualification/recusal	State: Judge Mills’ PEC membership not disqualifying; assigned judge properly denied recusal.	Demond: Mills had pecuniary/personal interest as PEC customer; impartiality might reasonably be questioned.	Held: Denial of disqualification/recusal affirmed (court followed prior decisions).
Removal of juror for temporary illness	State: trial judge may dismiss juror deemed disabled; discretion reviewed for abuse.	Demond: juror’s bladder infection was temporary; court should have delayed.	Held: Trial court did not abuse discretion removing juror; temporary illness can constitute disability.

Key Cases Cited

Brooks v. State, 323 S.W.3d 893 (Tex. Crim. App. 2010) (standard for sufficiency review)
Clayton v. State, 235 S.W.3d 772 (Tex. Crim. App. 2007) (consideration of all evidence admitted)
Bowen v. State, 374 S.W.3d 427 (Tex. Crim. App. 2012) (elements of misapplication of fiduciary property)
Geick v. State, 349 S.W.3d 542 (Tex. Crim. App. 2011) (theft-by-deception theory limits proof)
Daugherty v. State, 387 S.W.3d 654 (Tex. Crim. App. 2013) (consent induced by deception must be a substantial factor)
Merryman v. State, 391 S.W.3d 261 (Tex. App.—San Antonio 2012) (actual disposition immaterial to misapplication proof)
Skillern v. State, 355 S.W.3d 262 (Tex. App.—Houston [1st Dist.] 2011) (State need not prove final disposition to establish misapplication)
United States v. Allen, 76 F.3d 1348 (5th Cir. 1996) (funds become proceeds when removed from owner’s control for laundering analysis)
Kesaria v. State, 189 S.W.3d 279 (Tex. Crim. App. 2006) (permitting consecutive 180-day jail conditions per felony on community supervision)
Moore v. State, 82 S.W.3d 399 (Tex. App.—Austin 2002) (trial court’s discretion to find temporary juror illness a disability)