One time or another, at month’s end, all mature businesses have at least faced the risk of owing more money than they have in the bank. All mature businesses have lines of credit with lenders or one kind or another to smooth out cash flow problems.
But, when a business enters the death spiral that ends in its ultimate dissolution, every back-stop disappears or collapses. Then the business must feverishly ferret out additional resources (more business, more loans, more credit) while it simultaneously delays meeting its financial obligations as they come due.
This is when the temptation to steal or misallocate money can overwhelm judgment.
But, is it actually stealing if Struggling Business Owner says to Struggling Business Employee, “I know we promised to make contributions to your retirement account but we just don’t have the cash right now. I need that cash to pay other creditors. Sit tight and we’ll make it all good when we can…”? Is that “stealing”? Is that really “theft by swindle”?
No. That is not “theft by swindle.” Under Minnesota law, “theft by swindle” requires that the person charged (1) “obtains property or services from another person” by “swindling, whether by artifice, trick, device, or any other means” and (2) the person intended to commit theft by swindle. In the hypothetical above, it would seem that there was neither swindle nor intent to swindle — no trickster, no trickery. There was probably a breach of contract and other potential theories of financial liability, but not a crime.
This was the defense of Minnesota lawyer John Bonner to criminal charges brought against him for theft by swindle. A divided Court of Appeals held, 2-1, that there was sufficient evidence for the jury to have found Bonner guilty of theft by swindle. Court of Appeals Chief Judge Edward Cleary dissented, arguing:
This is a case that should have been handled primarily through civil litigation and perhaps through professional discipline, rather than through the criminal justice system. At the very least, the state failed to present sufficient evidence to prove appellant committed a theft “by swindling” as defined in Minn. Stat. § 609.52, subd. 2(a)(4). The evidence lacks any indicia of deception on the part of appellant. I would reverse this conviction.
Bonner’s criminal defense counsel sought Supreme Court review. The state was confident enough in the futility of Bonner’s petition (or was so uncomfortable with defending the underlying Court of Appeals decision?) that it declined to respond to Bonner’s petition.
On May 31, the Minnesota Supreme Court denied Bonner’s petition.
If readers side with Judge Cleary, then it seems to follow that Mr. Bonner was unjustly convicted. Maybe his only “crime” was failing in a business, running out of money to pay his business’ obligations. Either way, Mr. Bonner will be paying for his firm’s failure, if not his own moral failure, for a long time.