Nordan v. Commonwealth

CHARLES NICHOLAS NORDAN, S/K/A CHARLES NICK NORDAN, v. COMMONWEALTH OF VIRGINIA

Record No. 0238-17-2

COURT OF APPEALS OF VIRGINIA

JULY 17, 2018

UNPUBLISHED

Present: Judges Petty, Beales and AtLee Argued by teleconference

MEMORANDUM OPINION^* BY JUDGE RICHARD Y. ATLEE, JR.

FROM THE CIRCUIT COURT OF POWHATAN COUNTY

Paul W. Cella, Judge

J. Brian Bailey (Law Office of J. Brian Bailey, PLC, on brief), for appellant.

Christopher P. Schandevel, Assistant Attorney General (Mark R. Herring, Attorney General, on brief), for appellee.

Following a bench trial, a judge of the Circuit Court of Powhatan County ("trial court") found appellant Charles Nicholas Nordan guilty of five counts of felony embezzlement and one count of felony money laundering. It sentenced him to 120 years in prison with 90 years and 42 months suspended. On appeal, Nordan argues the trial court erred in:

1. denying [his] motion to strike for fatal variance between the indictments . . . and the facts proven at trial[;]

2. denying [his] motion to strike for failure to prove that the funds were entrusted to [him;]

3. denying [his] motion to strike for failure to prove fraudulent intent[; and]

4. failing to dismiss the embezzlement charges pursuant to a claim of right defense.

For the following reasons, we affirm.

I. BACKGROUND

"Applying familiar principles of appellate review, we will state the facts in the light most favorable to the Commonwealth, the prevailing party at trial." Williams v. Commonwealth, 278 Va. 190, 191, 677 S.E.2d 280, 281 (2009). In addition, because this memorandum opinion carries no precedential value and the parties are familiar with the record, we include only those facts necessary to the parties' understanding of this Court's reasoning and ruling.

A. The Businesses and Shareholders' Agreement

Nordan, under the guise of raising capital for businesses that would primarily invest in solar energy and train veterans to install solar panels, met with Clyde Childress as a potential partner and investor. Nordan told Childress the money would be used to "establish the businesses and make [them] profitable." Childress agreed to invest because he supported the businesses' goals, particularly helping veterans. He also stated he trusted Nordan because they shared military backgrounds. Childress was around 75 years old at the time. He did not perform any background check on Nordan, although if he had, one would have revealed that Nordan had filed for bankruptcy twice in the last fourteen years and had numerous outstanding monetary judgments against him.

Childress agreed to invest in five businesses: (1) Nationwide Capital Investment Services, Inc. ("Nationwide Capital"); (2) Virginia Renewable Energy Corp. ("Virginia Renewable"); (3) Global Logistics and Security, Inc. ("Global Logistics"); (4) Pocahontas Farms, Inc. ("Pocahontas Farms"); and (5) Full Spectrum Learning, Inc. ("Full Spectrum"). The businesses were set up so that the latter four companies were wholly-owned subsidiaries of Nationwide Capital.

Nordan also was a partner, along with his girlfriend, in a company called I3 Leasing. Childress expressly declined to invest in I3 Leasing, preferring to involve himself in the venturesthat would, ostensibly, benefit veterans. Relevant to this appeal, I3 Leasing owed a substantial amount of money to an investor, Larrie Dean (Nordan's girlfriend's stepfather).

Nordan told Childress that he had put $185,000 into these five businesses; Childress elected to do the same so they would be equal partners. They agreed to this arrangement in May 2015, although the terms were not reduced to writing and signed until July 10. Reflecting their oral agreement, that written contract ("Shareholders' Agreement") stated that Childress would pay $185,000 and acquire a 50% stake in Nationwide Capital and that Virginia Renewable, Global Logistics, Pocahontas Farms, and Full Spectrum were wholly-owned subsidiaries of Nationwide Capital. The attorney who drafted the Shareholders' Agreement initially included I3 Leasing as a fifth subsidiary, but, consistent with the understanding that Childress did not wish to participate in that business, it was crossed out (Nordan's initials appear in the margins of the contract next to that modification). The Shareholders' Agreement also reflected that Childress would loan the businesses $215,000. Finally, the Shareholders' Agreement stated that "[i]t is anticipated that each stockholder will be able to draw $10,000 per month from the Corporation in addition to the note repayment." The phrase "it is anticipated" is underlined by hand, consistent with their understanding that monthly draws could begin after the companies started making money.¹

B. Childress's Financial Contributions to the Partnership

Although Nordan's and Childress's partnership agreement was not memorialized in writing until July 10, 2015, Childress began investing in and contributing to the shared businesses prior to that. Specifically, on June 1, 2015, Childress transferred $30,000 from his bank account — specifically, Childress's family trust — to the Virginia Renewable bank account. On June 18, he transferred another $20,000 to that same account. On June 20, he wrote a check for $135,000 with Nordan as the payee; Nordan deposited this into the Nationwide Capital account. Childress also paid $149,000 for a down payment on some property "on behalf of Pocahontas Farms." Finally, on July 7, he wrote a check for $37,500 for use as a deposit on purchasing a poultry farm for Virginia Renewable on which they intended to install solar panels. After signing the Shareholders' Agreement, Childress invested an additional $50,500 in the corporations (specifically into the Nationwide Capital and Virginia Renewable accounts). In total, Childress deposited $235,500 into the businesses' accounts.

C. Nordan's Expenditures

A financial crimes investigator for the State Corporation Commission, Steven Cava, testified for the Commonwealth at trial. After examining the bank accounts affiliated with the businesses that Childress held an interest in, as well as those of I3 Leasing, he determined that prior to Childress's investments, the accounts had only $1,631.53. Despite Childress's contributing $235,500 into the accounts between June and August, all but $5,593.91 had been spent by the six companies by the end of August.² Cava traced the money over that three-monthperiod, and identified a number of expenses and withdrawals from the businesses' accounts that did not appear to have a legitimate business purpose.

Using money Childress invested in the shared business venture, Nordan made numerous purchases, without consulting Childress, that did not relate to the businesses' operations. On June 24, 2015, Nordan used $5,000 from the Virginia Renewable account to purchase a new pickup truck. He titled it in his name, and the purchase document reflects that it was to be for personal use.³ That same day, he paid $4,700 in cash from the Nationwide Capital account to purchase a Jaguar. On July 20, he used $12,000 from Pocahontas Farms to purchase a Harley-Davidson motorcycle. On July 24, he paid $1,228.64 to Baldwin Auto Services from the Global Logistics account, for services and repairs on a Honda Civic belonging to someone whom Nordan testified was "becoming an employee" in his business. Nordan also permitted his son to use a Full Spectrum company credit card on a personal trip to the Outer Banks.

On July 31, 2015, Nordan withdrew $35,000 from the I3 Leasing account to repay the loan from Larrie Dean to that business. In the days prior to that withdrawal, Nordan had made four $12,000 transfers into the I3 Leasing account from each of the Full Spectrum, Pocahontas Farms, Global Logistics, and Virginia Renewable accounts.⁴ When asked⁵ about these transfers,Nordan explained that these transfers were for lease payments, as Nordan had arranged for I3 Leasing to rent office space to the businesses in which Childress had invested. He produced four⁶ "lease agreements" that each provided for a monthly rental payment of $4,000 from one of the businesses Childress invested in to I3. Childress testified that he "was willing" to rent this space, but not until the businesses were "operating" — meaning there should not have been payments during June, July, and August of 2015, because at the time, none of the businesses in which Childress had invested had any use for space in the building. Moreover, Childress had never seen these "lease agreements" before. Nordan signed the leases on behalf of each respective lessee, and Nordan's girlfriend signed on behalf of I3. Nordan alleged the leases were signed on May 1, 2015. At trial, a special agent for the state police testified that he had examined Nordan's computer and had determined that the "lease agreements" had been created September 19, 2015, and, in his opinion, Nordan had backdated them to May 1.

D. Trial Court Rulings

In finding Nordan guilty of embezzlement, the trial court recited the following transactions as misuse of corporate funds:

• the purchase of the truck;

• the use of money to pay personal expenses to Baldwin Automotive (which includes both the Jaguar purchase and the car repair); and

• the purchase of the Harley-Davidson motorcycle.

It found that the money funneled through I3 to pay back the loan to Dean constituted money laundering. The trial court rejected Nordan's claim that the transfers to I3 Leasing were legitimate rent payments, finding that Nordan had fabricated and backdated the purported lease agreements. It also rejected Nordan's claim that he was entitled to draw upon company funds forpersonal use pursuant to the Shareholders' Agreement, because the businesses had no active operations or income. In so ruling, the trial court implicitly credited Childress's testimony and rejected Nordan's regarding the terms of their oral agreement prior to signing the written Shareholders' Agreement.

II. ANALYSIS

A. "Fatal Variance" in the Indictments

Each of...