People v. Rhoades

THE PEOPLE, Plaintiff and Respondent, v. LAUNA LEA RHOADES, Defendant and Appellant.

C078140

COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Shasta)

August 2, 2018

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 11F1723)

Defendant Launa Lea Rhoades appeals following a conviction for grand theft of $20,030 in public housing funds from the Shasta County Department of Housing (Housing Authority). (Pen. Code, § 487i ["Any person who defrauds a housing program of a public housing authority of more than four hundred dollars ($400) is guilty of grand theft"]). Her rent was subsidized by the "Section 8" housing subsidy program of the United States Department of Housing and Urban Development (HUD). (42 U.S.C.A. § 1437f.) Defendant violated Section 8 rules by obtaining the subsidy for an apartment that she failed to disclose was owned by her maternal grandmother. Defendant also violated Section 8 rules by failing to disclose inheritance income of $15,000. The trial court suspended imposition of sentence, placed defendant on conditional revocable release, and ordered her to pay restitution of $20,030, plus various fines and fees.

Defendant appeals, contending the federal regulation restricting rentals from certain family members (Code of Federal Regulations (CFR) tit. 24, § 982.306(d), hereafter CFR 982.306(d)) unconstitutionally burdens a fundamental right to familial association and equal protection (U.S. Const., 14th Amend.) and the right to privacy under the California Constitution. Defendant also claims the trial court abused its discretion by allowing evidence that she failed to disclose inheritance income of $15,000, because the evidence was inadmissible character evidence and was more prejudicial than probative.

We reject defendant's arguments and affirm the judgment.

FACTS AND PROCEEDINGS

Defendant made two motions to dismiss and a motion for judgment of acquittal on grounds that the regulation was unconstitutional and infringed on her fundamental right of familial association. The trial court denied the motions.

During the jury trial, evidence was adduced that defendant was accepted into the Section 8 program in June 2006. A Housing Authority program specialist met with her, educated her on the program rules and the consequences of noncompliance, and gave her a "Voucher" listing the rules -- including that she had to report all income and could not receive a subsidy to rent a unit owned by a parent, child, grandparent, grandchild, sister or brother, unless the Housing Authority approved a reasonable accommodation due to disability. The program specialist also had defendant sign a Certification that she "MUST NOT . . . Rent a unit from a relative without the written authorization from the Housing Authority" and that she "MUST report . . . within 15 calendar days . . . [¶] . . . [¶] [a] change in household income. . . ." She signed a new Certification annually.

The Housing Authority gave defendant a voucher for her to find an apartment for herself and her son on the private market.

Defendant asked to use her subsidy to rent an apartment in a duplex at 19307 East Niles Lane. Defendant concealed from the Housing Authority that the duplex is owned by defendant's grandmother, Charlotte Withers, who lives in her own home on the same street, at 19297 East Niles Lane. Defendant did not claim a need for or seek approval as a reasonable accommodation for disability. Before living in her grandmother's property, defendant lived with her mother at the mother's home on the same street, at 19251 East Niles Lane.

The Housing Authority -- not knowing that landlady Charlotte Withers is defendant's grandmother -- approved the apartment, and a Housing Authority Program contract was signed by defendant, Withers, and a Housing Authority employee. The rent was $500 per month, of which the Section 8 program paid $446 directly to the landlady every month, and defendant was supposed to pay the rest ($54) to the landlady. The record does not disclose whether or not defendant paid her share, but it does not matter, as we explain post.

In 2010, a Housing Authority program specialist attempted to contact defendant for the annual recertification required by Section 8. Defendant did not return the phone messages. The specialist phoned the landlord, Charlotte Withers and asked if Withers could give a message to defendant. Withers agreed to pass along a message and disclosed that she is defendant's grandmother. At trial, Withers testified she did not remember ever being told by the Housing Authority that Section 8 did not subsidize rentals from family members.

An investigator from the Office of Inspector General interviewed defendant, who confirmed that she is her landlady's granddaughter. Defendant said she was sure she was told she could not rent from a relative but "maybe" she "ignored" that rule and "just wanted to rent the house." She was willing to repay the money but did not have themeans to do so at that time. She inherited $15,000 around April 2010 from her father (who died in July 2009) but had already spent that money on a car and breast implants for her daughter and a motorcycle for her son.

The Housing Authority sent defendant a letter terminating her Section 8 benefits on July 31, 2010, for violating the rules and stating the Housing Authority had paid $20,030 on defendant's behalf in violation of program rules.

Evidence was adduced at trial about the specific rule against family rentals.

Thus, CFR 982.306 states: "The PHA [Public Housing Authority] must not approve a unit if the owner is the parent, child, grandparent, grandchild, sister or brother of any member of the family unless the PHA determines that approving the unit would provide reasonable accommodation for a family member who is a person with disabilities. This restriction against PHA approval of a unit only applies at the time a family initially receives tenant-based assistance for occupancy of a particular unit, but does not apply to PHA approval of a new tenancy with continued tenant-based assistance in the same unit."

A special agent of the HUD unit of the Office of the Inspector General, who investigates fraud and abuse in HUD programs, testified the reason for restricting rentals from relatives is to ensure program integrity. Before the restriction was adopted, HUD found that "a lot of times" tenants would not pay their share of the rent if they were renting from close family members. This defeated the program's purpose to have the program participant contribute to the rent.

The Housing Authority's housing assistant coordinator also said they used to encounter fraud before HUD promulgated the rule against renting from relatives. On occasion, landlords who were close relatives of tenants did not collect the tenant's share of the rent. Landlords who were related to subsidized tenants would be more likely than unrelated landlords to let the tenants get away with not paying their share of the rent, which defeated Section 8's purpose of making rent reasonable so a low-income familycould meet its obligations. Landlords who were relatives were also less likely to report or deal with problems with the tenants.

The Housing Authority's coordinator acknowledged she had no evidence in this case that defendant did not pay her share of the rent. The grandmother did not remember but was "pretty sure" the Housing Authority paid the full rent. Defendant's aunt, who handled the bookkeeping for Withers (the aunt's mother), saw the Housing Authority check every month but did not receive any money from defendant and was not responsible for collecting any money from defendant.

Defendant did not testify at trial. In closing argument, defense counsel argued insufficiency of evidence of intent to defraud; the forms were confusing; maybe defendant was running out of time to find an apartment (which the prosecutor said in rebuttal was not in evidence); there was no evidence defendant did not pay her share; defendant's admission that she received an inheritance was not enough to prove she received it; and defendant's admission of fault and that she ignored the rule about family rentals did not prove intent to defraud as opposed to maybe she just blamed herself for failing to read the forms she was signing.

The jury returned a verdict finding defendant guilty of grand theft of public housing funds in violation of section 487i.

The trial court suspended imposition of sentence for five years and placed defendant on conditional revocable release in the community.

DISCUSSION

IThe Section 8 Housing Program

The Section 8 Housing Choice Voucher Program provides rental assistance to low-income families to enable them to participate in the private rental market. (42 U.S.C. § 1437f; 24 CFR 982; Khan v. Bland (7th Cir. 2010) 630 F.3d 519, 523-524.) Althoughfunded by the federal government, the program is generally administered by state or local government agencies, which must comply with HUD rules and regulations. (24 CFR §§ 982.1(a), 982.52(a).) The housing agency issues a voucher to a participant, who can then search for housing. (24 CFR §§ 982.202, 982.302.) If a property owner agrees to lease a unit to a tenant under the program, the owner enters into a Housing Assistance Payment (HAP) contract with the housing agency and a separate lease agreement with the tenant. (Khan, supra, 630 F.3d at p. 524.) The housing agency pays the subsidized portion of the rent to the owner, and the tenant pays his or her share of the rent to the owner. (Ibid.) Landlords have no right to participate in the Section 8 program. (24 CFR § 982.306(e); Khan, supra, 630 F.3d at p. 529.) The program is for the benefit of...