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Failing to raise joint-account defense to embezzlement charge wasn’t ineffective

State v. Phyllis M. Schwersenska, 2018AP1619-CR, District 4, 4/30/20 (not recommended for publication); case activity (including briefs)

Schwersenska was convicted of embezzling money from a joint bank account she held with her daughter, H.R. The court of appeals holds trial counsel wasn’t ineffective for failing to raise the defense that, as joint owner of the account, none of the money in the account belonged solely to H.R. and so she can’t be guilty of theft from H.R.

Based on testimony of H.R. and other witnesses, the state’s theory of prosecution was that most of the money deposited in the joint account belonged to H.R., and that H.R. had signed a durable power of attorney (POA) under which, H.R. believed, Schwersenska was to act as a fiduciary. To counter this theory, Schwersenska’s trial counsel argued the POA wasn’t valid, so Schwersenska had equal, unfettered access to all the assets in the account, or that, in any event, the state failed to prove the amount of Schwersenska’s unauthorized withdrawals. (¶¶4-12).

Postconviction, Schwersenska argued, essentially, that trial counsel should’ve taken three specific acts to pursue an affirmative defense under § 705.03(1), which provides that any joint owner of an account has access to the money in the account irrespective of their contributions to the account unless there is clear and convincing evidence of a “different intent.” (¶¶1, 18-19). While the existence of a POA from one joint owner in favor of another may provide evidence of that different intent, it is not dispositive; indeed, a POA between joint owners may create conflicting presumptions if the POA prohibits self-dealing. Russ v. Russ, 2007 WI 83, 302 Wis. 2d 264, 734 N.W.2d 874. (¶¶20-24). The court of appeals disagrees trial counsel was ineffective for failing to undertake the acts Schwersenska argues should’ve been taken.

The first act was to introduce the joint account’s signature card. But the bank’s manager testified the account was jointly held and that all joint account holders can withdraw any or all of the funds, regardless of who deposited the money. Given this testimony, the signature card was cumulative and failure to introduce it wasn’t prejudicial. (¶¶28-30).

The second act was to argue at the close of the state’s case that the case should be dismissed because the state hadn’t proven the joint account owners had a “different intent” regarding the use of the money in the account. This was likewise not prejudicial, for there was in fact evidence from H.R. that the bulk of the money was hers and that, under the POA, Schwersenska was meant to act as a fiduciary; while the jury could disbelieve H.R., there was enough evidence to get past a motion to dismiss, and it isn’t ineffective to fail to bring a motion that would’ve been denied. (¶¶31-37).

The third act was to ask the circuit court for an instruction on the “different intent” rule to guide the jury’s assessment of the evidence. Schwersenska’s postconviction motion proposed a specific non-pattern instruction that should have been requested, but the court of appeals concludes the instruction is wanting because it doesn’t fully account for or describe the possibility the joint owners might form a “different intent” from the usual rule that all joint owners have access to all the funds. Thus, failure to request it wasn’t prejudicial, for the circuit court would have denied the request to give it because it doesn’t accurately describe the law. (¶¶38-44).

Clearly, though, the overarching controversy at trial was whether H.R. and Schwersenska in fact formed a “different intent” from the § 705.03(1) presumption. So, even if the specific instruction suggested in postconviction proceedings was flawed, it is also clear that trial counsel should’ve submitted an accurate instruction on both the right of a joint account holder to access the money in the account irrespective of their contribution and the requisites of the “different intent” exception. And given the absence of such an instruction here, it can’t be said the jury applied the correct legal standard to the facts of this case, and we should have little confidence in the jury’s verdict.

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