White-collar crime statute freezes Honeycutt's assets

At the end of the set of indictments issued September 4 against Councilman Tad Honeycutt and California Charter Academy founder C. Steven Cox, there's an additional provision, after all 117 counts are listed.

Citing California Penal Code 186.11, the San Bernardino County District Attorney's Office alleges that, in addition to charges of grand theft, misappropriation of public funds, filing a false tax return and failure to file false tax returns, the two men are to be charged with the state's aggravated white-collar crime enhancement.

The enhancement does two things: First, it can add up to five years in prison for Cox and Honeycutt, should they be convicted. In the meantime, it freezes their financial assets.

"The purpose of 186.11 is to make sure that they don't dissipate assets that will be [needed] for restitution," Deputy District Attorney Michael Fermin, the lead prosecutor in the case, said Wednesday. "That's what the statute's about: [freezing the assets] before they have the chance to spend everything."

Cox and Honeycutt are accused of misappropriating $5.5 million in the indictments handed down earlier this month. In an April 2005 audit of CCA commissioned by the California Department of Education, auditors alleged the misappropriation could total as much as $23 million.

"I think that the problem is that when the government attaches your assets, it's really exerting a tremendous amount of power and authority over you," said Mark Shoup, supervising public defender in the Victorville courthouse. "Normally, we reserve that kind of action to something where there's been a full judicial process.

"What [the prosecution is] doing is legal, don't get me wrong. I'm not saying it's illegal, I'm saying it's unfair," he said. "The assumption that whatever assets the defendant has, he got them illegally. ... We presume innocence in this country, and this statute doesn't presume that."

The aggravated white-collar crime enhancement is a relatively new provision in the penal code, having first gone into effect on July 1, 2005. In the two years since then, it has withstood challenges.

"To the extent that it's been challenged constitutionally, it's been upheld," Shoup said.

The freezing of Cox's and Honeycutt's assets complicated bail and complicates defense for the two men. Cox remained in jail for several days after Honeycutt was released.

At trial, Cox will be represented by public defender Geoff Canty, with Shoup assisting on the case. Thursday, Honeycutt said he was speaking with defense attorneys and attempting to arrange funding for his legal costs. Both Cox and Honeycutt were due in court Friday morning for a confirmation of counsel hearing.

The aggravated white-collar crime enhancement makes allowances for legal fees and living expenses.

"There's some provision for legal defense" in the statute, Fermin said.

"The court, in making its orders, may consider a defendant's request for the release of a portion of the property affected by this section in order to pay reasonable legal fees in connection with the criminal proceeding," California Penal Code 186.11 reads in part. "Any necessary and appropriate living expenses pending trial and sentencing, and for the purpose of posting bail."

"They both bailed out, so they're both people of means," Fermin said. Cox was being held on a $1 million bail and Honeycutt's bail was half that.

"I'm just saying that I think it's unfair," Shoup said. "There's been no proof that it's been obtained in a fraudulent manner. ... There's been no trial and certainly [Cox and Honeycutt haven't] been convicted of anything."

Beau Yarbrough can be reached at 956-7108 or at beau@hesperiastar.com.