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State v. Hoeck

July 6, 2007

STATE OF KANSAS, APPELLANT,
v.
TAMMY HOECK, APPELLEE.



Review of the judgment of the Court of Appeals in an unpublished opinion filed September 15, 2006. Appeal from Pratt district court; ROBERT J. SCHMISSEUR, judge. Judgment of the Court of Appeals affirming the district court is reversed. Judgment of the district court is reversed and remanded.

SYLLABUS BY THE COURT

1. Under the holding in United States v. Leon, 468 U.S. 897, 82 L. Ed. 2d 677, The opinion of the court was delivered by: Luckert, J.

At the heart of this appeal is the issue of whether this court has correctly construed the holding in United States v. Leon, 468 U.S. 897, 82 L.Ed. 2d 677, 104 S.Ct. 3405, reh. denied 468 U.S. 1250 (1984), establishing the good faith exception to the Fourth Amendment exclusionary rule. More specifically, has this court improperly restricted the good faith exception by applying the test of whether there is a substantial basis for the determination of probable cause to both the determination of a search warrant's validity and the determination of whether the good faith exception allows the use of the fruits of a search conducted pursuant to an invalid warrant? We conclude the answer to this question is "yes" and that, by imposing this restriction, prior Kansas cases have effectively nullified the good faith exception of Leon. We disapprove this restriction and adopt the Leon good faith exception.

The Supporting Affidavit

The focal point of this appeal is the affidavit used to support a search warrant for the residence of defendant Tammy Hoeck. Pratt Police Detective Jeff Ward applied for the search warrant and, in his supporting affidavit, stated that he believed that Hoeck was, in various ways over a period of time, stealing from her employer, PrimeTime Stores, Inc., a subsidiary of Tri-Lakes Petroleum, Inc. The parties' arguments do not question whether the affidavit establishes probable cause that Hoeck was involved in criminal activity; the issue is whether the affidavit established a nexus between the crime and Hoeck's residence sufficient to provide a basis to search the residence for evidence relating to the crimes.

In the affidavit, Detective Ward claimed that Michael J. Johnson, the Retail Operations Manager for PrimeTime Stores, Inc., gave him most of the information contained in the affidavit. He also received from Johnson information attributed to Mark Gauntt, an investigator with the Kansas Lottery Commission. This led to an investigation concerning several larcenous schemes by Hoeck, including embezzlement, theft of inventory, lottery ticket fraud, and credit card discrepancies.

Johnson told Detective Ward that he was responsible for overseeing all Kansas and Missouri PrimeTime stores. This job duty included overseeing district managers who were responsible for stores in each state. There were five Kansas store locations -- one each in Pratt, Salina, Inman, and two stores in Newton.

Johnson further indicated that, in January 2004, he became aware of an embezzlement scheme in the PrimeTime store in Pratt. During a subsequent internal investigation, he compared corporate computer records with handwritten daily perpetual inventory (DPI) reports and cash register receipts. Johnson determined that money had been stolen from the Pratt store through fraudulent merchandise sales records.

Hoeck was the manager of the Pratt store and was also the district manager responsible for overseeing the four other Kansas stores. Johnson told Detective Ward that, since his appointment as Regional Operations Manager, he had trouble obtaining DPI reports from Hoeck for the Pratt store. He found this odd because Hoeck regularly required store managers in the other Kansas stores to submit such reports.

According to Johnson, auditors found that Hoeck had not submitted any DPI reports to her supervisor from May 2002 until January 2004. Plus, inventory records indicated a loss in merchandise from the Pratt store in excess of $70,000. Johnson further claimed that the sales receipts for that time period balanced with the cash receipts, indicating that the person involved in the thefts, i.e., Hoeck, knew of the discrepancy and altered the sales records so that the daily reports balanced. Then, after being confronted in January 2004 with her failure to provide proper documentation, Hoeck began submitting DPI reports. The loss of merchandise subsequently lowered to what Johnson referred to as a "normal" level.

Johnson went on to tell Detective Ward that he had spoken to Agent Mark Gauntt of the Kansas Lottery Commission. Gauntt informed Johnson that, beginning in January 2004, there was a pending investigation concerning the theft of lottery tickets. On March 4, 2005, Kirk Ives, a Pratt County Sheriff's Deputy, told Gauntt that he had recovered two packs of Kansas lottery tickets at the entrance to the Pratt County landfill. Ives reported that one of the packs contained orange tickets from game No. 397, bearing numbers 000 to 149. That pack had been assigned to the PrimeTime store in Pratt. The other pack contained blue tickets from game No. 287, bearing numbers 001 to 029. This pack had been assigned to the PrimeTime store in Salina. But all winning tickets in the blue and orange packs were validated at the PrimeTime store in Pratt on March 2, 2005, at 5:48 p.m.

After this discovery, Gauntt contacted Johnson, who confirmed that Hoeck had been in both Salina and Pratt on March 2, 2005. Johnson also told Gauntt about the embezzlement scheme. Gauntt then learned that the company's end-of-day sales reports printed from the lottery terminal did not match computer records held by the Kansas Lottery for the period between January 2004 and March 2004. After receiving this information, Gauntt began an in-depth investigation and compared the actual sales reports from the PrimeTime store in Pratt with records held by the Kansas Lottery.

As a result of this comparison, Gauntt discovered that the reports from the Pratt store showed a much larger validation difference than the reports held by the Kansas Lottery. Moreover, the discrepancies were all in even $100 amounts. Gauntt further compared the Pratt store's lottery reports from one day to the next and detected discrepancies in the numbers on the preprinted ticket stock used in the store's lottery terminal. He also found discrepancies in activity between the store's lottery reports and the store's lottery terminal.

What is more, Gauntt examined several of the validation reports and thought that true and accurate reports had been scanned into a personal computer and the figures were then altered to place erroneous dates, times, and dollar amounts in the reports. He believed that these erroneous reports were then printed on ticket stock obtained from the store and turned into the corporate office as the actual report. These alterations, according to Gauntt, would explain the discrepancies between the validation reports and the amounts actually validated and would also explain why some of the numbers on the reports appeared to have been slightly out of line with other "characters/numbers."

Gauntt claimed that the scheme continued from January 7, 2004, to March 31, 2004, at which time a new lottery terminal was placed inside the Pratt store. Company records indicated that Hoeck was the sole employee present during times when all discrepancies were prepared and submitted to the company. Gauntt estimated that approximately $30,000 had been fraudulently obtained by Hoeck.

In addition to the above information, Gauntt also discovered that from a period between November 2004 until the time the affidavit for the search warrant was issued, all or a majority of 40 packs of lottery tickets were validated at the same time in the Pratt store. In one instance, 8 packs of tickets were validated at the same time after the Pratt store was closed for business. During the same time period, Gauntt found that 13 packs of tickets assigned to the PrimeTime store in Salina had been validated at the PrimeTime stores in Pratt, Newton, and Inman. Hoeck was the only person having access to all of these PrimeTime stores. Gauntt further found that tickets from the Pratt store were validated at the store in Salina on the same days that company records revealed that Hoeck was in Salina. Similarly, company records indicated that Hoeck was in Salina on the same day that Salina tickets were validated in Pratt and Newton.

Moreover, Johnson informed Detective Ward that from April 19, 2004, to April 26, 2004, Hoeck turned in credit card reports to the parent company reflecting sales lower than the charges actually made to customers' credit cards, which would have allowed Hoeck to keep the difference in the amounts. Johnson stated that this activity stopped when he confronted Hoeck about the discrepancies.

Search and District Court Proceedings

Based on the foregoing statements in the affidavit, Ward received a warrant to search Hoeck's residence. When officers executed the warrant and conducted the search, they seized numerous items from Hoeck's home, including a personal computer, a scanner, a printer, a laptop computer, a laptop case with removable floppy drive, a file with receipts from PrimeTime and handwritten notes, an envelope with credit card receipts with original signatures, a notebook with PrimeTime internal documents, audit reports for July 2, 2004, and April 29, 2004, and a roll of Kansas Lottery terminal stock.

The State ultimately charged Hoeck with 47 counts of felony theft and 69 counts of misdemeanor theft. Before trial, Hoeck filed a motion to suppress the evidence seized from her residence based on the argument that there was no nexus between the alleged criminal activity and Hoeck's residence. The trial court granted Hoeck's motion and also ruled that the good faith exception to the exclusionary rule did not apply.

Court of Appeals' Decision

The State brought an interlocutory appeal before the Court of Appeals. The Court of Appeals ultimately affirmed the trial court in State v. Hoeck, No. 95,830, unpublished opinion filed September 15, 2006.

The State first argued that the search warrant was valid because there were sufficient facts in the affidavit from which the magistrate could infer that the evidence would be found at Hoeck's residence. Second, the State argued that even if the warrant was invalid, the good faith exception to the exclusionary rule applied to prevent suppression of the evidence.

With respect to the validity of the warrant, the State contended that Detective Ward was not required to present in his affidavit facts connecting Hoeck's residence with the crimes. The Court of Appeals rejected the State's contention and affirmed the trial court on this issue, ruling that the affidavit failed to provide the magistrate with a substantial basis to find probable cause for the issuance of a warrant for Hoeck's residence. The State does not seek review of this issue. Therefore, the issue regarding the validity of the search warrant is not before this court.

Regarding the applicability of the good faith exception, the State argued that under Leon, evidence obtained by officers acting in reasonable reliance on a search warrant issued by a magistrate, which is subsequently held to be invalid, is subject to exclusion only if one of four specific circumstances exist: (1) the magistrate who issued the warrant was deliberately misled by false information; (2) the magistrate completely abandoned his or her neutral and detached role; (3) the warrant is so lacking in specificity that the officers cannot determine the place of the search or the items to be seized; or (4) the warrant bears so little indicia of probable cause that it is entirely unreasonable for an officer to believe the warrant is valid. The State contended that, because none of these four circumstances existed in this case, the evidence should not have been suppressed.

The Court of Appeals rejected the State's argument, observing that in State v. Longbine, 257 Kan. 713, 721-22, 896 P.2d 367 (1995), disapproved on other grounds by State v. Hicks, 282 Kan. 599, 147 P.3d 1076 (2006), this court held that Leon's good faith exception will not be applied where the warrant was based on an affidavit that failed to provide a substantial basis for determining the existence of probable cause. Noting its duty to follow Kansas Supreme Court precedent, the panel concluded that, because it had already determined that the affidavit did not provide the magistrate with a substantial basis to issue the warrant, the good faith exception did not apply. The Court of Appeals held, therefore, that the trial court properly suppressed the evidence.

The State, recognizing that the lower courts were required to follow our precedent, petitioned for our review of the lower courts' decisions and asked us to review our prior holding in Longbine and the case on which it relied, State v. Doile, 244 Kan. 493, 495, 769 P.2d 666 (1989), abrogated on other grounds by Horton v. California, 496 U.S. 128, 110 L.Ed. 2d 112, 110 S.Ct. 2301 (1990). We granted the State's petition for review of the issue; consequently, our jurisdiction arises under K.S.A. 20-3018(b).

Standard of Review

The question of whether this court has correctly construed the Leon good faith exception is one of law. Appellate courts have unlimited review over questions of law. See State v. Porting, 281 Kan. 320, 324, 130 P.3d 1173 ...


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