People v. Waterman CA4/3

FACTS

Defendant is an interior designer who owned an interior design company in Rancho Mirage named Studio Waterman. In 2006, Studio Waterman had cash flow problems. It lost its $250,000 line of credit and could not obtain a new line of credit from any other bank. Defendant made decisions about which client purchase orders would be fulfilled from the available funds. By February or March of 2007, Studio Waterman had $700,000 to $800,000 in unfunded liabilities and lacked sufficient funds to finish its current jobs. Its accountant suggested defendant move to a less expensive office building, cut down staff, or find new clients. Defendant refused.

1 All statutory references are to the Penal Code.

2 The company’s financial condition worsened. Its accountant gave defendant monthly reports on the company’s financial condition, including the outstanding balances on clients’ accounts. At this point, Studio Waterman had only three or four clients, including the Pharrises (Gerald and Lynn), the Berlins (James and Madeline), and the Wiltzes (James and Jane). Studio Waterman used much of the money paid by these clients to pay the company’s operating expenses, to advance other clients’…