Filed 7/30/13 P. v. Hatzell CA1/1
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIRST APPELLATE DISTRICT

                                                  DIVISION ONE


THE PEOPLE,
         Plaintiff and Respondent,
                                                                     A136286
v.
TIMOTHY MARK HATZELL,                                                (Solano County
                                                                     Super. Ct. No. FCR277485)
         Defendant and Appellant.

         Defendant Timothy Mark Hatzell entered a no contest plea to one count of grand
theft by embezzlement (Pen. Code, §§ 487, subd. (a), 503). The trial court placed him on
three years’ probation on the condition that he serve 90 days in jail and pay restitution to
the victim. After a restitution hearing, the court ordered defendant to pay restitution in
the amount of $40,695. Defendant contends the restitution order is not supported by
substantial evidence. Defendant also contends the trial court abused its discretion by
failing to employ a method rationally designed to determine the victim’s economic loss,
and by failing to make a clear statement of the calculation method used. We agree the
trial court failed to clearly state the methodology underlying its computation of the
restitution amount. Accordingly, we reverse the restitution order and remand for further
proceedings.
                           I. PROCEDURAL BACKGROUND & FACTS
         According to the probation report, the victim, Carol Rewick, owned the Fleet Feet
store in Vacaville. Defendant was a manager at the store. Rewick reported to police that
defendant “used his personal credit card and had falsely credited his account through
fraudulent returns for items that were never purchased.” Rewick discovered defendant’s
embezzlement by noticing a return for $260.10, not accompanied by a receipt and traced
it to defendant’s credit card.
       When confronted by Rewick, defendant admitted he had been embezzling for
about a year and promised to make full restitution. Based on his bank records, defendant
estimated he had taken about $10,000 in fraudulent returns. He claimed he never took
cash. According to the probation report, Rewick estimated her loss to be $6,069.14, and
possibly an additional loss of $841.01.
       In her victim restitution claim form, Rewick claimed a loss of $70,167.67. At the
restitution hearing, the prosecutor represented to the court that defendant had already paid
Rewick $10,000.
       Rewick testified defendant worked at her store from November 2007 to June 2010.
She discovered defendant had used his credit card to make suspicious returns of items
which had not been purchased or were not in stock. She confirmed defendant had
confessed to her he had been stealing for about a year. Looking back into her records,
she was able to identify a number of returns involving defendant’s credit card. She also
noticed a large number of returns using her employee number, which was “suspicious”
because each employee was supposed to use his or her own number for returns. She had
six or seven employees working at the store at the same time as defendant.
       Rewick had her office manager, Ashley Dobson, examine the records to look for
transactions that appeared fraudulent. One indication of fraud was an item returned at a
different price from the sale price. Rewick and Dobson prepared a spread sheet, admitted
as People’s exhibit 1, showing records of specific transactions. Rewick admitted on
cross-examination it was difficult to match returned items to her inventory because her
inventory “was never quite right” or “was always off.”1
       Exhibit 1 showed certain returns were done when defendant was working, but the
exhibit could not directly link the returns to defendant. All the returns were processed


       1
           The state of the inventory may have been due to defendant.

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under Rewick’s employee number. At the times in question, Fleet Feet had “a pretty
loose return policy” and all employees had “full ability to return any product without any
kind of signature . . . .” It seems Rewick gave her employees “reign” to process returns.
Although she testified they weren’t supposed to use her number, apparently they did with
some frequency.
       Rewick and Dobson also prepared a second spread sheet, admitted as People’s
exhibit 2, showing returns made day by day and noting whether they were cash returns or
credit card returns. The vast majority of the returns were cash returns, as opposed to ones
linked to defendant’s credit card and ATM card. Apparently, “a large majority” of the
returns were under Rewick’s employee number.
       Ashley Dobson testified regarding the preparation of the spread sheets. She
testified she considered returns suspicious if there was no customer name. She also
noticed a large amount of cash returns, which was unusual. She found $70,167.67 worth
of suspicious returns. She admitted on cross-examination she did not “actually have any
knowledge that these numbers that [she] calculated are actually money stolen . . . .”
       In a written order, the trial court ordered defendant to pay restitution in the amount
of $40,695 plus interest, with a credit of the $10,000 he had already paid. The court
noted Rewick had testified to a loss of $70,167.67 while defendant admitted he took
“approximately $10,000 in credit returns.” As far as we can tell, the amount of $40,695
does not appear in the evidence presented to the court.
       The court “took into account Ms. Rewick’s testimony that, following defendant’s
termination the store’s cash deposits were significantly higher and the customer return
rate significantly lower, defendant’s status as the store manager, and the large number of
suspicious returns . . . that occurred when defendant was on duty.” Noting that restitution
is meant to compensate the victim for actual loss and not provide a windfall (People v.
Chappelone (2010) 183 Cal.App.4th 1159, 1172), the court “discounted the amount of
restitution claimed by the victim for cash returns, because of the return procedures in
place (at the time all employees used Ms. Rewick’s code to process returns), and the
inability of the store to compare the reported returns with its inventory.”


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                                     II. DISCUSSION
       Defendant challenges only the restitution order. He concedes People’s exhibit 2
and related testimony show $11,337.11 in fraudulent returns linked to his credit card and
ATM card. But defendant disputes the proof of loss relating to the cash returns, i.e., the
basis of the balance of the restitution order. He contends the restitution order is not
supported by substantial evidence, and the trial court abused its discretion by failing to
employ a method rationally designed to determine the victim’s economic loss and by
failing to make a clear statement of the calculation method used.
       We review a trial court’s restitution order for abuse of discretion. (People v.
Giordano (2007) 42 Cal.4th 644, 663 (Giordano).) This abuse of discretion standard is
“deferential,” but “not empty.” (People v. Williams (1998) 17 Cal.4th 148, 162
(Williams).) We must determine whether a restitution order falls outside of reason, in
light of the pertinent facts and law. (Williams, supra, at p. 162.) “Under this standard,
while a trial court has broad discretion to choose a method for calculating the amount of
restitution, it must employ a method that is rationally designed to determine the . . .
victim’s economic loss. To facilitate appellate review of the trial court’s restitution
order, the trial court must take care to make a record of the restitution hearing, analyze
the evidence presented, and make a clear statement of the calculation method used and
how that method justifies the amount ordered.” (Giordano, supra, at pp. 663–664;
accord, People v. Jones (2010) 187 Cal.App.4th 418, 423 (Jones).)
       In the present case, the trial court did not make a clear statement of its calculation
method. As such, we cannot tell whether the court used a method rationally designed to
determine the victim’s economic loss. Simply put, we are at a loss to determine the
source of the amount of restitution ordered. The credit card and ATM returns seem
limited to $11,337.11, while the trial court ordered $40,695, a figure of puzzling
provenance. The trial court discounted the cash returns because the return procedures in
place at the time apparently allowed all employees to use Rewick’s code to process
returns, and because the store was unable to compare the reported returns with its



                                              4
inventory. However, it is unclear what method the court used in determining the amount
of discount to be applied.
       The trial court appears to have derived the restitution amount from speculation and
a misreading of the evidence. The court noted a large number of suspicious returns
occurred when defendant was on duty, but other employees were on duty as well, and the
evidence could not link defendant to any specific cash transaction. The court referred to
Rewick’s testimony that “the store’s cash deposits were significantly higher” after
defendant was terminated in 2010—but that does not accurately reflect her testimony.
Testifying in April 2012, she said her store had $843,000 in sales “last year”—
presumably, the calendar year 2011—and had $975,000 in sales the 11 months before
that—presumably, most of 2010, during which defendant was in her employ only until
June. The trial court also noted “the customer return rate [was] significantly lower” after
defendant’s departure—Rewick testified it dropped “quite a bit”—but this is imprecise.
It also does not take into account the fact that two other employees working at the same
time as defendant also left the store’s employ.
       We must remand this matter to the trial court for recalculation of the restitution
amount and for a clear statement of its calculation methods. (Jones, supra, 187
Cal.App.4th at pp. 427–428.)




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                                   III. DISPOSITION
       The restitution order is reversed. The cause is remanded to the trial court for
further proceedings not inconsistent with this opinion.




                                                 _________________________
                                                 Sepulveda, J.*



We concur:


_________________________
Dondero, Acting P.J.


_________________________
Banke, J.




       *
        Retired Associate Justice of the Court of Appeal, First Appellate District
assigned by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.

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