## Facts

- Two physicians contracted with Rodney Elgin Stark, doing business as Stark Construction, to build a medical facility for about $350,000, to be paid through construction-loan draws as work progressed.
- Under the arrangement, Stark was to use draw proceeds to pay subcontractors and material suppliers for labor and materials on the project.
- By February 15, 1990, Stark had received three draws totaling roughly $245,000.
- On March 1, the owners began receiving calls from subcontractors and suppliers stating they had not been paid.
- After confrontation, the parties agreed the owners would pay subcontractors and suppliers directly going forward; the owners later issued about $70,000 in checks from a fourth draw.
- Additional subcontractors and suppliers remained unpaid for work and materials that should have been covered by the first three draws.
- Stark admitted he had used some of the project funds to cover costs on other jobs and promised to repay as those jobs progressed.
- The owners reported the matter to regulatory and prosecutorial authorities and estimated losses of about $46,000.
- Stark testified he diverted the funds but claimed he always intended to pay the money back.

## Issues

1. Whether willful diversion of construction funds under California Penal Code § 484b is a general-intent offense or a specific-intent offense requiring proof of intent to cause nonpayment/noncompletion or to permanently deprive.

## Decision

- The Court of Appeal affirmed the judgment and upheld the trial court’s instruction treating Penal Code § 484b as a general-intent crime.
- The court held the offense requires proof that the defendant intentionally diverted entrusted construction funds from their specified purpose, resulting in nonpayment or noncompletion, but does not require proof the defendant intended that downstream result.
- The court rejected the argument that “willfully” in § 484b imports a specific intent to defraud or permanently deprive.
- Stark’s asserted intent to repay did not negate the mens rea for § 484b.
- The conviction for violation of § 484b and the true finding on the excessive-taking enhancement under Penal Code § 12022.6(a) were left intact.

## Legal Principles

- Penal Code § 484b defines a general-intent offense when it criminalizes the willful misapplication of construction funds without requiring an additional intent to achieve a further consequence.
- In this context, “willfully” generally means the act was done intentionally rather than accidentally; without added statutory language (e.g., “with intent to defraud”), it does not convert the crime into a specific-intent offense.
- The prosecution need not prove an intent to cause nonpayment or noncompletion; it is enough to prove knowing diversion of entrusted construction funds and a resulting failure to pay or complete as specified by the statute.
- A claimed intent to repay later is not a defense to a completed willful diversion of construction funds.

## Conclusion

The court affirmed the contractor’s conviction, holding that diversion of construction funds under Penal Code § 484b is a general-intent crime completed by intentional misapplication of entrusted funds leading to nonpayment or noncompletion, even if the defendant claims an intent to repay.


People v. Stark, 26 Cal. App. 4th 1179 (Cal. Ct. App. 1994)