Joseph Medrano was a licensed insurance broker and the founder, owner, and president of Insurance Management Corporation (IMC), an insurance brokerage firm. In 1996 or 1997, iPass, Inc., a publicly traded software company, retained him as its insurance broker. As a publicly traded company, iPass was required to have insurance coverage in order to conduct business. Medrano assisted iPass by obtaining proposals from insurance companies, making recommendations to iPass, presenting insurance policies to iPass for approval, and procuring insurance for iPass.
In late 2008, iPass, through IMC, renewed its workers compensation and domestic package insurance with Travelers and agreed to make four quarterly payments of $79,815 – a gross premium that included all commissions and fees – to IMC for this insurance. During a meeting with Medrano he represented to the insured that he had shopped more than 15 insurance companies for the its D&O policy and only one company was interested in providing a quote.
The insured was uncomfortable with this claim, and believed it was not probable, so they checked with a competing broker, Lockton. Over the course of the next several days, Lockton called the other insurance companies and learned they had never been approached by Medrano or by anyone representing iPass. Some of the companies said they would have entertained the idea of meeting with iPass and might have offered a competing bid. Lockton also reviewed iPass’s D&O policy and noticed that IMC had been collecting full commission in addition to charging a $50,000 broker fee. Ultimately iPass changed their broker to Lockton for all insurance except for the Travelers policy that had been written.
On August 28, 2009, iPass learned that Travelers was getting ready to cancel iPass’s workers compensation and domestic package insurance because it had not received all of the premium payments. As a result, iPass made a duplicate premium payment to Travelers, this time through Lockton, so that it would not lose coverage. When Medrano was asked to refund the premium responded that his finances had suffered significantly in the economic downturn, and added, “When I lost the iPass account, I almost lost everything.” and he no longer had the money.
During the broker’s criminal trial, the prosecutor presented evidence that Medrano retained funds in a similar way from another one of his brokerage clients, Golden Valley. It argued the evidence was relevant “to show his motive as well as his intent and his knowledge that he was taking those funds [from both Golden Valley and iPass around the same time, when he was having financial issues] for his personal use as opposed to a mistake or oversight.”
After Medrano’s criminal trial the jury deliberated for less than a day and reached a verdict, finding him guilty of grand theft by embezzlement. At sentencing, the trial court sentenced him to county jail for a total of three years, with eighteen months suspended. This consisted of the middle term of two years for embezzlement and one consecutive year for the excessive taking enhancement.
Medrano appealed arguing that the trial court abused its discretion and deprived him of due process and a fair trial when it admitted evidence of his prior uncharged misconduct against Golden Valley. The Court of Appeal rejected his arguments in the unpublished case of People v Medrano.
The Supreme Court has “long recognized that if a person acts similarly in similar situation he probably harbors the same intent in each instance . . . and that such prior conduct may be relevant circumstantial evidence of the actor’s most recent intent. The inference to be drawn is not that the actor is disposed to commit such acts; instead, the inference . . . is that, in light of the first event, the actor, at the time of the second event, must have had the intent attributed to him by the prosecution.”