The Checks, QuickBooks, and the Motive
Part 1 of 4
- The Checks, QuickBooks, and the Motive (you are here)
- The Checks (Claims 1-7)
- The QuickBooks Calls (Claims 8-14)
- The Money (Claim 15)
They built a forgery case against a man who had already told them he wrote the checks
I wrote those checks. I made those calls to QuickBooks. I told the investigators so from the first week, and I never denied either one. This is what I told them, and what the same people said afterward.
1. The QuickBooks calls
What I told them: February 17, 2010
San Diego Det. DuGal read my own notes aloud: “Quickbooks on-line. Decide to delete and start Quickbooks Pro 2010. Credit card for purchasing Quickbooks.”
His report says I made “these transactions two or three days after February 4, 2010.”
The same detective, nearly fifteen months later: May 12, 2011
On a recorded call, DuGal told QuickBooks: “I’ve interviewed him a couple times, and he never mentioned calling you guys and doing this.”
Then: “It would be awesome if Chase said, I didn’t do it. I didn’t call. I didn’t give a number. See, then I could tell a judge, well, now, maybe somebody is using Joseph’s name, Chase’s number. Which I don’t believe, but, you know.” (My 2017 handwritten copy of the transcript, p. 17:5-10; audio linked.)
2. Writing the checks
What I told them: February 17 and 22, 2010
My notes, read aloud by DuGal: “Went over when to write the checks.”
Five days later, on speakerphone, DuGal asked “how much of that money has been withdrawn to do manufacturing of the fountains?” I answered: “I’m guessing eighteen to nineteen thousand.”
San Bernardino, in the room: October 22, 2014
Det. Hanke: “And you didn’t tell San Diego that you were writing checks and signing Joseph’s name.”
I answered: “Actually I did. … I told Detective Dugal that.”
3. “Later admitted”
What I told them: February 17, 2010
In my first interview, my notes said “Credit card for purchasing Quickbooks.” DuGal’s report says I told him Joseph “wrote down his credit card number for Charles to use,” and I used it to order QuickBooks.
Det. Bachman, in his sworn warrant affidavit
“Merritt later admitted he tried to change the QuickBooks account and stated Joseph McStay instructed him to make the changes, though Merritt did not attempt to conduct the changes until days after their meeting and Merritt claimed he had already lost contact with Joseph McStay.”
Further on, in the same affidavit: “Merritt did contact Intuit as he stated in his original interview with SDSO investigators. Merritt did try to transfer EIP’s business accounts like he stated in his interview, but changed the contact information to his own cellular telephone number.” The affidavit concludes that my actions were “more consistent with him attempting to conceal any record of him making the fraudulent checks” (search warrant affidavit, June 2015, SW8A pp. 7-8 of 9, Bates 028871-028872).
4. Who wrote the checks: three versions from the State
What I told them: October 22, 2014
“I’m almost positive the Metro Sheet Metal check I wrote.” I told them I had signed Joseph’s name “probably more than 30 or 40” times over the years.
The State’s own case summary of that interview: “Merritt admitted to making the checks.”
What they told the court and the jury
Det. Hanke, under oath at the preliminary hearing: “I don’t believe he said he — I believe he said Joseph wrote the checks.”
Det. Smith, to the jury in 2019: “My understanding is Mr. Merritt admitted to receiving checks on the 4th, not writing them.” Smith was never in the interview.
5. The dates
What I told them: October 22, 2014
Asked why a check written on the 5th was dated the 4th: “I have no clue. I mean, I may have thought it was the 4th. I have no idea.” (p. 191:10-11) Det. Bachman: “you’re absolutely right. Right? It’s the next day. Maybe you thought it was the 4th. So you backdate it.”
His own report: “Merritt never denied writing or backdating the checks, and claimed he could have dated the checks thinking it was February 4th.”
What they wrote, and swore to
The case summary: I “had no explanation as to why he backdated the checks.”
Det. Hanke, under oath: “He did not offer any explanations.” In the same answers he said I “did not deny” backdating (prelim RT 124:10-14). Of the February 8 check I told Bachman, “I don’t know” (p. 198:24).
6. “Forged”
What the FBI said, in the State’s own words
The case summary: the FBI “concluded there were dissimilarities in the signatures, but could not say it was an absolute forgery due to the lack of original documents.”
What both prosecutors told the jury
Mr. Imes, in closing: “Why are the signatures different?” and “checks that were forged to the defendant.”
Ms. Rodriguez, in rebuttal: “you’ll see these signatures don’t match, this style of checks doesn’t match, this was done at the hands of the defendant. There’s one reasonable conclusion that you can take from these checks, and that’s that they were forged by the defendant.” (Claim 1)
Whose signature it was only mattered if I had denied signing. I hadn’t.
It wasn’t only the detectives. In February 2010 I told Dan Kavanaugh that Joseph had told me to delete the online QuickBooks account so Summer wouldn’t see it. In March 2010 I wrote out by hand for Joseph’s mother everything that had come in on the jobs and what I had been paid. Asked why he had questioned Dan about the transfers, DuGal answered about the money generally: he testified that money flowing in and out of EIP “at the discretion of the defendant and Dan Cavanaugh” seemed unusual to him at first, “but when I clarified it with them and with the family,” the answer was “yep, that was okay,” and he “had no reason to question what they were doing at that point in the investigation. None.” (RT 2521:14-22) He also said he “for sure was suspicious of the money flow,” though “there was no way to prove, without Joseph’s words, that the money flow was illegal” (RT 2482:25-27). In June 2011, on a call in which he was asking me to take a polygraph, DuGal himself told me that “you being able to order Quick Books for Joey’s business account” or “being able to access money within the business” was “not criminal and it’s not wrong as long as Joey had authorized it,” and that in his mind it was “not only an assumption but pretty much proved” that “that’s how the business was running.” All of it is in the State’s own files.
So the State knew. It tried the case as if I had denied it anyway.
My lawyers knew too, because I gave it to them in writing. On October 16, 2017, I gave James McGee my notes on the checks, and he put them into my permanent file that day. They pointed counsel to my February 17, 2010 interview and the February 22 speakerphone call, and said: “it is very clear I never had any intention of hiding the fact that I wrote these checks.” Also in 2017 I gave them a second folder, on QuickBooks, with each passage copied from the State’s own records and tabbed to its page. That was more than a year before trial. In January 2020, before the motion for a new trial, I gave Mr. Maline a written list that included “Show forthrightness of def. (18-19 grand),” “Def. wrote checks,” and “Def. called Q.B. (2-4 days after).” At trial Mr. McGee read the jury the February 17, 2010 exchange about my notes (“got checks and you went over when to write them… QuickBooks online, decided to delete and start QuickBooks Pro 2010”) and told them I had been “up front with them since day one” (RT 8343:9-27). But in the trial transcripts I have, the February 22 call was never used, and when Det. Smith told the jury I had admitted only to receiving the checks, nobody showed him my interview (What I gave counsel).
When I dated the checks, and why they were deleted from QuickBooks, were fair questions. They are answered below, one claim at a time. Whether I admitted writing the checks was never a question.
What this page answers
At trial the State told the jury three things about Joseph’s money, and built its motive on them:
- I forged checks on Joseph’s account for money, and backdated them to February 4 to hide it.
- Four days after the family disappeared, I pretended to be Joseph and tried to cancel and delete his QuickBooks account to cover my tracks.
- That was the motive: in Mr. Imes’s words, I owed Joseph $42,000, I “forged checks,” and I was “being sidelined.”
How these pages work: this first part has the timeline, why Joseph and I were keeping these jobs from Dan and Summer, and what I told the investigators and when. The State’s claims are answered one at a time in the next three parts: the checks (Claims 1-7), the QuickBooks calls (Claims 8-14), and the money (Claim 15). Each starts with the prosecutor’s own words and is answered right away, followed by what the State already knew from me, the record, and a fact check of what the prosecutor said.
Three prosecutors tried the case: Mr. Daugherty, Mr. Imes and Ms. Rodriguez. Mr. Imes gave the State’s closing argument. Ms. Rodriguez gave the rebuttal, the last thing the jury heard before it went to deliberate.
The timeline
The times come from QuickBooks’ own activity log for the custom account, Intuit’s records, the State’s case summary, and my AT&T record, Exhibit 794. The claims below are in the same order.
| Day | What happened |
|---|---|
| Sun., Jan. 31 | The State said I was at Joseph’s house and took his checks. Every call on my phone that day with a tower listed, 9:11 a.m. to 9:00 p.m., was on my home tower. (Claim 1) |
| Mon., Feb. 1 | Two $2,500 checks to me were created, printed and deleted in the custom account, 12:24 to 12:52 p.m. Neither was cashed. Joseph called me at 1:03 p.m. and we talked for almost ten minutes. (Claim 2) |
| Tue., Feb. 2 | I drove down to Joseph’s in the morning and he gave me a check. Back home, I wrote it for $2,495 and deleted it in QuickBooks, 11:27 to 11:37 a.m. I called Joseph at 11:46. (Claim 3) |
| Thu., Feb. 4 | Joseph and I met in Rancho Cucamonga, and he gave me the checks for the coming days. At 7:59 p.m. a $4,000 check to me was created in QuickBooks; it was deleted at 8:05. The State says it was created from the McStay house while my phone was off (Bates 000023). The last time I saw Joseph. (Claim 7) |
| Fri., Feb. 5 | 12:02 to 12:40 p.m.: I wrote five checks dated February 4 and deleted them. I left Joseph a message at 12:49. (Claims 4 and 5) |
| Mon., Feb. 8 | 2:20 p.m.: the last check, $6,500, deleted at 2:25. 2:44: subscription canceled online. 2:54: reactivated. No calls from my phone 1:55 to 3:05. 3:11 to about 4:58: my call to QuickBooks; QuickBooks Pro ordered on Joseph’s card. 5:01: message to Joseph. 5:05: a support case asks how to move the data to Pro. 6:15: the instructions are e-mailed to Joseph. (Claim 8) |
| Tue., Feb. 9 | 7:34 to about 8:17 a.m.: my second call to QuickBooks. Ryan Baker’s contact, 8:06 to 8:13. 8:16: subscription canceled. Calls to Joseph at 8:56, 9:17, 12:22 and 1:07. (Claim 9) |
| Mon., Feb. 15 | The family was reported missing. |
Why the jobs were kept from Dan and Summer
Every answer on this page depends on this. Joseph and I kept our custom jobs out of sight of his partner, Dan Kavanaugh, and his wife, Summer. That is why checks were deleted from QuickBooks as soon as they were printed, and why Joseph wanted his books moved off the internet to a desktop copy of QuickBooks.
Joseph McStay and I built custom waterfalls together. Joseph’s company, Earth Inspired Products, sold them, I designed and built them, and Metro Sheet Metal in Azusa did the fabrication of the sheet metal they required. Dan Kavanaugh was Joseph’s partner in the company. In early 2010 we had two big jobs going: three waterfalls for a customer in Riyadh, Saudi Arabia, and a water wall, 24 feet long by 10 feet tall, for Paul Mitchell.
Dan
Things between Joseph and Dan had gone bad long before then. Dan thought he was being ripped off, and he was threatening Joseph and the business. In their instant messages, from about the start of 2009, a year before Joseph disappeared, Dan threatens to take the site off the search engines in 30 days and demands to be bought out; Joseph answers that he and Summer now know “what you would potentially do to harm me and my family.” Their whole instant-message exchange is in the drop-down below, start to finish, as it was produced in discovery. Each name is shown once for each run of messages; the words and their order are as produced.
Read the whole exchange, start to finish
Dan:
the later you respond and deal with this, the worse its gonna be
but do what u want
i dont give a fuck
Josepe’ (Joseph):
what
Dan:
?
ill speak with u on the phone or somethin
dont im me
unless you want to talk about some shit
i know u prefer it done over instant message
its cool
no worries
ill be here when ur ready
late
like i said tho, if u try and postpone handling this because u dont like confrontation
it wont be to ur benefit
but live the dream lol
ur dreaming
it will be about 30 days from today that your site is gone from the search engines if u just wanna ignore me
Josepe’ (Joseph):
And why is that?
Dan:
why not
u treat me like a kid like im dumb or some shit
1. your site will be gone from the engines
2. i will make my own fountain site
and 3
i dont need it anyway
im fucking killing it on other shit
so get it out of your head that i cant do anything
be realistic
i made an offer to let u have the site
and buy me out
u fumbled that one
Josepe’ (Joseph):
Now, I, Summer & Kids know the “Real You” and what you would potentially do to harm me and my family… Your a great guy Dan… FK’n Sad…
Dan:
dont try your guilt trip shit on me bro
you and i had a business
do what u want man
i wish the best to u and ur fam
but dont burn fools
Josepe’ (Joseph):
Yay right… do you see the “contradiction”… You wish the best for me & my family, but have no problem destroying our livelihood? Your sick or something…
Dan:
ive told u the options
you choose whats best for you
you can disreguard my offer to buy me out
and continue thinking your site is permanent
or you can simply do it, and keep your site
and i wont do anything to harm it
ill give u ppc access to my shit and everything
and keep ur links up
not pointing to my new fountain site
and you can keep the site that isnt even that good , like u said yourself
all i did was find the backlinks guys anyway right
youve built six sites like it you said yourself
lol
Josepe’ (Joseph):
Your a great guy Dan… At least we all know your true colors…
Dan:
word
be more legit in ur future biz ops
with partners
and you might go far
we had a good thing goin for a while
apparently its not worth salvaging though to you
i gave u chances
no worries, better luck on ur next one
but u wont get another me
and theres lots of you
your lazy
smart, but lazy
thats why you never built any other sites like mine
Josepe’ (Joseph):
What do you want Dan?
Dan:
i want to be treated fairly, and more respected as a owner of this business
not simply some kid you throw a bone to once in a while
Josepe’ (Joseph):
Even if we came to a $$$ amount and you were paid…Given the malicious things you have written above…. you would take the $$$ and still do those malicious things….Whats the point? There is no reasoning with you or fairness with someone like you….
Dan:
heres the deal
ill give u a gentlemans promise
since were bros for years
and i dont hate you
we just had a falling out
were buddies
u think i want to fuck with u like that
wrong
ill respect your site
and your future with ur family
and even help u with the site still
with ppc, seo
ill make authority domains confirm it
that i havent pulled any of ur links
youll rank for years
when things bounce back youll do well
or
whatever u want man
point is
ill honor our deal
if u buy me out
nothing malicious of any kind will be done
its an offer on the table
a legit one
i dont wanna see my hard sweat and tears to make that beauty flush down the toilet
its still a site that makes me proud for what it is
think about it
ill give you a day to come up with what you wanna do
and get back to me with a dollar amount thats fair
and we’ll get past this
it was nothing
youll get control of my ppc accounts to see what keywords people have bought with for the last 6 months
and access to keep buying links
even more if u want
for better keywords
ill also help u in the future if u need shit done on the site
seo, etc
we dont have to end this badly
and you dont have to buy me out all up front
you can make payments
we can work something out
so you can stay afloat
but without me, the site will die
and it took 4 years to get it where it is
dont waste all that money u spent on links and making it
hit me up tomorrow and let me know what u decide
sleep on it
whats that site worth to you
and your future
cuz i can make more
youd be pretty screwed
just an update, authority domains will be available for you to call so you know your safe
when we make our deal
im on with them now, telling em you might buy me out
so they will have ur back still
im giving you till tomorrow
and im not fucking around
but as i said, ill honor anything we agree on 100%
and youll continue with your great rankings
i dont have time to compete against you, or even do a fountain site
but ill put that php seo friendly cart up in a sec and point all ur links to it in a heartbeat if i have to
and your wack domain and 2002 site design will go to page 1000 for every keyword
so now that you know how serious i am, and what im capable of..you can make a better decision how to end this
what did they tell ya lol
authority domains
nah i already know
theyre gonna call u back
and let u know what up
sounds like things went well
with everything
The messages came out of discovery without a date. Joseph’s own e-mail places them. He wrote to Paul, at the company that kept Earth Inspired Products ranked on the search engines, and pasted the exchange under it. The copy that survives is dated January 29, 2009. In it Joseph says he is 39 and that 2008 “was tough at times and extremely difficult this past 3 months in particular,” which fits. In the messages, Dan mentions “authority domains” and says “theyre gonna call u back”; Joseph’s e-mail thanks Paul “for taking my call.” In Joseph’s words:
“As of recently, due to the declining sales, etc., Dan Kavanaugh and myself have been having a “falling out.”” …
“Having said all the above, Dan has become quite malicious towards me to the point of affecting my family. Please see IM string below.”
“It’s quite sad, since we considered him like family, w/ my 2 youngest calling him “uncle Dan.” I would appreciate your input and any help you could recommend.”
“Fountains are my life, EIP feeds my family. I can’t have EIP disappear off the face of the earth and end up back in a cubicle working for someone else. But, if I have to for me and my family to survive, I will.”
“I do wish the best for Dan. I will not be malicious as he is being. And perhaps we can work through this or part ways amicably, I don’t know.”
This copy was not in discovery. Mechele Muir found it and sent it to my lawyers’ office on September 10, 2018, marked high importance: “CHASE WANTS THIS TOMORROW.” The lines above Joseph’s e-mail, “a year before disappearance” and “Joseph was afraid and Dan was threatening,” are her notes, not his, and her copy shortens the messages. The full exchange is the one above, from discovery. Personal and work e-mail addresses are blacked out.
See Joseph’s e-mail, as sent to my lawyers (3 pages)
Dan could see what came through the business. In his September 20, 2014 interview with San Bernardino detectives, Det. Hanke asked him about the money Joseph owed him. This is how he said he caught Joseph on a lead Joseph hadn’t told him about, and what he demanded: (pp. 179-180)
Read the full exchange
MR. KAVANAUGH: Some messages.
DETECTIVE HANKE: Okay. Tell me about — tell me what the conversation was like between you and Joe. He owed you some money.
MR. KAVANAUGH: Dude, I know that it’s hard to believe, but I can see everything that comes to the site. Stuff doesn’t slip through the cracks with me.
What’s this one single lead right here, the person who was inquiring about this Mexican restaurant custom water feature to the sum — to the tone of about 25 “Gs”?
And he’s like, oh, that. But how did you see that, dude? I’m like, really, bro? Came through a contact form on the site.
DETECTIVE HANKE: Really?
MR. KAVANAUGH: Come on, dude. And then he’s like, well, this and that. Like kind of like got called out right there. I’m like, dude. You need to pay up to the tune of like 20 “Gs,” and you can make it in payments to get current on what you owe.
DETECTIVE HANKE: Okay.
MR. KAVANAUGH: Otherwise, I will take the whole site and just — I won’t delete it, but I will redirect all my like marketing efforts and powers that be that are off-site to you, not in your control, and redirect them elsewhere. No problem.
DETECTIVE HANKE: So you feel —
MR. KAVANAUGH: That means all the sites on the internet that have links on that are right now pointing to you, making you look like you’re top dog, gone. So your site is still sitting there. Now it’s collecting dust. So no one is going on it.
And he’s like, whoa. Why are you like threatening me, this, that? After all I’ve done for you. Like you met my like wife and kids, like tried to like bring up all this irrelevant shit, dude, to me. And I’m like —
DETECTIVE HANKE: Well, you just called him out on something.
MR. KAVANAUGH: Yeah. The check needs to be in like the sum of ten grand up front right now. And then you need to pay to make back payments, another 20 grand over the next year to get it current, and we’ll be cool.
DETECTIVE HANKE: So you — so you estimated 30,000 that he owed you.
MR. KAVANAUGH: Just — just owed, just from those transactions.
DETECTIVE HANKE: Okay.
MR. KAVANAUGH: And then he never ended up paying it off.
See Dan Kavanaugh’s interview (September 20, 2014, pages 179-180)
That is the first reason each check was deleted from QuickBooks once it was written: Dan could get into Joseph’s QuickBooks. Asked what accounts he could get into, he told the detectives PayPal, and QuickBooks: (p. 65)
DETECTIVE HANKE: Okay. What — what accounts did you have access to?
MR. KAVANAUGH: Just the PayPal account. And that’s it.
DETECTIVE HANKE: Okay.
MR. KAVANAUGH: I didn’t have access to any bank accounts. I had access to the Quick Books account.
DETECTIVE HANKE: Okay. So you just had access to PayPal?
MR. KAVANAUGH: Yes.
See Dan Kavanaugh’s interview (September 20, 2014, page 65)
And the second QuickBooks account, the one for the custom jobs Joseph and I did, existed so Dan wouldn’t see those jobs. Dan knew it. He told the detectives Joseph set it up so Dan wouldn’t be paid on them: (p. 23)
MR. KAVANAUGH: He would then go on to create that separate Quick Books online account and try to run that through that account, kind of like behind my back. No commissions paid. I would have probably got ten grand for that commission. Right? Because we are sharing all the costs of this site. The back links are costing me like two grand a month, plus we were doing pay-for-click, couple thousand dollars a month on that minimum. Like a hundred dollars a day of buying dollar-a-click traffic off Google.
That would come right out of my profits, and we had little spreadsheets, Dan, Joe. Here’s all the sales. Here’s what we sold. Here’s our costs on the products, simple little spreadsheets. I still have some of those things. They straight prove that we were half/half business partners, and we shared the costs.
See Dan Kavanaugh’s interview (September 20, 2014, page 23)
He also told them he got into it. He reset the password on Joseph’s account, then found the second account and reset that one too. In the same answer he claimed I had changed the passwords and tried to delete both accounts. Nothing was ever deleted, and the only cancellations were on the custom account (Claims 8 and 9): (p. 140)
Read the full exchange
DETECTIVE HANKE: What — specifically when you logged onto Quick Books to see it, what did you — how did you log on with that? Which — which account?
MR. KAVANAUGH: Through his e-mail address, I went on Quick Books, and I typed in the log-in.
DETECTIVE HANKE: What was the log-in?
MR. KAVANAUGH: His log-in was something that Chase had changed it to. So I saw your Quick Books online access has been changed or edited.
DETECTIVE HANKE: Okay. What was —
MR. KAVANAUGH: So then I reset this so I could get in there and see stuff. I went in there, and everything looked fine in that one.
Then when I saw that there was a second — one of the other e-mail addresses, a second Quick Books online account — that was the custom fountains, just the deals with Chase — so I reset that password. I got in there.
Chase had updated both of the passwords and attempted to delete both accounts, I believe. But especially I remember him deleting — it said, your Quick Books account has been deactivated.
DETECTIVE HANKE: Okay.
See Dan Kavanaugh’s interview (September 20, 2014, page 140)
Det. Hanke’s report of that interview says the same about the second account: “Kavanaugh believed Joseph created the second account so Kavanaugh could not see the deals between Joseph and Merritt.” It also records Dan’s threat to take the website down: “Kavanaugh confronted Joseph in an instant message conversation and told him he needed to pay Kavanaugh his share of the profits of Kavanaugh would take the website down.” (Bates 007291, 007288)
See Det. Hanke’s report of the Kavanaugh interview (Bates 007288, 007291)
Joseph’s mother heard the same thing in February 2010, from McGyver McCargar, the State’s own witness. San Diego Det. Hillen’s report of his conversations with her says: (Bates 001819)
“Susan asked that I speak with McGyver McCargar. McCargar told Susan that Joseph was trying to buy Dan Kavanaugh out of the business due to Dan having total control of Joseph’s accounts and website.”
See Det. Hillen’s report (Bates 001819)
Summer
Dan was one reason. Summer was the other. Joseph didn’t want Summer to know how much money he was making, and she was looking at his computer to find out.
I told Det. DuGal that on February 17, 2010, thirteen days after Joseph disappeared. He had asked when I bought QuickBooks Pro. I told him, and started to explain why. He cut in with his own question before I finished: (San Diego transcript, p. 16:16-24)
DUGAL: When did you do that? Was it prior to February 4th?
MERRITT: No-no-no it was two, three, or four days after February 4th that I actually bought the Quick Books. Joseph and I sat down and talked about the Quick Books because Summer um Summer didn’t know how much money Joseph actually made and she never did. Um, and one of, one of Summer’s biggest problems is credit cards I mean she-she was, she spent a lot of money um she goes to Ross all the time, things like that so it, it was, it’s a big thing, it was, it had become a big thing um with Joseph not letting her know exactly how much money he was making because when she knew how much money
DUGAL: How much money does he make ah do you know?
See the San Diego interview transcript (February 17, 2010, p. 16)
Dan told San Bernardino the same thing in 2014, from what I told him in February 2010. When Dan and I first spoke, I told him Joseph had told me to delete the online QuickBooks account so Summer wouldn’t see it: (Kavanaugh interview, September 20, 2014, pp. 18:5-19:20)
Read the full exchange
MR. KAVANAUGH: But what I did hear was — Chase was like — this is like right when they weren’t answering e-mails. And it’s like — it was just weird to me. So he’s like, yeah. Joseph’s wife told me that — or, no. Joseph told me recently like in the last few days that I should delete the online Quick Books account so that his wife wouldn’t find it or wouldn’t see it. I’m like, what online Quick Books account?
We have an Earth Inspired Products, but he had created a second one, EIP Fountains, on my Quick Books account that I didn’t even know about.
DETECTIVE HANKE: Who created it?
MR. KAVANAUGH: Joseph —
DETECTIVE HANKE: Okay.
MR. KAVANAUGH: — and Chase.
Joseph created it, and then that was their little side hustle. Right? So a guy would call in on the site. Hey, I want to get a $30,000 wall feature made. Not like the standard line — just stuff we were distributing for companies, which would go on our regular Quick Books account. And we would just like sell those things.
Another side of the thing, custom fountains, just specific ones, like the expensive shit. That would be like 60 grand, a hundred grand, like $30,000. Right?
And then he had this new Chase guy, which I helped find the guy. But he went and created his own site, just a Quick Books account, not a website, not a new company.
But then his wife found that Quick Books online account through Joe’s sloppiness or his e-mail account he left open, or something. Said like, upgrade to Quick Books account. She’s probably like, what? Wives poke around and like do some research.
So, apparently, she got like privy to this other like — this money that was on the books — right? — a lot of money. Like told Chase to delete it supposedly. This is what Chase told me. And I’m like, why? That’s kind of weird. He’s like, Joseph didn’t want her to find out about this hundred grand in sales that we just did.
See the Kavanaugh interview (September 20, 2014, pp. 18-19)
Later in the same interview, Hanke asked him why Joseph had two accounts: (p. 129:11-16)
DETECTIVE HANKE: So — so tell me again why Joseph had two accounts.
MR. KAVANAUGH: Because he wanted to establish a second side, like, business with Chase that was not — not only hidden from me and his wife, but he thought — yeah. That’s basically it.
See the Kavanaugh interview (September 20, 2014, p. 129)
In 2014 I told Bachman the same thing about Summer: (my interview, October 22, 2014, p. 131:8-25)
MR. MERRITT: I think so. I’m almost positive it was. He had online because later on — as a matter of fact, two or maybe a week — a week or two before he had me switch his Quick Books and send him a new thing because his wife was big time using — she would constantly go on his computer to see how much money he was making.
And — and his finances were — he — he tried to keep them away from his wife. And it was — it was a big thing. And so he . . .
DETECTIVE BACHMAN: You said a week or two before what?
MR. MERRITT: Yeah. I think it was a week or two before Joseph disappeared. He asked me to — to switch his Quick Books.
And I don’t remember whether it was upgrade and then change it so that she couldn’t get on it or just change it. I don’t remember.
See my interview (October 22, 2014, p. 131)
For these reasons, Joseph decided to move QuickBooks off the internet and onto a desktop version, where Dan couldn’t see the transactions. Until that happened, any check written to me would be deleted from the online records as soon as it was printed. That is my account. When Bachman asked me in 2014, four years and eight months later and right after telling me I was “lying in a murder investigation,” whether I had ever deleted checks from QuickBooks, I said, “I don’t remember… it’s possible,” and asked why, “I — I don’t know. I don’t remember” (interview pp. 187-188). The detectives knew about Dan’s threat and his access in 2014. Det. Hanke’s report records both (Bates 007288, 007291).
What I told them, and when
The State tried this case as if I had hidden the checks and the QuickBooks calls. This is what I told the investigators, Dan and Joseph’s family, and when. Every claim below comes back to it.
| When | Who | What I told them |
|---|---|---|
| Feb. 2010 | Dan Kavanaugh | Joseph had told me to delete the online QuickBooks account so Summer wouldn’t see it (Dan’s own account in 2014, above). |
| Feb. 17, 2010 | Det. DuGal, San Diego | My notes: the checks, when to write them, “decide to delete and start Quickbooks Pro 2010,” and that I bought it on Joseph’s card “two, three, or four days after February 4th.” |
| Feb. 22, 2010 | DuGal and Dan, on speakerphone | Who deposited the Saudi and Paul Mitchell money, and that about “eighteen to nineteen thousand” had been taken out to build the fountains. |
| Mar. 17, 2010 | Susan Blake, Joseph’s mother | In my handwriting: everything that came in, and what I had taken, including the checks I wrote. |
| 2010 | The family, to DuGal | DuGal testified that money flowing in and out of EIP “at the discretion of the defendant and Dan Cavanaugh” seemed unusual to him at first, “but when I clarified it with them and with the family,” the answer was “yep, that was okay.” |
| June 9, 2011 | DuGal | The February 4 meeting was about getting Dan out of Joseph’s accounts; I had access to Joseph’s QuickBooks and could write checks; we were switching to QuickBooks Pro. |
| June 21, 2011 | DuGal | I would “just about bet anything” that whenever I did anything with QuickBooks or money, I left Joseph a message. DuGal: ordering QuickBooks for Joseph’s business account was “not criminal and it’s not wrong as long as Joey had authorized it,” and in his mind “pretty much proved” to be how the business ran. |
| Oct. 22, 2014 | Dets. Bachman and Hanke | I wrote the checks; I signed Joseph’s name, “probably more than 30 or 40” times over the years; I could print checks from his QuickBooks; I called QuickBooks. I said I didn’t think I represented myself to be Joseph, and I still believe I gave my own name; Hanke’s report of his interview with Baker says the caller represented himself as Joseph McStay (Claim 10). (Claims 4 to 6, 11) |
February 17, 2010: my first interview with San Diego
Det. DuGal asked me to jot down some notes on what I remembered of February 4, 2010. I did, and gave them to him. DuGal read them aloud during the interview, and the checks were in them. This is the whole paragraph of his follow-up report: (Bates 001674)
“Charles had written notes to himself in preparation for this interview. I read the notes he had written and read the notes aloud. His notes read, “Payments to Metro. Got checks and rent. Went over when to write the checks. Quickbooks on-line. Decide to delete and start Quickbooks Pro 2010. Credit card for purchasing Quickbooks.” Charles claimed Joseph had provided him with Joseph’s credit card number to purchase the Quickbooks Pro 2010. Charles claimed Joseph wrote down his credit card number for Charles to use. Charles used the credit card number to order Quickbooks and then Charles disposed of Joseph’s credit card number and did not use it again. Charles made these transactions two or three days after February 4, 2010.”
See DuGal’s report (Bates 001673-001675)
In the interview itself, DuGal went through those notes with me line by line. The checks were near the top, and so was when to write them: (San Diego transcript, pp. 15:18-16:3)
DUGAL: Let’s finish this thing, payments to Metro got checks and went, went over when to write and went over when to write
MERRITT: When to write the checks.
DUGAL: Okay
MERRITT: and then talked
DUGAL: Talked to him about Quick Books
MERRITT: Quick Books
DUGAL: on line decided to delete and start Quick Books Pro 2010
MERRITT: 2010
DUGAL: credit card for purchasing
MERRITT: Quick Books, he gave me, he gave me the credit card number.
See the transcript (San Diego interview of me, 2-17-10, pages 15)
Later in the same interview I told DuGal why Joseph and I met on the 4th: to get checks, for me and for the work, and to plan around when the Paul Mitchell money would come in: (p. 31:6-15)
Read the full exchange
MERRITT: That’s what I met Joseph, let’s get back to where we were that’s what I met Joseph there for is to get those checks, get checks for me, figure out um how, what-what we were gonna do, when the money was gonna be coming in from Paul Mitchell, when the money you know when the checks are gonna clear, when-when his-his money is gonna be available for me to get money and stuff like that and to figure out where the electrical boxes and stuff goes because um Joseph and I sit down often because I mean we’re talking projects that are pretty expensive um the Paul Mitchell one is a 24’ long by 10’ tall I mean as big as that wall there, a water wall and so there is just enormous amount of stuff and Joseph doesn’t manufacture waterfalls, he makes drawings and stuff but he doesn’t know how to build ’em, he doesn’t know how to-to put them down on paper so that somebody that is building ’em which is Metro can actually make it happen and so we-we get together all the time and go over all of the pictures and all of the
See the transcript (San Diego interview of me, 2-17-10, pages 31)
February 22, 2010: on speakerphone with DuGal and Kavanaugh
Five days later, DuGal was interviewing Dan Kavanaugh about a check Joseph had around the 4th. Before I was on the line, Dan explained to DuGal how the money on a job moved: most of the first deposit went to me, to build it, and Joseph and Dan took their cut from the later deposit. He also told DuGal I “should have like thirty of that”: (transcript pp. 18:3-19:3)
Read the full exchange
DUGAL: Okay so that check you believe was deposited into what account?
KAVANAUGH: I know for a fact that that cause Chase deposited that check, did you say Joseph’s dad deposited it?
DUGAL: No Joseph was supposed to be depositing it
KAVANAUGH: Joseph I guess Chase or Joseph there was two parts of that check there was like a sixteen grand and the rest of it like a twenty something you could call Chase and ask that
DUGAL: Twenty something thousand?
KAVANAUGH: Yeah for a total thirty grand that was a half down payment on a sixty grand project of four waterfalls so they put half down part of it was with the check to the bank and the other was like a wire we’ll have to check with Chase and confirm neither of those went to my accounts or to the accounts that I have any access to so that money was just taken in Joseph would have taken the money off the top from the company and then Chase took the majority of that because up front most of that deposit goes to the building of it to get that near completion
DUGAL: Sure
KAVANAUGH: Joe doesn’t take his and my cut until the later deposit
DUGAL: Okay but-but from a law enforcement standpoint there was a physical sixteen thousand dollar check that was in Joseph’s possession somewhere around the 4th of February
KAVANAUGH: Should have been tote, it should been a check and either another check or a wire I’ll call Chase right now and ask him totalling thirty so thirty and then there’s a Paul Mitchell job for twelve a total of twenty four so he took he then took about forty two and then he put out about thirty to my knowledge of Chase
DUGAL: And you think all that money is moved since February 4th?
KAVANAUGH: Chase should have like thirty of that and spent maybe on building the fountain and then employees yeah the employee named him Dave so if I just give Chase a call and just say the initial 50% deposit
See the transcript (San Diego interview of Dan Kavanaugh, 2-22-10, pages 18, 19)
Then, with DuGal there, Dan called me and put me on speakerphone. I told them who deposited the Saudi and Paul Mitchell money, and DuGal asked me how much had been taken out to build the fountains. I added it up out loud: (transcript pp. 20:1-21:22)
Read the full exchange
KAVANAUGH: Let’s call him right now cause this is important here I’ll call Chase Merritt who will answer I’ll handle this, I’ll put him on speaker here, it’s on Troy and Roy (ringing)
MERRITT: This is Chase
KAVANAUGH: Hey Chase, Dan here
MERRITT: Yeah Dan
KAVANAUGH: I’m sitting down with the two detectives, Detective Troy and Roy
MERRITT: ’kay
KAVANAUGH: and they want to confirm a couple details about the 50% down deposits that were made by the Saudi Arabian Interior Design firm that landed us checks, they want to know like if they were checks and who deposited ’em and to what accounts
MERRITT: Joseph’s he deposited them oh I actually deposited the sixteen let’s see uh Joseph deposited the thirty one thousand dollar one from Saudi Arabia
KAVANAUGH: Okay and did..
MERRITT: I, I deposited the sixteen thousand dollar one into Joseph’s account from
KAVANAUGH: It’s Paul Mitchell
MERRITT: Paul Mitchell
DUGAL: Hey Chase what days were those two deposits made?
MERRITT: Oh…
DUGAL: Was that the day that you saw Joseph up in Rancho Cucamonga?
MERRITT: No, no those, that was approximately before then um probably you know I’m not sure exactly how long before but I would guess
KAVANAUGH: Week or close
MERRITT: a week or five days
KAVANAUGH: I thought it was about that too
DUGAL: And what, how much money from, so that all went into EIP’s business account?
MERRITT: I’m sorry say that one more time
DUGAL: Did that money all that money in total go into EIP’s business account?
MERRITT: Y-Yes sir, yes it did
DUGAL: and how much of that money has been withdrawn to do manufacturing of the fountains?
MERRITT: Um six, probably..
DUGAL: Just give me an estimate
MERRITT: I can..I’m-I’m-I’m trying to add it up dude just one second, ten
DUGAL: He was the same way in person he’s like (inaudible)
MERRITT: twelve thirteen probably about
DUGAL: just give me a round number
KAVANAUGH: That’s fine you can do with that one
MERRITT: I’m-I’m guessing eighteen to nineteen thousand
DUGAL: Okay
MERRITT: between the two maybe
See the transcript (San Diego interview of Dan Kavanaugh, 2-22-10, pages 20, 21)
The withdrawals were the checks. The State’s own check lists show what I had written on Joseph’s account, all dated February 2 to 4: to me, $2,495.00, $4,500.00, $6,500.00 and $2,350.00, a total of $15,845.00; and to Metro, $1,650.00 and $250.00. Together, $17,745.00. I gave DuGal “eighteen to nineteen thousand” while, in my words on the call, “trying to add it up.” (Bates 007415, 007417)
See the State’s check lists (Bates 007415 and 007417)
March 17, 2010: what I wrote out for Joseph’s mother, and the family’s answer
On March 17, 2010, sitting in Susan Blake’s car, I wrote out for her everything that had come in on the jobs and what I had taken, including the checks I wrote. The pages, and what she said about them at trial, are under Claim 15 (the pages I wrote in Susan Blake’s car).
Before that, Dan, who could see the QuickBooks and PayPal accounts, had told Joseph’s mother that nothing had been taken out. San Diego Det. Hillen’s report of their conversation in February 2010 says: (Bates 001818)
“Susan said she asked Dan to check the business accounts to see if any money is missing and Dan told her nothing has been taken out of the accounts.”
See Det. Hillen’s report (Bates 001818)
At trial, Det. DuGal told the jury that money moving through the business “at the discretion of the defendant and Dan Cavanaugh” seemed unusual to him at first, until he asked us and the family: (RT 2521:14-22)
Q THEN WHAT LED YOU TO ASK DAN CAVANAUGH FOR SPECIFIC INFORMATION REGARDING THOSE TRANSFERS?
A BECAUSE IT SEEMED UNUSUAL TO ME INITIALLY THAT MONEY WAS FLOWING BETWEEN OR IN AND OUT OF THE E.I.P. FUNDS, AT THE DISCRETION OF THE DEFENDANT AND DAN CAVANAUGH. BUT WHEN I CLARIFIED IT WITH THEM AND WITH THE FAMILY, AND I GOT A UNILATERAL ANSWER THAT YEP, THAT WAS OKAY. I HAD NO REASON TO QUESTION WHAT THEY WERE DOING AT THAT POINT IN THE INVESTIGATION. NONE.
See the trial transcript (RT 2521, Det. DuGal)
On another day of his testimony, he said he had talked with Dan and me “several times” about how the money flowed, and our answers were “consistent, that they had access”: (RT 2475:3-19)
Q (BY MR. MALINE:) You asked Mr. Kavanaugh questions, and then did you take any subsequent action after asking Mr. Kavanaugh questions?
MR. DAUGHERTY: Objection. Vague.
THE COURT: Overruled. He can answer.
THE WITNESS: This investigation was ongoing. I talked to Mr. Kavanaugh and the defendant several times about financial records, about the business, who did what, how money flowed. I got answers from both of them that were consistent, that they had access.
Q (BY MR. MALINE:) Money flowing out of EIP and Joseph’s account was an important issue for you; correct?
A Absolutely.
Q Okay. And you would want to know whether persons were taking money out of the account because that would be important to your investigation; correct?
A Absolutely.
See the trial transcript (RT 2475, Det. DuGal)
And that both of us “said they had a legal right, they were running the business,” and that although he “was suspicious of the money flow, there was no way to prove, without Joseph’s words, that the money flow was illegal”: (RT 2482:16-27)
Q (BY MR. MALINE:) You said you talked to the partners; right? Now, the follow-up to that question is, did you do anything to check — I’ll scratch that. Did you talk to Dan Kavanaugh about what he sent you to question the accuracy of it?
A I’ll restate what I’ve stated before, both business partners said they had a legal right, they were running the business, they were continuing to manufacture and distribute water features, and there would be money flow occurring, and the family members were trying take over the business to make sure the business didn’t fail. So there’s — although, I for sure was suspicious of the money flow, there was no way to prove, without Joseph’s words, that the money flow was illegal.
See the trial transcript (RT 2482, Det. DuGal)
June 2011: two more calls with DuGal
On June 9, 2011, DuGal asked me about the QuickBooks Pro order. I told him what the February 4 meeting was about: (recorded call, June 9, 2011, pp. 13:21-14:13)
MERRITT: Um well I know this when uh I get uh Joseph and Joseph and I met um on the 4th
DUGAL: Yes
MERRITT: and he was having a problem with Dan and uh the-the Paypal account because Dan was able to access his-his QuickBooks his checking account everything
DUGAL: Yeah
MERRITT: um and he wanted to get him out of it
DUGAL: Get Dan out of it?
MERRITT: Right, right
DUGAL: Okay
MERRITT: So um he-ee asked me about it and I said yeah I think that’s a good idea because I had acc.. I had access to his QuickBooks and I’m hittin’ you know our books were both I mean he had access to mine books I-I had access to his um I hell I could even right checks
DUGAL: Uh huh
MERRITT: but um either he I can’t you know I don’t I honestly don’t remember it’s been so damn long either he or I did order QuickBooks Pro because I believe he had regular QuickBooks
See the recorded call (June 9, 2011, pp. 13-14)
On June 21, 2011, I told him I would “just about bet anything” that whenever I did anything with QuickBooks or money, I called Joseph and left him a message: (recorded call, June 21, 2011, pp. 30:14-31:5)
Read the full exchange
MERRITT: Yeah and oh by the way I’m, I’m virtually positive um I would, I would just about bet anything on the fact that um whenever I did anything with Quick Books with, with money uh with anything as far as Joseph, Joseph is concerned
DUGAL: Uh-huh
MERRITT: I’m almost positive that I called him and left a message saying exactly what transpired
DUGAL: What you intended to do about ordering it or
MERRITT: Yeah I you know I it’s been so long that I don’t remember a whole lot about it but I’m positive that um when the Quick Books was ordered I would have called him and said besides the fact that I was still trying to reach him I still would have also called him and left a message saying by the way dude the Quick Books is on its way or the Quick Books are its ordered or, or uh I wrote a check to the stainless steel guy or whatever it was I’m positive that I would have called and left a message on Joseph’s machine at least letting him know besides the fact that I was calling him off the hook trying to find him I would have been calling him also to let him know what because I always let him know everything that I did as I did it and so if you go back also to um his messages I’m, I’m pretty positive that you’ll also find that
DUGAL: A message from you
MERRITT: Messages from me I mean I know that you’ll find a lot of messages from me because I called him quite a few times
See the recorded call (June 21, 2011, pp. 30-31)
And in the same call, DuGal named my ordering QuickBooks for Joseph’s business account first, said none of it was “criminal” or “wrong as long as Joey had authorized it,” and said that in his mind it was “pretty much proved” that this was how the business ran: (p. 31:6-22)
Read the full exchange
DUGAL: And Chase let me continue with what I’m telling you though. From my perspective I’ve investigated this case so, so deeply and talked to so many people I understand the relationship you had with Joey, I understand the relationship Joey had with Dan and I understand the relationship you had with Dan
MERRITT: Uh-huh
DUGAL: And even with the family had with you guys what I care about are those three partners, those business partners to some degree
MERRITT: Uh-huh
DUGAL: There’s you, Dan and Chase I’m sorry you, Dan and Joey um but again when you step outside of me when you step to my people that are assisting me investigate this case and you start to talk about things like you being able to order Quick Books for Joey’s business account or Dan being able to access Joey’s emails and write checks or you being able to access money within the business investigators outside of me freak out right because they go well that’s wrong and I’ll tell you this
MERRITT: Well
DUGAL: It’s not criminal and it’s not wrong as long as Joey had authorized it and there is absolutely in my mind not only an assumption but pretty much proved that you guys had been existing that way that’s how the business was running
See the recorded call (June 21, 2011, p. 31)
PayPal: what DuGal told the jury, and what I said
At trial DuGal said I told him I had a right to move money through Joseph’s PayPal account: (RT 2482:4-9)
Q Okay. So — well, that’s Dan Kavanaugh; correct?
A Correct.
Q Okay. And you asked Mr. Merritt about these transfers?
A I don’t know if I asked specific dates and amounts, but I asked the defendant if he had access and a right to transfer money in EIP PayPal’s account and the answer was yes.
See the trial transcript (RT 2482, Det. DuGal)
Asked to find where his reports showed he had asked me about the transfers Kavanaugh sent him, he pointed to 106 pages, and Mr. Maline asked him to look during a break: (RT 2482:28-2483:28)
Read the full exchange
Q Back to my question, these transfers that he sent you, did you check anything, other than speaking to Mr. Kavanaugh and Mr. Merritt, whether what Mr. Kavanaugh sent you was accurate information?
A I think — I’m trying the best I can to answer your question. I don’t know that I specifically said on this date, at this time, this amount of money, did you transfer that out because it wouldn’t have mattered. What I asked is general questions, do you have legal rights to transfer money within the business account? And the answer was yes.
Q If you could look through your report, you said that you talked to Mr. Merritt about these transfers, can you find anywhere in your report where you asked Mr. Merritt about what Mr. Kavanaugh sent you?
MR. DAUGHERTY: Objection. Vague. Cumulative.
THE COURT: Overruled.
MR. DAUGHERTY: Misstates the testimony.
THE COURT: He can answer.
THE WITNESS: Well, I have sitting in front of me 106 pages of typed follow-up paragraphs of what I did on a daily basis, and I have an unbelievable amount of typed words, so if you want to review all of my reports to find something that specific, we are going to have to come back.
Q (BY MR. MALINE:) I don’t want to do it now, that’s a good point, because we don’t want to waste the jury’s time, but I would like you to look at the break — okay — would you do that for me?
A You think I can cover my reports during a break?
Q Will you do the best that you can?
See the trial transcript (RT 2482-2483, Det. DuGal)
This is what I actually told him about PayPal. On June 21, 2011, I said Dan had access and, “as far as I know,” was taking money out; that I had the same access; and that “I didn’t use ’em after… Joseph was reporting missing”: (recorded call, June 21, 2011, pp. 31:23-32:21)
Read the full exchange
MERRITT: Well, well yeah of course I mean Dan, Dan had access he and even I had a little bit of a problem with this fact. Dan had access to, to Joseph’s account through, through the PayPal
DUGAL: Yes
MERRITT: And he was taking out money left and right as far as I know
DUGAL: You’re saying after the, after the 4th or really after even after they were reported missing
MERRITT: Even after they were reported missing
DUGAL: Yeah
MERRITT: I mean he, he just kept
DUGAL: I agree there’s a potential that there was money flowing right into his pocket
MERRITT: And I, I had a (inaudible) problem I had told um Joseph’s mom I said you need to get him off of this PayPal stuff and this is, this is crazy he has, he has access to I think it was uh a thousand dollars a day or something like that. I had access to his PayPal I could, I could have gone on his PayPal I had all the, I had, I had Joseph’s everything
DUGAL: Right
MERRITT: I had two or three of his credit card numbers I, I had uh all their all the I had everything just the same as Dan did
DUGAL: Yep
MERRITT: But I didn’t
DUGAL: I get that
MERRITT: I didn’t use ‘em after, after Joseph, after Joseph was reporting missing I, I, I told Joseph’s mom I said you need to lock these accounts up. Get Dan away from this you know like what does he need the money for
See the recorded call (June 21, 2011, pp. 31-32)
Even earlier, on March 9, 2010, DuGal asked me about Dan’s PayPal transfers. This is his own report of that call: (DuGal follow-up report, p. 18 of 27)
“I asked Charles about the several PayPal cash transfers from Joseph’s account to Dan Kavanaugh on February 16, 2010. I told Charles the monetary amount of the transfers were $3,000, $2,447.99, $2,000, and $1,000. I asked Charles if there was a good reason for these financial actions. Charles told me it was more than likely valid transfers. Charles is not familiar with how PayPal worked but he was pretty sure there are limits for each single transaction. Charles believed Dan needed to get $1,000-$2,000 to Charles to complete the Paul Mitchell project.”
See DuGal’s follow-up report (page 18 of 27)
On June 9, 2011, twelve days before the June 21 call, I told him that when Joseph’s account was frozen, I asked Dan to pay me through PayPal, and he wouldn’t: (recorded call, June 9, 2011, p. 17:14-27)
Read the full exchange
MERRITT: Yeah it-it’s my website and you know and it just got it got absolutely crazy it got it’s got ridiculously crazy and I was uh at-at that time we also had a money issue you know um his I would I can you know like-like I told you earlier I-I wrote checks off of Joseph’s account all the time but the-the um account apparently was frozen
DUGAL: Yes
MERRITT: and you know and I had I had written a couple of couple of checks for I believe the Saudi Arabia job and-and something else I can’t remember it but then the-the account was frozen and I told Dan I said Dan you know it’s my understanding we can access the accounts through Paypal and uh Joseph’s mom says-says that it’s fine and look you know we I’ve-I’ve done all of this work and you know I’m about to go belly up I-I need this you know I need this money
DUGAL: Yeah
MERRITT: and he wouldn’t do it uh and then he uh he just that he wouldn’t do a lot of things uh he wouldn’t answer the phone for the website I mean it was just it was crazy so
See the recorded call (June 9, 2011, p. 17)
I had access to Joseph’s PayPal, the same as Dan, and I told DuGal so. I didn’t use it after Joseph went missing, and I was the one telling Joseph’s mother to lock the accounts up so Dan couldn’t keep taking money out. When Joseph’s account froze, I asked Dan to pay me for the Saudi work through the PayPal account he controlled, which Joseph’s mother had said was fine, and he wouldn’t. That is what DuGal’s own report of the June 9 call says: I asked Dan if he could access the business account through PayPal, Susan had authorized payment to me if Dan could, and Dan refused (DuGal follow-up report on me, pp. 23-24). It says nothing about my claiming a right to move money through it myself. I had access, the same as Dan, but I never used it after Joseph went missing. When Mr. Maline asked him to find where his reports showed he had asked me about the transfers, he pointed to 106 pages. The answer was in them: his own report of my March 9, 2010 call says I was “not familiar with how PayPal worked” (above). I had told my lawyers what I actually said. Neither of them came back to it.
See DuGal’s follow-up report (pages 23 and 24 of 27)
What the State did with all this
Every one of these statements was in the State’s files. The State still tried the case as if I had denied writing the checks. This is what the court and the jury heard instead.
At the preliminary hearing, Hanke was asked whether I told him I wrote the February 5 checks. He was in the room on October 22, 2014, when I told him “I’m almost positive the Metro Sheet Metal check I wrote” (p. 121). Hanke then showed me the two Metro checks dated the 4th, which were computer-generated, and asked whether those were the ones I wrote. I said I thought I had handwritten the Metro checks: “I am almost positive the checks that I wrote were not computer generated. The ones that I wrote to Metro” (p. 124:5-7). When he followed up, I said I could have done them either way:
DETECTIVE HANKE: I just want to make — be clear in my mind. Because these ones are computer generated, you don’t believe you wrote these ones. You would have handwritten a check to Metro?
MR. MERRITT: I would have either handwritten it or I would — because I — I could computer generate them. But I don’t think it would have been on the 4th.
DETECTIVE HANKE: Okay. You’re saying you would — you could computer generate —
MR. MERRITT: Well, of course. Yeah. I can — I can — I could have done the checks. But I don’t think I would have done them on the 4th.
See my interview (October 22, 2014, pp. 124:24-125:10)
That was my honest memory, four and a half years later, of how the Metro checks were made. It was never a denial that I wrote checks. Under oath, Hanke turned it into this (prelim RT 123:22-124:2):
Q Did you show him the checks that were created on February 5th and backdated to February 4th?
A Yes, I did.
Q Did he tell you he wrote those checks?
A I don’t believe he said he — I believe he said Joseph wrote the checks.
Q Did he identify the typewritten entries and say: Those were typewritten, he wouldn’t have done that?
A That’s correct.
See the preliminary hearing transcript (page 123)
At trial, the jury heard about my interview from a detective who was never in the room. On cross-examination, my attorney, Mr. McGee, asked Det. Ryan Smith whether I had admitted in that interview to writing the checks. Smith did not take part in my October 22, 2014 interview. The transcript opens “Detective Bachman and Detective Hanke” (p. 1), and Smith’s name appears nowhere in its 365 pages (RT 4138:8-23, February 19, 2019):
Q. Yes. First, all this stuff about the checks in the lower case, you deduced that those were written by possibly somebody else?
A. Correct. I did not believe Joseph wrote those checks.
Q. Did you get that from the fact that Merritt admitted in his interview that he wrote those checks?
MR. IMES: Objection. Assumes facts not in evidence. Misstates testimony.
MR. MCGEE: That statement is in evidence.
THE COURT: Overruled. He can answer — well, overruled. He can answer.
THE WITNESS: My understanding is Mr. Merritt admitted to receiving checks on the 4th, not writing them. I’d have to review whatever transcript you are talking about.
See the trial transcript (RT 4138)
Mr. McGee’s question was accurate: in that interview I told the detectives I wrote the checks (pp. 121, 137, 140, 187, 201). Mr. Imes objected to it anyway: “Assumes facts not in evidence. Misstates testimony.” The court overruled him. Smith, who had no firsthand knowledge, then gave the jury his “understanding,” which was the opposite of the record. He added that he would “have to review whatever transcript you are talking about.” Nobody showed it to him. Mr. McGee moved on to the QuickBooks check details Hanke had collected, and Mr. Imes let the answer stand.
Ms. Rodriguez put the same idea to Cathy Jarvis on cross-examination. Cathy answered that Joseph gave me the checks, and that she did not know whether I had said who wrote them (RT 5397:13-5398:4, March 14, 2019):
Q Okay. Well, the defendant told you that he had the checks from Joseph, right?
A Yes.
Q And he said that Joseph gave him the checks, right?
A Yes.
Q And he said that Joseph wrote the checks, right?
MR. MALINE: Objection. Misstates testimony.
THE COURT: Overruled. She can answer.
THE WITNESS: Joseph gave him the checks. I don’t know whether he specified he wrote the checks, but I know he had checks from Joseph. That’s —
Q Do you recall telling the investigator when you were interviewed that Joseph had given the defendant checks and that Joseph had written the checks?
A I don’t believe it was specifically talking about the checks from the 4th. I think he was just talking in general about checks given to Chase.
See the trial transcript (RT 5397, 5398)
Mr. Imes objected the moment my attorney said I admitted writing the checks. Both of them knew how important this was. Yet when Smith told the jury the opposite of what my interview says, neither stepped up to correct the record. This assertion gave the jury the impression that I lied about the checks written on Joseph’s account. It was a direct assertion, and the half that mattered is categorically false. I did tell them Joseph gave me checks on the 4th, and I told them, more than once, that I wrote them. I never said I only received them. Once the jury believed I lied about checks I wrote, and about what I did financially before and after the family disappeared, it gave them a clear road to motive for this crime.
From my very first contact with law enforcement, I told them these checks were written by me and why. I never wavered. I told San Bernardino’s detectives more than once that I wrote the checks, and that I wrote them after the 4th. If they had only cared to look at San Diego’s reports, I was fairly detailed then too. Any hesitancy on my part was only because four years and eight months had passed, and my memory of it was a bit sketchy.
Who’s who
- Joseph McStay: owner of Earth Inspired Products (EIP).
- Me, Chase Merritt: I designed and built the custom waterfalls.
- Dan Kavanaugh: Joseph’s partner in EIP. He ran the website.
- Summer McStay: Joseph’s wife.
- Metro Sheet Metal, Azusa (Dave Sequeida Sr.): fabricated the sheet metal portion of the fountains.
- Susan Blake: Joseph’s mother.
- McGyver McCargar: a family friend who was painting at the McStay house.
- Rahage Trading, Riyadh (paid through Kocache Enterprises): the Saudi customer.
- MW Mitchell Construction: the Paul Mitchell job.
- Intuit: the company that makes QuickBooks. Joseph had two QuickBooks Online accounts: the main one (contact@earthinspiredproducts.com) and the custom one for the jobs he and I did (custom@earthinspiredproducts.com).
- Shawn Augenstein: the Intuit representative on the February 8, 2010 case. The trial transcript spells him “Augustine,” and Baker’s interview “Odgenstine.”
- Ryan Baker: the Intuit representative who took the February 9, 2010 call. He testified by video.
- Mike West: an Intuit investigator who testified about the account records.
- Annette Dron and Janet Taylor: Intuit employees who spoke with Det. DuGal in 2011. Dron testified for the defense on April 16, 2019.
- Det. Troy DuGal: San Diego Sheriff’s Department, 2010-2011.
- Dets. Eddie Bachman, Dan Hanke and R. Smith: San Bernardino County Sheriff’s Department, 2014. Det. Hanke handled the QuickBooks records.
- Mr. Daugherty, Mr. Imes and Ms. Rodriguez: the prosecutors.
- James McGee and Rajan Maline: my lawyers at trial. Mr. Terrell: my lawyer at the preliminary hearing.
The checks
As the State’s own case summary lists them (Det. Bachman, Bates 000022-000024), with the check numbers from the State’s check lists (Bates 007415, 007417):
- February 1: two checks to me, $2,500 each, memo “deposit” (#4092, #4093). Printed and deleted. Never given to me, never cashed.
- February 2: a check to me for $2,495, memo “deposit sa 1001” (#4240, dated February 2). I cashed it February 2 at Union Bank. (A $0.00 check was also created and printed; it was not cashed.)
- February 4, 7:59 p.m.: a check to me for $4,000, memo “paul mitchell.” Never printed; deleted at 8:05 p.m. Two print jobs were sent that night, and nothing readable was recovered from them (RT 3941-3942). Never negotiated.
- February 5, dated February 4: to me, $4,500, “paul mitchell” (#4237). Cashed February 5 at Union Bank.
- February 5, dated February 4: to Metro Sheet Metal, $1,650, “misc manufacture” (#4236), and $250, “copper” (#4238). Metro cashed them March 5.
- February 5, dated February 4: to me, $6,505, “balance sa (1001).” Not cashed.
- February 5, dated February 4: to me, $2,350, “lighting install sa (1001)” (#4242). Deposited February 5 at Bank of America. (The State’s summary first lists it as $2,300.50; the check was $2,350.00, as the summary itself later says and the bank report and check list show.)
- February 8, dated February 4: to me, $6,500, “saudi arabia final” (#4241). Deposited February 9 at Bank of America.
Much of the money I received went on to Metro and into the two jobs. “Where the money went,” under Claim 15, shows where it went.
See the State’s case summary (Bates 000022, 000023, 000024)
Exhibits and terms
- RT: the trial transcript (reporter’s transcript). “RT 7025:17-18” means page 7025, lines 17 to 18.
- Bates number: the page number stamped on each page of the discovery the State turned over.
- Exhibit 794: my AT&T phone record, February 2009 to February 2010.
- Joseph’s T-Mobile record: T-Mobile’s subpoena response to Det. DuGal, February 24, 2010 (Bates 005509-005512; shown in Part 2).
- Exhibits 1115 and 1123: the defense accountant’s flow-of-money charts for the Saudi and Paul Mitchell jobs. Both were shown to the jury. 1123 was shown, with boxes ordered removed, as Exhibit 1133.
- Exhibit 740: Metro Sheet Metal’s statement of March 1, 2010. The court kept it out, except that the jury heard $3,450 was still due.
- Exhibit 419: Joseph’s e-mail to me of February 1, 2010.
- Exhibit 990: my e-mail to Susan Blake from Riyadh.
- Folder D: my notes on the checks, given to James McGee October 16, 2017.
- Exhibit 794 items 9150-9179: my calls on February 8 and 9, 2010 (AT&T pages 374-375).
- INT_MCSTAY (INT) numbers: the pages Intuit produced to San Bernardino under the search warrant. Exhibits 808 and 809 are INT 000047-49 (custom account) and INT 000050-54 (main account).
- The custom account: Joseph’s second QuickBooks Online account, custom@earthinspiredproducts.com. The main account: contact@earthinspiredproducts.com.
- Activity log: the custom account’s “All activities by all users” log, printed October 13, 2014.
- MMA: master administrator, the one user who can close or delete a QuickBooks Online company.
- Prelim RT: the preliminary hearing transcript.
Sources
- Trial transcript, People v. Merritt, San Bernardino County Superior Court, Case No. FVI1404194 (RT): Sequeida Jr. 2846; Blake 4995 (court), 5512-5514, 5541-5542; exhibit rulings 7011-7026 (April 29, 2019); defense accountant 7080-7086; Det. DuGal 2475, 2482-2483, 2521; Annette Dron 6240-6281 (April 16, 2019); Jan. 31, 2019 hearing 3627-3640; Ryan Baker 3739-3780 (Feb. 6, 2019); Mike West 3975-3996 (Feb. 13, 2019); Det. Hanke 4054-4066 (Feb. 14, 2019); closing arguments 8190-8225 (Imes), 8420-8430 and 8448 (Rodriguez); Det. R. Smith 4138; Cathy Jarvis 5397-5398; Det. Schroeder 3941-3942; Mr. McGee’s closing 8343.
- San Diego Sheriff’s Department: interview of Daniel Kavanaugh, 2-22-10 #2 (pp. 18-24); DuGal follow-up report on my interview of February 17, 2010 (Bates 001673-001675), and the interview transcript (pp. 15, 16, 31).
- San Bernardino County Sheriff’s Department: bank report, Det. R. Smith, October 27, 2014 (Bates 007446-007448); case summary; interviews of Susan Blake (August 13, 2014) and Dave Sequeida Sr. (September 30, 2014); my interview (October 22, 2014), and Det. Bachman’s report of it (Bates 007861-007863); Det. Bachman’s search warrant affidavit, June 2015 (Bates 028871-028872).
- Trial exhibits: 794 (my AT&T record), 990 (my e-mail to Susan Blake from Riyadh), 1115 (Saudi flow of money, shown to the jury), 1123 (Paul Mitchell flow of money; shown to the jury, modified, as 1133), 740 (Metro’s March 1, 2010 statement), 419 (Joseph’s e-mail of February 1, 2010).
- My handwritten pages for Susan Blake, March 17, 2010; my photos from Saudi Arabia; the Rahage Trading purchase-order e-mail.
- Intuit records, INT_MCSTAY000004-000054; the custom account activity log and check audit histories (Exhibits 421, 425, 426, 427, 429).
- San Bernardino: search warrant to Intuit sworn August 21, 2014; Det. Hanke’s reports (Bates 000589; 007467-007470) and the interview of Ryan Baker, October 24, 2014; interview of Dan Kavanaugh, September 20, 2014; preliminary hearing testimony of Det. Hanke (pp. 101-124).
- San Diego: recorded calls with me, June 9 and June 21, 2011, and DuGal’s follow-up report on me (pp. 23-24); Det. Hillen’s report on Susan Blake (Bates 001818-001819); recorded call between Det. DuGal and Intuit, May 11, 2011; recorded calls with Annette Dron, May 12, 2011 (audio; my 2017 handwritten copy of the transcript) and May 24, 2011 (audio); my interview of February 17, 2010 (pp. 15-16, 31).
- My notes on the checks (Folder D), given to James McGee October 16, 2017.
Part 1 of 4
- The Checks, QuickBooks, and the Motive (you are here)
- The Checks (Claims 1-7)
- The QuickBooks Calls (Claims 8-14)
- The Money (Claim 15)