Indiana Criminal Conversion of Money Requires No “Special Chattel” Segregation Under the CVRA

Introduction

Case: Harper v. S&H Leasing, LLC (Ind. Apr. 9, 2026).
Parties: Keith D. Harper (Appellant-Defendant) vs. S&H Leasing, LLC; K&K Real Estate Holdings, LLC; Thomas Hagen; Brian Brisco; and Jeremy Noetzel (Appellees-Plaintiffs).
Core dispute: Whether Harper’s diversion of loan proceeds obtained in K&K’s name constituted criminal conversion of money supporting treble damages under Indiana’s Crime Victim’s Relief Act (“CVRA”), Ind. Code § 34-24-3-1.

The case arose from internal conflict among members/managers of two related LLCs. During discovery in a separate operating-agreement dispute, Plaintiffs uncovered a 2017 transaction in which Harper caused K&K to receive $273,787 (net loan proceeds) and then routed substantial portions to his personal home-equity line of credit and used the remainder for his personal benefit, without disclosure or authorization and without repayment. The trial court found, among other things, a CVRA-eligible property offense and awarded treble damages.

The key legal issue before the Indiana Supreme Court was narrow but consequential: whether, in CVRA litigation predicated on criminal conversion, money must satisfy a judicially created “special chattel”/segregation requirement (a determinate sum entrusted for a specific purpose and often kept separate), a concept long associated with civil conversion doctrines.

Summary of the Opinion

The Court held that money need not be “special chattel” to support criminal conversion under Ind. Code § 35-43-4-3(a), and therefore no such extra element applies to civil CVRA claims. Crimes in Indiana are defined by statutory elements, and the “special chattel” requirement is not among them. The Court rejected the segregation/commingling-based limitation as “antiquated” and inconsistent with the statute’s text and structure.

The Court emphasized that the proper limiting principle separating criminal conversion from ordinary commercial disputes is mens rea (the “knowingly or intentionally” requirement), not whether funds were segregated. Applying the statute to the facts, the Court affirmed the trial court’s determination that Harper knowingly exerted unauthorized control over K&K’s property.

Disposition: The treble-damages judgment under the CVRA was affirmed, but the case was remanded with instructions to modify the judgment so that treble damages are awarded to K&K (the actual victim of the conversion), not S&H.

Analysis

Precedents Cited

  • Harper v. S&H Leasing, LLC, et al., 260 N.E.3d 960 (Ind. Ct. App. 2025)
    The Court granted transfer, vacating the Court of Appeals’ opinion under Ind. Appellate Rule 58(A). The vacated opinion illustrates the doctrinal tension the Supreme Court resolves: the panel majority felt “obligated” to deny conversion due to commingling (special-chattel logic) while affirming CVRA treble damages by recharacterizing the conduct as theft—an awkward result given included-offense principles. Judge Vaidik’s concurrence foreshadowed the Supreme Court’s approach by urging elimination of the segregation requirement for money-conversion.
  • Clark-Silberman v. Silberman, 78 N.E.3d 708 (Ind. Ct. App. 2017)
    Cited as an example of the Court of Appeals’ “special chattel” approach in money cases—upholding conversion where cash was treated like a determinate, separately held fund (safe-deposit context). The Supreme Court uses this line of cases to show how the doctrine shifted toward a segregation-focused test that is not grounded in the criminal statute.
  • Bowden v. Agnew, 2 N.E.3d 743 (Ind. Ct. App. 2014) and Trietsch v. Circle Design Grp., Inc., 868 N.E.2d 812 (Ind. Ct. App. 2007)
    These cases articulated the “special chattel” formulation (“a determinate sum entrusted to apply to a certain purpose”) that Harper invoked. The Supreme Court rejects importing this doctrine into criminal conversion/CVRA analysis.
  • Kopis v. Savage, 498 N.E.2d 1266 (Ind. Ct. App. 1986)
    Identified as the seminal appellate decision introducing the special-chattel concept into this area, largely to separate breach-of-contract disputes from property crimes. The Supreme Court treats Kopis as an understandable but ultimately misguided blending of civil trover/conversion principles into criminal conversion analysis.
  • Coffin v. Anderson, 4 Blackf. 395 (Ind. 1837) and Bunger v. Roddy, 70 Ind. 26 (1880)
    These older Indiana Supreme Court decisions are traced to show the true source of “special chattel”: the common-law civil action of trover (and later tort conversion), not the modern statutory crime. The Supreme Court leverages them to distinguish civil conversion’s historic limitations from statutory criminal conversion.
  • Knotts v. State, 187 N.E.2d 571 (Ind. 1963)
    Provides the foundational rule that Indiana has no common-law crimes and the legislature fixes the elements of statutory crimes. This principle anchors the Court’s holding: courts cannot add a “special chattel” element to criminal conversion.
  • Wojtowicz v. State, 545 N.E.2d 562 (Ind. 1989)
    Cited for the proposition that “Criminal conversion is a lesser included offense of theft.” The Court uses this to expose the doctrinal “perversity” of imposing a special-chattel element on conversion that theft does not share.
  • Roderick Dev. Inv. Co. v. Cmty. Bank of Edgewater, 668 N.E.2d 1129 (Ill. App. Ct. 1996) and Ford Motor Credit Co. v. Fincannon Ford, Inc., Cause No. 1:19-CV-502-HAB, 2021 WL 1379941 (N.D. Ind. Apr. 12, 2021)
    These authorities support a policy critique: a segregation/commingling rule perversely allows the wrongdoer to control whether liability for conversion attaches—effectively rewarding commingling and punishing “punctilious” separation of misappropriated funds.
  • Sutherland v. O’Malley, 882 F.2d 1196 (7th Cir. 1989)
    Used to illustrate that other jurisdictions similarly restrict civil conversion of money, reinforcing that the “special fund” idea is a civil-conversion construct rather than a necessary component of Indiana’s criminal conversion statute.
  • Klinker v. First Merchants Bank, N.A., 964 N.E.2d 190 (Ind. 2012); Wysocki v. Johnson, 18 N.E.3d 600 (Ind. 2014); Kesling v. Hubler Nissan, Inc., 997 N.E.2d 327 (Ind. 2013)
    These cases supply the CVRA framework: no criminal conviction is required; the plaintiff must prove each element of the predicate offense by a preponderance of the evidence. The Supreme Court builds directly on this “elements-only” approach to reject the extra-statutory special-chattel add-on.
  • Benaugh v. Garner, 876 N.E.2d 344 (Ind. Ct. App. 2007) and Greg Allen Const. Co. v. Estelle, 798 N.E.2d 171 (Ind. 2003)
    These cases are cited for CVRA policy dynamics: treble damages deter property crime but also create incentives to reframe civil disputes as CVRA claims. The Court responds by identifying mens rea as the proper limiting device.
  • Ind. & Mich. Elec. Co. v. Terre Haute Indus., Inc., 507 N.E.2d 588 (Ind. Ct. App. 1987)
    Used to contrast civil conversion’s strict-liability-like nature (good faith is no defense) with criminal conversion’s mens rea requirement (good faith can negate the criminal intent element).
  • Larson v. Karagan, 979 N.E.2d 655 (Ind. Ct. App. 2012); Catellier v. Depco, Inc., 696 N.E.2d 75 (Ind. Ct. App. 1998); French-Tex Cleaners, Inc. v. Cafaro Co., 893 N.E.2d 1156 (Ind. Ct. App. 2008)
    These decisions illustrate how mens rea—not segregation—screens out ordinary contract disputes: where the defendant reasonably believes it is entitled to the money or contract ambiguity exists, the “knowing/intentional unauthorized control” element fails.
  • Tobin v. Ruman, 819 N.E.2d 78 (Ind. Ct. App. 2004) and CT102 LLC v. Auto. Fin. Corp., 175 N.E.3d 869 (Ind. Ct. App. 2021)
    Cited to reiterate that mere nonpayment of a debt generally cannot be criminal conversion; the creditor typically owns a right to repayment, not the specific property allegedly “converted.”
  • Town of Brownsburg v. Fight Against Brownsburg Annexation, 124 N.E.3d 597 (Ind. 2019)
    Supplies the appellate review framework for findings and conclusions in a Trial Rule 52 bench trial (clear error for findings; de novo for conclusions).
  • Willis v. Dilden Bros., Inc., 184 N.E.3d 1167 (Ind. Ct. App. 2022); Snow v. State, 137 N.E.3d 965 (Ind. Ct. App. 2019); Auto Liquidation Ctr., Inc. v. Chaca, 47 N.E.3d 650 (Ind. Ct. App. 2015)
    These examples reinforce that conversion applies broadly to many forms of property; the Supreme Court uses them to highlight that money should not be singled out for an extra, non-statutory element in the criminal context.
  • Coppolillo v. Cort, 947 N.E.2d 994 (Ind. Ct. App. 2011)
    Mentioned in the procedural posture discussion concerning unjust enrichment (not the focus of the Supreme Court’s analysis on the CVRA issue).

Legal Reasoning

  1. Statutory-elements primacy: crimes are defined by statute, not judicial gloss.

    The Court begins with the premise from Knotts v. State that Indiana recognizes no common-law crimes; thus, the legislature exclusively “fixes the elements” of criminal offenses. Criminal conversion’s elements are set out in Ind. Code § 35-43-4-3(a): (1) knowingly or intentionally, (2) exerting unauthorized control, (3) over property of another. The CVRA (Ind. Code § 34-24-3-1) requires proof of “each element” of the predicate crime—no more and no less.

  2. The “special chattel” rule is a civil trover/conversion doctrine, not a criminal conversion element.

    The Court traces “special chattel” to Coffin v. Anderson (trover requires “specific goods”; general deposits sound in debt/assumpsit) and Bunger v. Roddy (conversion of money where entrusted for a purpose and misapplied). It then explains that Kopis v. Savage imported that civil doctrine into a CVRA/criminal-conversion setting to separate contract breach from crime. But the Court holds that such importation is impermissible when it functions as an extra element not found in Ind. Code § 35-43-4-3.

  3. Structural inconsistency with theft and included-offense doctrine.

    Indiana’s theft statute (Ind. Code § 35-43-4-2(a)) adds an “intent to deprive” element to otherwise similar conduct. The legislature’s key differentiator is scienter, not segregation of money. Imposing special chattel on conversion but not theft produces a doctrinal inversion, because conversion is a lesser included offense of theft (Wojtowicz v. State), yet the special-chattel rule would make conversion harder to prove than theft.

  4. Policy: segregation tests reward commingling and distort deterrence.

    The Court rejects the segregation-centric approach for incentivizing wrongdoers to commingle funds to avoid conversion liability, echoing Roderick Dev. Inv. Co. v. Cmty. Bank of Edgewater and Ford Motor Credit Co. v. Fincannon Ford, Inc.. The CVRA’s deterrent design (Benaugh v. Garner) would be undermined if legal doctrine effectively teaches how to launder the traceability of misappropriated funds.

  5. The real limiting principle is mens rea (good faith/entitlement beliefs).

    Recognizing concerns about CVRA “overreach” and pleading incentives (Greg Allen Const. Co. v. Estelle), the Court holds that the correct boundary is the criminal statute’s mental state. Unlike the tort of conversion—where good faith is no defense (Ind. & Mich. Elec. Co. v. Terre Haute Indus., Inc.)—criminal conversion requires proof the defendant acted knowingly or intentionally (Ind. Code § 35-41-2-2(a), (b)). Cases like Catellier v. Depco, Inc. and French-Tex Cleaners, Inc. v. Cafaro Co. show that reasonable disputes over entitlement/contract meaning negate the required criminal intent. Similarly, ordinary debt nonpayment typically cannot qualify (Tobin v. Ruman; CT102 LLC v. Auto. Fin. Corp.).

  6. Application to Harper: ample evidence of knowing unauthorized control.

    Applying Trial Rule 52 review principles from Town of Brownsburg v. Fight Against Brownsburg Annexation, the Court finds the record supports the trial court’s findings: Harper caused K&K to borrow, moved proceeds to his personal line of credit, failed to disclose to co-members, failed to document as a loan to him, and never repaid. The trial court discredited Harper’s “restructuring business debt” explanation, supported by balance sheets showing no indebtedness to him at the relevant time. These facts satisfy the statutory elements of criminal conversion without any need to prove segregation or “special chattel.”

  7. Remedy correction: identify the proper CVRA victim.

    Although treble damages were warranted, the Court directs modification because K&K—borrower and source of the misappropriated loan proceeds—was the “victim” of the conversion, not S&H.

Impact

  • Doctrinal reset for CVRA claims predicated on criminal conversion of money.

    Plaintiffs no longer need to litigate whether money was “segregated,” “earmarked,” or otherwise “special chattel” to pursue CVRA treble damages based on criminal conversion. The inquiry returns to statutory elements: property of another, unauthorized control, and knowing/intentional conduct.

  • Reduced incentive for strategic relabeling as “theft” when “conversion” fits.

    The Court’s approach eliminates the awkward pathway seen in the vacated Court of Appeals opinion (conversion denied due to commingling, theft found instead), aligning included-offense logic and simplifying pleading and proof.

  • Sharper focus on intent and ownership—especially in business-entity and fiduciary settings.

    In closely held businesses, member-manager transactions often involve control over funds that are not kept in discrete “escrow-like” accounts. After this decision, liability will more often turn on whether the defendant knowingly exceeded consent/authority (and whether the funds were truly “property of another”), rather than on accounting formality.

  • Continued protection for bona fide commercial disputes.

    The Court expressly preserves the line that the legislature did not intend to criminalize bona fide contract disputes (French-Tex Cleaners, Inc. v. Cafaro Co.) or mere nonpayment of debts (Tobin v. Ruman), by emphasizing mens rea as the gatekeeping element.

Complex Concepts Simplified

  • CVRA (Crime Victim’s Relief Act): A statute allowing a victim of certain crimes to sue civilly and potentially recover treble damages (up to 3× actual damages) plus attorney’s fees, upon proving the crime’s elements by a preponderance of the evidence (no criminal conviction required).
  • Criminal conversion (Ind. Code § 35-43-4-3(a)): Knowingly or intentionally taking or keeping control of someone else’s property in a way the owner did not authorize (or beyond the scope of authorization).
  • “Special chattel” / segregation requirement: A judge-made limitation (from civil conversion/trover history) that treated money as convertible only if it was a specific, identifiable fund (often kept separate). The Court holds this is not part of the criminal conversion statute and thus cannot be required for CVRA claims based on criminal conversion.
  • Mens rea: The mental state the law requires. Here, criminal conversion requires “knowingly” or “intentionally,” which helps ensure that routine business disagreements or mistaken nonpayment do not become CVRA treble-damages cases.
  • Lesser included offense: A crime whose elements are all contained within a more serious crime. Because conversion is included in theft (Wojtowicz v. State), it would be illogical to require an extra “special chattel” element for conversion but not theft.

Conclusion

Harper v. S&H Leasing, LLC establishes a clear rule for Indiana: criminal conversion of money—and CVRA treble-damages claims predicated on it—does not require proof that funds were “special chattel” or segregated. The Court re-centers the analysis on statutory text and mens rea, rejecting a long-used but extra-statutory doctrine derived from civil trover/conversion. Going forward, Indiana courts and litigants should expect CVRA conversion cases involving money to turn on (1) whether the property was “of another,” (2) whether control was unauthorized, and (3) whether the defendant acted knowingly or intentionally—rather than on how neatly the funds were kept in the books.