People v. Thompson , 2018 COA 83 ( 2018 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
June 14, 2018
2018COA83
No. 14CA1332, People v. Thompson — Crimes — Securities —
Fraud and Other Prohibited Conduct
A division of the court of appeals applies the family
resemblance test, introduced in Colorado by People v. Mendenhall,
2015 COA 107M, to conclude that substantial evidence supports (1)
a decision that the promissory note is a security and (2) the
criminal conviction for securities fraud. The division further
concludes that the laws regarding the definition of a security and
the unit of prosecution for securities fraud were not well settled at
the time of defendant’s conviction, and, because these issues were
not raised before the trial court, any error with respect to these laws
was not obvious and does not constitute reversible error. The
division affirms the conviction and sentence for two counts of
securities fraud and one count of theft.
COLORADO COURT OF APPEALS 2018COA83
Court of Appeals No. 14CA1332
Douglas County District Court No. 12CR277
Honorable Paul A. King, Judge
The People of the State of Colorado,
Plaintiff-Appellee,
v.
Steven Curtis Thompson,
Defendant-Appellant.
JUDGMENT AFFIRMED
Division III
Opinion by JUDGE RICHMAN
Webb and Fox, JJ., concur
Announced June 14, 2018
Cynthia H. Coffman, Attorney General, Nicole D. Wiggins, Assistant Attorney
General, Denver, Colorado, for Plaintiff-Appellee
Douglas K. Wilson, Colorado State Public Defender, Elizabeth Porter-Merrill ,
Deputy State Public Defender, Denver, Colorado, for Defendant-Appellant
¶1 Defendant, Steven Curtis Thompson, appeals the judgment of
conviction entered upon jury verdicts finding him guilty of two
counts of securities fraud and one count of theft. We affirm.
I. Background
¶2 The People charged defendant based on transactions he had
entered into with the victims, Tom and Debbie Witt (the Witts).
Defendant was the sole member of SGD Timber Canyon LLC, (SGD),
which held an interest in sixty-three undeveloped lots in the Timber
Ridge subdivision. By October 2009, these lots were in foreclosure,
and in February 2010, SGD filed for bankruptcy. Defendant did not
disclose either of these facts to the Witts when he negotiated the
transactions that gave rise to this case.
¶3 The Witts loaned defendant $200,000 to acquire a lot in
Timber Ridge and another $200,000 for construction of a home on
the lot, with the understanding that the loans would be repaid with
a profit share of as much as $400,000 when the home was sold to a
prequalified buyer. In September 2010, the Witts wired $400,000
to defendant’s accounts.
¶4 Later, at defendant’s urging, the Witts increased the loan
amount to $2.4 million and converted their investment into a
1
“bridge loan” to defendant, who represented that the proceeds
would be used for continued development of Timber Ridge.
Defendant told the Witts that the investment would be “no risk” to
them and that they would receive a guaranteed profit. He
suggested that the investment was a “no brainer” because he would
secure the loan with other valuable property he owned. The Witts
agreed to the new arrangement because they felt it was a “safer
opportunity.”
¶5 The Witts wired an additional $2 million to defendant’s
account in October 2010, and the parties executed a promissory
note and guarantee agreement. Pursuant to the documents,
defendant agreed to repay the loan with a “profit” of $240,000, all
bank fees, and 8% annual interest by January 2011. The
promissory note was “secured by” defendant’s “primary and second
residences,” with collateral to convert to twenty-four lots in Timber
Ridge “upon closing and final purchase of Timber Ridge.”
¶6 Defendant did not tell the Witts that the collateralized
properties were “heavily leveraged.” He incorrectly listed the
address of his “second residence” on the note. He represented the
value of the Timber Ridge development to be $31 million, but
2
mortgagee Flagstar Bank estimated the market value at $6.75
million. He did not reveal that Flagstar had initiated foreclosure
proceedings, which had been delayed by SGD’s bankruptcy petition.
The Witts testified that they would not have given any money to
defendant had they known his true financial condition.
¶7 Defendant used the money on items not related to Timber
Ridge, including payment of his own attorney fees, checks made out
to himself or for “cash,” and paying off the note on, and making
improvements to, his “second residence.”
¶8 In December 2010, Flagstar Bank completed foreclosure
proceedings. Defendant did not tell the Witts of the foreclosure and
instead told them that he was “moving forward” with the property.
But he never developed the property in Timber Ridge.
¶9 In January 2011, when the Witts’ note came due, defendant
defaulted on the payment. He attempted to negotiate a new note
with them, offering additional collateral, but the Witts refused.
Defendant thereafter filed for personal bankruptcy, and his
“primary residence” was sold at a public trustee sale. The Witts did
not receive any money from the sale. Defendant eventually repaid
3
only $70,000 to the Witts. The Witts brought a civil suit against
defendant, but did not recover any further monies from him.
¶ 10 The People charged defendant with two counts of securities
fraud, under sections 11-51-501(1)(b) and (1)(c), C.R.S. 2017, and
one count of theft under section 18-4-401(1)(b), C.R.S. 2017.
Defendant’s theory of defense was that he lacked the mens rea for
the charged offenses. He argued that he was unable to repay the
Witts because his business plan had failed.
¶ 11 A jury found defendant guilty of all three counts. The trial
court sentenced him to twelve years in the custody of the
Department of Corrections for each of the securities counts, to be
served concurrently, and eighteen years for the theft conviction, to
be served consecutively to the other sentences.
¶ 12 On appeal, defendant claims that (1) insufficient evidence
supports his securities fraud convictions; (2) the trial court erred by
tendering an inaccurate jury instruction regarding the definition of
a security; (3) insufficient evidence supports his theft conviction; (4)
the trial court erred by admitting propensity evidence; (5) the two
securities convictions must be merged; and (6) his sentences must
4
all run concurrently. We address and reject each contention in
turn.
II. Sufficient Evidence of Securities Fraud
¶ 13 First, defendant claims that the evidence is insufficient to
support his securities fraud convictions because the promissory
note and guarantee he provided to the Witts do not constitute a
security. The jury was instructed, as relevant here and pursuant to
section 11-51-201(17), C.R.S. 2017, that security “means any note,
. . . or . . . guarantee of. . . any of the foregoing.” Defendant
correctly states that securities fraud cannot occur absent a security
and argues that, despite the statutory definition, not all notes are
securities. See People v. Mendenhall, 2015 COA 107M.
A. Definition of a Security
¶ 14 The securities fraud statute requires that fraud must be
perpetrated in connection with the offer, sale, or purchase of any
security. § 11-51-501(1). At the time of defendant’s trial, the test
for determining whether a note was a security was “the presence of
an investment in a common enterprise that is premised on a
reasonable expectation of profits to be derived from the
entrepren[e]urial or managerial efforts of others.” People v. Milne,
5
690 P.2d 829, 833 (Colo. 1984); see also Sec. & Exch. Comm’n v.
W.J. Howey Co., 328 U.S. 293, 301 (1946) (“The test is whether the
scheme involves an investment of money in a common enterprise
with profits to come solely from the efforts of others.”). In Milne, the
court concluded that the notes issued by the defendant were
securities because the noteholders (1) “entrusted money with the
defendant in return for ‘investment notes,’ with the expectation of
receiving periodic interest payments in addition to repayment of the
principal amount”; (2) “invested with the primary purpose of
receiving profits”; and (3) “had no ability to control or manage the
funds they invested or otherwise ensure that their promised return
was actually paid.” 690 P.2d at 833-34.
¶ 15 The federal definition of securities, on which Colorado’s
definition is based, is purposely broad “to regulate investments, in
whatever form they are made and by whatever name they are
called.” Reves v. Ernst & Young, 494 U.S. 56, 61 (1990).
Recognizing “the virtually limitless scope of human ingenuity,
especially in the creation of ‘countless and variable schemes devised
by those who seek the use of the money of others on the promise of
profits,’” Congress enacted a definition of “security” sufficiently
6
broad to encompass virtually any instrument that might be sold as
an investment. Id. at 60-61 (citation omitted).
¶ 16 In 2015, the year after defendant’s trial, a division of this court
held that the “family resemblance” test adopted by the Supreme
Court in Reves applies to determine when a note is a security under
the Colorado Securities Act (CSA). Mendenhall, ¶ 37.1
¶ 17 Under the family resemblance test, a note is presumed to be a
security, but that presumption may be rebutted by a showing that
the note strongly resembles instruments such as
notes delivered in consumer financing; notes
secured by a mortgage on a home; short-term
notes secured by a lien on a small business or
some of its assets; notes evidencing a
“character” loan to a bank customer;
short-term notes secured by an assignment of
accounts receivable; notes which simply
formalize an open-account debt incurred in the
ordinary course of business; and notes
evidencing loans by commercial banks for
current operations.
1In Reves v. Ernst & Young, 494 U.S. 56, 64 (1990), the Supreme
Court did not overrule Securities & Exchange Commission v. W.J.
Howey Co., 328 U.S. 293, 301 (1946), but distinguished it on the
grounds that Howey addressed “investment contracts” rather than
notes. The division in People v. Mendenhall, 2015 COA 107M, did
not cite Milne or Howey or distinguish the facts of those cases. The
People do not contest resolving this issue based on Mendenhall.
7
Id. at ¶ 33. This showing may be established by four factors, which
we will describe and analyze below. See id. at ¶ 34.
B. Standard of Review
¶ 18 Defendant did not argue at trial that his promissory note was
not a security, or that not all notes are securities. But he frames
his claim on appeal as a sufficiency of the evidence claim and
asserts that preservation is “not required.” Though he moved for
judgment of acquittal, he only argued that the evidence was
generally insufficient to support a finding of guilt on any of the
charges. The People agree with defendant’s statement regarding
issue preservation.
¶ 19 Ordinarily, a defendant may raise a sufficiency claim for the
first time on appeal. People v. Garcia, 2012 COA 79, ¶ 35. When
reviewing for sufficiency, we view the evidence in the light most
favorable to the prosecution to determine if the conviction was
supported beyond a reasonable doubt. Id. at ¶ 34. But defendant’s
argument is no ordinary sufficiency challenge; rather, his claim is
premised solely on a novel interpretation of the securities fraud
statute.
8
¶ 20 Some divisions of this court have held that when a defendant
does not raise a sufficiency of evidence claim turning on a statutory
interpretation in the trial court, his argument on appeal provides a
basis for is reversal only if any error is plain. See People v. Kadell,
2017 COA 124; People v. Maestas, (Colo. App. No. 11CA2084, Jan.
15, 2015) (not published pursuant to C.A.R. 35(f)) (cert. granted Oct.
26, 2015); People v. Lacallo, 2014 COA 78, ¶¶ 6, 20.
¶ 21 Other divisions have held that even in absence of preservation,
we may reverse a conviction if it fails the substantial evidence test.
See People v. McCoy, 2015 COA 76M, ¶ 37 (cert. granted Oct. 3,
2016).
¶ 22 We need not resolve this conflict, because we conclude that
even applying the broader substantial evidence test, defendant’s
claim fails.
C. Analysis
¶ 23 Defendant does not argue that applying the definition of a
security as it existed at the time of his trial — the “presence of an
investment in a common enterprise that is premised on a
reasonable expectation of profits to be derived from the
entrepren[e]urial or managerial efforts of others” — was not
9
sufficiently established by the evidence. Milne, 690 P.2d at 833. He
merely argues that his note was not a security (1) because it was for
a term of less than nine months; and (2) it strongly resembles a
note that is not a security under the family resemblance test,
established in Colorado by Mendenhall, because it was an
unconditional personal loan.
¶ 24 We reject defendant’s first argument. Under Reves, a note is
presumed to be a security. 494 U.S. at 65. Citing a second circuit
case, defendant argues that the presumption only applies if the
note is for a period of longer than nine months. See Exch. Nat’l
Bank v. Touche Ross & Co., 544 F.2d 1126 (2d Cir. 1976). But
Reves explicitly declined to decide the question whether a note for a
term of less than nine months was excepted from the presumption.
494 U.S. at 71. And Mendenhall makes no mention that the note
must extend for at least nine months to be presumed a security.
See Mendenhall, ¶ 32. Further, other circuit courts have held that
the presumption does apply to notes maturing in less than nine
months unless they are commercial paper. See, e.g., Sec. & Exch.
Comm’n v. Reynolds Enters., Inc., 952 F.2d 1125, 1131-32 (9th Cir.
1991) (finding nine-month exception does not apply to notes that
10
are “not commercial paper”); Holloway v. Peat, Marwick, Mitchell &
Co., 900 F.2d 1485, 1488-89 (10th Cir. 1990) (holding that
exception is limited to “prime quality negotiable commercial paper
of a type not ordinarily purchased by the general public”); Sanders
v. John Nuveen & Co., 463 F.2d 1075, 1079-80 (7th Cir. 1972)
(same).
¶ 25 Nor do we agree with defendant’s argument that consideration
of the family resemblance factors is sufficient to rebut the
presumption that the promissory note is a security. Instead, we
conclude that three of the four factors support a conclusion that the
promissory note is a security.
¶ 26 The four factors are described as follows:
First, we examine the transaction to assess the
motivations that would prompt a reasonable
seller and buyer to enter into it. If the seller’s
purpose is to raise money for the general use
of a business enterprise or to finance
substantial investments and the buyer is
interested primarily in the profit the note is
expected to generate, the instrument is likely
to be a “security.” If the note is exchanged to
facilitate the purchase and sale of a minor
asset or consumer good, to correct for the
seller’s cash-flow difficulties, or to advance
some other commercial or consumer purpose,
on the other hand, the note is less sensibly
described as a “security.”
11
Second, we examine the “plan of distribution”
of the instrument, to determine whether it is
an instrument in which there is “common
trading for speculation or investment[.]”
Third, we examine the reasonable expectations
of the investing public: The Court will consider
instruments to be “securities” on the basis of
such public expectations, even where an
economic analysis of the circumstances of the
particular transaction might suggest that the
instruments are not “securities” as used in
that transaction.
Finally, we examine whether some factor such
as the existence of another regulatory scheme
significantly reduces the risk of the
instrument, thereby rendering application of
the Securities Acts unnecessary.
Reves, 494 U.S. at 66-67 (citations omitted).
¶ 27 With respect to the first factor, based on the Witts’ testimony
alone, a reasonable jury could infer that defendant’s purpose was to
raise money for the development of Timber Ridge properties and
that the Witts’ interest was primarily to profit from advancing
money to defendant. There was no suggestion that the Witts were
purchasing a “minor asset” or a consumer good. The note promises
that defendant will repay the $2.4 million, in addition to $240,000
12
profit, fees, and interest. (Emphasis added.) Under this factor, the
note “is likely to be a ‘security.’” Id. at 66.
¶ 28 As to the second factor, the record does not include any
evidence that the instrument obtained by the Witts was traded
under a “plan of distribution.” But a transaction between only two
entities may still be a security. See Nat’l Bank of Yugoslavia v.
Drexel Burnham Lambert, Inc., 768 F. Supp. 1010, 1015-16
(S.D.N.Y. 1991) (applying Reves).
¶ 29 With respect to the third factor, no evidence indicated the
reasonable expectations of an “investing public,” but the Witts’
expectation was that they would obtain a profit on their investment,
plus interest, within a period of time. The Witts, as the investing
public, would therefore reasonably view the transaction as an
investment and the note as a security. See id. at 1016.
¶ 30 Finally, defendant suggests no “regulatory scheme,” and we
are not aware of one, that so significantly reduced the investment
risk as to make application of the CSA unnecessary. He suggests
that the availability of a civil suit against him satisfies the Reves
requirement of a “regulatory scheme,” but we disagree. Although
civil suits provide a remedy for victims of fraud, the civil system
13
does not regulate the risks of a promissory note. Accordingly, we
conclude that the fourth family resemblance factor weighs in favor
of the presumption that the note is a security.
¶ 31 For these reasons, we conclude that the Witts’ investment,
memorialized by the promissory note, was a transaction protected
by the CSA. And it did not strongly resemble the family of
transactions that are not securities.
¶ 32 In sum, we conclude that, after applying the four-factor test
announced in Reves and adopted by Colorado in Mendenhall, the
evidence, viewed as a whole and in the light most favorable to the
prosecution, was “sufficient to support a rational conclusion that
the defendant is guilty of [securities fraud] beyond a reasonable
doubt.” McCoy, ¶ 37.
III. Jury Instruction Defining “Security”
¶ 33 In instructing the jury, the trial court included the statutory
definition of “security,” which includes “any note.” See
§ 11-51-201(17). Defendant did not object to the definition of
security given to the jury, nor tender an alternative instruction.
Nonetheless, defendant contends the trial court plainly erred by
14
denying “his right to a jury determination that the notes at issue
were securities.” Mendenhall, ¶ 40. We disagree.
¶ 34 Plain error is error that is obvious. Obvious errors “must
contravene (1) a clear statutory command; (2) a well-settled legal
principle; or (3) Colorado case law.” Scott v. People, 2017 CO 16,
¶ 16 (quoting People v. Pollard, 2013 COA 31M, ¶ 40). “Moreover,
an erroneous jury instruction does not normally constitute plain
error where the issue is not contested at trial[.]” People v. Miller,
113 P.3d 743, 750 (Colo. 2005). Because plain error requires that
the error be obvious and any legal principles be “well settled,” we
only consider the status of the law at the time of trial. People v.
O’Connell, 134 P.3d 460, 465 (Colo. App. 2005).
¶ 35 Definitional jury instructions that accurately track the
language of the applicable statute are generally proper and
sufficient. People v. Houser, 2013 COA 11, ¶ 76.
¶ 36 Mendenhall was decided after defendant’s trial. Though
federal case law concerning the Federal Securities Exchange Act of
1934 and the Federal Securities Act of 1933 is persuasive, it does
not settle the law governing the CSA. See United States v. McKye,
734 F.3d 1104, 1110 (10th Cir. 2013) (“[T]he district court erred
15
when it instructed the jury that notes are securities.”); see also
Reves, 494 U.S. at 63 (holding that not every note is a security). At
the time of defendant’s trial, no Colorado case law directly
addressed the issue of whether “any note” is a security.
¶ 37 Accordingly, we conclude that, at the time of defendant’s trial,
the law was not well settled, and any error in the given jury
instruction would not have been obvious or plain. See People v.
Valdez, 2014 COA 125, ¶ 27 (“[W]here the law is unsettled, the trial
court’s alleged error with respect to the law cannot constitute plain
error.”); see also People v. Howard-Walker, 2017 COA 81M, ¶¶ 56-
57 (finding no plain error on evidentiary issue where latest supreme
court formulation occurred over a year after trial and no appellate
case directly addressed particular issue raised) (cert. granted May
21, 2018).
IV. Two Convictions for Securities Fraud and Double Jeopardy
¶ 38 Defendant claims that his two convictions and sentences for
securities fraud violated double jeopardy because they are
alternative ways of committing the same offense, and therefore the
two counts should be merged. But he did not raise this claim
16
before the trial court. As discussed in Part III, supra, the law is not
well settled in this area, and we perceive no plain error.
A. Law of Merger and Double Jeopardy
¶ 39 We review de novo whether merger applies to criminal
offenses. People v. Zweygardt, 2012 COA 119, ¶ 40. An
unpreserved double jeopardy claim is reviewable for plain error.
Reyna-Abarca v. People, 2017 CO 15, ¶¶ 45-46.
¶ 40 Unless a statute expressly authorizes multiple punishments
for the same criminal offense, the Double Jeopardy Clauses of the
United States and Colorado Constitutions prohibit “the imposition
of multiple punishments for the same criminal conduct.” Woellhaf
v. People, 105 P.3d 209, 214 (Colo. 2005); see U.S. Const. amends.
V, XIV; Colo. Const. art. II, § 18. When a statute provides
alternative ways of committing a single criminal offense, multiplicity
concerns may materialize. Woellhaf, 105 P.3d at 214. In such
cases, courts must determine “the legislatively prescribed unit of
prosecution” and “whether the defendant’s conduct constitutes
factually distinct offenses, that is, whether the conduct satisfies
more than one defined unit of prosecution.” Id. at 211, 218-19.
17
¶ 41 In determining whether offenses are factually distinct, we
consider factors including the time and location of the events, the
defendant’s intent, and whether the People presented the acts as
legally separable. See Quintano v. People, 105 P.3d 585, 591-92
(Colo. 2005). However, no one factor is dispositive and the inquiry
ultimately focuses on “all the evidence introduced at trial to
determine whether the evidence on which the jury relied for
conviction was sufficient to support distinct and separate offenses.”
Id. at 592.
¶ 42 If a defendant is convicted of multiplicitous counts, the proper
remedy is to merge the multiplicitous convictions. See People v.
Rhea, 2014 COA 60, ¶¶ 16-17.
B. Multiplicity Not Obvious
¶ 43 A person commits securities fraud in Colorado when, in
connection with the offer, sale, or purchase of any security, he
(b) . . . make[s] any untrue statement of a
material fact or [omits] to state a material fact
necessary in order to make the statements
made, in the light of the circumstances under
which they are made, not misleading; or
(c) . . . engage[s] in any act, practice, or course
of business which operates or would operate
as a fraud or deceit upon any person.
18
§ 11-51-501(1).
¶ 44 Defendant was charged with one count of securities fraud by
means of an untrue statement or material omission under section
11-51-501(1)(b), and one count of securities fraud based on fraud
by deceit under section 11-51-501(1)(c). Other than by
incorporating the statutory language, the complaint does not
specify what conduct supports the respective charges.
¶ 45 In closing argument, the prosecutor argued that defendant
committed two separate offenses because (1) he did not disclose the
foreclosure or the bankruptcy to the Witts; and (2) he took their
money, put it in in his main bank account, and started to spend it.
The jury instructions state the elements of each charge, but do not
specify the conduct relating to each instruction. The jury returned
one verdict as to each count, but the general verdict forms do not
indicate what conduct supports each verdict.
¶ 46 We agree with defendant that the General Assembly prescribed
only a single unit of prosecution for securities fraud. See People v.
Abiodun, 111 P.3d 462, 466 (Colo. 2005) (holding that when the
legislature joins “a number of acts . . . as a disjunctive series,”
19
rather than describing them in different provisions under different
titles, it defines alternative means of committing a single offense).
Thus, sections 11-51-501(1)(b) and (c) are alternative means of
committing securities fraud.
¶ 47 Accordingly, defendant’s two convictions and sentences could
be supported only if his alleged offenses were “factually distinct”
under Quintano.
¶ 48 The evidence of defendant’s false statements and material
omissions in obtaining the loans supports a conviction under
section 11-51-501(1)(b). But the prosecution did not argue that
there was a separate fraud or deceit supporting the section 11-51-
501(1)(c) charge. Instead, the prosecution argued that the deceitful
conversion of funds constituted the violation of subsection (c).
Although the misleading act and the conversion of funds happened
on separate days, perhaps giving defendant “time to reflect” on his
behavior, Quintano, 105 P.3d at 592, the prosecutor did not clearly
separate defendant’s misleading statements and omissions from his
later misuse of the funds, each of which related to the same note
and the same victims.
20
¶ 49 We read federal law to require, as relevant here, a separate
sale and a separate fraudulent statement in each count to support
a multiple count indictment for securities fraud. See United States
v. Langford, 946 F.2d 798, 804 (11th Cir. 1991) (reversing some of
the defendant’s multiple convictions for securities fraud in a
scheme against one victim because “each count of the indictment
must be based on a separate purchase or sale of securities and
each count must specify a false statement of material fact — not a
full-blown scheme to defraud — in connection with that purchase
or sale”); see also United States v. Regensberg, 604 F. Supp. 2d 625,
629 (S.D.N.Y. 2009) (holding that two counts of securities fraud
were not multiplicitous because each count embodied “groups of
two separate transactions that are governed by different terms and
conditions, involved different buyers, and occurred over different
time periods”).
¶ 50 Applying the federal standard, we conclude that defendant was
charged with and convicted of multiplicitous counts of securities
fraud because the evidence showed a sale of one security, to one
21
investor based on one set of false or misleading statements.2 But
no Colorado case, well-settled legal principle, or statutory command
addressed the proper unit of prosecution under the Colorado
securities law. Accordingly, we cannot conclude that in the absence
of a motion it would have been obvious to the trial court that the
two convictions were multiplicitous. We conclude that there was no
plain error.
V. Sufficient Evidence of Theft
¶ 51 Defendant was charged with one count of theft under section
18-4-401(1)(b). To support a conviction for that offense, the
prosecution must prove that defendant (1) knowingly obtained,
retained, or exercised control over something of value of another
without authorization or by threat or deception; and (2) knowingly
used, concealed, or abandoned it in a manner to permanently
deprive the Witts of its use or benefit. See id.
2 Had the separate counts charged a securities violation based on
each of the Witts’ advances as part of a continuing fraud, multiple
counts may have been supported, but that is not what was charged
here. See Peoria Union Stock Yards Co. Ret. Plan v. Penn Mut. Life
Ins. Co., 698 F.2d 320, 326 (7th Cir. 1983) (Where the contract was
a continuing one that required periodic payments, fraudulent
statements to keep contributions coming “was fraud in connection
with the continuing sale of a security.”).
22
¶ 52 Defendant argues that there was insufficient evidence that he
knowingly used the Witts’ money in a manner to permanently
deprive them of its benefit because the transaction was an
unconditional personal loan and he used a portion of the proceeds
to improve one of the properties offered as collateral on the note.
Although this argument was not preserved, we address it for the
reason described in Part II.B, supra. We are not persuaded.
¶ 53 The Witts testified at trial that they had agreed the money was
to be used for the development of Timber Ridge, as a “no risk”
investment in the project. And an investigator testified that
defendant used the funds to pay his own attorney fees, to improve
the house that his wife continued to occupy at the time of trial, and
for other personal expenses.
¶ 54 Defendant’s argument that he failed to repay the Witts
because they refused to release a lis pendens on his “second
residence” is without merit because this supposed buyer did not
surface until March 2013, well after defendant had defaulted on the
loan to the Witts and after he was criminally charged. The
argument does not affect this conclusion. See People v. Pedrie, 727
23
P.2d 859, 863 (Colo. 1986) (holding that the return of stolen
property is not a defense to a theft charge).
¶ 55 We conclude that, viewing this evidence in the light most
favorable to the prosecution, it is sufficient to support a rational
conclusion that defendant knowingly obtained the Witts’ money by
deception and intended to permanently deprive them of it.
VI. Admissibility of Evidence of Other Transactions
¶ 56 In a pretrial motion, the prosecution requested the trial court
to allow evidence that in 2010 defendant had obtained money from
another person under false pretenses by entering into an agreement
to sell a lot in Timber Ridge that he did not own. The prosecution
argued the evidence was relevant to show identity, knowledge,
motive, intent, modus operandi, and lack of mistake or accident.
Over defendant’s objection, the court ultimately allowed the
evidence to show identity, knowledge, motive, and lack of mistake
or accident, and gave the jury an instruction limiting use of
witnesses’ testimony to those purposes.3
3 When the prosecutor informed the court that the charge of theft in
the case did not require intent, but only “a knowing use in a
manner to permanently deprive,” the court reversed its position that
the evidence would be admissible for intent.
24
¶ 57 One witness testified that he had purchased lot 8 in the
Timber Ridge subdivision in 2007, and another witness testified
that he had paid defendant $120,000 for the same lot in 2010. The
second witness also testified that when he asked for his money
back, defendant responded with an expletive.4
A. Applicable Law and Standard of Review
¶ 58 Under CRE 404(b), a defendant’s prior act cannot be admitted
to prove the defendant’s character to show that he or she acted in
conformity with that character on a particular occasion, but it can
be admitted for other purposes if the trial court has determined that
the prior act occurred, and that the evidence satisfies the four-
prong test in People v. Spoto, 795 P.2d 1314, 1318 (Colo. 1990).
¶ 59 Under Spoto, the Rule 404(b) evidence must
(1) relate to a material fact; (2) be logically
relevant; (3) have a logical relevance that “is
independent of the intermediate inference,
prohibited by CRE 404(b), that the defendant
has a bad character” and committed the crime
charged because he acted in conformity with
that bad character; and (4) have a probative
4Defendant was convicted of theft by deception from this victim and
his conviction was affirmed by a division of this court. People v.
Thompson, (Colo. App. No. 13CA1413, Feb. 16, 2017) (not published
pursuant to C.A.R. 35(e)).
25
value that is not substantially outweighed by
the danger of unfair prejudice.
Perez v. People, 2015 CO 45, ¶ 25.
¶ 60 That other act evidence may imply a defendant’s bad character
does not preclude the evidence so long as it is offered for a
permissible purpose. Spoto “does not demand the absence of the
inference but merely requires that the proffered evidence be
logically relevant independent of that inference.” People v. Snyder,
874 P.2d 1076, 1080 (Colo. 1994).
¶ 61 Because defendant objected to the admission of the evidence,
we review the trial court’s admission of other act evidence for abuse
of discretion. The decision will not be disturbed unless it was
arbitrary, unreasonable, or unfair. People v. Osorio-Bahena, 2013
COA 55, ¶ 21.
¶ 62 In ruling on the Rule 404(b) motion, the district court
explicitly noted Spoto and engaged in the required four-part
analysis for the offered purposes.
¶ 63 Defendant argues that the evidence was not logically relevant
to prove identity, motive, knowledge, or absence of mistake. We are
not persuaded.
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B. Analysis
¶ 64 Defendant’s explanation of his transaction with the Witts was
that (1) it was a legitimate business deal; (2) he had no intention to
defraud or deceive them; (3) he intended to perform according to the
agreement; and (4) he was unable to do so because of unfortunate
or unexpected business consequences beyond his control.
¶ 65 Evidence that the defendant had permanently deprived
another investor of his money, by similar false promises and
deceptive statements involving the same project, is logically relevant
to prove that his motive was not to enter into a legitimate business
agreement with the Witts, and that his inability to return the Witts’
investment was not due to a mistake or accidental circumstances
beyond his control.
¶ 66 We conclude that the probative value of introducing the prior
act was not substantially outweighed by the danger of unfair
prejudice, “especially because the court gave a limiting instruction.”
People v. Cooper, 104 P.3d 307, 309 (Colo. App. 2004); see Garcia,
¶ 20 (“We presume that the jury followed the court’s [limiting]
instructions, absent evidence to the contrary.”). We further
conclude that the district court’s admission of the prior act evidence
27
was not so arbitrary, capricious, or unfair as to constitute an abuse
of discretion. See People v. Torres, 224 P.3d 268, 274 (Colo. App.
2009) (finding no abuse of discretion where trial court ruled that,
considering the similarities between the two incidents, the probative
value of the prior act was not substantially outweighed by its
potentially prejudicial effect).
VII. Sentencing
¶ 67 Finally, defendant argues that his sentence for theft must run
concurrently with the concurrent sentences for securities fraud
because the crimes are based on identical evidence. We disagree.
A. Standard of Review and Applicable Law
¶ 68 The parties agree that defendant did not preserve this issue for
review. As such, we review for plain error. See Reyna-Abarca, ¶ 47.
¶ 69 Although a sentencing court generally has discretion to impose
concurrent or consecutive sentences on a defendant convicted of
multiple crimes, consecutive sentences are statutorily prohibited if
identical evidence supported each count. § 18-1-408(3), C.R.S.
2017. To determine whether the evidence is identical, a court must
decide whether the convictions were “based on more than one
distinct act and, if so, whether those acts were separated by time
28
and place.” People v. Glasser, 293 P.3d 68, 79 (Colo. App. 2011).
The sentencing court’s decision will be overturned “only if the
evidence supports no other conclusion than that the charges are
based on identical evidence.” People v. Muckle, 107 P.3d 380, 383
(Colo. 2005). Further, “the mere possibility that the jury may have
relied on identical evidence in returning more than one conviction is
not sufficient to trigger the mandatory concurrent sentencing
provision.” Id.
B. Analysis
¶ 70 We agree with the People that the theft and securities fraud
charges were not necessarily based on identical evidence, and
therefore decline to disturb the sentencing court’s discretion.
¶ 71 The convictions for securities fraud were predicated on the
misstatements and material omissions made by defendant to the
Witts in connection with the sale of a security, an element of
evidence for securities fraud not required for theft. Defendant’s
retention and use of the funds obtained from the Witts for personal
benefit knowingly permanently deprived them of its use, an element
of evidence not required for securities fraud.
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¶ 72 In these circumstances, it is not the case that “the evidence
supports no other conclusion than that the [theft and securities
fraud] charges are based on identical evidence.” Id. Because
different evidence supported each offense, we affirm the imposition
of a consecutive sentence for the theft conviction.
VIII. Conclusion
¶ 73 The judgment and sentence are affirmed.
JUDGE WEBB and JUDGE FOX concur.
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