Alberto Alba Villarreal v. State ( 2015 )

ACCEPTED
13-15-00037-CR
THIRTEENTH COURT OF APPEALS
CORPUS CHRISTI, TEXAS
9/17/2015 4:10:34 PM
Dorian E. Ramirez
CLERK
13-15-00037-CR
COURT OF APPEALS FILED IN
13th COURT OF APPEALS
IN THE THIRTEENTH JUDICIAL DISTRICT
CORPUSCCHRISTI/EDINBURG,
OURT TEXAS
9/17/2015 4:10:34 PM
DORIAN E. RAMIREZ
ALBERTO ALBA VILLARREAL, § Clerk
APPELLANT, § APPEAL FROM THE 445TH
§ JUDICIAL DISTRICT COURT
VS. § CAMERON COUNTY, TEXAS
§
STATE OF TEXAS, § CAUSE NO. 2013-DCR-3189-I
APPELLEE. §
BRIEF FOR APPELLANT, ALBERTO ALBA VILLAREAL
GERALD H. GOLDSTEIN *
CYNTHIA E. ORR
GOLDSTEIN, GOLDSTEIN & HILLEY
310 S. ST. MARY’S ST., STE. 2900
SAN ANTONIO, TEXAS 78205
EDWARD STAPLETON
STAPLETON & STAPLETON
2401 Wild Flower, Suite C
Brownsville, Texas 78526
*LEAD COUNSEL ORAL ARGUMENT REQUESTED
PARTIES TO THE CASE
Representing the State at Trial:
Julie Allen
Assistant District Attorney
Bar No. 24055096
946 E. Harrison St.
Brownsville, Texas 78520
956-544-0849
Representing the Appellant at Trial:
Edward Stapleton
Bar No. 19058400
Attorney at Law
2401 Wild Flower, Suite C
Brownsville, Texas 78525
956-544-0882
Ricardo Adobbati
Bar No. 00790208
Attorney at Law
134 E. Price Rd.
Brownsville, Texas 78520
956-544-6882
Carlos Masso
Bar No. 24013112
Attorney at Law
1000 East Madison
Brownsville, Texas 78520
956-504-0469
Representing the Appellant at the Motion for New Trial:
Edward Stapleton
Bar No. 19058400
Attorney at Law
ii
2401 Wild Flower, Suite C
Brownsville, Texas 78526
956-544-0882
Representing the State on Appeal:
Luis V. Saenz
District Attorney
Bar No. 17514880
Cameron County District Attorney’s Office
946 E. Harrison St.
Brownsville, Texas 78520
956-544-0849
Representing the Appellant on Appeal:
Gerald H. Goldstein (Lead Counsel)
Bar No. 08101000
Cynthia E. Orr
Bar No. 15313350
Goldstein, Goldstein & Hilley
310 S. St. Mary’s St., Ste. 2900
San Antonio, Texas 78205
E-mail: ggandh@aol.com
E-mail: whitecollarlaw@gmail.com
210-226-1463
210-226-8367 facsimile
Edward Stapleton
Bar No. 19058400
Attorney at Law
2401 Wild Flower, Suite C
Brownsville, TX
(956) 544-0882
The Honorable Frederick Hinojosa presided at the trial of this case.
iii
TABLE OF CONTENTS
Parties to the Case ..................................................................................................... ii
Table of Contents ......................................................................................................iv
Table of Authorities ................................................................................................ vii
Request for Oral Argument ..................................................................................... xii
Restatement of the Issues ....................................................................................... xiii
Statement of the Case..............................................................................................xiv
Statement of the Issues..............................................................................................iv
Statement of Facts ......................................................................................................1
Summary of the Argument.......................................................................................11
Point of Error Number One: The convictions are void because they were obtained
through the prosecution of the case by the Texas Securities Board; a violation of
the separation of powers. 5R28, 10R4-5. Article II, Texas Constitution
..................................................................................................................................12
Point of Error Number Two: Section 581-29(C)(3) of Vernon’s Civil Statutes is
unconstitutional on its face because it assigns criminal penalties to ordinary
negligence. Fifth, Sixth and Fourteenth Amendments, United States Constitution.
5R49. ......................................................................................................................17
Point of Error Number Three: Section 581-29(C)(1) of Vernon’s Civil Statutes is
unconstitutional on its face because it assigns criminal penalties to ordinary
negligence. Fifth, Sixth and Fourteenth Amendments, United States Constitution.
5R49 ........................................................................................................................17
Point of Error Number Four: The court erred by denying Appellant’s motion to
dismiss count one (securities laws) because the statute of limitations had expired
on this offense. 1CR7, 6R109, 3CR674, 6R120, 3CR801, 11R 36. ......................24
iv
Point of Error Number Five: The court erred by denying Appellant’s motion to
dismiss and count two (theft) because the statute of limitations had expired on this
offense. 1CR7, 6RR109, 3CR 674, 6R120, 3CR801, 11R 36.
..................................................................................................................................24
Point of Error Number Six: The Evidence is Insufficient to Sustain a Conviction on
Count One, passim. 1CR7. Jackson v. Virginia, 443 U.S. 307, S.Ct. 2781, 61
L. Ed. 2d 560 (1979) .................................................................................................32
Point of Error Number Seven: The Evidence is Insufficient to Sustain a Conviction
on Count Two, passim. Jackson v. Virginia, 443 U.S. 307, S.Ct. 2781, 61 L. Ed. 2d
560 (1979) ...............................................................................................................32
Point of error number eight: The state failed to plead and disprove the exception to
the sale of a security contained in the criminal provision of the securities act, so
count one failed to state an offense.1CR5-7, 1CR150-154, 5R46, 7R15. State v.
Laird, 208 S.W.3d 667 (Tex. App.—Fort Worth 2006, no. pet.) ...........................43
Point of Error Number Nine: The Denial of Villarreal’s Request for the Inclusion
of the Statutory Exemption in the Jury Instruction Constitutes Reversible Error
13R21 Dean v. State, 443 S.W.2d 173 (Tex. Crim. App. 1968). ...........................45
Point of Error Number Ten: A Material Variance Exists Between the Allegations
in Count two of the Indictment and the Proof Presented at Trial. Passim Gollihar v.
State, 46 S.W.3d 243, 246 (Tex. Crim. App. 2001) ...............................................46
Point of Error Number Eleven: A Material Variance Exists Between the
Allegations in Count one of the Indictment and the Proof Presented at Trial.
Passim Gollihar v. State, 46 S.W.3d 243, 246 (Tex. Crim. App. 2001) ................. 46
Point of Error Number Twelve: The Prosecution Became an Interested Party when
it Gave Advice to the Victim in his Civil Suit, passim. 4R15. Young v. U.S. ex rel.
Vuitton et Fils S.A., 481 U.S. 787, 107 S. Ct. 2124, 95 L. Ed. 2d 740 (1987).
..................................................................................................................................49
Point of Error Number Thirteen: The court Erred in Permitting the Texas Securities
Board to Act as Both Prosecutors and Witnesses in this Case. 10R323. In Re
Guerra, 235 S.W.3d 392, 431.
..................................................................................................................................52
v
Point of Error Number Fourteen: The Court should have stricken Garrido’s
testimony and granted a mistrial when the state failed to produce his videotaped
statement that had been in their possession. 2R6, 4R49. Jenkins v. State, 912
S.W.2d 793 (Tex. Crim. App. 1993)
..................................................................................................................................53
Points of Error Fifteen through Eighteen:
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
due process clause of the 5th and 14th amendments to the United States
Constitution. 11 R1 75.
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
due course of law provisions of article 1, sections 13 and 19 to the Texas
Constitution. 11 R175.
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
fair trial clause of the 6th amendment to the United States Constitution. 11 R1
75.
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
fair trial clause of article 1 section 10 to the Texas Constitution. 11 R1 75.
..................................................................................................................................55
Prayer .......................................................................................................................61
Certificate of Compliance ........................................................................................62
Certificate of Service ...............................................................................................63
vi
TABLE OF AUTHORITIES
CASES:
Barnes v. State, 824 S.W.2d 560 (Tex. Crim. App. 1991) .................................28,30
Bartlett v. State, 270 S.W.3d 147 (Tex. Crim. App. 2008) .....................................59
Bridwell v. State, 804 S.W.2d 900 (Tex. Crim. App. 1991) .....................18,19,22,52
Brooks v. State, 323 S.W.3d 893 (Tex. Crim. App. 2010) ......................................39
Carella v. California, 491 U.S. 263, 109 S. Ct. 2419, 105 L. Ed. 2d 218 (1989) ..........
..................................................................................................................................60
Clark v. State, 878 S.W.2d 224 (Tex. App. -- Dallas 1994, no pet.) ......................58
Cooper v. State, 527 S.W.2d 563 (Tex. Crim. App. 1975)......................................24
Cochran v. United States, 157 U.S. 286, 15 S. Ct. 628, 39 L. Ed. 2d 704 (1895) ..... 21
Cupit v. State, 122 S.W.3d 243 (Tex. App. – Houston [14th Dist.] 2003 pet. ref’d)
..................................................................................................................................28
Dean v. State, 433 S.W.2d 173 (Tex. Crim. App. 1968) ................39,40,41,42,44,45
Digges v. State, 2012 Tex. App. Lexis 5195 (Tex. App.-Dallas 2012, no pet.) ..... 25
Elonis v. United States, 135 S. Ct. 2001, 192 L. Ed. 2d 1 (2015) ........................20,21
Ex parte Giles, 502 S.W.2d 774 (Tex. Crim. App. 1973) .......................................12
Ganger v. Peyton, 379 F.2d 709 (4th Cir. 1967) .....................................................51
Gollihar v. State, 46 S.W.3d 243 (Tex. Crim. App. 2001) .................................46,47
Graves v. State, 795 S.W.2d 185 (Tex. Crim. App. 1990) ......................................27
vii
Gross v. State, 380 S.W.3d 181 (Tex. Crim. App. 2012) ........................................39
Hartsfield v. State, 200 S.W.3d 813 (Tex. App. – Texarkana 2006).......................14
Higginbotham v. State, 356 S.W.3d 548 (Tex. App,. –Texarkana 2011, pet.
ref’d)..30
Hooper v. State, 214 S.W.3d 9 (Tex. Crim. App. 2007) .........................................39
In re Guerra, 235 S.W.3d 392 (Tex. App.-Corpus Christi 2007, reh’g den.) ......... 51
Jackson v. State, 646 S.W.2d 225 (Tex. Crim. App. 1983).....................................32
Jackson v. Virginia, 443 U.S. 307, S.Ct. 2781, 61 L. Ed. 2d 560 (1979).................. 38
Jenkins v. State, 912 S.W.2d 793 (Tex. Crim. App. 1993)............................52,53,59
Johnson v. State, 452 S.W.3d 398 (Tex. App. -- Amarillo 2014, pet. ref’d) .......... 59
Jones v. Richards, 776 F.2d 1244 (4th Cir. 1985) ...................................................50
Marshall v. Jerrico, Inc., 446 U.S. 238, 100 S. Ct. 1610,
64 L. Ed. 2d 182 (1980) ........................................................................................21,50
McGinnis v. State, 541 S.W.2d 431 (Tex. App.-San Antonio 1976, no pet.)..............
..................................................................................................................................58
Morissette v. United States, 342 U.S. 246, 72 S. Ct. 240, 96 L. Ed. 2d 288 (1952) .. 21
Northern Indiana Public Service Co. v. Izaac Walton League, 423 U.S. 12, 96
S. Ct. 172, 46 L. Ed. 2d 156 (1975) ...........................................................................19
Provident Life & Assc. Ins. Co. v. Knot, 128 S.W.3d 211, 215 (Tex. 2003) .......... 24
Prudential Ins. Co. of Amer. v. Jefferson Assoc. Ltd.,
896 S.W.2d 156 (Tex. 1995) .........................................................................…37,38
Rogers v. United States, 422 U.S. 35, 95 S. Ct. 2091, 45 L. Ed. 2d 1 (1975) ......... 3,21
Selman v. State, 807 S.W.2d 310 (Tex. Crim. App. 1991) .....................................59
viii
Stanfield v. State, 213 S.W.2d 837 (Tex. Crim. 1948) ............................................33
Staples v. United States, 511 U.S. 600, 114 S. Ct. 1793, 128 L. Ed. 2d 608 (1994)..20
State v. PUC of Texas, 344 S.W.3d 349 (Tex. 2001) ..............................................26
State v. Rosenbaum, 852 S.W.3d 525 (Tex. Crim. App. 1993) ...............................13
State v. Weaver, 982 S.W.2d 892 (Tex. Crim. App. 1998) .....................................27
Sullivan v. United States, 508 U.S. 275, 113 S. Ct. 2078,
124 L. Ed. 2d 182 (1993) ..........................................................................................21
Taylor v. State, 450 S.W.3d 528 (Tex. Crim. App. 2014) ........................25,29,30,36
Thomas v. State, 65 S.W.3d 38 (Tex. Crim. App. 2001) .........................................26
Tita v. State, 267 S.W.3d 33 (Tex. Crim. App. 2008) .............................................28
TSC Indus. v. Northway, 426 U.S. 438, 96 S. Ct. 2126, 48 L. Ed. 2d 757 (1976) .... 19
United States v. Baker, 17 F.3d 94 (5th Cir. 1994) ............................................46,47
United States v. Dotterweich, 320 U.S. 277, 64 S. Ct. 134, 88 L. Ed. 48 (1943) ..... 20
United States v. Sprick, 233 F.3d 845 (5th Cir. 2000) ........................................46,47
Young v. United States ex rel. Vuitton et Fils S.A., 481 U.S. 787, 107 S. Ct. 2124,
95 L. Ed. 2d 740 (1987) .............................................................................................50
Constitutions, Statutes and Rules:
Constitutions:
United States Constitution, Fifth Amendment.................................................8,17,21
United States Constitution, Sixth Amendment ..............................................17,21,22
United States Constitution, Fourteenth Amendment ...............................................17
ix
Texas Constitution, Article I, § 10 ...........................................................................52
Texas Constitution, Article I, § 19 ...........................................................................54
Texas Constitution, Article II, § 1 ...........................................................................12
Texas Constitution, Article III .................................................................................12
Texas Constitution, Article IV .................................................................................12
Texas Constitution, Article V ..................................................................................12
Statutes
Texas Finance Code, Section 151.501 .....................................................................31
Texas Penal Code, Section 31.01(4) ...................................................................29,38
Texas Penal Code, Section 31.03.....................................................................2,27,29
Texas Penal Code, Section 31.03(E)(7) ................................................................2,29
Texas Penal Code, Section 31.09 .............................................................................27
Vernon’s Annotated Texas Civil Statutes, Article 581-2 (B) ..................................12
Vernon’s Annotated Texas Civil Statutes, Article 581-2 (D)..................................12
Vernon’s Annotated Texas Civil Statutes, Article 581-2 (G)..................................12
Vernon’s Annotated Texas Civil Statutes, Article 581-29(C)(3)…… ..2,11,16,46,47
Vernon’s Annotated Texas Civil Statutes, Article 581-29-1 ...................................25
Vernon’s Annotated Texas Civil Statutes, Article 581-3 ...................................13,39
Vernon’s Annotated Texas Civil Statutes, Article 581-37 ......................................39
Vernon’s Annotated Texas Civil Statutes, Article 581-4(A).........................26,42,44
x
Vernon’s Annotated Texas Civil Statutes, Article 581-4(E) ...................................26
Vernon’s Annotated Texas Civil Statutes, Article 581-5 (C) .............................18,21
Rules:
Texas Rules of Appellate Procedure, Rule 39.1 ........................................................ 1
Texas Rules of Evidence, Rule 615(e)................................................................11,53
Texas Code of Criminal Procedure, Article 12.01 (4)(A) ...................................... 27
OTHER:
1 C. Torcia, Wharton’s Criminal Law § 27, pp. 171-72 (15th ed. 1993) ................ 21
Black’s Law Dictionary (10th ed. 2014)...................................................................33
ABA Standards for Criminal Justice for the Prosecution Function (2015) ............. 50
xi
13-15-00037-CR
COURT OF APPEALS
IN THE THIRTEENTH JUDICIAL DISTRICT COURT
ALBERTO ALBA VILLARREAL, §
APPELLANT, § APPEAL FROM THE 445TH
§ JUDICIAL DISTRICT COURT
VS. § CAMERON COUNTY, TEXAS
§
STATE OF TEXAS, § CAUSE NO. 2013-DCR-2189-I
APPELLEE. §
BRIEF FOR APPELLANT, ALBERTO ALBA VILLARREAL
TO THE HONORABLE JUDGES OF THE COURT OF APPEALS IN THE
THIRTEENTH JUDICIAL DISTRICT, CORPUS CHRISTI, TEXAS:
Appellant, ALBERTO ALBA VILLARREAL, by and through undersigned
counsel, respectfully submits this, his brief, and seeks that his conviction be
reversed and the judgment of the trial Court rendered, or in the alternative, that he
be granted a new trial.
REQUEST FOR ORAL ARGUMENT
Appellant, ALBERTO ALBA VILLARREAL, requests oral argument in
this case pursuant to Rule 39.1 of the Texas Rules of Appellate Procedure. Since
this case presents res nova issues and concerns the fact bound inquiries regarding
the sufficiency of the evidence and expiration of the statute of limitations,
argument will assist this Court in deciding the case.
xii
RESTATEMENT OF THE ISSUES
Point of Error Number One: The convictions are void because they were obtained
through the prosecution of the case by the Texas Securities Board; a violation of
the separation of powers. 5R28, 10R4-5. Article II, Texas Constitution
Point of Error Number Two: Section 581-29(C)(3) of Vernon’s Civil Statutes is
unconstitutional on its face because it assigns criminal penalties to ordinary
negligence. Fifth, Sixth and Fourteenth Amendments, United States Constitution.
5R49.
Point of Error Number Three: Section 581-29(C)(1) of Vernon’s Civil Statutes is
unconstitutional on its face because it assigns criminal penalties to ordinary
negligence. Fifth, Sixth and Fourteenth Amendments, United States Constitution.
5R49
Point of Error Number Four: The court erred by denying Appellant’s motion to
dismiss count one (securities laws) because the statute of limitations had expired
on this offense. 1CR7, 6R109, 3CR674, 6R120, 3CR801, 11R 36.
Point of Error Number Five: The court erred by denying Appellant’s motion to
dismiss and count two (theft) because the statute of limitations had expired on this
offense. 1CR7, 6RR109, 3CR 674, 6R120, 3CR801, 11R 36.
Point of Error Number Six: The Evidence is Insufficient to Sustain a Conviction on
Count One, passim. 1CR7. Jackson v. Virginia, 443 U.S. 307, S.Ct. 2781, 61
L. Ed. 2d 560 (1979)
Point of Error Number Seven: The Evidence is Insufficient to Sustain a Conviction
on Count Two, passim. Jackson v. Virginia, 443 U.S. 307, S.Ct. 2781, 61 L. Ed. 2d
560 (1979)
Point of error number eight: The state failed to plead and disprove the exception to
the sale of a security contained in the criminal provision of the securities act, so
count one failed to state an offense.1CR5-7, 1CR150-154, 5R46, 7R15. State v.
Laird, 208 S.W.3d 667 (Tex. App.—Fort Worth 2006, no. pet.)
xiii
Point of Error Number Nine: The Denial of Villarreal’s Request for the Inclusion
of the Statutory Exemption in the Jury Instruction Constitutes Reversible Error
13R21 Dean v. State, 443 S.W.2d 173 (Tex. Crim. App. 1968).
Point of Error Number Ten: A Material Variance Exists Between the Allegations
in Count two of the Indictment and the Proof Presented at Trial. Passim Gollihar v.
State, 46 S.W.3d 243, 246 (Tex. Crim. App. 2001)
Point of Error Number Eleven: A Material Variance Exists Between the
Allegations in Count one of the Indictment and the Proof Presented at Trial.
Passim Gollihar v. State, 46 S.W.3d 243, 246 (Tex. Crim. App. 2001)
Point of Error Number Twelve: The Prosecution Became an Interested Party when
it Gave Advice to the Victim in his Civil Suit, passim. 4R15. Young v. U.S. ex rel.
Vuitton et Fils S.A., 481 U.S. 787, 107 S. Ct. 2124, 95 L. Ed. 2d 740 (1987).
Point of Error Number Thirteen: The court Erred in Permitting the Texas Securities
Board to Act as Both Prosecutors and Witnesses in this Case. 10R323. In Re
Guerra, 235 S.W.3d 392, 431.
Point of Error Number Fourteen: The Court should have stricken Garrido’s
testimony and granted a mistrial when the state failed to produce his videotaped
statement that had been in their possession. 2R6, 4R49. Jenkins v. State, 912
S.W.2d 793 (Tex. Crim. App. 1993)
Points of Error Fifteen through Eighteen:
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
due process clause of the 5th and 14th amendments to the United States
Constitution. 11 R1 75.
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
due course of law provisions of article 1, sections 13 and 19 to the Texas
xiv
Constitution. 11 R175.
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
fair trial clause of the 6th amendment to the United States Constitution. 11 R1
75.
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
fair trial clause of article 1 section 10 to the Texas Constitution. 11 R1 75.
STATEMENT OF THE CASE
Appellant Alberto Alba Villarreal was charged on November 6, 2013 with
one count of “False Statement Securities” greater than $10,000 but fewer than
$100,000 in violation of “§ 581-29(C)(3)” and one count of “Theft of Property”
greater than $200,000 in violation of “§ 31.03(e)(7)” [ostensibly occurring on or
about November 7, 2008]. The indictment charges that the offense conduct took
place on November 7, 2008 though the exhibit relied on by the State to substantiate
the charged conduct is dated November 3, 2008. This exhibit is a contract with
Nafta Holdings, LLC for membership shares of Nafta Holdings LLC. However, by
November 6, 2013, the statute of limitations had expired for offenses occurring on
or before November 6, 2008. The jury found Appellant guilty of both counts and
sentenced him to ten years for
xv
count one and five years for count two to run concurrently. His ten-year sentence
of confinement was suspended and the defendant was placed on community
supervision for ten years on January 20, 2015, and he was granted bond pending
appeal.
STATEMENT OF FACTS
Appellant came from humble beginnings, growing up in Matamoros,
Tamaulipas, Mexico, and moving to Brownsville, Texas in 1978. 12R39. Insurance
was the Villarreal family business, as Appellant’s uncle, father, and two brothers
all owned or worked for insurance businesses. 12 RR 40. Appellant entered the
insurance field by working for International Insurance Agency, a company run by
Appellant’s brother Ramon, where he worked on marketing and business
development in the South Texas region. 12R19. Appellant met with David Rogers
and Raul Villanueva, loan officers at First National Bank, and they gave him a $2.3
million loan in a CD for the purpose of starting an insurance company. 10R110.
The collateral was some of Appellant’s real estate, which the bank appraised at $4
million. 7R85-87.
Enrique Garrido was a wealthy Mexican national and sophisticated
businessman. 11R108. Garrido knew Appellant from having met with him before
and by conducting insurance business with Appellant’s brother, Alejandro. 11R80.
Garrido and Appellant had a good relationship and were friends. 10R124.
1
Appellant was even a guest of honor at Garrido’s daughter’s wedding. 10R124.
Appellant and Garrido discussed the fact that he would go into business with both
Appellant and Alejandro’s insurance companies. 11R91. Garrido wanted to
diversify and admired Appellant’s and Alejandro’s businesses. 11R91. Garrido
was aware that Appellant used his property as collateral for the loan to start the
insurance company and that the CD was encumbered. 9R55, 12R49. Attorney,
William Pope, prepared their contract. 12R199. And all understood that the
agreement was not a sale of securities but, instead, a contract forming an LLC.
12R199. Both Appellant and Garrido signed the contract on November 3, 2008
obligating Garrido to pay $2 million in two payments. 3CR714.
The contract gives Appellant, as Manager, control over “entering into,
making, and performing contracts, agreements, and other undertakings binding the
Company that may be necessary, appropriate, or advisable in furtherance of the
purposes of the Company and making all decisions and waivers thereunder.”
3CR691. Garrido understood that Appellant had incurred expenses to get the
insurance company off the ground and that Appellant would be reimbursed for
those efforts. 12R51, 53. He knew that all of Appellant’s money was tied up and
that Appellant had to live using investment funds. 9R67-68. Garrido also knew
that the money invested by Appellant was encumbered by the bank and that
Appellant needed money in order to form Nafta Holdings, LLC. 9R55-56.
2
Garrido also expressly agreed in writing that Appellant had the power to pay debts
and obligations of the company as he saw fit. 9 RR 66-67, 10R96, Dx10, 15R47.
Under its express terms, Villarreal could:
“to do all such other things within the power of a shareholder of the
Corporation, including giving consents and waiving notices, if
exercising such power, in his judgement, is necessary or advantageous
for the interests of the Nominor [Garrido].”
Garrido and Appellant went to Wells Fargo and First National Banks, and
deposited $1 million of Garrido’s money into them. 12R98. Garrido maintained
signatory authority over both accounts and his personal financial advisor worked at
First National Bank, Mr. Esteve. 3CR282-283, 10R96-97.
Garrido was obligated to invest $2 million, but his initial payment was $1
million. 10R118. The first $650,000 was deposited on November 6, 2008 and the
rest, $350,000, was deposited November 7, 2008. 12R94, 201; 3 CR 422, 423.
When Garrido’s $1 million was deposited, 24% of Nafta Holdings, LLC vested
with Garrido. 10R122. The agreement called for an additional 24% to be
transferred to Garrido contingent on the November 27th payment of a further $1
million he was obligated to make under the contract. 10R96. But Garrido
breached the contract by failing to make his next payment. 9R57-58 And he
attempted to renegotiate the contract, through his son-in-law, Alexander Gerard (an
analyst in investment banking) to take management control of Nafta Holdings,
LLC. But this attempt did not reach fruition. 9R72-77, 80.
3
Garrido, being in possession of signatory rights, could have withdrawn his
money if he had that desire. 9R61, 63. Ms. Lujan, with the Texas Securities Board,
testified and confirmed that Garrido was a signatory on both Nafta Holdings, LLC
accounts. 9R98, 179. She testified that she simply traced the flow of the money
and could not say that any of the payments of the Nafta Holdings, LLC accounts
were either unlawful or made without Mr. Garrido’s knowledge or understanding.
9R162-163 She further testified that the first $1million was transferred out of the
Nafta Holdings, LLC accounts by June 2009. 9R166. Thereafter, Garrido deposited
his tardy second $1 million on July 1, 2009. 12 RR 182; 3 CR 518–521. He also
had signatory authority over this account. 3CR518.
Appellant then used the money to make efforts to get the insurance company off
of the ground. 12R204. Some of the payments made by Appellant were to keep
from defaulting on the $2 million loan. 9R156. Entities or persons associated with
Garrido also received payments from the accounts of Nafta Holdings, LLC.
9R157-158. Ms. Lujan testified that she did not know who Mr. Massu or Mr.
Galvan were and could not say that a payment to them was illegitimate. 9R162-
163. Ms. Lujan also could not testify that Villarreal knew what Nafta General
Agency or Jose Angel Castillo Peraza did with the monies transferred to their
accounts. 9R164-165. Garrido did not testify these payments were illegitmate.
Nafta General was an agency with which Nafta Holdings, LLC was going to
4
contract to do business. 12R63-64. Ms. Lujan testified that she did not know if
Garrido received funds from Appellant or if Garrido had an interest in Vizo, Inc or
other entities receiving investment monies. 9R152.
Other use of the funds in the Nafta Holdings, LLC accounts included Garrido’s
use of Appellant’s driver to travel to Mexico for his medicine, to go to the airport,
and to ferry monies to a woman friend at Burlington. Also, Garrido admitted to
going out with the woman, taking her on vacations, and having Appellant or the
driver take her to the airport for Garrido. 10R108-109. Garrido frequently
admitted asking Appellant to deliver those types of gifts to people for him.
10R108-109. After making these admissions, Garrido angrily accused counsel for
Appellant of being gay and not liking women. 10R109-110. The funds used for
these activities also appeared to come from Nafta Holdings, LLC. The driver,
alone, received about $156,751.25. 10R113.
The Government then sponsored and admitted Appellant’s testimony at a prior
proceeding to the effect that Garrido was aware of all the expenditures made from
investment money. 10R116-124.
The Texas Department of Insurance requires treasury bills, so Appellant
went to First National Bank Financial Management to request that they transfer the
money deposited with them into treasury bills. 12R82. First National Bank gave
Appellant notice that they would not release the $2 million in the CD Appellant
5
opened with them for the purpose of starting Nafta Holdings, LLC. 12R178. As
stated above, Garrido admitted he knew this. 9R55 Appellant then told Garrido of
First National Bank’s refusal to release the funds and Garrido expressed his
support for Appellant, encouraging him to sue First National. 12R182.
Appellant sued First National Bank and lost. 12R178. Garrido hired the lawyer
married to the bank’s appellate lawyer to file a complaint against Villarreal with
the Texas Securities Board December 12, 2011. DX2, 15R38. 10R104-105.
Garrido’s personal financial advisor also worked at First National Bank. 10R98-
99.
Garrido and Appellant’s relationship continued for four years after Garrido
made his initial investment. 12R186. And Mr. Garrido did not claim that anything
was amiss until several years later. Appellant was indicted on November 6, 2013
for False Statement Securities and Theft of Property. 1CR 5-7.
When asked about his own investments and use of funds, Garrido asked for
a lawyer to help him answer the questions. 9R81. After being advised of his Fifth
Amendment rights, he continued answering questions; but in an unsatisfactory
manner. He often argued with Appellant’s counsel or refused to answer.
Initially, Mr. Garrido was going to appear as a defense witness. 1CR22. He
was represented by Mr. Paul Fourt in a civil suit against Mr. Villarreal. Counsel
announced to the court that they felt that if the civil case resolved, that the criminal
6
case would not need to go forward. 2R10-11, 3R7. Angela Cole, An Assistant
Director with the Texas State Securities Board, began communicating with Garrido
as a complaining witness. 1CR36.
Thereafter, the state attempted to take the deposition of Garrido. 1 CR 44-
46, 4R5-6. Mr. Fourt appeared in court indicating he represented Garrido in his
civil case. 3R7-8, 4R6. He stated that his client did not want to proceed with
prosecution, but that when he met with prosecutors at the district attorney’s office
in an attempt to prepare an affidavit of non-prosecution based on his settlement of
the civil case, the district attorney rejected that. 4R14. Mr. Fourt also objected to
the fact that the district attorney met with his client out of his presence based on
their representation they would not discuss the civil case with his client. However,
they did discuss the civil case with his client and even advised him on the merits of
him accepting the settlement in that civil case. 4R15, 3R3. After that Mr. Fourt lost
communications with his client and was given orders by Garrido through an email
to nonsuit the civil case. 5R39. Garrido represented that he was scared into
believing that any civil settlement would never be paid and his only venue to
resolve this matter was a criminal case. 5R39. But, Garrido’s lawyer, Mr. Fourt,
never gave him that advice. That advice must have come from his meeting with
Ms. Allen and Miss Cole, the assistant district attorney and the Securities Board
lawyer. 5R40.
7
These prosecutors stepped over the line from performing their function as
prosecutors and became advocates and legal representatives, of Garrido. Id.
Counsel objected that this conflict disqualified the lawyers from pursuing the
prosecution of the case. Id. The state denied that it provided Garrido civil advice.
However, it never denied speaking to him about his civil case. 5R41. But defense
counsel were in possession of texts and emails from Garrido contradicting the
state’s representation that it gave him no legal advice. 5R43. The state’s only
objection to that representation was that Mr. Fourt was no longer Mr. Garrido’s
attorney. 5R43. This is strange since Mr. Garrido brought Mr. Fourt to represent
him when he subsequently asked for counsel during his testimony. 10R7.
Appellant noted that the state would not be aware of counsel’s status had it not
been discussing Garrido’s suit and its disposition with him. 5R44.
“Your honor let me just add one thing. How she knows or if she knows or
how she found out that Mr. Fourt is no longer the attorney I don’t know.
There’s been no filings made of any kind or any representation other than
the phone call that I received from. … Mr. Fourt no longer the attorney. I
was advised by him that he got an email that he was told to nonsuit the
lawsuit. However, when that discussion took place prior to the nonsuit, and
it’s not a coincidence that this nonsuit issue came up after we were already
seeking his deposition in the civil case, which was actually I think set for
today we would’ve been taking his deposition. So obviously they’re
intertwined. Somebody advised him that he could not get out of the civil
case deposition unless you were to nonsuit the lawsuit, and I’m certain that
Mr. Fourt was not doing that because he was actually prosecuting the civil
case to try and get a resolution on the matter.” 5R44.
SUMMARY OF THE ARGUMENT
8
The Texas Securities Board was without authority to prosecute this case and doing so
violates separation of powers doctrine. The securities law applied by the trial court below
employed an unconstitutional civil standard of proof, which does not require criminal
wrongdoing. Moreover, prosecutors violated their ethical obligation to provide a disinterested
prosecution by providing to their complaining witness and testifying before the jury.
Additionally, the Court commented on the weight of the evidence, in effect, instructing a verdict
of guilty.
The evidence presented was insufficient to support the conviction, failed to prove the
state’s complaining witness had any material representation made, in that at all times the sole
complaining witness and alleged victim had access to his own funds. He was also aware of all
Appellant’s material financial arrangements and at the time of the signing of the contract in
2008, any alleged misrepresentation and/or theft had already occurred. Furthermore, the State
did not plead and prove the tolling of the applicable statute of limitations. Accordingly, the
convictions are void.
The indictment fails, to give notice, and so does not allege an offense against the laws
of Texas, and several variances exist between the allegations and the proof; including theft of
U.S. Currency, versus checks; and a violation of 581-29(C)(3) misrepresentation versus fraud
581-29(C)(1). Lastly, the state failed to produce the video statement of its sole material witness
and alleged victim, which Rule 615 mandates that the trial court strikes that witness’ testimony.
A mandatory remedy the trial court failed to provide. Therefore, the court erred in not striking
his testimony and declaring a mistrial as required by the Texas Rules of Evidence.
ARGUMENT
Point of Error Number One: The convictions are void because they were
obtained through the prosecution of the case by the Texas Securities Board; a
9
violation of the separation of powers. 5R28, 10R4-5. Article II, Texas
Constitution
The Texas Constitution provides each branch its respective powers. Too
much power concentrated within the hands of one person or class will lead to
tyranny; with no other person or class to keep the power in check. Here, the
prosecution by the Securities Board steps squarely outside these fundamental
constitutional bounds by charging and prosecuting a criminal case. The authority
of the Texas Securities Board, in the executive branch, is expressly limited to
investigation functions.1
The Texas Constitution gives powers that are mutually exclusive to each
branch. See TEX. CONST. art. II, § 1 (“Those which are Legislative to one; those
which are Executive to another, and those which are Judicial to another; and no
person, or collection of persons, being of one of these departments, shall exercise
any power properly attached to either of the others, except in the instances herein
expressly permitted.”) So, each branch exercises only the power “granted to one
department of government.” See Ex parte Giles, 502 S.W.2d 774, 780 (Tex. Crim.
App. 1973). Therefore, one department of the government attempting to “to
interfere with the powers of another is null and void.” See Ex parte Giles, 502
S.W.2d 774, 780 (Tex. Crim. App. 1973).
1The stated constitutional and statutory authority of the Texas Attorney General’s Office to
engage in prosecutions is limited to that office as is set out below.
10
The Legislative, Executive and Judicial departments are each governed by
Article III, IV and V, respectively. See TEX. CONST. art. III, IV, V. Within Article
V, county and district attorneys fall under the umbrella of the Judicial Department.
See TEX. CONST. art. V, § 21. The Governor appoints the board members and
designates one of those members to be the presiding officer. See Texas Civil
Statutes Art. 581-2(B) & (D). The Commissioner is appointed by a majority of the
Securities Board. See Texas Civil Statutes Art. 581-2(G). So, the Judicial
department of Texas has no role in the creation nor operation of the Securities
Board.
Moreover, the job of the Securities Board is to investigate any potential
criminal activity, not to prosecute investigated individuals. See Texas Civil
Statutes Art. 581-3. Once the Commissioner investigates, that person “shall at
once lay before the District or County Attorney of the proper county any evidence
which shall come to his knowledge of criminality…” See Texas Civil Statutes Art.
581-3.
Once the evidence is brought to the district or county attorney, the district or
county attorney makes the decision to prosecute. The Commissioner cannot make
the decision to prosecute. Id. If the district or county attorney decides not to
prosecute, the Commissioner must take it to the Attorney General. Id. The statute
does not give the Commissioner the substituted power to prosecute, only the
11
attorney general. The prosecution by the Securities Board is a violation of the
Separation of Powers that the Texas Constitution strictly prohibits.
A “‘special prosecutor’ with the consent of the district attorney, assists the
district attorney in the investigation and prosecution of a particular case, but the
district attorney is responsible for the prosecution, control and management of the
case.” See State v. Rosenbaum, 852 S.W.2d 525, 529 (Tex. Crim. App.1993). So
the “special prosecutor” may not take control or lead the prosecution. Id. A
“special prosecutor” takes control of a case by making “crucial prosecutorial
decisions, including, but not limited to, decisions regarding whether to prosecute,
what investigative powers to utilize, and what plea- bargains to strike.” See
Hartsfield v. State, 200 S.W.3d 813, 817 (Tex. App. —Texarkana 2006, pet ref’d).
Here, an attorney from the Securities Board (“TSB”), Ms. Good, is leading
the prosecution. The state represented that attorneys from the Security Board
would participate in the case. 3R6. Counsel objected to this suggesting that the law
did not support them appearing as special prosecutors. 5R28. The securities lawyer
also prepared the wording of the indictment. 2R10. A lawyer for the Texas
Securities Board was the sole witness who testified before the grand jury. 4R8. The
investigator who worked on the case was from the Texas Securities Board and the
presentation to the grand jury was based on her investigation. 2R7. The assistant
district attorney advised the court that the case was their, the Securities Board’s,
12
case. She explained that it was a very complicated and specialized case that was
the type that the Securities Board lawyers tried. She referred to the Securities
Board lawyers as “lead prosecutor in this case.” 5R41. The state also designated
Texas Securities Board members as expert witnesses in the case; Joe Rotunda, the
Director of Enforcement, and Travis Iles, the Assistant Director of Enforcement;
both lawyers. 1CR13. Thereafter, Ms. Angela Cole appeared as a witness in an
affidavit seeking the deposition of Mr. Garrido. 1CR49. And testified at the pretrial
hearing. 4R15.
Discussing the “special prosecutor” issue, at the beginning of voir dire, Ms.
Allen introduced Ms. Cole and Ms. Good as prosecutors in the case. 6R4–5.
Counsel for Appellant immediately objected that he was not waiving his right to
contest the legitimacy of the prosecution by lawyers from the Securities Board,
6R12-13, and that he wanted to address the attempt to use securities lawyers as a
special prosecutor. 5R38. He requested that the state be required to file a motion to
include a special prosecutor and provide “the basis” for having such a prosecutor.
5R44-45. The court noted his objection to the special prosecutor, but allow the
representation by the State Securities Board lawyers. 5R44. Also, Appellant raised
the separation of powers issue saying; "The issue is basically separation and
balance of powers between the police authority and prosecution, and this case
develops why that is a problem. This is actually an SEC case where they were
13
engaged in some of the similar activities. The SEC office seems to cultivate their
own witnesses and then they're talking about the problems with what [that] creates,
and you have the same person or at least in the same firm doing probable cause,
doing prosecutions. The prosecutors begin to act like police and police begin to act
like the prosecutors." 10R4-5.
Good, counsel with the Securities Board conducted voir dire in this case. 6R
28. She informed the jury that it was she and the Texas Securities Board that
brought the indictment:
“It is actually the one found in a separate section called the
Texas Securities Act, and the Texas Securities Act created the agency
that I and one of my colleagues work for. …And then lastly the Texas
Securities Act provides methods of enforcement by taking actions
against individuals and companies who violate the Act including
criminal actions. That’s why we’re here today.” 6R28-29 [emphasis
added].
Another securities lawyer, Mr. Rotunda testified that he reviewed the investigation
of those working under him and determined whether or not this case merited being
taken to a grand jury. 7R30. Therefore, the Securities Board attorneys, usurping the
duties of the District Attorney, were in control of the prosecution, which is an
Executive department infringement on the Judicial department’s powers. As a
consequence, these convictions are void.
Point of Error Number Two: Section 581-29(C)(3) of Vernon’s Civil Statutes
is Unconstitutional on its Face Because it Assigns Criminal Penalties to
Ordinary Negligence. Fifth, Sixth and Fourteenth Amendments, United States
Constitution. 5R49.
14
Point of Error Number Three: Section 581-29(C)(1) of Vernon’s Civil Statutes
is Unconstitutional on its Face Because it Assigns Criminal Penalties to
Ordinary Negligence. Fifth, Sixth and Fourteenth Amendments, United States
Constitution. 5R49.
These points of error will be argued together.
The face of the indictment alleges “false statement securities 58l-29(c)(3)”
and in count 1, that Appellant did “then and there sell and offer for sale a
membership interest in… a security… and said [Appellant] committed
fraud…by… Intentionally failing to disclose…a material fact; and…Intentionally
and knowingly misrepresenting …a relevant fact.”
Appellant objected to the Securities charge because the Act allows a
prosecution at an “extremely low threshold” “on what they have to prove.” 5R49.
“Even though we’ve got an allegation in here that involves some
culpable mental state, it becomes almost a strict liability under that
approach.” Id.
A criminal statute that does not carry a sufficient mental state violates the Fifth
Amendment requirement of proof beyond a reasonable doubt, and the Sixth
Amendment requirement of a jury verdict in relation to the Fifth Amendment
requirement. These amendments are applicable to the states through the
Fourteenth Amendment.
15
Appellant was convicted of Tex. Civil Code §581-20(C)(3) or (1)2. That statute
states:
C. In connection with the sale, offering for sale or delivery of the
purchase, offer to purchase, invitation of offers to purchase,
invitations of offers to sell, or dealing in any other manner in any
security or securities, whether or not the transaction or security is
exempt under Section 5 or 6 of this Act, directly or indirectly:
(1) engage in any fraud or fraudulent practice;
…(3) knowingly make any untrue statement of a material fact or
omit 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
(emphasis added).
As evidence of the ambiguous nature of the Securities law, the state appears
to have, itself, become confused about the attributes of a prosecution by
confusing a misstatement case under subsection (3) with a fraud case under
subsection (1). Both are constitutionally infirm, however, so we need not
distinguish them here. But, the state must prove what it charges. And since
it proved an alleged fraud but charged an alleged misstatement case, the
variance is fatal to this conviction as briefed below.
Under both subsections of the Securities law, however, Texas Court of
Criminal Appeals uses a reasonable person standard to determine whether or not a
fact meets the definition of “material” in the context of the penal section of Texas
securities transactions. Bridwell v. State, 804 S.W.2d 900, 903-04 (Tex. Crim.
2 See variance point of error below.
16
Ohio App. 1991). The Court of Criminal Appeals stated and expanded that sentiment
when it said:
We find that the Supreme Court’s definition of ‘materiality’ provides
the most objective standard yet applied to securities transactions, and
therefore is appropriately applied to interpret ‘material fact’ in
connection with articles 581-29(C)(1) and 581-4(F). Restated, an
omitted fact is material if there is a substantial likelihood that it would
have assumed actual significance in the deliberations of a reasonable
investor, in that it would have been viewed by the reasonable
investor as significantly altering the total mix of available
information used in deciding whether to invest.
Id. at 904. (emphasis added).
The Court of Criminal Appeals improperly uses that definition in a penal
context; it was derived for civil purposes, in a civil context, where a reasonable
person standard suffices. The definition is from TSC Indus. v. Northway, 426 U.S.
438, 449, 96 S. Ct. 2126, 48 L. Ed. 2d 757 (1976). In TSC Indus. the Supreme
Court determined the definition of material in the context of a civil Securities and
Exchange Commission statute that regulates corporation’s proxy statements to
investors. In determining the most sufficient definition of material, the Court
stated that the consideration should be, “the proper balance between the need to
insure adequate disclosure and the need to void the adverse consequences of
setting too low a threshold for civil liability…” Id. 449 (citing to Northern
Indiana Public Service Co. v Izaac Walton League, 423 U.S. 12, 15, 96 S. Ct. 172,
46 L. Ed. 2d 156 (1975))[emphasis added]. Therefore, when the Supreme Court
17
defined material as stated in the previous paragraph, it intended it to be applied
only to civil cases. The Court of Criminal Appeals, however, improperly applies
that definition to criminal cases. Again, this is what the Court relied upon in
Bridwell v. State, 804 S.W.2d 900, 903-04 (Tex. Crim. App. 1991). The trial court
and prosecutors, here, relied on the same case.
Additionally, the United States Supreme Court in Elonis v. United States,
135 S. Ct. 2001, 2010 (2015), held that a reasonable person standard does not
suffice in a penal context, because that criminalizes ordinary negligence. Elonis
involved how “true threat” should be defined in a penal context. The Court
declined to define true threat as how a reasonable person would view the words
communicated to them. In regard to that holding, the Court specifically explained
its reasoning when it stated, “Elonis’s conviction…was premised solely on how his
posts would be understood by a reasonable person. Such a ‘reasonable person’
standard is a familiar feature of civil liability in tort law, but is inconsistent with
‘the conventional requirement for criminal conduct—awareness of some
wrongdoing.’” Id. at 2011 (citing to Staples v. United States, 511 U.S. 600, 606-07,
114 S. Ct. 1793, 128 L.Ed2.d 608(1994) (quoting United States v. Dotterweich, 320
U.S. 277, 281, 64 S. Ct. 134, 88 L. Ed. 48 (1943)).
The Elonis Court went on to say that a reasonable person standard makes
ordinary negligence a crime, and that defies conventional requirements regarding
18
the necessary mental requisite to commit a crime. Id. at 2010. The Court explored
this concept when it said:
Having liability turn on whether a ‘reasonable person’ regards the
communication as a threat—regardless of what the defendant thinks—
‘reduces culpability on the all-important element of the crime to
negligence,’ United States v. Jeffries, 692 F.3d 473, 484 (6th Cir.
2012), (Sutton, J., dubitante) and we ‘have long been reluctant to infer
that a negligence standard was intended in criminal statutes,’
Elonis at 2011 (citing to Rogers v. United States, 422 U.S. 35, 47 (1975)(Marshall,
J., concurring) (citing Morissette v. United States, 342 U.S. 246, 72 S. Ct. 240, 96
L. Ed. 2d 288 (1952)). See 1 C. Torcia, Wharton’s Criminal Law § 27, pp. 171-72
(15th ed. 1993); Cochran v. United States, 157 U.S. 286, 294, 15 S. Ct. 628, 39
L. Ed. 2d 704 (1895) (“defendant could face ‘liability in a civil action for
negligence, but he could only be held criminally for an evil intent actually existing
in his mind’”).
Additionally, § 581-29(C)(1) (and 581-4(F)) is facially unconstitutional,
because it does not require a jury to find every element of the alleged offense
beyond a reasonable doubt. Rather, the Court of Criminal Appeals only requires
that the jury find, beyond a reasonable doubt, a substantial likelihood that a
defendant misrepresented or omitted a material fact. The Court of Criminal
Appeals held this when it stated:
Applying the ‘substantial likelihood’ test of TSC Industries, Inc. v.
Northway, Inc. to the facts in the instant case, we find that the
evidence was sufficient to support a rational jury finding beyond a
19
reasonable doubt that appellant’s failure to disclose his prior
fraudulent dealings was fraud within the meaning of articles 581-
29(C)(1) and 581-4(F).
Bridwell v. State, 804 S.W.2d 900, 904 (Tex. Crim. App. 1991).
The Fifth Amendment requires proof beyond a reasonable doubt, and the
Sixth Amendment requires an interrelated jury verdict. Sullivan v. Louisiana, 508
U.S. 275, 278, 113 S. Ct. 2078, 124 L. Ed. 2d 182 (1993). The Supreme Court
specified that “[i]t would not satisfy the Sixth Amendment to have a jury determine
that the defendant is probably guilty, and then leave it up to the judge to
determine…whether he is guilty beyond a reasonable doubt.” Id.
Criminal fraud is prohibited under Chapter 32 of the Penal Code and it is
based not on a general definition allowing negligence, but a series of specific
definitions requiring criminal conduct. See Tex. Penal Code 32.32 (West 2015). In
fact, the definition of “fraud” used in the indictment sets a threshold that is too low.
See section above explain the low civil threshold employed.
The indictment, on its face, is not a criminal fraud charge. Counsel filed a
exception to the indictment asking for dismissal of the count one charge on the
basis that it did not constitute an offense and that motion was denied. 1CR150.
The indictment, in count one alleges that the “defendant committed fraud in
connection with the sale of said security” following the statutory citation to the
misrepresentation portion of the statute, not the fraud portion, and preceding a
20
lengthy eleven paragraphs long rendition of “misstatement” allegations. 1CR5-
7. These 11 separate paragraphs assert various failures to disclose facts and
making misrepresentations that variously described the nondisclosures as a
“material fact” and “relevant facts.” Nowhere does count one explain what the
“fraud” is that constitutes an offense.
Chapter 32 of the Penal Code sets out all criminal “fraud” offenses under
Texas law. None of those offenses are charged in count one or in the 11 paragraphs
following count one. The closest any of the chapter 32 fraud offenses come to
conduct charged in the indictment is with respect to section 32.32 of the Penal
Code, which sets out an offense for intentionally or knowingly making a material
or misleading “written” statement to obtain property or credit. Nowhere in the
indictment in count one is it alleged that the Appellant made a written material or
misleading statement to obtain credit. The title to the security statute containing the
“fraud” provision explains that these provisions should be “penal” in nature.
Reference is, therefore, made to the Texas Penal Code to define fraud. If this
were not the case, “fraud” would be defined in the securities laws as mere
negligence in 581-4(F) and is unconstitutional as explained above. Since the statute
says it is a penal provision, the Penal Code defines criminal “fraud” in the
securities provisions and none of those fraud offenses are applicable or even
charged here.
21
Because the Securities law is unconstitutional the conviction on count one must be
reversed and rendered.
Point of Error Number Four: The court erred by denying Appellant’s motion
to dismiss count one (securities laws) because the statute of limitations had
expired on this offense. 1CR7, 6R109, 3CR674, 6R120, 3CR801, 11R 36.
Point of Error Number Five: The court erred by denying Appellant’s motion
to dismiss and count two (theft) because the statute of limitations had expired
on this offense. 1CR7, 6RR109, 3CR 674, 6R120, 3CR801, 11R 36.
These points of error will be argued together.
The State must plead and prove any tolling provision to the statute of
limitations. Here, the State did neither. Cooper v. State, 527 S.W.2d 563 (Tex.
Crim. App. 1975)[statements at a pretrial motion hearing will not prove tolling
which is the State’s obligation in a securities case]. This Court reviews whether
the statute of limitations for an offense has expired prior to the charge under a de
novo standard of review. Provident Life & Assc. Ins. Co. v. Knot, 128 S.W.3d 211,
215 (Tex. 2003).
The indictment charged the violation of the securities laws (count one) and
theft (count two) occurring on “the 7th Day of November 2008.” 1CR5-7.
However, proof in the case showed that the company agreement forming Nafta
Holdings, LLC is dated November 3, 2008. Therefore, the offenses of securities
fraud/misstatement and theft were completed on November 3, 2008. The statute of
limitations for these two offenses runs five years after the date of completion of the
offense. Five years after November 3, 2008 is November 3, 2013. The indictment
22
in this case was brought on November 6, 2013, at 11:20 a.m. 1CR7. Counsel filed
a motion for writ of habeas corpus asking for the indictment to be dismissed on this
basis (6R109), which writ was denied. 3CR674, 6R120. Appellant requested that
the court give a limiting instruction to the jury, informing them that if certain
actions were outside the statute of limitations, it could not consider it as part of the
offense. 8R170. Counsel also submitted a motion for a directed verdict and for a
finding of the statute of limitations bar, which was denied. 3CR801, 11R36.
Fraud/Misstatements
To satisfy the statute of limitations, an indictment for securities fraud must be
brought within five years of the crime. Section 581-29-1, Vernon’s Annotated
Civil Statutes. The limitations period beings to run when the crime is complete.
Digges v. State, 2012 Tex. App. Lexis 5195 (Tex. App.-Dallas 2012, no pet.), cert.
denied, 133 S. Ct. 2801 (2013). Garrido on cross-examination does not dispute that
the investment contract was signed on November 3, 2008. 9R51. In Taylor v. State,
450 S.W.3d 528, 538 (Tex. Crim. App. 2014) the court explained that when a
contract is involved, the offense is completed when the defendant forms the intent
to take the money at the time the contract is entered. Under the circumstances of a
contract, deprivation of property is not criminal conduct. It is a fact intrinsic to the
existence of a contract. So the offense is complete when the defendant enters into
the contract with the intent to commit fraud or theft.
23
Appellant was indicted on November 6, 2013, (1CR7) three days after the
statute of limitations expired. All of the alleged securities and alleged
misstatements involved in the sale of the purported securities were made on or
before November 3rd, 2008. Therefore, the prosecution’s indictment is time-
barred by the statute of limitations. Garrido testified that all of the statements that
induced his investment were made in August, September, and October of 2008.
9R51-52
SALE OF SECURITY
The Texas Securities Act, Art. 581-4(E), defines “sale” as follows: the terms “sale”
or “offer for sale” or “sell” shall include every disposition, or attempt to dispose
of a security for value. The term “sale” means and includes contract and
agreements whereby securities are sold, traded or exchanged for money, property
or other things of value, or any transfer or agreement to transfer, in trust or
otherwise. State v. PUC of Tex., 344 S.W.3d 349, 359. A “security” is defined, in
part, as: “any share, stock, treasury stock, stock certificate, under a voting trust
agreement, collateral trust certificate, equipment trust certificate, pre-organization
certificate or receipt, subscription or reorganization certificate, note bond,
debenture, mortgage certificate or other evidence of indebtedness….” Tex. Rev.
Civ. State. Ann. Art. 581-4(A). “Evidence of indebtedness” means “some writing
that indicates a contractual obligation to pay in the future for consideration
24
presently received.” Thomas v. State. 65 S.W.3d 38, 45 (Tex. Crim. App. 2001).
So when Villarreal offered the interest in the contract to Garrido, and he agreed,
the alleged offense conduct was complete.
Ms. Good agrees, “fraud has to be a connection with the sale or someone
offering you a particular investment.” 6R29 [emphasis added]. Garrido on cross-
examination does not dispute that the contract was signed on November 3rd 2008,
(9R51), which would constitute the offer for sale. Therefore, the Nafta Holdings,
LLC agreement signed on November 3rd contractually obligated Mr. Garrido to pay
the monies on or about November 7th. Once he was contractually obligated, the
statute of limitation of five years on any false misstatements commenced. Garrido
agreed that he was obligated to pay the monies to invest in Nafta Holdings, LLC
by November 3, 2008 when he signed the agreement. The alleged offense conduct
was completed on that date and the Indictment is untimely.
THEFT
A theft occurs when (1) property is (2) unlawfully appropriated (3) by
someone (4) with intent to deprive the owner of that property. Tex. Penal Code
Ann. § 31.03. The statute of limitation for felony theft is five years. Code Crim.
Proc. Ann. Art. 12.01(4)(A) (Vernon 2015). The Texas Penal Code allows multiple
thefts committed pursuant to one scheme or continuing course of conduct – at
different times and against different victims – to aggregate within one offense for
25
purpose of the offense grade. TEX. PENAL CODE ANN. § 31.09. Aggregation under
section 31.09 creates a single offense for jurisdiction, punishment, and statute of
limitation purposes. Graves v. State, 795 S.W.2d 185, 187 (Tex. Crim. App. 1990).
Each individual theft becomes an element of the aggregate theft offense. State v.
Weaver, 982 S.W.2d 892, 893 (Tex. Crim. App. 1998). The limitation period for
aggregate theft begins to run after the last theft is completed. Tita v. State, 267
S.W.3d 33, 35 n.1 (Tex. Crim. App. 2008).
A theft is complete when all the elements have occurred. Barnes v. State,
824 S.W.2d 560, 562 (Tex. Crim. App. 1991). Theft is not a continuing offense – it
does not continue as long as the actors retain control of the stolen property. Barnes,
824 S.W.2d at 562; see also Cupit v. State, 122 S.W.3d 243, 246 (Tex. App.—
Houston [14th Dist.] 2003, pet. ref’d) Moreover, “[t]heft by exercising control is
committed and the statute of limitations commences once possession of the
property becomes unlawful.” Barnes, 824 S.W.2d at 562-63.
On November 3, 2008, Nafta Holdings, LLC formed an investment
contract. 6R32-33. The evidence presented shows that the investment contract was
signed and formed on November 3, 2008. 7R89. The State’s theory was that Mr.
Villarreal was in financial straights before that investment, had a home foreclosed
on the next day after the contract was signed, and had the motive and intent to steal
Mr. Garrido’s investment before the contract was signed.
26
Therefore, the statute of limitations began to run when Appellant exercised
control over the property, not the actual acquisition of the monies. Theft, under the
penal code, is the unlawful “appropriation” of money. See Section 3.03 of the
Texas Penal Code. "Appropriate" means: to bring about a transfer or purported
transfer of title to or other nonpossessory interest in property, whether to the actor
or another; or to acquire or otherwise exercise control over property other than
real property.” See Section 31.01(4), Texas Penal Code. When Mr. Villarreal
obtained the nonpossessory interest in Mr. Garrido’s $1million upon the signing of
the insurance company contract, the alleged offense conduct was completed.
Taylor v. State, 450 S.W.3d 528, 538 (Tex. Crim. App. 2014).
The statute of limitations for theft 31.03(e)(7), began to run on November 3,
2008, meaning it expired on November 3, 2013. Appellant was indicted on
November 6, 2013, at 11:20 a.m., outside the statute of limitations. 1CR7.
The State does not dispute the date of the unlawful appropriation but
characterizes other acts as an element of theft after November 6, 2008. 6R115. The
State argues that Appellant’s subsequent misrepresentation – made well within the
statute of limitations – completed the theft. A theft occurs when (1) property is (2)
unlawfully appropriated (3) by someone (4) with intent to deprive the owner of
that property. Tex. Penal Code Ann. § 31.03. The State argues that Appellant
continued to make misrepresentations regarding the investment funds. Those
27
alleged misrepresentations did not create a new theft offense because no additional
property was transferred or induced by any alleged representations that Mr.
Garrido testified induced him to make the investment. A theft occurs when each
element of the alleged offense is complete. Any subsequent misrepresentations,
possession or conduct does not extend the alleged theft. It is not a continuing
offense. Taylor v. State, 450 S.W.3d 528, 538 (Tex. Crim. App. 2014).
In Barnes v. State, 824 S.W.2d 560, 563 (Tex.Crim. App. 1991), a county
building superintendent was convicted of theft by a public servant for keeping a
lawn mover that he was supposed to trade in. The court of appeals reversed the
judgment and entered a judgement of acquittal. The court held that theft by
exercising control was committed, and the statute of limitations commenced, “once
possession of the property becomes unlawful.” Id. at 563. Villarreal obtained a
non-possessory interest in the property on November 3, 2008, when the Nafta
Holdings, LLC contract was signed. 7R89. Therefore, the statute of limitations
began to run when Villarreal exercised control over the property.
In Taylor v. State, 450 S.W.3d 528, 537 (Tex. Crim. App, 2014), the court
held a claim of theft made in connection with a contract…requires proof of more
than an intent to deprive the owner of property and subsequent appropriation of the
property. In that circumstance, the State must prove that the appropriation was a
result of the false pretext, or fraud. Moreover, the evidence must show that the
28
accused intended to deprive the owner of the property at the time. The court
emphasized, the deprivation of property cannot occur prior to the formation of the
requisite intent. Higginbotham v. State, 356 S.W.3d 548, 588 (Tex. App,. –
Texarkana 2011, pet. ref’d).
The inducement for the contract took place in August, September and
October of 2008, before November 3, 2008; when Garrido testified that all
conversations that he had with Villarreal lead up to the agreement. 9R51-52. The
statute of limitations began to run on November 3, 2008, when Appellant and
Garrido entered into the investment contract.
Since the statute of limitations expired before the indictment was brought
for counts one and two, these convictions must be reversed and rendered.
Point of Error Number Six: The Evidence is Insufficient to Sustain a
Conviction on Count One, passim. 1CR7. Jackson v. Virginia, 443 U.S. 307,
S.Ct. 2781, 61 L. Ed. 2d 560 (1979)
Point of Error Number Seven: The Evidence is Insufficient to Sustain a
Conviction on Count Two, passim. Jackson v. Virginia, 443 U.S. 307, S.Ct.
2781, 61 L. Ed. 2d 560 (1979)
These points of error will be argued together.
The State Failed to Prove Theft of “U.S. Currency” as Alleged in Count Two
of the Indictment.
Count two of the indictment alleges that Villarreal acquired and unlawfully
appropriated $200,000.00 or more in “U.S. Currency”. 1CR7 “Currency” is
defined in the Texas Finance Code as the “coin and paper money of the United
29
States.” Tex. Fin. Code Ann. § 151.501. Appellant testified at trial that Garrido
never gave him any money in cash or coins. 12R94. Garrido made his initial
$1million payment in the form of two checks, one on November 6, 2008 for
$650,000 and the other on November 7, 2008 for $350,000. 3CR422, 423. The
evidence is insufficient to show theft of “U.S. Currency” because the money was
deposited by check.
In Jackson v. State, an appellant made a challenge to the sufficiency of the
evidence by arguing that the evidence only showed theft of a check, not theft of
cash as charged in the indictment. Jackson v. State, 646 S.W.2d 225, 226 (Tex.
Crim. App. 1983). The court found this unpersuasive, holding that the check was
simply the instrumentality through which appellant received the cash. Id. Jackson
can be distinguished here, because Nafta Holdings, LLC was the party to whom the
check was made out and the party that ultimately received the money. 3CR422,
423. Appellant had access to the money as the owner of Nafta Holdings, LLC, but
Garrido also had access in his role as Business Administrator and account
signatory. Therefore, Appellant did not receive the cash in the manner
contemplated in Jackson. 3CR283. Also, Jackson concerned an indictment that
charged theft of cash, whereas here the indictment alleges theft of “U.S.
Currency”. Jackson v. State, 646 S.W.2d 225, 226 (Tex. Crim. App. 1983); 1CR7.
The difference is that U.S. Currency cannot be construed to include checks, while
30
checks, as in Jackson, can be construed to mean instrumentalities through which
one receives cash.
The Texas Court of Criminal Appeals has previously discussed definitions
of the terms defining the instrument through which money is appropriated, by
looking at the common parlance of the word. See Stanfield v. State, 213 S.W.2d
837, 837 (1948) (interpreting the common parlance of the word “money” to mean
“money of the United States”). “Currency” is defined as an “item (such as a coin,
government note, or banknote) that circulates as a medium of exchange.”
Currency, Black’s Law Dictionary (10th Ed. 2014). “Check,” however, is defined
as a “draft, other than a document draft, signed by the drawer, payable on demand,
drawn on a bank, and unconditionally negotiable.” Check, Black’s Law Dictionary
(10th Ed. 2014). Because the definition of currency requires an item that circulates
as a medium of exchange, a check cannot be considered an item of currency. The
definition of “Cash” includes “negotiable checks,” but this indictment alleges theft
of “U.S. Currency,” not cash. Cash, Black’s Law Dictionary (10th Ed. 2014).
The State Failed to Prove that Appellant Appropriated U.S. Currency
Without the Effective Consent of the Owner.
Count Two of the indictment alleges that Appellant appropriated, “by
acquiring or otherwise exercising control over,” U.S. currency “without the
effective consent of the owner, namely, by deception, and with intent to deprive
31
the owner of the property”. 1CR7 The allegation that Appellant did not have the
effective consent of Garrido is left without any support. In fact, the evidence
presented strongly supports Garrido’s consent to Appellant’s operations of the
company. Appellant and Garrido were both signatories on the Nafta Holdings,
LLC account. 3CR282, 283. Garrido was an authorized signer with access to the
money and he willingly deposited his money into the Nafta Holdings, LLC Wells
Fargo account. Garrido understood that the expenses incurred by Appellant in
trying to get the insurance company off the ground would be reimbursed to
Appellant through the $1million investment. 12R51, 53. The contract for Nafta
Holdings, LLC, to which Appellant and Garrido agreed on November 3, 2008,
gives Appellant, as Manager, the “sole and exclusive control of the management,
business and affairs of the Company, and the Manager shall make all decisions and
take all actions for the Company not otherwise provided for in this Agreement,
including, without limitation . . . entering into, making, and performing contracts,
agreements, and other undertakings binding the Company that may be necessary,
appropriate, or advisable in furtherance of the purposes of the Company and
making all decisions and waivers thereunder” [emphasis added]. 3CR691 The
Company Agreement also gives the Manager the ability, “to the extent that funds
of the Company are available therefor, [to pay] debts and obligations of the
Company”. 3CR691. Even when First National Bank would not release
32
Appellant’s money in the CD Appellant had opened with them, Garrido expressed
his support and even told Appellant, “sue them, beat the hell out of them, and I’m
with you partner.” 12R182. The evidence presented is therefore insufficient to
support the allegation in Count Two that Appellant did not have the effective
consent of Garrido.
In fact, the evidence strongly supports that Garrido knew what Appellant
was doing with the money. The fact that the contract included language that the
Manager shall have “sole and exclusive control . . . . [of] other undertakings
binding the Company” shows that Garrido intended to allow Appellant a great deal
of leeway in his operations of Nafta Holdings, LLC. 3CR691. Garrido could have
insisted on making a very specific list of duties of the Manager, yet the language
even allows the Manager to pay “debts and obligations of the Company.” 3CR691
But instead, he went further and signed express authority in a “rights of
shareholders” agreement to give Appellant complete discretion to make all of
Garrido’s decisions as shareholder. DX 10, 15R48 [“to do all such other things
within the power of a shareholder of the Corporation, including giving consents
and waiving notices, if exercising such power, in his judgement, is necessary or
advantageous for the interests of the Nominor.”]. The fact that Appellant, as
Manager, had the ability to pay the debts and obligations of Nafta Holdings LLC,
at his discretion, supports Appellant’s testimony that Garrido understood that
33
Appellant had incurred expenses in trying to get the insurance company off the
ground and that Appellant would be reimbursed for those efforts. 12R51, 53.
Garrido knew that the CD was encumbered by the bank and that Appellant needed
money in order to form Nafta Holdings, LLC prior to making the investment and
also needed to live. 9R55-56. Garrido had signatory rights over both Nafta
Holdings, LLC accounts and he could get his money out by himself if he had had
that desire. 9R61, 63.
The State Failed to Prove that the Appellant Committed a Theft by Deception,
and with Intent to Deprive the Owner of Property.
There is no proof that Appellant had any intention or expectation that Nafta
Holdings, LLC would not succeed or that Appellant would not fulfill his
obligations as stated in the contract. In Taylor v. State, the Court of Criminal
Appeals dealt with a similar issue and held that “[a] contractor accused of theft
may not be convicted of that offense on the theory that he acquired a down
payment from his customer by deception if there [was] no reason to doubt that [the
contractor accused of theft] had every expectation at the time that the money
changed hands of fulfilling his contractual obligations; at the time of the down
payment, the customer paid voluntarily, and the accused neither intended nor knew
he would not perform.” Taylor v. State, 450 S.W.3d 528, 536 (Tex. Crim. App.
2014). Here, Garrido paid voluntarily and Appellant neither intended nor knew he
would not perform. It was Garrido’s failure to follow through with his second
34
contractually obligated payment that caused the venture to flounder and the failure
of the First National Bank that caused it to fail.
Further, the Court also held that “only when, at the time the money is
exchanged pursuant to the contract, the accused either intends not to, or at least
knows he will not, perform his part of the bargain may he be held criminally liable
for theft.” Id. Therefore, the deception must have happened at the time Appellant
and Garrido contracted, which was on November 3, 2008. 12R94, 201. All the
evidence was that Appellant, and his father before him, historically engaged in the
insurance business. He further arranged to contribute his own monies to the joint
venture and disclosed their encumbrance to Garrido. There is nothing in the
evidence showing that Appellant intended not to perform under the contract. When
asked by counsel what he was told by Appellant regarding the potential success of
Nafta Holdings, LLC, Garrido said, “He told me that it was going to be a great
business of great gain.” 8R173. Appellant’s representations to Garrido do not lead
to the conclusion that Appellant will not perform or knew he would not perform,
but rather constitute the type of representation made by any person before a
financial investment. Also, Appellant’s statements did not give Garrido any
expectation of certain or guaranteed financial gains or goals. This the sort of
puffery recognized as non-criminal in nature. See Prudential Ins. Co. of Amer. v.
35
Jefferson Assoc. Ltd., 896 S.W.2d 156, 162 (Tex. 1995)[mere puffing or opinion
does not constitute fraud].
Garrido also answered affirmatively to whether Appellant seemed wealthy to
Garrido and testified that he “considered [Appellant] a businessman” and “never
thought he was a fraudulent person, a man who steals.” Id. Under the theft statute,
“Deception” means to “[create] or [confirm] by words or conduct a false
impression of law or fact that is likely to affect the judgment of another in the
transaction, and that the actor does not believe to be true.” Tex. Penal Code Ann. §
31.01. If the deception allegedly committed by Appellant on Garrido was that he
represented himself as a wealthy and successful businessman, then Appellant
would need to be unsuccessful and not wealthy in order for his representations to
fall under the definition of “Deception”. However, Appellant is a successful and
wealthy businessman, as evidenced by the fact that he had a net worth of $3.2
million. 12R78. There is no statutory definition of “successful businessman” and
representing oneself as a successful businessman does not constitute a deception
under § 31.01. See Prudential, supra.
The State Failed to Disprove Exceptions in the Texas Security Act.
This Court determines whether evidence is sufficient by reviewing it in the
light most favorable to the verdict to determine whether a rational juror could have
found the essential elements beyond a reasonable doubt. Jackson v. Virginia, 443
36
U.S. 307, S.Ct. 2781, 61 L. Ed. 2d 560 (1979); Brooks v. State, 323 S.W.3d 893
(Tex. Crim. App. 2010). Also, the rational juror is not permitted to draw
conclusions based upon speculation. Hooper v. State, 214 S.W.3d 9, 15 (Tex.
Crim. App. 2007). Speculation may not seem entirely unreasonable, “but it is not
sufficiently based on facts or evidence to support a conviction beyond reasonable
doubt.” Gross v. State, 380 S.W.3d 181, 188 (Tex. Crim. App. 2012). Villarreal
moved for a directed verdict at the close of this case. 11R24.
Although it is the burden of the Appellant to raise an exception to the Texas
Securities Act, Tex. Rev. Civ. Stat. Ann. art. 581-37, if raised, “the burden shift[s]
to the State to disprove such defense beyond a reasonable doubt.” Dean v. State,
433 S.W.2d 173, 178 (Tex. Crim. App. 1968). Appellant raised the two statutory
exemptions provided in article 581-5(C) of the Texas Revised Civil Statutes in his
Motion for Exception to the Indictment. 1CR150–153. The exemptions provided
in article 581-5(C) apply (1) when a vendor, in an isolated transaction, sells an
investment of its personal holdings or the vender’s registered agent sells the
investment, and (2) when an insurance company regulated by the Texas
Department of Insurance sells a security owned by the company and the sale is not
made or intended to benefit any other company. Tex. Rev. Civ. Stat. Ann. art.
581-5(C) (West Supp. 2014).3
3
Article 581-5(C) of the Texas Revised Civil Statutes states that this Act does not apply to:
37
Facts supporting the applicability of these exemptions appear on the face of
indictment. Paragraph four states that Appellant committed fraud in connection
with the sale of a security, a membership interest in Nafta Holdings, LLC, by,
“[i]ntentionally failing to disclose that the assets of Nafta Holdings, LCC were
pledged 100% to First National Bank, as of the 10th day of June,
2008 . . . .” 1CR6. This paragraph raises that Appellant, in an isolated transaction,
sold an investment of his personal holdings to First National Bank, thereby placing
this action within the statutory exemption under article 581-5(C)(1). Because
Appellant argued for the applicability of this exempt transaction, the burden is on
the State to disprove this defense beyond a reasonable doubt. Dean, 433 S.W.2d at
178. The State failed to do so. The State was unable to demonstrate that Appellant
was in the business of selling securities or that he was involved in “repeated and
successive transactions of a like character.” Tex. Rev. Civ. Stat. Ann. art. 581-
5(C)(1) (West Supp. 2014). Nor does the State provide any evidence to suggest
(1) Sales of securities made by or in behalf of a vendor, whether by dealer or other agent, in the
ordinary course of bona fide personal investment of the personal holdings of such vendor, or
change in such investment, if such vendor is not engaged in the business of selling securities and
the sale or sales are isolated transactions not made in the course of repeated and successive
transactions of a like character; provided, that in no event shall such sales or offerings be exempt
from the provisions of this Act when made or intended by the vendor or his agent, for the benefit,
either directly or indirectly, of any company or corporation except the individual vendor (other
than a usual commission to said agent), and provided further, that any person acting as agent for
said vendor shall be registered pursuant to this Act; (2) Sales by or on behalf of any insurance
company subject to the supervision or control of the Texas Department of Insurance of any
security owned by such company as a legal and bona fide investment, provided that in no event
shall any such sale or offering be exempt from the provisions of this Act when made or intended,
either directly or indirectly, for the benefit of any other company as that term is defined in this
Act.
38
that this sale was intended to benefit any other company or corporation other than
Nafta Holdings, LLC. Id. The State therefore failed to provide sufficient evidence
to disprove this exempt transaction defense beyond a reasonable doubt. Dean, 433
S.W.2d at 178.
Similarly, the indictment raises the second statutory exemption provided in
article 581-5(C)(2) of the Texas Revised Civil Statutes. The indictment states that
Appellant did “sell and offer for sale a membership interest in Nafta Holdings,
LLC, said membership interested being a security,” to Garrido. 1CR5. Raul
Villanueva, a former employee for First National Bank, served as a loan officer for
Appellant’s companies. 8R59–60. Raul Villanueva identified Nafta Holdings,
LLC as an insurance related company Appellant was involved with at First
National Bank. 8R61–62. As Villarreal testified, “Nafta Holdings was going to be
the owner of Nafta Insurance Company.” 12R64. Villarreal acquired a $2.3
million loan to start an insurance company and this loan was given to Nafta
Holdings, LLC directly. 12R78–79. In starting this company, Appellant testified
that an application for an insurance company would need to be submitted to the
Texas Department of Insurance and, in forming this company, he sought to acquire
$2 million in working capital required by the Texas Department of
Insurance. 12R176–77. Thus, Nafta Holdings, LLC was an insurance company
subject to the supervision or control of the Texas Department of
39
Insurance. Appellant sold a membership interest in Nafta Holdings, LLC and there
are no facts to suggest that this sale was made for the benefit of any other
company. As a result, the evidence presented raised the affirmative defense
provided in article 581-8(C)(2) and the state was thus required to disprove this
defense beyond a reasonable doubt.” Dean v. State, 433 S.W.2d 173, 178 (Tex.
Crim. App. 1968). Because the State did not disprove these two exemptions the
evidence was insufficient to convict.
Point of error number eight: The state failed to plead and disprove the
exception to the sale of a security contained in the criminal provision of the
securities act, so count one failed to state an offense.1CR5-7, 1CR150-154,
5R46, 7R15. State v. Laird, 208 S.W.3d 667 (Tex. App.—Fort Worth 2006, no.
pet.)
Appellant raised the applicability of the insurance related contract provision
in the Securities Act via pretrial motion. 1CR150-154. He argued that the act did
not apply to this contract, by its own terms. The court denied his motion. 7R15
Article 581-4 (A) defines the term “security.” The face of the indictment
asserts in its title that “false statements securities 581-29 (C) (3)” is charged.
Further, the opening paragraph of the indictment states that the “Defendant
committed fraud in connection with the sale of the security”. 1 CR5.
The definition of a security expressly excludes any contract or agreement in
40
relation to and in consequence of any insurance contract. 4 The Penal Code
requires that such exceptions must be plead in the indictment and negated by the
State by proof beyond a reasonable doubt. See V.T.C.A § 2.02 (West 2015). The
statute under which Appellant was indicted is found in Vernon’s Texas Civil
Statutes, not the Texas Penal Code. See TEX. CIV. STAT. CODE ANN. art. 581-29
(West 2015). Article 581-29 is titled Penal Provisions. See id. However, this does
not excuse the state from negating the exemption and proving it beyond a
reasonable doubt. In State v. Laird, 208 S.W.3d 667 (Tex. App.—Fort Worth 2006,
no. pet.), the defendant was indicted for violating the state clean air act by burning
“domestic waste”, which is found in the Texas Water Code Annotated, along with
any exceptions to the definition of “domestic waste.” See State v. Laird, 208
S.W.3d 667, 670–71 (Tex. App.—Fort Worth 2006, no. pet.) (showing the
definition and exceptions are found in Texas Water Code Annotated).
Nevertheless, the court found the indictment “the state must negate the existence of
any exception to an offense in the charging instrument… and the negation of an
exception to the offense is an element of the offense.” See id. at 671. The court
was not troubled by the fact the definition or exceptions were found outside of the
4 "Provided, however, that this definition shall not apply to any insurance policy, endowment
policy, annuity contract, optional annuity contract, or any contract or agreement in relation to
and in consequence of any such policy or contract, issued by an insurance company subject to
the supervision or control of the Texas Department of Insurance when the form of such policy or
contract has been duly filed with the department is now or hereinafter required by law." See TEX.
CIV. STAT. CODE ANN. art. 581-4 (A) (West 2015).
41
Texas Penal Code. See id. at 671, n. 5 (2006) (finding “[e]ven though the offense
of outdoor burning is found in the water code, not the penal code, the penal code's
negation-of-exceptions requirement applies to offenses defined by other laws as
well.”)
Count one of the indictment fails to state an offense because it does not
plead that an exception to the securities law is negated. The state is obligated by
the Vernon’s Texas Penal Code to prove beyond a reasonable doubt that any
exception contained in the law does not apply. See id. Under Vernon’s Texas Civil
Statutes section 581-4 the security law provides that it does not apply to any
“insurance policy, endowment policy, annuity contract, optional annuity contract,
or any contractor agreement in relation to any consequence of any such policy or
contract, issued by an insurance company subject to the supervision or control of
the Texas Department of Insurance when the form of such policy or contract has
been fully filed with the Department is now or hereinafter required by law.” See
TEX. CIV. STAT. CODE ANN. art. 581-4 (A) (West 2015). Therefore, the conviction
in count one is void.
Point of error number nine: The Denial of Villarreal’s Request for the
Inclusion of the Statutory Exemption in the Jury Instruction Constitutes
Reversible Error 13R21 Dean v. State, 443 S.W.2d 173 (Tex. Crim. App.
1968).
The defense of exempt transactions was raised by the evidence, “whether such
evidence be produced by the State or the defense, and whether it be strong or
42
feeble, unimpeached, or contradicted, it is reversible error for the court to fail to
submit an affirmative instruction thereon if proper special requested charge or
objection has been made by the defense.” Dean, 433 S.W.2d at 178. Villarreal
objected to the jury charge by requesting “for the definitions of exemptions from
the acts for insurance sale.” 13R21. Although Villarreal did not request the
inclusion of the exemption for a vendor under article 581-5(C)(1) in the jury
charge, he did previously request that the State address both of the exempt
transactions listed under article 581-5(C) of the Texas Revised Civil Statutes in the
Motion for Exception to the Indictment. 1CR150. Despite this request, the trial
court ruled against Villarreal and denied the motion for exception to the
indictment. 7R15. The trial court’s prior denial of the inclusion of this statutory
exemption would have made the subsequent request for the vendor exemption
frivolous. Villarreal, therefore, was not required to repeatedly ask for the inclusion
of this defense. Because the court declined to include these defenses in the
instruction provided to the jury, the court committed a reversible error. Dean, 433
S.W.2d at 178.
Point of error number ten: A Material Variance Exists Between the
Allegations in Count two of the Indictment and the Proof Presented at Trial.
Passim Gollihar v. State, 46 S.W.3d 243, 246 (Tex. Crim. App. 2001).
Point of error number eleven: A Material Variance Exists Between the
Allegations in Count one of the Indictment and the Proof Presented at Trial.
Passim Gollihar v. State, 46 S.W.3d 243, 246 (Tex. Crim. App. 2001).
43
A variation exists between the offense alleged in Count Two of the
indictment, theft of U.S. Currency, and the evidence produced at trial, that Garrido
wrote checks to Nafta Holdings, LLC. 1CR7. This variance is fatal and thus
violates Appellant’s 5th Amendment right to due process. A variance occurs if
there is a discrepancy between the allegation in the indictment and the proof
presented at trial. Gollihar v. State, 46 S.W.3d 243, 246 (Tex. Crim. App. 2001).
A variance is material and will require reversal only if it “prejudices the
defendant's ‘substantial rights,’ either by surprising the defendant at trial or by
placing him at risk of double jeopardy.” United States v. Baker, 17 F.3d 94, 98 (5th
Cir. 1994). Due process is implicated in that the indictment failed to sufficiently
inform Appellant of the charge against him to allow him to prepare an adequate
defense at trial. Gollihar v. State, 46 S.W.3d 243, 248 (Tex. Crim. App. 2001)
(citing U.S. v. Sprick, 233 F.3d 845, 853 (5th Cir. 2000)). Appellant found himself
in a situation where the charge against him alleged that he appropriated U.S.
Currency, meaning cash or coins, but the proof presented at trial was that he
appropriated checks. Appellant was therefore left at trial to defend himself from a
charge not specified in the indictment, which is exactly the sort of surprise
contemplated in Baker. Thus, the variation between the proof presented at trial and
the allegation in the indictment was material, rendering the variance fatal and
requiring reversal.
44
In Count One of the indictment, there is a material variance between the
allegations in the indictment, False Statement Securities in violation of Art. 581-
29(C)(3), and the proof presented at trial, Fraud or Fraudulent practices in violation
of Art. 581-29(C)(1). 1CR7. Here, the variance prejudices Appellant’s substantial
rights and placed him at risk of double jeopardy. Under Article 581-4, “fraud” is
defined as “misrepresentations, in any manner, of a relevant fact; any promise or
representation or predication as to the future not made honestly and in good faith,
or an intentional failure to disclose a material fact.” Vernon's Ann.Texas Civ.St.
Art. 581-4. In Art. 581-29(C)(3), an offense is to “knowingly make any untrue
statement of a material fact or omit 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.” Vernon's Ann.Texas Civ.St. Art. 581-29(C)(3). The
difference between Art. 581-29(C)(1) and (C)(3) is that the untrue statements must
be, under the circumstances under which they are made, not misleading. However,
the indictment does not include such language and simply identifies the alleged
misrepresentation and follows it with “said information being a material fact.”
1CR7. Due Process is again implicated because Appellant has not been given
notice through the indictment in order to prepare an adequate defense at trial.
Gollihar v. State, 46 S.W.3d 243, 248 (Tex. Crim. App. 2001) (citing U.S. v.
Sprick, 233 F.3d 845, 853 (5th Cir. 2000)). The indictment gave Appellant the
45
impression that the charged offense was that of “False Statement Securities” yet
the proof presented at trial was merely fraud. Therefore, Appellant was surprised in
the manner delineated in Baker. United States v. Baker, 17 F.3d 94, 98 (5th Cir.
1994). Similarly, Appellant is subjected to the risk of double jeopardy because an
entirely different statutory offense has been proven at trial than the one alleged in
the indictment, so Appellant could expect to be brought back to court over the
same transaction. In regards to Count One of the indictment, the variance is
material and thus requires reversal.
Point of Error Number Twelve: The Prosecution Became an Interested Party
when it Gave Advice to the Victim in his Civil Suit, passim. 4R15. Young v.
U.S. ex rel. Vuitton et Fils S.A., 481 U.S. 787, 107 S. Ct. 2124, 95 L. Ed. 2d 740
(1987).
Initially, Mr. Garrido was going to appear as a defense witness. 1CR22 He
was represented by Mr. Paul Fourt. 1CR26 Further, Mr. Garrido had a civil suit
against Appellant. Id. Counsel announced to the court that they felt that if the civil
case resolved, that the criminal case would not need to go forward. 2R10-11, 3R7
Attorney Angela Cole, with the Texas State Securities Board as an Assistant
Director, began communicating with Mr. Garrido as a complaining witness in the
case. 1CR36 Thereafter, the state attempted to take the deposition of Mr. Garrido
1CR44-46, 4R 5-6 Mr. Fourt appeared in court indicating he represented Mr.
Garrido in his civil case. 3R7-8, 4R6 He stated that his client did not want to
proceed with prosecution of this case. But that when he met with prosecutors at the
46
DAs office, in an attempt to prepare an affidavit of non-prosecution based on his
settlement of the civil case, the district attorney rejected that. 4R14 Mr. Fourt also
objected to the fact that the district attorney met with his client out of his presence
based on their representation they would not discuss the civil case with his client.
However, they did discuss the civil case with his client and even advised the client
on the merits of him accepting the settlement in that civil case. 4R15, 3R3 After
that Mr. Fourt lost communications with his client and was given orders by Mr.
Garrido through an email to nonsuit the civil case. 5R39 Mr. Garrido represented
that he was scared into believing that any civil settlement would never be paid in
his only venue to resolve this matter was a criminal case. 5R39 But, his lawyer,
Mr. Fourt never gave him that advice. That advice must have come from his
meeting with Ms. Allen and Miss Cole, the assistant district attorney and the
Securities Board lawyer. 5R40 These prosecutors stepped over the line as
disinterested prosecutors and became advocates and legal representatives of Mr.
Garrido. Id Counsel objected that this conflict prohibited the lawyers from
pursuing the prosecution of the case. Id The state denied that it provided Mr.
Garrido civil advice. However, it never denied speaking to him about his civil
case. 5R41 And, in response to defense counsel’s representation they were in
possession of texts and emails from Mr. Garrido contradicting that representation,
5R43, the state’s only objection was that Mr. Fourt was no longer Mr. Garrido’s
47
attorney. 5R43 Defense counsel noted that the state would not be aware of this
information had it not been discussing Mr. Garrido’s suit and its disposition with
him. 5R44
“Your honor let me just add one thing. How she knows or if she
knows or how she found out that Mr. Fourt is no longer the attorney I
don’t know. There’s been no filings made of any kind or any
representation other than the phone call that I received from Mr. for
the Mr. Forrest no longer the attorney. I was advised by him that he
got an email that he was told to nonsuit the lawsuit. However, when
that discussion took place prior to the nonsuit, and it’s not a
coincidence that this nonsuit issue came up after we were already
seeking his deposition in the civil case, which was actually I think set
for today we would’ve been taking his deposition. So obviously
they’re intertwined Somebody advised him that he could not get out
of the civil case deposition unless you were to nonsuit the lawsuit, and
I’m certain that Mr. Fourt was not doing that because he was actually
prosecuting the civil case to try and get a resolution on the matter.”
5R44
At trial, the prosecution became an interested party when it represented and
gave advice to Garrido regarding his civil suit and, therefore, deprived Appellant
of his right to a disinterested prosecution. The Supreme Court has previously
established a “categorical rule against the appointment of an interested prosecutor.”
Young v. U.S. ex rel. Vuitton et Fils S.A., 481 U.S. 787, 814, 107 S. Ct. 2124, 2141,
95 L. Ed. 2d 740 (1987). The Court’s justification in establishing such a rule was
that “[i]t is a fundamental premise of our society that the state wield its formidable
criminal enforcement powers in a rigorously disinterested fashion, for liberty itself
48
may be at stake in such matters.” Id at 810. While it is true that prosecutors “are
necessarily permitted to be zealous in their enforcement of the law,” Marshall v.
Jerrico, Inc., 446 U.S. 238, 248, 100 S. Ct. 1610, 1616, 64 L. Ed. 2d 182 (1980), the
measures taken by the prosecution in the instant case clearly rise above the level of
acceptable zealousness and pass into the realm of prosecutorial misconduct. It is
important to remember, “the prosecutor's client is not the victim but the people
who live in the prosecutor's jurisdiction." ABA STANDARDS FOR CRIMINAL
JUSTICE: FOR THE PROSECUTION FUNCTION, STANDARD 3-3.1 (2015). Representing
and giving advice to a victim in a related civil matter and barring the plaintiff’s
civil attorney from sitting in on the meeting is essentially becoming a private,
interested prosecutor who is also representing plaintiff in a civil action. The
Fourth Circuit has handled a similar situation and responded that “use of private
prosecutors who are also representing plaintiffs in civil actions against the criminal
defendant should be discouraged.” Jones v. Richards, 776 F.2d 1244, 1247 (4th
Cir. 1985).
Point of Error number Thirteen: The court erred in permitting the Texas
Securities Board to act as both prosecutors and witnesses in this case. 10R323.
In Re Guerra, 235 S.W.3d 392, 431.
A prosecutor’s “primary duty” is “not to convict, but see that justice is
done.” In this regard, any interest that is inconsistent with the prosecutor’s duty to
see that justice is done is a conflict that could potentially violate a defendant’s right
49
to fundamental fairness. “Moreover, a conflict arising from a prosecutor's non-
economic, personal interest in the case can violate a defendant's right to due
process.” In Re Guerra, 235 S.W.3d 392, 431 (Tex. Crim. App. 2007, overruled on
other grounds).
Appellant argues that Angela Cole should have been disqualified because
Ms. Cole was biased and has a conflict of interest, and was a witness to one of the
concerns raised by Mr. Stapleton regarding Mr. Garrido. The absence of an
impartial and disinterested prosecutor has been held to violate a criminal
defendant’s due process right to a fundamentally fair trial. Ganger v. Peyton, 379
F.2d 709, 714 (4th Cir. 1967). In other words, the due process rights of a criminal
defendant are violated when a prosecuting attorney who has a conflict of interest
relevant to defendant’s case prosecutes the defendant. Ms. Cole stated on the
record that the Texas Securities Board had assigned her to this case a couple of
years ago. 4R16. Appellant objected that the witness from the Texas Securities
Board should not have been able to testify because lawyers from the same office
were prosecuting the case, citing the Bridwell case. 10R4 But then the court and
Stapleton discuss the fact the TSB lawyers are prosecuting. In error, the Judge
says that they are representing the Cameron County DA's office. But on the record
and when they speak, they say they are representing the Texas Security Board.
10R31. Appellant objected that they remain employees of the agency. He said it
50
would be like him becoming a special prosecutor then asking his partner to testify
in the case. 10R32 Stapleton asked that Ms. Lujan's testimony be stricken as a
remedy to the separation of powers problem and the court denied that request at
10R30 Ms Lujan works for the same Securities Board that Ms. Good and Ms. Cole
work for. 9R148 The Appellant complained that the same office investigated,
prosecuted and acted as witnesses in the case. 10R4-5. Ms Cole or another lawyer
from her office testified before the grand jury, her office investigated and chose to
charge Villarreal, lawyers in her office were named as expert witnesses, she
testified at a pretrial hearing and her colleague, Ms. Lujan, testified at trial in front
of the jury. Because Appellant was deprived of a disinterested prosecution, his
convictions must be reversed and he should be granted a new trial.
Point of error number Fourteen: The Court should have stricken Garrido’s
testimony and granted a mistrial when the state failed to produce his video
taped statement that had been in their possession. 2R6, 4R49. Jenkins v. State,
912 S.W.2d 793 (Tex. Crim. App. 1993)
The trial court denied Mr. Villareal’s due process of law and the right to
confront the witness against him under Article I, Sections 10 and 19, of the Texas
Constitution, by refusing to order the State to produce a prior-statement of Mr.
Garrido.
Texas Rule of Evidence 615 (e) provides that when the party who calls a
witness does not produce his prior statement “that is in their possession and that
relates to the subject matter of the witness's testimony,” the witness’s testimony
51
must be stricken from the record. TEX. R. EVID. 615(a) & (e). In addition if it’s an
attorney for the state that disobeys the order, the court must declare a mistrial. In
Jenkins v. State, 912 S.W.2d 793 (Tex. Crim. App. 1993), the court held the “plain
language” of 614(a), re-codified as 615, “requires a prosecutor to produce witness
statements that are in the prosecutor's possession.” Id. at 819.
Here, the district attorney’s office met with Mr. Garrido in its office and
videotaped his interview. 2R6, 4R49. Thereafter, the district attorney lost the prior
statement. Id. Counsel objected stating that they were entitled to the spoliation
presumption. 4R49, 5R33 That is, that the destroyed statement which was in the
states control to produce must be presumed favorable to the defense. The
interview was filmed in the district attorney’s office. The district attorney’s office
possessed the prior statement from Mr. Garrido. Instead, the state made an oral
motion in limine to prohibit the defendants from even mentioning the lost
recording of Garrido. 7R16 The Court erred in permitting the Garrido testimony
to stand. Appellant’s convictions should be reversed and he should be granted a
new trial.
Points of Error Fifteen through Eighteen:
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
due process clause of the 5th and 14th amendments to the United States
Constitution. 11 R1 75.
52
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
due course of law provisions of article 1, sections 13 and 19 to the Texas
Constitution. 11 R175.
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
fair trial clause of the 6th amendment to the United States Constitution. 11 R1
75.
The court’s comment on the State’s evidence as having proved its case
was the equivalent of directing a verdict in favor of the state and was therefore
calculated to cause egregious harm to the appellant requiring reversal under the
fair trial clause of article 1 section 10 to the Texas Constitution. 11 R1 75.
These 4 points of error will be argued together below.
The court commented on the weight of the evidence in front of the jury in
a manner that caused egregious harm because it amounted to the equivalent of a
directed verdict of guilt. During the cross-examination of the Appellant’s
character witness, Ms. Davila, the Appellant objected to a question concerning
whether she had learned he used investor funds for personal expenses because it
was not an accepted and proven fact; it was a matter for the trial jury to decide in
the very trial before it. However, the Court overruled the objection, finding that
that was the testimony so far; thus commenting on the weight of the evidence.
Q. (By Ms. Cole) Have you heard that the Defendant has used
investor funds for personal expenses?
MR. STAPLETON: And we’ll object to that.
That’s not been proved yet. That’s what this whole trial is about.
53
THE COURT: It’s what the testimony is so far.
I'll overrule the objection.
MR. STAPLETON: Yes, Your Honor.
Q. (By Ms. Cole) Have you heard that the Defendant has used
investor funds that were supposed to go into a company for his own
personal expenses without telling that investor?
A. No, ma'am. “ 11R175
The comment of the court, in effect, told the jurors that the case had been
proven by the state against the Appellant. In light of the fact that the evidence was
insufficient for a myriad of reasons as stated in the sufficiency, variance, and
statute of limitations points of error in this brief, the harm caused by the court’s
comment was egregious in light of all of the other evidence.
The state proved that Mr. Garrido and Villarreal reached a contractual
agreement to form an insurance company together on November 3 of 2008. The
binding contract obligated Mr. Garrido to pay $2 million in two payments. He
made the first payment into an account over which he had signatory authority
along with Mr. Villareal. 9R63 & 97-98 He testified that he could have obtained
his money from this account at any time. In exchange for this money, he obtained
24% interest in the company. Thereafter he was to make another $1 million
payment, which he failed to do. Because Mr. Garrido failed to make this additional
payment, the deal could not go forward as planned. 9R56-57 He attempted to
renegotiate the deal to obtain full management authority over the monies through
his son-in-law. 9R72-76 It was not until three months later that those monies were
54
transferred to other accounts. The First National Bank was where most of these
funds went and Mr. Garrido had signatory authority over this account as well.
9R155. In fact, his own personal financial advisor, Tomas Esteve, also worked at
First National Bank. 10R97 The testimony was that Mr. Garrido directed
expenditures (9R157) and had signed and express agreement for Mr. Villarrael to
exercise all control and make all decisions for all stockholders in the company. See
defense Exhibit 10, 15R47.
Ms. Lujan, who examined the financials tracing the flow of Mr. Garrido’s $1
million, reached no conclusion regarding whether any of the expenditures or
transfers constituted the illegal or unlawful transfer of funds or was done without
Mr. Garrido’s understanding. 9R162-163
Mr. Garrido agreed that he asked Mr. Villarreal to provide his girlfriend
monies and had him finance his trips to Mexico for medicine, among other things.
To just one driver, Mr. Garrido had transferred over $156,000. And he agreed he
signed the agreement for Mr. Villarreal to manage the money.
Furthermore, both the theft by deception offense and material misstatement
to sell a security offense have a five year statute of limitations that expired three
days before the indictment was brought in this case. The state’s theory was that this
was theft by deception and the sale of a security by misstatements. Mr. Garrido’s
testimony is that all representations upon which he relied to conduct this
55
contractual agreement had concluded in October 2008. 9R52 The contractual
agreement was entered into on November 3, 2008, more than five years before the
date of the indictment. 1CR 5-7 And the state’s proof varied from the indictment in
a number of ways. Not the least of these, was the fact that the indictment charged
violation of article 581-29 (C)(3), material misstatements and the sale of the
security, and the state kept alleging article 581-29 (C) (1), fraud in the sale of a
security violation. Further, the state charged theft of United States currency in its
theft count, Count 2, but instead prove the transmission of a cashier’s check and a
regular check. See points of error concerning sufficiency of the evidence, variance
and the statute of limitations above. The facts in these points of error are hereby
incorporated by reference as if fully set out below.
Because the proof in support of these 2 counts in the indictment was so
slight, the court’s comment caused egregious error. It was the equivalent of
instructing the jury that the state had met its burden of proof of showing that, under
either theory (theft or misrepresentations in the sale of security), Mr. Villarreal had
taken investor funds and diverted them to his own personal use. The courts
comment on the weight of the evidence was in essence an instructed verdict of
guilt. Cf. McGinnis v. State, 541 S.W.2d 431, 432 (Tex. App.-San Antonio 1976,
no pet.). Therefore, it was the type of comment that was calculated to convey to
the jury his opinion of the case. See Clark v. State, 878 S.W.2d 224, 226 (Tex-
56
Dallas 1994, no pet.). Due process and the Appellant’s trial by jury rights require a
neutral judge who has not commented on the weight of the evidence to the jury.
Where, as here, the comments cause probable prejudice to appellant, and egregious
harm, the case must be reversed. To prevail on this point the state must prove that
the courts error made no contribution to the conviction because it established harm
of a constitutional dimension. See id.
In Bartlett v. State, 270 S.W.3d 147, 154 (Tex. Crim. App. 2008) the
trial court gave a neutral instruction regarding the failure of the defendant to
take a breath test. The Court of Criminal Appeals overturned the conviction
because the court has singled out particular evidence to the jury for none of
the permissible purposes. The three permissible purposes only include
where the law prescribes the weight that must be assigned to testimony (as
with accomplice witness testimony), when the jury is permitted to conclude
one fact from the proof of another (such as in deadly conduct when pointing
a weapon at another allows the jury to conclude reckless conduct), or when
the jury may not reach a conclusion about the evidence without first
reaching a predicate conclusion (such as compliance with article 38.23).
None of these three permissible reasons were present here. Even though the
instruction was neutral in Bartlett, the Court of Criminal Appeals reversed
the conviction.
57
Under the due process clause defendants are entitled to a trial by neutral and
detached judge. The judge who is commented on the weight of the evidence is not
such a judge. See Johnson v. State, 452 S.W.3d 398, 405 (Tex. App. -- Amarillo
2014, pet. ref’d.). And where the comment influences the jury to reach a
conclusion about guilt, especially in weak case like this one, the Appellant is
deprived of a fair and impartial jury.
"The [Supreme] Court has disapproved the use of mandatory
conclusive presumptions not merely because it conflicts with the
overriding presumption of innocence with which the law endows the
accused, but also because it invades the fact finding function which in
a criminal case the law assigns solely to the jury. The constitutional
right to a jury trial embodies a profound judgment about the way in
which law should be enforced and justice administered. It is a
structural guarantee that reflects a fundamental decision about the
exercise of official power -- a reluctance to entrust plenary powers
over life and liberty of the citizens to one judge or group of judges. A
defendant may assuredly insist upon observance of this guarantee
even when the evidence is so overwhelming as to establish guilt
beyond a reasonable doubt. That is why the Court has found it
constitutionally impermissible for a judge to direct a verdict for the
State." Carella v. California, 491 U.S. 263, 109 S. Ct. 2419, 2421-22,
105 L. Ed. 2d 218 (1989) (citations omitted) (Scalia , J., concurring)
See also Selman v. State, 807 S.W.2d 310, 313 (Tex. Crim. App. 1991).
Because the comment on the weight of the evidence deprived Appellant of a fair
trial by an impartial jury and judge, and he was caused egregious harm thereby, his
conviction should be reversed.
58
PRAYER
WHEREFORE, PREMISES CONSIDERED, the Appellant prays that his
conviction and sentence be reversed and he should either be granted a new trial or
his judgment should be rendered and for any further relief to which he may be
entitled to at law or in equity.
Respectfully submitted,
By: _/s/_____________________
Cynthia E. Orr
Gerald H. Goldstein (Lead Counsel)
Bar No. 08101000
Cynthia E. Orr
Bar No. 15313350
Goldstein, Goldstein & Hilley
310 S. St. Mary’s St., Ste. 2900
San Antonio, Texas 78205
E-mail: ggandh@aol.com
E-mail: whitecollarlaw@gmail.com
210-226-1463
210-226-8367 facsimile
Edward Stapleton
Bar No. 19058400
Attorney at Law
2401 Wild Flower, Suite C
Brownsville, Texas 78526
956-544-0882
956-504-0814 facsimile
59
CERTIFICATE OF COMPLIANCE
I hereby certify that this document complies with the typeface requirements of
Tex. R. App. P. 9.4(e) because it has been prepared in a conventional typeface no
smaller than 14-point for text and 12-point for footnotes. This document does
comply with the word-count limitations of Tex. R. App. P. 9.4(i) because it
contains 14,833 words, excluding any parts exempted by Tex. R. App. P. 9.4(i)(1).
By: /s/_____________________
Cynthia E. Orr
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing Appellant’s
Brief has been electronically transmitted to District Attorney Luis Saenz via e-
mail: district.attorney@co.cameron.tx.us as a registered participant of the e-File
Texas, filing system, on this the 16day of September, 2015.
By: _/s/________________________
Cynthia E. Orr
60