Chad Michael Hays v. State , 2012 Tex. App. LEXIS 4620 ( 2012 )

In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
_________________________
No. 06-11-00126-CR
______________________________
CHAD MICHAEL HAYS, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 196th Judicial District Court
Hunt County, Texas
Trial Court No. 25588
Before Morriss, C.J., Carter and Moseley, JJ.
Opinion by Justice Carter
OPINION
Chad Michael Hays1 appeals his conviction for securities fraud.2 Chad was charged with
intentionally failing to disclose material facts to investors in connection with Chad’s offer for
sale and sale of interests in two oil wells. See TEX. REV. CIV. STAT. ANN. art. 581-29(C).3 After
more than $2.5 million was raised for the purpose of drilling oil wells, neither of the proposed
wells was ever drilled by this company. The indictment alleged the fraudulent activities
involved more than $100,000.00, making the offense punishable at the first degree felony range.
TEX. REV. CIV. STAT. ANN. art. 581-29(C)(4)(c).4 Chad was sentenced to twenty-five years’
imprisonment. The instant appeal challenges the sufficiency of the evidence to prove securities
fraud in the amount of $100,000.00 or more, and sufficiency of the evidence to establish venue
in Hunt County. We affirm the trial court’s judgment.
I. Factual Background––Selling Interests in Wells
Chad worked for his father, Mack, in Mack’s company, Mack Diamond Energy (MDE);
the company purported to be in the business of drilling for oil. In late 2006 and into 2007, MDE
was raising money to drill an oil well in northeast Texas; the well was referred to as the Honey
1
Because there are several members of the Hays family involved in the events leading to the conviction, we will
address Hays family members, including Chad, by their first names.
2
Chad faced three indictments, all of which were tried in a single proceeding. The first two indictments charged
Chad with multiple counts of (1) selling unregistered securities, and (2) selling securities without being a registered
agent or dealer. See TEX. REV. CIV. STAT. ANN. art. 581-29(A), (B). Those convictions are addressed in our
opinions in cause numbers 06-11-00124-CR and 06-11-00125-CR, issued on even date herewith.
3
Amended by Act of May 18, 2011, 82nd Leg., R.S., ch. 523, § 2, 2011 Tex. Sess. Law Serv. 1298, 1299 (West
2011).
4
A “security” includes “any instrument representing any interest in or under an oil, gas or mining lease, fee or title
. . . .” TEX. REV. CIV. STAT. ANN. art. 581-4(A) (West 2010). This applies regardless of whether the security is
evidenced by a written instrument. Id.
2
Grove Single Well Joint Venture. In 2007, the company also began selling interests in another
well, the Mack Diamond Oil Creek Field 2 Joint Venture. At least one witness testified MDE
was a family business run by Mack and Chad. Sarah Padilla, MDE’s secretary, said that when
Mack was not in the office, Chad was in charge. Melody Ford Thompson Hays, Mack’s widow,
testified Mack and Chad ran MDE.
Mack5 formed MDE in 2005; he invited his brother, Kevin Hays, to join the fledgling
company in May 2005. After about three months, though, Kevin left the company because there
was no business being conducted. Kevin returned to MDE in November 2006. By that time,
Chad was working for the company. Articles of Organization were filed in October 2005. Of
the testifying witnesses, only one, Morris Cates, made his investment during 2006. The other
witnesses who testified at trial made their investments between February and September 2007.
The investors who testified at trial all said they expected drilling to commence relatively
soon. Witnesses said, based on statements from Chad, and in one case from Mack, they all
believed drilling was “imminent”––the investors’ expectations were that drilling would be
underway anywhere from thirty days to within six months. The investors believed as follows:
Sarah DeJong thought drilling was “terribly imminent, like a few weeks or something” of
her July 3, 2007, investment;
David Harper believed drilling would be occurring within thirty days of his July 30,
2007, investment;
5
All the witnesses with personal knowledge of Mack described him as a significant alcoholic; his appearances in the
office became less and less frequent; he yelled at and berated family and employees. Mack eventually died after
falling at home and suffering a head injury; whether alcohol was involved was not said.
3
Mike Brown thought the drilling would happen “fairly quick,” within two to three weeks
of his investment made in May 2007––Chad told him within two to three weeks the well
would be deep enough to know if it would produce;
Dwight McGee said Mack told him, before McGee invested in February 2007, the
drilling would begin within three months;
Morris Cates invested in November 2006; he was told on “a couple of occasions” by
Chad a drilling rig was “en route” to the well site, and Cates assumed drilling would
begin with six months of his investment; and
Fred Jones (the only investor whose paperwork specifically indicated he was investing in
the “second” well, i.e., the MDE Oil Creek Field 2 Joint Venture well invested in
September 2007), believed drilling would be happening within a month, based on
comments from Chad.
However, drilling, at least as contracted for and anticipated by MDE, never occurred. 6 MDE had
a contract with Boom Drilling, an Oklahoma well drilling company, to commence drilling at the
beginning of January 2007. In November 2006, MDE’s chief financial officer, Don Dean, was
very concerned about the amount of money being spent by MDE on salaries and the fact that
months had gone by without the beginning of drilling on the well. He contacted Boom Drilling
and renegotiated the contract. Dean said the original contract called for Boom Drilling to be paid
around $1 million as down payment, then $19,000.00 or $20,000.00 a day to have the drilling rig
on site. In December 2006, Dean said it was obvious MDE could not meet that fee, and
renegotiated to around $100,000.00 or $150,000.00 initial payment to get a rig to the site; about
$50,000.00 when the rig was ready to begin drilling; and then a daily rate of about $12,000.00.
Even at these greatly reduced rates, which allowed MDE to get the rig to the site, MDE could not
6
There were indications during trial that subsequent to MDE’s disbanding, another company drilled a producing well
on the site.
4
pay for drilling to begin. Even if Boom Drilling were timely paid, no drilling could have been
done because MDE did not acquire a drilling permit or a bond from the Railroad Commission, as
required, until the end of January or beginning of February 2007.
In January 2007, Boom delivered a drilling rig to the site, after MDE had made the
renegotiated down payment. There is conflicting evidence as to why Boom did not begin
drilling. Dean testified that Floyd Keefer, MDE’s drilling engineer, told Dean MDE would not
send Boom’s next payment because there were parts on the rig which were not appropriate,
pursuant to the parties’ contract. However, Dean also testified that Mack told Dean MDE did not
have enough money to send a subsequent payment, even if the proper parts were on site. 7 Dean
described the company, in the first quarter of 2007, as “not in good financial condition at all.”
Kevin said that he heard conversations in the office indicating that a payment check to Boom had
bounced and that Mack had told Don and Chad MDE did not have the money to pay Boom.
Kevin said Dean told him Boom left the site because MDE did not have enough money in
escrow to pay Boom; Chad told Kevin that Boom left because they had not been paid, and MDE
was being sued by Boom. After reviewing MDE’s accounts, Jeff Warsing, investigator for the
Texas Securities Board, said that after January 2, 2007, the company never had enough money
on hand to pay for the drilling and testing of the well. Through his questioning of the State’s
witnesses, though, Chad suggested Boom arrived on site with the wrong drilling rig, and this was
why drilling never started. However, Kevin testified Boom was to bring one rig, to drill to a
7
Dean added that when he reviewed the company’s books, he found hundreds of debit card transactions, apparently
charged by Mack, for nonbusiness purchases at such businesses as convenience and grocery stores. When Dean
discussed this with Mack, Dean realized that “Mack didn’t know the difference [between business and personal
checking accounts] and didn’t know how to run the company.”
5
depth of 3,000 or 3,500 feet, and then another rig would continue the drilling. This plan for rigs
to attain different depths was specifically set out in the drilling contract. Warsing testified Boom
left the well site because MDE did not have a drilling permit.8
At some point, Mack and Chad, as well as at least one other person with MDE, began to
offer shares in a second well in an attempt to secure enough funding for the first, unstarted, well
(i.e., the Honey Grove Single Well Joint Venture). Kevin refused to make offers to sell this
second well interest when the first had not been drilled.9 Dean warned Mack and Chad not to
divert investments received for the second well to the first project. Of the investors who testified
at trial, most of them invested in 2007––after Dean had renegotiated the drilling contract in
December 2006.10 However, all but one of the testifying witnesses invested in the Honey Grove
well, i.e., the first, undrilled, well.
The expenditure sheet, State’s Exhibit 3, was sent to several investors sometime after
August 29, 2007; based on the cover letter and testimony from some investors, the expenditure
sheet was generated in response to multiple inquiries about MDE’s spending and why the well
had not been drilled. The expenditure sheet listed several items that were not directly related to
the drilling or analysis of the seismic results. The sheet listed $2,530,578.20 in expenditures; it
8
When asked by Chad’s attorney how Warsing knew that, Warsing said he “interviewed Tommy Weder.” We did
not find an explanation of who Weder is in the record. But the contract between Boom and MDE is signed, on
behalf of Boom by a person whose name appears to be Tommy Wedey. Padilla testified that representatives of
Boom visited the MDE office, one of whom she said was Tommy Weider.
9
Kevin was fired by Mack, a few weeks after Kevin said he would not sell the second well.
10
Dwight McGee sent $50,000.00 in February 2007; Mike Brown sent $17,000.00 in May; Sarah DeJong and David
Harper sent $68,750.00 and $34,375.00, respectively, in July 2007; and Fred Jones sent $45,000.00 in September
2007.
6
characterized $1,301,097.76 as related to contracting with the drilling company, equipment, and
geological and seismic expenses, among other things. The expenditure sheet listed $176,011.80
for business and office expenses: the office’s telephone system; vehicle; construction and repair
of the office; insurance; etc. Finally, the sheet claimed $874,863.74 in salaries.
Many of the investors testified they were surprised to see such expenses listed, finding
them to be inappropriate or unrelated to their investments of drilling a well (which had not
occurred). Warsing testified only $376,403.83 of the expenses listed were legitimately related to
researching, testing, and drilling an oil well.
MDE sent potential investors paperwork related to the well projects: there were
applications to complete and questionnaires about the investors’ suitability or willingness to
assume risk. Also included was a “letter” from a John Magee. In this letter, Magee stated in
1989 he had been involved with a well that showed great promise and actually began producing
oil and gas. An inexperienced well worker, though, caused a problem with the well and drilling
was stopped. Chad referenced this letter in selling well interests, saying that the proposed well
would be on or near the site of this “Magee” well. Four of the testifying investors in this case
said this Magee letter was instrumental in their decision to invest in the MDE project. However,
Magee had been dead since 2006. In the documents Chad supplied to investigators pursuant to
their subpoena, the Magee letter was not included. Based on exhibits presented to investors at
trial, it appears most, in the MDE documents they received, saw a signed copy of the Magee
letter. At least one exhibit, though, contained an unsigned Magee letter. Sarah Padilla, MDE’s
secretary, testified she saw Chad sign the letter in 2007. Padilla also said that when salespersons
7
were offering well interests, the Magee letter was held out as important as regards the likelihood
of a producing well.
II. Sufficiency of the Evidence
A. Standard of Review
Chad’s appeal first complains the evidence is insufficient to support the jury’s verdict of
guilty. In evaluating legal sufficiency, we review all the evidence in the light most favorable to
the jury’s verdict to determine whether any rational jury could have found the essential elements
of the charged offense beyond a reasonable doubt. Brooks v. State, 323 S.W.3d 893, 912 (Tex.
Crim. App. 2010) (citing Jackson v. Virginia, 443 U.S. 307, 319 (1979)); Hartsfield v. State, 305
S.W.3d 859, 863 (Tex. App.—Texarkana 2010, pet. ref’d). Our rigorous legal sufficiency
review focuses on the quality of the evidence presented. Brooks, 323 S.W.3d at 917–18
(Cochran, J., concurring). We examine legal sufficiency under the direction of the Brooks
opinion, while giving deference to the responsibility of the jury “to fairly resolve conflicts in
testimony, to weigh the evidence, and to draw reasonable inferences from basic facts to ultimate
facts.” Hooper v. State, 214 S.W.3d 9, 13 (Tex. Crim. App. 2007) (citing Jackson, 443 U.S. at
318–19); Clayton v. State, 235 S.W.3d 772, 778 (Tex. Crim. App. 2007).
B. Fraud in the Sale of Securities
The indictment accused Chad of engaging in fraud in connection with the offer for sale
and sale of interests in either of two wells, the Honey Grove Single Well Joint Venture well
and/or the Oil Creek Field 2 Joint Venture. The indictment lists ten investors as victims and the
amounts those parties invested. Several of the listed investors did not testify at trial, but of the
8
ones who did, their investment values aggregate to more than $100,000.00. The indictment
alleged two methods of committing fraud:
By intentionally failing to disclose that funds invested by previous investors in the
Mack Diamond Energy, LLC, Honey Grove Single Well Joint Venture were used
for purposes unrelated to the drilling, testing and completion of an oil and/or gas
well, said information being material fact; &
Intentionally failing to disclose that in December 2006, Mack Diamond Energy
entered into an agreement with Boom Drilling wherein Boom Drilling was to drill
the Honey Grove Single Well Joint Venture well; that Mack Diamond Energy
breached its agreement with Boom Drilling by failing to pay Boom Drilling
pursuant to the terms of the agreement; and for that reason, the Honey Grove
Single Well Joint Venture was not drilled; said information being material fact
....
The jury charge limited the number of investors to McGee, Brown, DeJong, Harper, and
Jones. The jury was asked to determine if Chad had engaged in fraud, as alleged, in offering to
sell interests in Mack Diamond Energy oil wells in the amount of $100,000.00 or more to the
five listed investors.
1. Identification
First, Chad argues that there is no evidence linking him to the investments of McGee,
Brown, or DeJong. He explains that none of them personally met the salesperson and only
testified that they were called by someone who identified himself as Chad Hays. None of them
identified him and all lived out of the state. No commission checks were shown to be associated
with them. Likewise, he cites United States v. Ross for the holding that the fact that a person
identifies himself or herself on the telephone is not sufficient to permit the jury to infer who the
caller is. 321 F.2d 61 (2d Cir. 1963). The State counters that each of these parties testified to
9
conversations with a person identifying himself as Chad Hays after receiving his unsolicited call.
Each of them conversed with Chad about MDE’s investment opportunities in the oil wells and
received a document from MDE designating Chad as a vice-president who oversaw acquisitions
of joint ventures and investor capital contributions. The document referenced the projects and
indicated they were in Fannin County, Texas. Scott Harper, son of investor David Harper, met
Chad and identified him in court. David Brown received a handwritten note from Chad with a
confirmation letter from MDE.
Chad’s authority, Ross v. State, illustrated that while identifying a salesperson by name
only is not sufficient, other evidence allows a jury to infer the proper identification. In Ross,
other evidence included other similar calls, telephone records, and transaction receipts
identifying that “24” was associated with Ross.
Here, the son of one of the investors personally identified Chad; Padilla testified that
Chad made the solicitation calls; the prospectus sent to the investors identified Chad as a vice-
president of MDE overseeing venture capital contributions. The information further stated that
the project was located in Fannin County, Texas. This evidence, cumulatively, is sufficient to
allow the jury to infer that the defendant, Chad Hays, was the same person who solicited
investments from DeJong, Brown, and McGee.
10
2. Disclosure of the Boom Drilling Contract
Chad argues there is insufficient evidence that he intentionally failed to disclose to
investors that MDE breached its contract with Boom Drilling by failing to pay Boom.
We first examine the evidence supporting a conviction for intentionally failing to disclose
information about the Boom Drilling contract.11 Article 581-29(C) creates an offense where one:
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:12
....
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 . . . .
TEX. REV. CIV. STAT. ANN. art. 581-29(C)(3) (footnote omitted). The State alleged that Chad
intentionally failed to disclose to investors that MDE entered an agreement with Boom Drilling
to have Boom drill the Honey Grove well and that MDE breached that contract by failing to pay
Boom; thus, the Honey Grove well did not get drilled; and all of this constituted a material fact.
“[A]n 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
11
The statute provides for multiple ways to commit a single offense, so sufficient evidence to show Chad committed
either allegation will support the verdict. Cf. Kitchens v. State, 823 S.W.2d 256, 258 (Tex. Crim. App. 1991).
12
Amended by Act of May 18, 2011, 82nd Leg., R.S., ch. 523, § 2, 2011 Tex. Sess. Law Serv. 1298, 1299.
11
information used in deciding whether to invest.” Bridwell v. State, 804 S.W.2d 900, 904 (Tex.
Crim. App. 1991).
The evidence shows Dean renegotiated the contract with Boom in early December 2006.
During December 2006 and January 2007, Boom moved a drilling rig on site. Of the six
investors who testified, five were supposedly investing in the Honey Grove well. Kevin testified
the initial check to Boom bounced and after Boom did not get fully paid, Boom packed their rig
and left.
Of the five investors listed in the jury charge, McGee invested $34,375.00 on February 9,
2007; Brown invested $17,000.00 May 21, 2007; DeJong invested $68,750.00 July 2, 2007;
Harper invested $34,375.00 July 31, 2007; and Jones invested $45,000.00 September 11, 2007.
Most of the investors specifically said it would have affected their decision to invest in the well
project had they known that Boom did not drill because it was not paid. Harper testified that he
was not told that a drilling rig had been on site and then left without drilling and that he would
not have invested had he known this. Brown said that fact was not disclosed to him and that it
would have been a “pretty important” consideration in deciding to invest had he known Boom
had placed a rig on the site, but not drilled. McGee said that information “would have impacted
our decision-making process for sure.” Although Jones supposedly was investing in the second
well, not the Honey Grove well, he also said he would consider it “very material” had he known
Boom had not drilled because their contractual obligations were not satisfied.13 Based on these
13
Jones defined “materiality” as follows: “Materiality is what a reasonable investor would believe would be
important in making his or her decision on an investment that would be of -- they would influence their decision,
12
comments, and the fact that of the testifying witnesses, four of them were investing, in 2007, in
the very well which was supposed to have been drilled the beginning of that year, the fact that
Boom did not drill as agreed would be a material fact.
As for whether MDE breached the contract with Boom, Chad relies on evidence, most of
which was suggested by Chad through his cross-examination of State’s witnesses, that Boom
provided the wrong or inadequate drilling equipment, and this was the reason drilling never
commenced. He relies on evidence that drilling engineer Floyd Keefer reportedly told Chad that
Boom arrived on the site with the wrong equipment. This evidence of what Keefer told Chad
was introduced by Chad’s attorney cross-examining Investigator Warsing with testimony Keefer
apparently made when he testified to the Texas Securities Board. But Keefer did not testify at
trial and the transcript of this testimony was not offered at trial. Kevin testified that Boom did
not have improper equipment, but first brought in a rig to drill up to 3,500 feet depth in order to
get the project started and planned to use another rig to drill up to 15,000 feet. Substantial
evidence supported the State’s theory that Boom was not paid and therefore moved off the site.
Dean said he renegotiated the contract to substantially lower rates, but that even at those
rates, MDE could not meet payments beyond the initial down payment. Kevin said he heard
discussions in the office to the effect MDE could not pay Boom; Kevin also testified that a
payment check to Boom had bounced; and that Boom left the site because MDE did not have
sufficient escrow funds. Dean said Mack told him MDE lacked sufficient funds for a subsequent
payment. And Warsing testified that based on his review of MDE’s finances, at no time after the
that would be important and fundamental to their decision, as opposed to trivial, nominal amounts that don’t
matter.”
13
beginning of January 2007 did MDE have sufficient funds to pay Boom. 14 This evidence points
to a breach by MDE of the drilling contract with Boom.
It appears that the five investors listed in the jury charge were contacted by Chad after
Boom left the site. The jury could infer Chad intentionally did not tell those investors about the
company’s history with Boom. Despite the failure to meet the terms of both the original and
renegotiated contracts with Boom, Chad told or allowed investors to believe drilling was about to
commence. He was responsible for most of MDE’s sales. Kevin said Chad was present in the
office when discussions were held about the lack of money to pay Boom; likewise, Padilla said
Chad was in a meeting with other members of MDE when representatives of Boom visited the
MDE office in the first quarter of 2007. He assured one investor he was “ Christian and that he
was honest,” but there was testimony Chad was in the habit of referring to investors as
“pissants.” While there was evidence Chad was persistent in calls to potential investors, many
said that after they had sent their money, and no drilling occurred, Chad did not return calls (one,
Cates, did say Chad always took or returned his calls).
Further instances of Chad’s behavior would allow the jury to infer he intentionally did
not tell investors about the Boom contract breakdown. Jones, the only testifying investor whose
money was earmarked for the second well, questioned Chad about the failure to drill that well,
and Jones’ inability to find status updates on MDE’s website. Jones said Chad had been making
the same explanation for “a few months,” that MDE was still acquiring final funding. Jones told
14
Even if funds had been available, it appears MDE did not apply for a drilling permit until late January or February
2007. Warsing said that drilling could not begin without a permit and that his investigation showed at least part of
the reason for Boom’s leaving the site was MDE’s lack of permit or bond.
14
Chad that there must be something wrong in the transaction and that based on Jones’ experience
in other well investments, “this [was] way too long for a successful offering to take -- to get it
completed.” Chad “became agitated and indignant” about Jones’ questioning; Chad was “pretty
upset” and told Jones that Chad would not want Jones in a future investment. Chad refused to
return Jones’ investment.
Chad contacted Paul West, who was initially interested in Chad’s offer to invest in one of
the wells.15 After doing his own research, though, West found MDE’s representations of twenty-
five years’ experience and success in the oil drilling business did not add up. West said that in
his first conversations with Chad, Chad was positive and had West interested in investing in the
well. Over time, though, Chad’s telephone demeanor “went from this tone of positive
opportunity to almost a sound of desperation,” which concerned West. When West told Chad he
would not invest in the venture because “it just wasn’t adding up and not working” for West,
based on his research, West said Chad grew very angry and called West an “expletive” idiot.
Intent may be inferred from circumstantial evidence such as acts, words, and the conduct
of the appellant. Guevara v. State, 152 S.W.3d 45, 50 (Tex. Crim. App. 2004). In the totality of
the circumstances, a rational jury could infer Chad intentionally withheld information about the
breached agreement with Boom Drilling and this breach was a material fact.
3. Failure to Disclose Use of Funds
The State’s indictment also alleged Chad intentionally failed to disclose funds invested
by previous investors were used for purposes not related to the drilling, testing, and completion
15
West said he was contacted by Chad in early 2007, but did not state which well project was being offered to him.
15
of an oil well. As mentioned above, MDE sent a statement of expenditures to investors. Of the
investors who testified at trial, all16 said they would not have invested in the well project had
they known monies would be applied to the non-well-related expenses detailed in the
expenditure sheet. Even though no well had been drilled, the statement showed that
$2,530,578.20 had been spent. The expenditures included $176,011.80 for business/office
expenses, including more than $35,000.00 for building payments, $21,000.00 for building
repairs/roof, and $40,000.00 for office repair. Additionally, $874,863.74 had been spent for
payroll, including over $250,000.00 to Mack and $121,000.00 to Chad.
Specifically, on reviewing the expenditure sheet, Susan DeJong testified she thought,
“[W]e’ve been scammed and they spent all the money and almost nothing has to do with drilling
a well.” David Harper, although not specifically referencing the expenditure sheet, said he
would not have made his investment had he known investor funds would have been used for
purchases unrelated to drilling and testing a well. Mike Brown was “shocked” when he saw the
list of expenditures. Dwight McGee, while acknowledging a startup business would incur some
administrative costs, still said he would not have invested had he known investor funds would
have been spent for matters not related to drilling and testing. When Fred Jones saw the
expenditure list, he found the spending “very contrary to acceptable practices”; regarding such
expenses, he would not have invested “without a very good explanation.”
16
Excepting Morris Cates: Cates was not alleged as a fraud victim in this case, and there was no evidence he
received a copy of the statement of expenditures; and he was not questioned, as all other investors were, about his
feelings regarding the non-well-related spending.
16
As for whether Chad intentionally failed to disclose MDE’s spending practices, we refer
to the summary of events supporting an inference of intent in our discussion of the Boom
Drilling matter. Further, there was testimony Chad was deeply involved in the company, as the
son of the founder and a vice-president of MDE.17 Padilla saw Chad preparing the expenditure
sheet that was sent to investors. She said Chad was in charge in Mack’s absence, and she saw
Chad “a few times” looking through papers on Mack’s desk. Kevin also described Chad as in
charge and “handling the investors” when Mack was out of the office. Mack’s wife, Melody,
said Chad asked her, as Mack’s wife and a signatory on the company’s bank account, to close the
account and open a new one. There was sufficient evidence to allow a rational jury to infer Chad
intentionally withheld information about the company’s spending practices from investors.
The expenditure list which was given to the investors in August 2007 makes it clear that
investor funds were diverted to salaries, office repairs, and general expenses.
III. Venue in Hunt County
Chad’s second point of error contends there is insufficient evidence in the record to
establish proper venue in Hunt County. If no specific venue provision is stated, offenses are
properly prosecuted in the county where the offense was committed. TEX. CODE CRIM. PROC.
ANN. art. 13.18 (West 2005). Venue is not an element of the offense and need be proved by only
a preponderance of the evidence and not beyond a reasonable doubt. See TEX. CODE CRIM.
PROC. ANN. art. 13.17 (West 2005); Murphy v. State, 112 S.W.3d 592, 604 (Tex. Crim. App.
2003). Absent affirmative record evidence showing the contrary, we presume venue to have
17
To be fair, almost all employees in the sales area were referred to as vice-president. According to Kevin, this was
because Mack stated a vice-president did not need a license to sell the well interests.
17
been proper in the trial court. TEX. R. APP. P. 44.2(c)(1); see also State v. Blankenship, 170
S.W.3d 676, 681 (Tex. App.—Austin 2005, pet. ref’d) (“It is presumed that venue was proved at
trial unless disputed at trial or the record affirmatively shows the contrary.”). Since venue was
not challenged or disputed at the trial, it is presumed that it was proven.
Further, the application agreements presented by MDE to the investors stated the
agreement was performable in Wolfe City, Hunt County, Texas, any disputes or controversies to
be litigated in the courts in Hunt County. We overrule this point of error.
We affirm the judgment of the trial court.
Jack Carter
Justice
Date Submitted: April 3, 2012
Date Decided: June 11, 2012
Publish
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