Peter T. Dvorak v. State of Indiana

FILED
May 17 2017, 9:50 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Thomas W. Farlow Curtis T. Hill, Jr.
Darren A. Craig Attorney General of Indiana
Jenai M. Brackett
Indianapolis, Indiana James B. Martin
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Peter T. Dvorak, May 17, 2017
Appellant-Defendant, Court of Appeals Case No.
53A01-1604-CR-923
v. Appeal from the Monroe Circuit
Court
State of Indiana, The Honorable Marc R. Kellams,
Appellee-Plaintiff. Judge
Trial Court Cause No.
53C02-1506-FC-540
Barnes, Judge.
Case Summary
[1] Peter Dvorak appeals the trial court’s denial of his motion to dismiss charges of
Class C felony offer or sale of an unregistered security and Class C felony acting
as an unregistered agent. We reverse and remand.
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Issue
[2] Dvorak raises one issue, which we restate as whether the trial court properly
denied his motion to dismiss charges based on the statute of limitations.
Facts
[3] In June 2015, the State charged Dvorak with Count I, Class C felony offer or
sale of an unregistered security, and Count II, Class C felony acting as an
unregistered agent. The State alleged:
Count I:
[O]n or about July 9, 2007 in Monroe County, State of Indiana,
Peter T. Dvorak did knowingly offer or sell a security that was
not registered, was not exempt under I.C. 23-19-2-1 and I.C. 23-
19-2-2 of the Indiana Securities Act, or was not a federal covered
security, to-wit: Peter T. Dvorak offered or sold a Promissory
Note and an Agreement to Lend and Borrow Money to Todd
Wahl that were not registered with the Indiana Secretary of
State’s Office, Securities Division, as required by law. I.C. 23-2-
1-3 (2007) and I.C. 23-2-1-18.1 (2007).
Additionally, Peter T. Dvorak concealed his true actions from
Todd Wahl by structuring the Promissory Note and Agreement
to Lend and Borrow Money so that they did not mature until
July 9, 2010; therefore, Todd Wahl would not know that the
investment was not valid until July 9, 2010. Further, Dvorak
concealed his actions from the State of Indiana by offering and
selling the security while not registered with the Indiana
Secretary of State. Because the security was not registered and
because Dvorak was not registered to offer or sell securities, he
kept himself out of the purview of both law enforcement and
industry regulators. These offenses could not have been
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discovered by the State of Indiana until after Todd Wahl made
his complaint to the Indiana Secretary of State, Securities
Division on September 1, 2011.
Count II:
[O]n or about July 9, 2007 in Monroe County, State of Indiana,
Peter T. Dvorak did knowingly transact business as an agent
without being registered with the Indiana Secretary of State,
Securities Division, to-wit: Peter T. Dvorak offered or sold a
Promissory Note and an Agreement to Lend and Borrow Money,
both securities, to Todd Wahl, without being registered. I.C. 23-
2-1-8 (2007) and I.C. 23-2-1-18.1 (2007).
Additionally, Peter T. Dvorak concealed his true actions from
Todd Wahl by structuring the Promissory Note and Agreement
to Lend and Borrow Money so that they did not mature until
July 9, 2010; therefore, Todd Wahl would not know that the
investment was not valid until July 9, 2010. Further, Dvorak
concealed his actions from the State of Indiana by offering and
selling the security while not registered with the Indiana
Secretary of State. Because the security was not registered and
because Dvorak was not registered to offer or sell securities, he
kept himself out of the purview of both law enforcement and
industry regulators. These offenses could not have been
discovered by the State of Indiana until after Todd Wahl made
his complaint to the Indiana Secretary of State, Securities
Division on September 1, 2011.
Appellant’s App. Vol. II pp. 18-19.
[4] Dvorak filed a motion to dismiss the charges and argued that the charges were
barred by the statute of limitations. Dvorak claimed that the five-year statute of
limitations began running when the alleged offenses occurred in July 2007. He
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contended that the statute of limitations was not tolled because the “State
fail[ed] to allege any facts demonstrating that Dvorak did any positive act that
constitute[d] concealment.” Id. at 24. The State responded that Dvorak
concealed the offenses by structuring the securities to mature three years later,
resulting in Wahl having no reason to believe that a crime occurred until those
securities matured.
[5] After a hearing, the trial court denied Dvorak’s motion to dismiss. The trial
court found that “[t]he statute of limitations was tolled because Defendant’s
structuring of the security was a positive act by the defendant that was
calculated to conceal the fact that a crime had been committed.” Id. at 10. The
trial court found the case to be similar to State v. Chrzan, 693 N.E.2d 566 (Ind.
Ct. App. 1998). The trial court noted “it only became evident that a crime was
committed when the security matured.” Id. at 11. Further, the trial court
noted: “If the ruling were otherwise, illegal securities could always be structured
to mature after the statute of limitations had passed, and the State would be
prevented from ever knowing of its illegality until after it was too late.” Id. At
Dvorak’s request, the trial court certified the order for interlocutory appeal, and
we accepted jurisdiction pursuant to Indiana Appellate Rule 14(B).
Analysis
[6] Dvorak appeals the trial court’s denial of his motion to dismiss. “We review a
trial court’s denial of a motion to dismiss for an abuse of discretion.” Lebo v.
State, 977 N.E.2d 1031, 1035 (Ind. Ct. App. 2012). We will reverse only where
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the decision is clearly against the logic and effect of the facts and circumstances.
Id. When a defendant files a motion to dismiss an information, we take the
facts alleged in the information as true. Id. “Questions of fact to be decided at
trial or facts constituting a defense are not properly raised by a motion to
dismiss.” Id.
[7] Indiana Code Section 35-41-4-2(a) provides that the prosecution for a Class C
felony is barred unless it is commenced within five years after the commission
of the offense. However, Indiana Code Section 35-41-4-2(h)(2) provides that
“[t]he period within which a prosecution must be commenced does not include
any period in which . . . the accused person conceals evidence of the offense,
and evidence sufficient to charge the person with that offense is unknown to the
prosecuting authority and could not have been discovered by that authority by
exercise of due diligence . . . .”
[8] Indiana Code Section 35-41-4-2 protects “defendants from the prejudice that a
delay in prosecution could bring, such as fading memories and stale evidence.”
Lebo, 977 N.E.2d at 1036 (quoting Sloan v. State, 947 N.E.2d 917, 920 (Ind.
2011)). “[It] also ‘strike[s] a balance between an individual’s interest in repose
and the State’s interest in having sufficient time to investigate and build its
case.’” Id. (quoting Sloan, 947 N.E.2d 920). “‘[A]n information alleging a time
outside the statute of limitations which does not allege facts sufficient to
constitute an exception to the statute is subject to a motion to dismiss.’” Id.
(quoting Reeves v. State, 938 N.E.2d 10, 16 (Ind. Ct. App. 2010), trans. denied).
“[W]hen the State relies on this exception, it must plead the circumstances of
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the concealment exception in the information so that the ‘defendant is apprised
of the facts upon which the State intends to rely and may be prepared to meet
that proof at trial.’” Id. (quoting Reeves, 938 N.E.2d at 17).
[9] In support of his argument that the concealment tolling provisions do not apply
here, Dvorak relies on Study v. State, 24 N.E.3d 947 (Ind. 2015), cert. denied, and
Kifer v. State, 740 N.E.2d 586 (Ind. Ct. App. 2000). In Study, the State charged
the defendant with two bank robberies in 2007. In 2012, the State added
charges related to other bank robberies that also had occurred in 2006 and 2007.
On appeal, the defendant argued that the trial court erred by allowing the
charging information to be amended to add the charges in 2012 because the
charges were filed outside of the statute of limitations.
[10] Our supreme court held that the concealment provisions do not refer to “any
evidence about the offense or who committed the offense”; rather, it specifically
requires “that the concealed evidence be related to the existence of the offense.”
Study, 24 N.E.3d at 952. The concealment provisions apply only where
“positive acts that conceal that an offense has been committed” exist. Id. The
charging information in Study alleged that the “concealment occurred when
Study concealed his identity by wearing a mask, and concealed the getaway car,
clothes worn during the crime, items taken from a victim, the weapon used, and
evidence linking the robbery to other robberies.” Id. at 954. However, “[n]one
of these actions would serve to prevent law enforcement from discovering that a
bank had been robbed.” Id. The law enforcement officials had discovered the
robbery and began investigating immediately. The court concluded that the
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defendant “did not engage in any positive act calculated to conceal the fact that
a robbery occurred on March 21, 2006.” Id. at 957-58. Consequently, the
statute of limitations was not tolled, and the court dismissed the charge related
to that robbery.
[11] In Kifer, the defendant left the scene of an accident in 1987 after striking and
killing a jogger. Kifer, 740 N.E.2d at 586-87. After the accident, the defendant
removed his license plates and headlight rings and sold the car to a salvage
yard. The State learned that the defendant had struck the jogger and charged
the defendant in 1999. The defendant filed a motion to dismiss the charges
based on the statute of limitations, but the trial court denied the motion. On
appeal, this court rejected the State’s argument that the statute of limitations
was tolled by concealment. This court held the defendant’s alteration and
disposal of his car did not amount to concealment of the fact that a crime had
been committed but was only concealment of his guilt. “It is well settled that
concealment of guilt is not concealment of the fact that an offense has been
committed.” Id. at 588. We noted that “there must be a positive act performed
by the defendant calculated to prevent discovery of the fact that a crime has
been committed.” Id. However, the commission of the offense was “fully
known in 1987,” and the prosecution twelve years later was barred by the
statute of limitations. Id.
[12] The State, on the other hand, relies on State v. Chrzan, 693 N.E.2d 566 (Ind. Ct.
App. 1998). There, during his employment as manager of a grain elevator, the
defendant “secreted $12,000 to $15,000 for use in the event he was fired as
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manager.” Chrzan, 693 N.E.2d at 567. He resigned in January 1994, and two
years and three days later, the State charged him with misappropriation of
funds and the knowing use of a false measure. The trial court dismissed the
charges, and on appeal, the State argued that the two-year statute of limitations
was tolled by the defendant’s concealment of his offense. We agreed that the
defendant’s “manipulation of financial records” and the writing of two checks
to the employer shortly after his resignation were “positive acts on the part of
the perpetrator to conceal the fact that a crime had been committed.” Id.
Consequently, we reversed the dismissal of the charges.
[13] Here, Dvorak argues that there are no allegations of any positive act that he
committed to conceal the fact that an offense had been committed. The State
argues that Dvorak’s “structuring of the unregistered security included the
selection of a maturity date that would cause his illegal activity to fly under the
radar for three years after the illegal sale.” Appellee’s Brief p. 10. Dvorak
points out, however, that whether he was registered to offer or sell securities
and whether the security was registered were matters of public records on the
date of the alleged offenses. Wahl could have determined those facts at the
time he entered into the agreements. The maturity date of the agreements did
not prevent Wahl from determining that Dvorak and the securities were
unregistered.
[14] The State also notes that failing to disclose that a security is not registered and
that a seller is not registered as a broker-dealer has been found to be a material
omission on the part of the seller. See Manns v. Skolnik, 666 N.E.2d 1236, 1249
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(Ind. Ct. App. 1996). In Manns, the Indiana Securities Commissioner filed an
administrative complaint against the defendant for violating Indiana securities
laws by failing to register herself and a security with the securities division.
After the commissioner found that she had violated several state securities laws,
the defendant appealed to the trial court, which affirmed the commissioner’s
order.
[15] On appeal, the defendant challenged, among other things, the commissioner’s
determination that she committed fraud under Indiana Code Section 23-2-1-12,
which at the time provided:1
It is unlawful for any person in connection with the offer, sale or
purchase of any security, either directly or indirectly, (1) to
employ any device, scheme or artifice to defraud, or (2) to make
any untrue statements of a material fact or to omit to state a
material fact necessary in order to make the statements made in
the light of circumstances under which they are made, not
misleading, or (3) to engage in any act, practice or course of
business which operates or would operate as a fraud or deceit
upon any person.
The defendant challenged the determination that she omitted a material fact by
failing to disclose that the security was not registered and that she was not a
registered broker-dealer. This court held:
A reasonable investor would consider the broker’s registration
with the division important in making the investment decision
1
Repealed by Pub. L. No. 27-2007, § 37 (eff. July 1, 2008).
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because the registration serves as a means to verify the
experience, legitimacy, and veracity of the broker. In addition,
the fact that the security was not registered with the division
would reflect on the validity of the transaction. Accordingly, this
information was material and the omission, therefore, constitutes
a violation of the statute.
Manns, 666 N.E.2d at 1249.
[16] The Manns decision, however, is unpersuasive here. Manns dealt with fraud
allegations against the defendant in the context of an administrative complaint,
and the omission was relevant to the fraud determination. In the context of
concealment tolling the statute of limitations in a criminal case, our courts have
held that a “positive act” to conceal the fact that an offense has been committed
is required. Study, 24 N.E.3d at 952. The omission discussed in Manns is not,
however, a “positive act,” which is necessary to toll the statute of limitations.
[17] We conclude that Dvorak did not engage in any positive act calculated to
conceal the fact that he was not registered and the security was not registered
with the Secretary of State. Consequently, we conclude that the trial court
erred by denying Dvorak’s motion to dismiss. We reverse and remand for
proceedings consistent with this opinion.
Conclusion
[18] The trial court erred by denying Dvorak’s motion to dismiss. We reverse and
remand.
[19] Reversed and remanded.
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Kirsch, J., and Robb, J., concur.
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