State v. Reynolds

02/08/2017
DA 14-0521
IN THE SUPREME COURT OF THE STATE OF MONTANA Case Number: DA 14-0521
2017 MT 25STATE OF MONTANA,
Plaintiff and Appellee,
v.
RICHARD FRANKLIN REYNOLDS,
a/k/a RICHARD ADKINS,
Defendant and Appellant.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and For the County of Gallatin, Cause No. DC 12-37A
Honorable Holly Brown, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Chad Wright, Chief Appellate Defender, Chad Robert Vanisko, Assistant
Appellate Defender, Helena, Montana
For Appellee:
Timothy C. Fox, Montana Attorney General, Tammy K Plubell, Assistant
Attorney General, Jesse Laslovich, Special Assistant Attorney General,
Helena, Montana
Marty Lambert, Gallatin County Attorney, Bozeman, Montana
Submitted on Briefs: December 7, 2016
Decided: February 8, 2017
Filed:
__________________________________________
Clerk
Justice Laurie McKinnon delivered the Opinion of the Court.
¶1 Richard Reynolds (Reynolds) appeals his conviction for securities fraud on speedy
trial grounds and, alternatively, asks for a new trial on the basis that the District Court
erred when instructing the jury. At trial, the District Court refused Reynolds’ proposed
jury instructions, which included language regarding exemptions to the statutes under
which he was charged—§§ 30-10-201(1) and -202(1), MCA. The District Court used the
State’s proposed instructions instead, which omitted the references to the statutory
exemptions. Reynolds’ objections to the District Court’s refusal of his proposed jury
instructions form the basis of this appeal, in addition to the denial of his motion to
dismiss for lack of a speedy trial. We affirm and restate the issues on appeal as follows:
1. Whether Reynolds was denied his right to a speedy trial guaranteed by Article
II, Section 24 of the Montana Constitution.
2. Whether the District Court erred when it refused Reynolds’ proposed jury
instructions referencing exemptions to §§ 30-10-201 and -202, MCA.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 The State filed an Information against Reynolds, charging him with multiple
felony counts that alleged fraud, theft by embezzlement, failure to register as a securities
salesperson, failure to register a security, and operating a fraudulent pyramid promotion
scheme. Reynolds’ schemes and frauds were far-reaching and victimized not only
Montanans, but people throughout the country. The State’s charging documents reflected
the complexity of his scheme and listed or referenced 141 witnesses across the country by
their initials. Although Reynolds targeted some unsophisticated investors for smaller
amounts, he fooled some who were experienced and convinced many to part with
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substantial sums. Reynolds accumulated over $5.3 million from these individuals and
kept approximately $4.3 million for his own personal use.
¶3 The complexity of Reynolds’ schemes matched the scale of his takings. Reynolds
created false companies that purportedly engaged in gold mining, trading, currency
exchange, and other plausible-sounding market activities. He gave the companies names
like Buffalo Investment Corporation, Buffalo Investment Group Incorporated, Buffalo
Exchange Company, Buffalo Extension, Real World Direct Corporation, Consulting
Investors Incorporated, Plus 5 Market Incorporated, and United Consultant Investment
Corporation. Reynolds asked his investors to sign confidential questionnaires that
enabled him to deny requests to inspect company books, allowing him to shuffle funds
between these companies as often as he liked. He made himself CEO or president of
each company and ensured that only he or he and his wife were the sole signatories to the
corporate accounts.
¶4 After taking money from individuals, Reynolds would generate and send fictional
statements showing remarkable returns on the purported investments. Sometimes, when
investors were suspicious of their remarkable good fortune, they would test Reynolds by
asking him to return a portion of their initial investment. Reynolds would comply, using
shuffled funds from other investors to ease their mind. Eventually, however, he failed to
return money when it was demanded. In July of 2011, one investor asked to withdraw
$10,000 of his investment, but never received it. In September of 2011, that same
investor asked that the entirety of his $75,000 be returned. He never received that either.
3
Similar misfortune befell others as Reynolds’ schemes became more and more
unsustainable.
¶5 Lynne Egan (Egan) is a forensic accountant trained in securities investigations,
financial analysis, and financial forensics. She is a non-practicing Certified Public
Accountant and Deputy Securities Commissioner for the Montana Commissioner of
Securities and Insurance. This agency oversees the Securities Department of the State
Auditor’s Office, which reviews applications of individuals seeking to offer and sell
securities in Montana. Egan first encountered Reynolds in June of 2009, when she
counseled him on how to comply with a Cease and Desist order her office had issued
against him. In the spring of 2011, Reynolds again garnered her attention when her
office fielded multiple inquiries regarding his offerings and sales of securities. These
inquiries eventually prompted her to investigate whether Reynolds had violated Montana
securities statutes. As part of her investigation, she met with the FBI regarding
Reynolds’ activities and spoke with investors who had given him money. By
subpoenaing bank statements for his personal and business accounts, Egan was able to
track Reynolds’ financial activities and potential securities violations.
¶6 Reynolds never registered any of his business entities with Montana’s Securities
Department as Montana law required. His Private Placement Memoranda (PPM), which
served as a prospectus for potential investors, stated that his offerings were exempt from
registration requirements. Indeed, not every issuer of securities in Montana must register.
If an issuer wishes to claim a registration exemption, however, he must apply for and be
approved for that exemption through Egan’s office. Egan testified she could not identify
4
any exception upon which Reynolds could have relied. Additionally, she indicated he
would not have been granted an exemption from her office. His PPMs, she testified,
contained unreasonable promises of 100 percent returns every 90 days, and other
concerning language that she had never encountered before in a PPM. Additionally, the
state of Missouri had issued a Cease and Desist order relating to fraud against Reynolds
within the last five years, also making Reynolds ineligible for an exemption. Egan thus
testified she would never have approved an exemption for Reynolds.
¶7 Reynolds eventually discovered Egan’s investigation. In order to avoid detection,
Reynolds did not fly, but drove to Atlanta in November of 2011 for an investors’
meeting. Once in Atlanta, Reynolds confessed in the meeting that the fantastic returns on
the statements he had sent were fabricated. He informed the investors at the meeting that
he had been moving funds between his companies to cover losses and support failing
companies. A witness to the meeting testified that Reynolds said, “[T]hey’ve got stuff on
me. Lynne Egan has probably 20 counts on me and four or five of them will probably
stick.”
¶8 Egan did indeed have “stuff” on him. She had tracked every investment,
expenditure, and investor connected with Reynolds. She compiled all of this information,
including the names, addresses, email addresses, and telephone numbers for each investor
into a 120-page report. On February 22, 2012, the State filed an Information against
Reynolds and requested issuance of a warrant. During a subsequent bond hearing, at
which the District Court continued bond for $10,000,000, Reynolds admitted he was
aware of the charges and warrant for his arrest, but nonetheless chose not to turn himself
5
in. Electing instead to continue his business dealings, he eluded capture until July 5,
2012—134 days after the State filed its Information. Another 19 days would pass until
his initial appearance. The District Court scheduled his omnibus hearing 28 days later on
August 21, 2012, but postponed it three times, at Reynolds’ request, until November 20,
2012—91 days after the original omnibus date. After the omnibus hearing, the State
requested a trial in March or April of 2013, and the District Court would have set trial in
May of 2013. However, defense counsel objected as he would not have sufficient time to
prepare his case by then, preferring instead a trial date in July. The court’s next available
date, however, was August 5, 2013. The State’s requested trial date would have
represented a 192-day span, but the defendant’s request for additional time added another
66 days—258 days in total. Defense requests to continue trial after the initial date added
another 120 days of delay, until December 3, 2013, when Reynolds finally had his trial.
A total of 650 days passed from the day the State filed the Information until trial.
Reynolds filed a motion to dismiss for lack of a speedy trial in August 2013, which the
District Court denied after conducting an Ariegwe analysis.
¶9 Reynolds could not afford his bond and so spent much of the delay before trial in
Gallatin County Detention Center. Despite complaints of overall discomfort, Reynolds
testified the jail administrators made genuine efforts to run a quality facility. These
administrators, at the direction of the District Court, agreed to make special
accommodations to allow him greater access to a computer and other materials to assist
in his defense. However, Reynolds maintained that these accommodations were
inadequate and insisted on a daily work-release program or house arrest instead.
6
¶10 Before entering Gallatin County Detention Center, Reynolds suffered from
chronic lower back pain, high blood pressure, excessive weight, and type II diabetes.
While there, his conditions did not deteriorate significantly. Although the detention
center hospitalized him for refusing his medication, which he said made him ill, he did
have an x-ray of his lower back, saw an orthopedic surgeon for his back problems, and
lost weight. He eventually felt well enough in the detention center to write songs and
literature that would potentially earn him money. The high-carbohydrate prison diet
exacerbated his diabetes, however. He was not able to control his diet until his release to
house arrest. While under house arrest, which the District Court granted in June of 2013,
Reynolds saw a chiropractor and slept on a special mattress in his home for his back pain.
His house arrest meant he had access to 3 file cabinets and 27 banker’s boxes containing
materials relating to his defense. At home, he could work in an office with access to all
of his files, except for those he had encrypted, and the only thing he wanted was more
time to spend on his defense.
¶11 Reynolds contends the State was uncooperative throughout the discovery process,
hindering his attempts to move his case forward, and necessitating his requests for
additional time. Many of these contentions centered on electronic discovery. The State
seized hard disks from Reynolds’ computers, which it then searched for relevant
documents. The State obtained its search warrant for these drives on October 29, 2012,
and created electronic images of the drives. These images, given to defense counsel on
March 14, 2013, were replicas of information contained on the physical disks seized from
Reynolds. In addition, the State supplied a memorandum from the forensic detective who
7
created the duplicate discs, Dana McNeil (McNeil), explaining how the images should be
accessed and alerting counsel that some portions of the data were encrypted. McNeil also
told defense counsel to notify him of any problems with the images as he would be happy
to assist. Not until August 2013, however, nearly six months later, did defense counsel
contact McNeil. Reynolds could not access portions of encrypted data and so asked that
the drives be cloned.1 McNeil provided these cloned copies on September 18, 2013. The
Defense continued having difficulty accessing the full range of electronic data, but never
retained an expert for assistance and never requested access to the original drives.
¶12 The State continued to comply with its on-going discovery obligations by
producing discovery from September 2012 through August 2013. Although Reynolds
asserts the State’s production of discovery was piecemeal and untimely, the volume of
materials it received prevented a single and immediate disclosure. Office of the Public
Defender paralegal Kate Beckman testified she spent approximately 80 hours organizing
more than 15,000 pages of documents provided by the State. These 80 hours spanned
five months, May through October, in 2013—approximately five hours per week. Thus,
although her office received these documents October 9, 2012, defense review did not
begin until May of 2013. This release of documents included Egan’s 120-page dossier.
Office of the Public Defender investigator Glenn Farrell testified that as of October 7,
2013, only 31 witnesses had acknowledged his investigatory efforts and that he had not
1
Cloning and imaging are similar processes that replicate information from a computer’s hard
disk, but through different mediums. Cloning a hard disk requires another hard disk that
becomes the “clone,” containing all the same information as the original. Imaging encapsulates
the information from the original hard disk and places it into a file that can be later examined
with software. That file can then be placed onto a portable medium, like a thumb drive.
8
been able to verify the identities of any witness. Yet, on direct examination during his
speedy trial hearing, Reynolds testified his trial preparation efforts were proceeding
quickly; that he had access to all his files; and, other than wanting more time to prepare,
he was generally happy while at home, working on his defense.
STANDARD OF REVIEW
¶13 We review a district court’s findings of fact underlying a speedy trial claim for
clear error. State v. Ariegwe, 2007 MT 204, ¶ 119, 338 Mont. 442, 167 P.3d 815. A
court’s findings of fact are clearly erroneous if they are not supported by substantial
credible evidence, if the court misapprehended the effect of the evidence, or if a review
of the record leaves this Court with the definite and firm conviction that a mistake has
been made. Whether factual circumstances amount to a speedy trial violation when
evaluated according to a four-factor balancing test is a question of constitutional law that
we review de novo, to determine whether the lower court’s interpretation and application
of the law are correct. Ariegwe, ¶ 119.
DISCUSSION
¶14 1. Whether Reynolds was denied his right to a speedy trial guaranteed by Article
II, Section 24 of the Montana Constitution.
¶15 An accused’s right to a speedy trial is guaranteed by United States Constitution
Amendments Six and Fourteen, and by Article II, Section 24 of the Montana
Constitution. A reviewing court must analyze a potential speedy trial violation by
balancing four factors: (1) the length of the delay; (2) the reasons for the delay; (3) the
accused’s assertion of his right to a speedy trial; and (4) the prejudice to the accused as a
9
result of the delay. Ariegwe, ¶ 20. A minimum 200 days must elapse between the speedy
trial clock’s commencement and the date of trial before a speedy trial claim merits
analysis. Ariegwe, ¶ 41.
Factor One: The length of the delay
¶16 The speedy trial clock commences at the earliest of either arrest, indictment,
information, or complaint, and runs until the date of trial, or the date a guilty plea is
entered. Ariegwe, ¶¶ 42-43.
¶17 Here, there is no dispute that the span of days between the State filing its
Information and Reynolds’ trial exceeded the 200-day threshold. The length of the delay
past the 200-day threshold was 450 days, for a total of 650 days.
Factor Two: The reason for the delay
¶18 Under the second factor, the Court must identify each period of delay in bringing
the accused to trial. Ariegwe, ¶ 63. The Court must then attribute each period of delay to
the appropriate party and assign weight to the period based on the specific cause and
motive for the delay. Ariegwe, ¶ 67.
¶19 We consider the extent to which the delay stretches beyond the 200-day trigger
date because a presumption of prejudice to the accused arises at the trigger point. That
presumption intensifies as the delay exceeds the trigger date: the greater the excess over
the trigger date, the more likely the accused suffered prejudice. Ariegwe, ¶ 49. The
intensifying effect of the presumption does not relieve the accused of providing evidence
of prejudice. Ariegwe, ¶ 51. “The further the delay stretches beyond the trigger date, the
more compelling the State’s justifications for the delay must be under Factor Two.”
10
Ariegwe, ¶ 107. When delay is caused by the complexity of the case, less weight is
assigned to the State. Ariegwe, ¶¶ 70-71. A valid reason for delay is assigned less
weight than bad faith, negligence, or even institutional delays beyond control of the
prosecution. Ariegwe, ¶ 70.
¶20 Here, 450 days beyond the threshold indicates the State would normally bear a
heavy burden to show the delay has not prejudiced Reynolds. Such a delay would
likewise mitigate Reynolds’ burden to show undue prejudice. However, this case is
undisputedly complex, as evidenced by the voluminous files in evidence and the large
number of victims and witnesses who were spread throughout the country. The
complexity of these proceedings and nature of the underlying investigation weigh in the
State’s favor.
¶21 The initial period of delay was between February 22, 2012, and July 5, 2012—the
time between the filing of the Information and Reynolds’ arrest. This 134-day period is
entirely attributable to Reynolds and weighs heavily against him as he knew the
Information had been filed, but made no effort to surrender or inform law enforcement of
his whereabouts. Indeed, the record supports the contention that he deliberately hid in his
hotel room in an effort to postpone or avoid altogether his capture and trial. Reynolds
stayed in the same hotel room for at least 77 of those 134 days.
¶22 The second period of delay is the 19 days between his arrest in Kansas and his
initial appearance in Gallatin County District Court on July 24, 2012. These days are
attributable to the State as institutional delay since the time was needed to transport
Reynolds from Kansas to Montana and then set an appearance date. The State is assigned
11
almost no weight for this delay, however, as the Defendant would not have required
transport had he not attempted to avoid capture.
¶23 The third period of delay consists of 119 days from July 24, 2012—Reynolds’
initial appearance—to November 20, 2012—the date of Reynolds’ omnibus hearing. The
record reflects that 28 days of this delay are attributable to the State and considered
institutional delay due to the District Court’s limited availability to conduct omnibus
hearings. The remaining 91 days are attributed to Reynolds because of his requests for
additional time to prepare. These continuances are attributed to Reynolds, but are
assigned little weight due to the complexity of the case.
¶24 The next period of delay consists of 258 days between November 20, 2012—the
omnibus hearing—and the first trial date set for August 5, 2013. The State requested a
trial date in March or April, but the court had available only a date in May. Defense
counsel objected that he would not have sufficient time to prepare and would prefer
instead a date in July. The court had no availability in July, and so set trial for August 5.
Since the court would have set trial for May at the earliest based on the State’s request,
the delay from November 20, 2012, to May 31, 2013—192 days—is institutional delay
that is assigned less weight to the State. The remaining 66-day delay from May 31, 2013,
to August 5, 2013, is attributed to Reynolds and assigned little weight as the result of his
counsel’s request for more time to prepare.
¶25 The final period of delay is the 120 days between the first trial date of August 5,
2013, and the continued trial date of December 3, 2013. This period of delay is the result
of defense requests to continue trial for additional time to prepare and is, therefore,
12
attributed to the defense. This delay is assigned little weight as reasonable diligence
might necessitate additional time for counsel to prepare, given the volume of evidence
and complexity of the case.
¶26 We conclude that 239 days of delay are attributable to the State, but none weigh
heavily against it as the delays were institutional and resulted from the necessities
inherent in bringing a complex case to trial. By contrast, 411 days are attributed to the
Defendant, and 134 of those days weigh heavily against him for consciously avoiding the
authorities who sought his arrest.
Factor Three: the accused’s response to the delay
¶27 An accused’s responses indicate whether he actually wanted a speedy trial and
inform the court as to whether there has been a deprivation of the speedy trial right.
Ariegwe, ¶ 84. “[W]hether the accused actually wanted to be brought to trial promptly is
an ‘important’ consideration in ascertaining whether his or her right to a speedy trial has
been violated.” Ariegwe, ¶ 76. Responses to delays must be viewed under the totality of
the circumstances and in light of the accused’s other conduct. Ariegwe, ¶ 80.
¶28 As we noted above, Reynolds caused 411 days of delay himself. Of those 411
days, 277 were caused by his requests for additional time to prepare. Although he argues
the State is to blame for these days because of dilatory discovery tactics, the record tells a
different story. The defense did not timely examine the hard disk when it was given to
them, and the problems with encrypted files and reading the data on the digital images
likely could have been quickly addressed by an expert. The defense never hired an expert
and chose instead to request cloned drives, which increased the delay. Although the
13
defense received more than 15,000 pages of documents from the State in October of
2012, Kate Beckman did not begin her review until May of 2013—nearly eight months
later. Even then, the time she spent organizing and reviewing these documents was not
substantial and she did not proceed at a hurried pace, but rather five hours per week.
Lynne Egan’s 120-page report, included in those documents, provided every investor’s
name, address, phone number, and email address. By the time of the District Court’s
speedy trial hearing, nearly a year after these documents were produced, the defense
investigator had contacted only 31 witnesses. Notwithstanding these points of defense
delay, Reynolds testified at the speedy trial hearing that his defense was not suffering or
impaired. He had access to a substantial volume of files—27 banker’s boxes, and three
file cabinets’ worth, in addition to those contained in his office computer—and only
wanted for more time. We therefore cannot say these 277 days, linked to Reynolds’
desire for more time, were due to dilatory tactics or “piecemeal” releases of discovery by
the State. We count these delays instead as evidence Reynolds desired more time than
diligence would have required and that he did not actually want a speedy trial.
¶29 The initial delay of 134 days, however, unquestionably stemmed entirely from
Reynolds’ avoidance of the law. He hid in his hotel room rather than surrender himself
to authorities to begin the proceedings against him. We weigh this period against the
Defendant too, and assign heavy weight for the delay against Reynolds. He deliberately
avoided apprehension and indicated no interest at all in having a speedy trial.
Additionally, his testimony at his speedy trial hearing discredits the notion that he
actually wanted a speedy trial when what he really wanted was additional time to prepare.
14
We conclude therefore that Reynolds did not actually want a speedy trial, which weighs
heavily against him in the balancing of the four factors.
Factor Four: prejudice to the accused
¶30 Under factor four, the reviewing court must examine the interests of the defendant
that the Speedy Trial right was designed to protect. Ariegwe, ¶ 86. The United States
Supreme Court enumerated these interests: (1) preventing oppressive pre-trial
incarceration; (2) minimizing anxiety and concern of the accused; and (3) limiting the
possibility that the defense will be impaired. A reviewing court may find prejudice to the
accused under any one or all of these factors. Ariegwe, ¶ 88.
1. Preventing oppressive pre-trial incarceration
¶31 Reynolds argues that his incarceration inhibited his ability to participate in his
defense preparation. “[T]he length of the pretrial incarceration that is ‘oppressive’ is less
for a relatively simple offense than it is for a complex charge.” Ariegwe, ¶ 91. Although
his incarceration was lengthy, the charges against Reynolds and the preparation required
for them, were complex. While incarcerated, he was treated for his medical conditions
and able to pursue worthwhile activities like writing literature and songs. Additionally,
the record demonstrates through Reynolds’ own testimony that detention staff were
willing to accommodate his defense preparation efforts—accommodations never before
afforded to other prisoners. Reynolds never found these proposals satisfactory, however,
and chose not to avail himself of them. Despite the District Court’s concerns about his
flight risk, the expansive and portable nature of his crimes, and his unabashed willingness
to continue engaging in similar enterprises, the District Court ultimately allowed
15
Reynolds to spend much of his pretrial incarceration at home—nearly six months—where
he had access to all of his files, a computer, additional medical care of his choosing, and a
special mattress for his back. Given these facts, we do not find his pretrial incarceration
was oppressive.
2. Minimizing anxiety and concern of the accused
¶32 When analyzing anxiety and concern, the Court focuses on ways the pending
charges have unduly disrupted the accused’s life or aggravated the anxiety and concern
inherent in being accused of a crime. Nonetheless, a certain amount of anxiety naturally
accompanies being accused of a crime, and the speedy trial guarantee is designed to
minimize it, not eliminate it altogether. Ariegwe, ¶ 97. We do not see evidence in the
record that Reynolds endured anxiety and concern beyond that ordinarily accompanying
being accused of a crime. Although his life was disrupted in that he was no longer able
to work, the nature of the charges against him was such that his work constituted a
massive criminal enterprise—a salient point his incarceration was meant to address.
Further, his release to house arrest in July of 2013 mitigated the disruptions to his life,
and he was able to work at home on his defense preparation as he liked, and sleep in his
own bed.
3. Limiting the possibility that the defense will be impaired
¶33 Limiting the impairment of the defense is the most important of the factors to
address when examining whether the accused was prejudiced by delays leading to his
trial. A defense impaired by pretrial delay undermines the fairness of the criminal justice
system. Ariegwe, ¶ 98. Reynolds argues that his inability to access files while
16
incarcerated and the State’s piecemeal discovery impaired his ability to participate in his
defense preparation. These arguments do not align with the record. Reynolds’ testimony
at the District Court’s speedy trial hearing on October 7, 2013, indicates he was pleased
with how his defense preparations were proceeding, and that he had access to all of his
files, other than those he had encrypted. Although the case was voluminous, the State’s
efforts to supply discovery were ample. The State’s delivery of records to the defense on
October 9, 2012, supplied significant detail regarding the State’s case. Among these
documents was Egan’s 120-page compilation detailing investors, investments, and
thorough contact information for the State’s witnesses. Although the Defendant could
not access his encrypted files, and could not timely view the electronic disk images
supplied by the State, these difficulties coincide with the defense’s decision not to hire an
expert with experience in such things. The State likewise cannot be responsible for the
defense’s decision to start organizing its case in May of 2013 instead of October 9, 2012,
when the 15,000 pages of documents and Egan’s report were received. Neither is the
State responsible for the defense’s delay in interviewing witnesses; only 31 were
contacted by the defense investigator as of October 7, 2013, despite Egan providing all of
their contact information on October 9, 2012, nearly one year earlier. We cannot
conclude that Reynolds’ alleged impairment of his defense was the State’s responsibility.
Balancing
¶34 In the final analysis, we find that although Reynolds’ pretrial delay was lengthy,
lengthy delays often are necessary and must accompany highly complex criminal
litigation. Further, we find Reynolds did not want a speedy trial. With the great majority
17
of pretrial delay attributed to him, the record demonstrates Reynolds wanted to avoid trial
altogether. At a minimum, he wanted more time to prepare his defense, efforts of which
began late. Finally, even if he did desire a speedy trial, we cannot see that he was
prejudiced by the delays. The District Court’s denial of Reynolds’ motion to dismiss for
lack of a speedy trial is therefore affirmed.
¶35 2. Whether the District Court erred when it refused Reynolds’ proposed jury
instructions referencing exemptions to §§ 30-10-201 and -202, MCA.
¶36 A district court has correctly instructed a jury in a criminal case when, taken as a
whole, the instructions fully and fairly instructed the jury on the law applicable to the
case. State v. Cybulski, 2009 MT 70, ¶ 34, 349 Mont. 429, 204 P.3d 7 (citing State v.
Archambault, 2007 MT 26, ¶ 14, 336 Mont. 6, 152 P.3d 698). We review a district
court’s broad discretion to instruct a jury for an abuse of that discretion. Cybulski, ¶ 34.
A district court abuses its discretion if its actions are arbitrary or exceed the bounds of
reason and substantial injustice results. Cybulski, ¶ 34 (citing State v. Bieber, 2007 MT
262, ¶ 22, 339 Mont. 309, 170 P.3d 444). The district court’s decisions regarding jury
instructions are presumed correct, and the appellant bears the burden to prove they are in
error. State v. Carnes, 2015 MT 101, ¶ 6, 378 Mont. 482, 346 P.3d 1120. We consider
any mistakes in a jury instruction to be reversible error only if the instruction
prejudicially affected the defendant’s substantial rights. Cybulski, ¶ 34. Although a jury
must be instructed on each theory supported by the record, defendants are not entitled to
instruct the jury on every nuance of their theory of the case. Cybulski, ¶ 36. A district
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court therefore does not err when it refuses a proposed instruction containing language
with no application to the defendant’s case. See Cybulski, ¶ 36.
¶37 Reynolds sought to include language in his proposed instructions that had no
application to his case. Reynolds’ proffered instructions differed from the District
Court’s in that they referenced language relevant to circumstances in which Reynolds’
transactions or securities would be exempt from Montana’s securities regulations under
§ 30-10-105(8)(a), MCA. That additional language had no application to Reynolds’ case
because eligibility for the exemptions requires the person offering or selling the securities
to have first registered in Montana pursuant to § 30-10-201, MCA. Admin. R. M.
6.10.301(2) (2016). Egan, as the person in charge of securities registration for the State,
testified that Reynolds had never submitted a registration application. On that basis
alone, Reynolds did not qualify for an exemption. However, even if Reynolds was
otherwise qualified for an exemption under § 30-10-105, MCA, the Administrative Rules
of Montana preclude an exemption when, within five years prior to registration, someone
affiliated with the sale of securities2 is subject to a state administrative enforcement order
in which fraud or deceit was found. Admin. R. M. 6.10.301(3)(c) (2016). Reynolds was
2
Administrative Rule of Montana 6.10.301(3) (2016) incorporates the Federal Administrative
Rules to identify the parties the rule is meant to cover. The relevant portion of 17 C.F.R.
§ 230.262(a) (2017) is reproduced here: “the issuer; any predecessor of the issuer; any affiliated
issuer; any director, executive officer, other officer participating in the offering, general partner
or managing member of the issuer; any beneficial owner of 20% or more of the issuer’s
outstanding voting equity securities, calculated on the basis of voting power; any promoter
connected with the issuer in any capacity at the time of filing, any offer after qualification, or
such sale; any person that has been or will be paid (directly or indirectly) remuneration for
solicitation of purchasers in connection with such sale of securities; any general partner or
managing member of any such solicitor; or any director, executive officer or other officer
participating in the offering of any such solicitor or general partner or managing member of such
solicitor[.]”
19
subject to such a State Administrative Enforcement Order issued in May of 2009 in
Missouri—less than five years before the Buffalo entities and UCIC were begun in
Montana. This Missouri Cease and Desist order against Reynolds identified his multiple
violations of Missouri code provisions relating to general fraud. Administrative Rule of
Montana 6.10.301(3)(c) unquestionably applied to Reynolds: he was an issuer and
executive officer of the fraudulently created entities. Additionally, the Missouri order,
which found he had engaged in fraudulent behavior, was in effect at the time the Buffalo
and UCIC entities were created. Reynolds was therefore precluded from qualifying for
the exemptions under § 30-10-105(8)(a), MCA, even if he had registered as required.
¶38 Since the District Court reasoned along these same lines when refusing Reynolds’
instruction containing the exemption language, we cannot say the District Court’s refusal
was an abuse of its discretion. Neither can we say the given instruction failed to fully
instruct the jury on the law applicable to the case. The State’s instructions plainly
identified the wrongful conduct and mental state required for a conviction under the
statute. The State’s instructions thus fully instructed the jury as to the applicable law.
Since the instructions given at trial fully and fairly informed the jury as to the applicable
law, and the District Court’s refusal was neither arbitrary nor unreasonable, the District
Court did not commit reversible error by refusing Reynolds’ instructions. On this basis,
Reynolds’ request for a new trial with different jury instructions is denied.
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CONCLUSION
¶39 The judgment of the District Court denying the Defendant’s motion to dismiss for
lack of a speedy trial, and denying the Defendant a new trial on the basis the jury was not
properly instructed, is affirmed.
/S/ LAURIE McKINNON
We concur:
/S/ MIKE McGRATH
/S/ MICHAEL E WHEAT
/S/ BETH BAKER
/S/ JIM RICE
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