State v. Moore

2015 UT App 112THE UTAH COURT OF APPEALS
STATE OF UTAH,
Plaintiff and Appellee,
v.
SHAWN H. MOORE,
Defendant and Appellant.
Opinion
No. 20130422-CA
Filed April 30, 2015
Third District Court, Salt Lake Department
The Honorable Katie Bernards-Goodman
No. 081908861
Lori J. Seppi and John B. Plimpton, Attorneys
for Appellant
Sean D. Reyes and Karen A. Klucznik, Attorneys
for Appellee
JUDGE JAMES Z. DAVIS authored this Opinion, in which JUDGES
J. FREDERIC VOROS JR. and JOHN A. PEARCE concurred as to Part I
and concurred in the result.
DAVIS, Judge:
¶1 Shawn H. Moore appeals from his convictions of four
counts of securities fraud, four counts of sale by an unlicensed
agent, and one count of pattern of unlawful activity. We agree
with Moore’s argument that the jury instructions defining the
‚willfulness‛ mens rea for the securities fraud charges and the
sale by an unlicensed agent charges were incomplete and
misstated the law. Accordingly, we reverse all of Moore’s
convictions and remand for further proceedings in accordance
with this opinion.
State v. Moore
BACKGROUND
¶2 Moore’s convictions arise from investments various
clients made in VesCor Capital, Inc. while Moore worked there.
The details of the investments and Moore’s relationship to the
investments, however, are not central to our determination on
appeal. Suffice it to say, counts one through eight against Moore
represent the securities fraud charges and unlicensed agent
charges and arise from four specific investments made by four
different VesCor clients between December 2003 and January
2006. Count nine, the pattern of unlawful activity charge, alleges
counts one through eight as predicate offenses and alleges three
additional investments occurring in August 2001 and March and
June 2003 (the time-barred investments) as predicate offenses.
The State did not bring separate securities fraud and unlicensed
agent charges against Moore for these additional investments
because they fell outside of the statute of limitations.
¶3 Moore’s primary argument on appeal is that the jury
instructions defining the ‚willfulness‛ element of counts one
through eight were incorrect and misleading. Moore also argues
that Brian Glen Lloyd, a practicing attorney who testified for the
State as a securities expert, impermissibly provided legal
conclusions in his testimony. Additionally, Moore challenges the
trial court’s restitution order, arguing that the court failed to
consider the mandatory statutory factors in calculating court-
ordered restitution and that the court’s requiring Moore to pay
restitution for the time-barred investments was improper
because those investments did not form a basis for his securities
fraud or unlicensed agent convictions.
ISSUES AND STANDARDS OF REVIEW
¶4 ‚Generally, *w+hether a jury instruction correctly states
the law presents a question of law which we review for
20130422-CA 2 2015 UT App 112State v. Moore
correctness.‛ State v. Cruz, 2005 UT 45, ¶ 16, 122 P.3d 543(alteration in original) (citation and internal quotation marks
omitted). ‚*W+e look at the jury instructions in their entirety and
will affirm when the instructions taken as a whole fairly instruct
the jury on the law applicable to the case.‛ State v. Maestas, 2012
UT 46, ¶ 148, 299 P.3d 892 (citation and internal quotation marks
omitted).
¶5 Because we agree with Moore that the ‚willfulness‛ jury
instructions were erroneous, we need not decide the other issues
raised on appeal. This decision nonetheless addresses Moore’s
arguments to the extent that doing so may offer guidance for the
trial court on remand.1 See Armed Forces Ins. Exch. v. Harrison,
2003 UT 14, ¶ 38, 70 P.3d 35 (‚*I+n the interest of judicial
economy, a brief discussion of these issues is appropriate as
guidance for the trial court on remand.‛ (citation and internal
quotation marks omitted)).
ANALYSIS
I. The Willfulness Jury Instruction
¶6 Moore’s defense at trial focused on the willfulness
element in both the securities fraud charges and the sale by an
unlicensed agent charges. As charged, the securities fraud
statute makes it unlawful for
1. Judge Voros and Judge Pearce concur only as to Part I of this
decision and do not join in Part II, to the extent they disagree
with the propriety of reaching issues that may arise on remand
in this case. As a result, the discussion under Part II reflects the
views of Judge Davis and is not a part of the majority decision.
20130422-CA 3 2015 UT App 112State v. Moore
any person, in connection with the offer, sale, or
purchase of any security, directly or indirectly to:
...
(2) make any untrue statement of a material fact or
to 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; or
(3) engage in any act, practice, or course of
business which operates or would operate as a
fraud or deceit upon any person.
Utah Code Ann. § 61-1-1 (LexisNexis 2011). The sale by an
unlicensed agent charges required the State to prove that Moore
transacted ‚business in this state as a broker-dealer or agent‛
without a license. Id. § 61-1-3(1). This section ‚govern*s+ both
civil and criminal liability.‛ State v. Larsen, 865 P.2d 1355, 1358
(Utah 1993). ‚To ascertain the elements of a criminal violation,‛
we must read this section ‚in conjunction with section 61-1-21,
which specifies the requisite mental state and penalties for a
criminal violation.‛ Id. Here, the mens rea required for both the
securities fraud and unlicensed agent offenses is willfulness. See
Utah Code Ann. § 61-1-21 (LexisNexis 2011).
¶7 A showing of willfulness, therefore, was required as to
each of the nine charges against Moore. For counts one through
eight, the jury was required to directly find that Moore acted
willfully in relation to the specific elements of each charge. With
count nine, the pattern of unlawful activity charge, the jury was
required to find that Moore engaged in ‚at least three episodes
of unlawful activity,‛ which could include ‚the activity alleged
in counts one through eight.‛ See id. § 76-10-1602(2) (Supp. 2014)
(defining ‚pattern of unlawful activity‛); id. § 76-10-1603 (2012).
In other words, Moore’s conviction on count nine depended
upon the jury’s verdict for counts one through eight. The jury
20130422-CA 4 2015 UT App 112State v. Moore
could also determine that the time-barred investments
constituted two of the ‚at least three episodes of unlawful
activity‛ necessary for a conviction on count nine. But for the
jury to rely on any of the time-barred investments in reaching its
verdict on count nine, it was instructed that it had to determine
whether Moore ‚willfully‛ omitted or made untrue statements
of material fact or ‚willfully‛ sold securities without a license
with regard to those particular investments. Accordingly, the
mens rea of willfulness pervaded the trial, and Moore’s
convictions on all nine counts depended on the jury’s
understanding and application of that concept.
¶8 Jury instructions 23, 43, and 50 address the mens rea
required to sustain Moore’s convictions. Moore argues that
Instruction 50 was ‚legally incorrect‛ and that ‚Instructions 23
and 43, when read together, were incomplete and misleading.‛
We address each argument in turn.
A. Instruction 50
¶9 Instruction 50 states,
In securities law, salespeople are under a
duty to investigate.
A salesperson cannot deliberately ignore
that which he has a duty to know and recklessly
state facts about matters of which he is ignorant. A
salesperson cannot recommend a security unless
there is an adequate and reasonable basis for such
recommendation. By his recommendation he
implies that a reasonable investigation has been
made and that his recommendation rests on the
conclusions based on such investigation.
Where the salesperson lacks essential
information about a security, he should disclose
20130422-CA 5 2015 UT App 112State v. Moore
this as well as the risks which arise from his lack of
information. A salesperson may not rely blindly
upon the issuer of the security for information
concerning a company.
Moore argues that Instruction 50 imposed criminal liability for
behavior that amounted to recklessness and directed the jury
that ‚it had to convict‛ him of securities fraud if it found that he
failed to satisfy a ‚‘duty to investigate’ or ‘duty to know.’‛ We
agree.
¶10 Instruction 50 has essentially supplanted the actual
elements of the securities fraud charges against Moore. Nowhere
in the applicable statutory framework is there any language akin
to Instruction 50 imposing criminal liability for acts amounting
to willful blindness or a violation of a duty to know. See State v.
Johnson, 2009 UT App 382, ¶ 42, 224 P.3d 720 (‚*T+he plain
language of section 61-1-1(2) . . . makes no mention of an
affirmative duty to disclose in the absence of a prior[,
misleading+ statement.‛). Moreover, section 61-1-21
unambiguously reserves criminal liability for ‚willful‛ violations
of the Utah Uniform Securities Act and decidedly does not allow
criminal prosecution of an individual who, as Instruction 50
provides, ‚recklessly state[s] facts about matters of which he is
ignorant.‛ (Emphasis added.) See Utah Code Ann. § 61-1-21.
Indeed, the use of the word ‚recklessly‛ in Instruction 50 is a
clear indicator that the instruction is not appropriate in this
criminal case. See Larsen, 865 P.2d at 1358 (‚The plain language
of section 61-1-21 requires that to be liable for a criminal
violation of section 61-1-1(2), the defendant must have acted
‘willfully’ in misstating or omitting material facts.‛).
¶11 Hanly v. Securities & Exchange Commission, 415 F.2d 589(2d Cir. 1969), the source of the language incorporated into
Instruction 50, supports our conclusion. There, the Second
20130422-CA 6 2015 UT App 112State v. Moore
Circuit Court of Appeals indicated that a violation of a ‚duty to
know‛ would not be sufficient to sustain even a civil action for a
securities violation. Id. at 595–96. Hanly involved an appeal from
an administrative proceeding initiated by the Securities and
Exchange Commission (SEC), in which the SEC ‚barred‛ five
securities salesmen ‚from further association with any broker or
dealer‛ for having made ‚materially misleading‛
representations in the offer and sale of a particular stock. Id. at
592, 595. In its review of the SEC’s decision, the Second Circuit
recognized that the ‚petitioners have not been criminally
charged, nor have they been sued for damages by their
customers‛; rather, the SEC initiated ‚private proceedings,‛ at
the close of which it revoked ‚each petitioner’s privilege of being
employed in the securities industry.‛ Id. at 595 (emphasis
omitted). It was ‚in this context‛ that the Second Circuit
recognized that ‚*b+rokers and salesmen are under a duty to
investigate and their violation of that duty brings them within
the term ‘willful’ in the *federal securities+ Act.‛ Id. at 595–96
(citation and additional internal quotation marks omitted). The
court explained that the petitioners were being held to such
‚strict‛ standards in light of a ‚special duty‛ imposed in that
circuit ‚upon those who sell *the specific type of stock at issue+
not to take advantage of customers in whom confidence has
been instilled.‛ Id. at 597. The court recognized that a securities
dealer, by virtue of that position, ‚implicitly represents‛ to
potential buyers that ‚he has an adequate basis for the opinions
he renders.‛ Id. at 596. The court also recognized the unique role
of this implied warranty given the posture of the case, stating,
‚*T+his implied warranty may not be as rigidly enforced in a
civil action where an investor seeks damages for losses allegedly
caused by reliance upon his unfounded representations . . . .‛ Id.
¶12 Thus, Hanly is applicable to only a small class of
specialized securities cases initiated by the SEC in an
administrative setting, and the Second Circuit recognized that
20130422-CA 7 2015 UT App 112State v. Moore
the standards imposed on the petitioners in that case were not
appropriate in a civil, let alone criminal, setting. Accordingly,
Hanly does not provide an appropriate basis for a jury
instruction in the case before us. See State v. Larsen, 865 P.2d
1355, 1360 (Utah 1993) (recognizing that ‚the Utah legislature
has not required the courts to interpret the Utah Uniform
Securities Act in lockstep with federal decisions‛). The broad
language of Instruction 50 essentially imposes criminal liability
for conduct that in Hanly was sufficient to sustain an
administrative action, not a criminal action or even a civil action.
See Larsen, 856 P.2d at 1360 (explaining that willfulness is a
‚highly culpable mental state‛ and ‚is not consistent with ‘strict
liability’‛). Likewise, Instruction 50 raises the specter of a
knowledge or scienter requirement, which Utah courts have
specifically and repeatedly rejected in the context of criminal
prosecutions under the Utah Uniform Securities Act. See, e.g., id.
at 1360 & n.8 (‚*A+ finding of scienter is not a prerequisite to
criminal liability under section 61-1-1(2) . . . .‛); State v. Wallace,
2005 UT App 434, ¶¶ 12–15 & n.6, 124 P.3d 259 (encouraging the
legislature to weigh in on whether a defendant’s knowledge of
the facts underlying a securities violation should factor into a
finding of willfulness, i.e., whether the defendant acted
‚‘deliberately and purposefully’‛), aff’d, 2006 UT 86, 150 P.3d
540.2 This is far from the particularized unlawful conduct and
2. We echo this court’s sentiment in State v. Wallace that guidance
from the legislature on this issue would be helpful. See 2005 UT
App 434, ¶ 15 n.6, 124 P.3d 259, aff’d, 2006 UT 86, 150 P.3d 540.
After all, a ‚fundamental purpose‛ behind the securities reforms
that occurred after ‚the stock market crash of 1929 and the
depression of the 1930s‛ ‚was to substitute a philosophy of full
disclosure for the philosophy of caveat emptor.‛ Securities &
Exch. Comm’n v. Capital Gains Research Bureau, Inc., 375 U.S. 180,
186 (1963).
20130422-CA 8 2015 UT App 112State v. Moore
standard of willfulness required by the Utah Code. Cf. State v.
Chapman, 2014 UT App 255, ¶ 11, 338 P.3d 230 (describing the
willfulness instruction as including a defendant’s ‚conscious*+
avoid*ance of+ the existence of a fact or facts‛ or a ‚conscious
objective or desire to ignore a material fact or facts‛ and
distinguishing this from actions that are ‚merely negligent,
careless, or foolish‛ (internal quotation marks omitted)); State v.
Bushman, 2010 UT App 120, ¶ 19, 231 P.3d 833 (‚*T+he actions for
which the [Securities] Act imposes administrative sanctions—
violations of Utah securities laws—do not constitute criminal
behavior under the Act unless undertaken with the appropriate
mental state.‛).
¶13 ‚*A+n error in jury instructions that was properly
preserved at the trial level is reversible only if a review of the
record persuades the court that without the error there was a
reasonable likelihood of a more favorable result for the
defendant.‛3 State v. Crowley, 2014 UT App 33, ¶ 17, 320 P.3d 6773. Moore urges that we apply the ‚higher standard of scrutiny‛
that is available when an ‚error results in the deprivation of a
constitutional right.‛ See State v. Calliham, 2002 UT 86, ¶ 45, 55
P.3d 573. Under this higher standard, we must reverse the
‚conviction unless we find the error harmless beyond a
reasonable doubt.‛ Id. In contrast, under the standard we
generally apply, we may reverse a conviction ‚only if a review of
the record persuades the court that without the error there was a
reasonable likelihood of a more favorable result for the
defendant.‛ State v. Crowley, 2014 UT App 33, ¶ 17, 320 P.3d 677(citation and internal quotation marks omitted). Because we
conclude that the errors here satisfy the lower, ‚reasonable
likelihood‛ standard for reversal, we need not separately
consider the harmless-beyond-a-reasonable-doubt standard.
Moreover, Moore has not demonstrated that an error in an
(continued<)
20130422-CA 9 2015 UT App 112State v. Moore
(citation and internal quotation marks omitted). The State asserts
that Instruction 50 ‚was not key to the State’s case‛ and that any
error in the instruction was harmless in light of the
‚overwhelming‛ evidence that Moore ‚knew‛ he was omitting
or misstating material information to investors and acting
without the proper license. Moore asserts that the State utilized
the standard outlined in Instruction 50 to its advantage by
presenting the case to the jury as both ‚a material omission case‛
and a ‚duty to investigate case,‛ and he cites examples from the
State’s closing argument describing Moore as having a ‚duty to
know this stuff,‛ the ‚onus . . . [to] do what you need to do to
make sure you don’t hurt people,‛ and the ‚legal obligation to
make sure that *the+ things *he is+ telling *an investor+ are true.‛
¶14 We agree with Moore that Instruction 50 greatly distorted
the willfulness element required for a conviction on eight of the
nine charges against Moore. While Instruction 50 is framed in
(386 U.S. 18, 24
(1967). On the contrary, our supreme court consistently
evaluates errors in defining the mens rea element under the non-
constitutional standard for prejudice. See State v. Powell, 2007 UT
9, ¶¶ 2, 19, 154 P.3d 788 (‚Although the jury instruction
regarding mens rea was erroneous, the error was harmless.‛);
State v. Casey, 2003 UT 55, ¶¶ 43, 46, 82 P.3d 1106 (holding that
the trial court erred in instructing the jury that attempted
murder can be committed ‚knowingly,‛ but that ‚no harm
resulted‛ in the case); State v. Fontana, 680 P.2d 1042, 1049 (Utah
1984) (holding that any error in the mens rea instruction ‚was
not prejudicial and cannot serve as the basis for reversal‛).
20130422-CA 10 2015 UT App 112State v. Moore
terms particularly relevant to the securities fraud charges, we are
nonetheless convinced that Instruction 50’s definition of
willfulness also distorted the requirements for a conviction on
the unlicensed agent charges where willfulness is also an
element of those charges. Instruction 50 replaced the statutory
requirement of willfulness with a recklessness standard that
ought to remain confined to the type of administrative setting
from which it came. Instructions 23 and 43 do not alleviate our
concerns with Instruction 50, as discussed further below. See
State v. Maestas, 2012 UT 46, ¶ 148, 299 P.3d 892 (‚*W+e look at
the jury instructions in their entirety and will affirm when the
instructions taken as a whole fairly instruct the jury on the law
applicable to the case.‛ (citation and internal quotation marks
omitted)). As a result, the jury was not instructed properly on a
necessary element required to sustain Moore’s convictions of
counts one through eight. An error in the jury instructions that
relieves the State of its burden of proof with respect to a
contested element is not harmless. Crowley, 2014 UT App 33,
¶ 19. Accordingly, we reverse Moore’s convictions on those
counts. Because the State needed to establish a pattern of
unlawful activity for count nine by demonstrating that Moore
committed at least one of the acts alleged in counts one through
eight, our reversal of those convictions requires that we reverse
his conviction on that charge as well.
B. Instructions 23 and 43
¶15 Next, Moore challenges Instructions 23 and 43. Instruction
23 provides general definitions of the applicable mental states,
including a definition of ‚intent‛: ‚A person engages in conduct
intentionally or with intent or willfully with respect to the nature
of his conduct or to a result of his conduct, when it is his
conscious objective or desire to engage in the conduct or cause
the result.‛ Instruction 23 is derived from the Utah Criminal
Code. See Utah Code Ann. § 76-2-103(1) (LexisNexis 2012)
20130422-CA 11 2015 UT App 112State v. Moore
(providing general definitions for what it means for a person to
engage in conduct intentionally, knowingly, recklessly, or with
criminal negligence). We do not consider Instruction 23’s
language to be problematic, but we agree with Moore that, on its
own, Instruction 23 does not adequately instruct the jury on
willfulness in this situation, nor does it offer much clarity when
read in conjunction with Instruction 43. Instruction 43 states,
A defendant acts willfully if it was his conscious
objective or desire to engage in the conduct or
cause the result—not that it was the defendant’s
conscious desire or objective to violate the law, nor
that the defendant knew that he was committing
fraud in the sale of the security.
¶16 Moore argues that Instructions 23 and 43 include
language from State v. Larsen, 865 P.2d 1355 (Utah 1993), that is
beneficial to the State but detrimental to Moore. Specifically,
Moore argues that Instructions 23 and 43 ‚omitted Larsen’s
clarifying language.‛ Moore asserts that the language of these
two instructions allowed the jury to reach a guilty verdict if it
found that he had a ‚conscious objective or desire to engage in
conduct such as signing thank you letters or distributing
paperwork‛ and that it could do so ‚without regard to whether
he engaged in the conduct with a conscious objective or desire to
misstate a material fact, omit a material fact necessary to
complete a predicate statement, or engage in an act that operated
as a fraud.‛
¶17 The ‚clarifying language‛ from Larsen that Moore
references is the supreme court’s statement,
To act willfully in this context means to act
deliberately and purposefully, as distinguished
from merely accidentally or inadvertently. Willful,
20130422-CA 12 2015 UT App 112State v. Moore
when applied to the intent with which an act is
done or omitted, implies a willingness to commit
the act, which, in this case, is the misstatement or
omission of a material fact. Willful does not require
an intent to violate the law or to injure another or
acquire any advantage.
Id. at 1358 n.3 (citation omitted). The Larsen court rejected
concerns that the willfulness requirement would result in
‚accounting firms and other professionals [being] held liable for
‘good faith oversight’ or failure ‘to discover and disclose a
material fact.’‛ Id. at 1360. The Larsen court explained ‚that the
prosecution must prove beyond a reasonable doubt that the
accused ‘desire[d] to engage in the conduct or cause the result,’‛
in order to limit liability for ‚only those professionals who
willfully omit or misstate material facts.‛ Id. (alteration in
original) (citation and internal quotation marks omitted). Put
differently, Larsen requires that Moore’s fraud convictions rest
on facts indicating, for example, that he ‚made a willful
misstatement or omission of a material fact‛ by having
‚consciously avoided the existence of a fact or facts‛ or, in other
words, that Moore ‚acted with a conscious objective or desire to
ignore a material fact or facts,‛ see Chapman, 2014 UT App 255,
¶ 11 (internal quotation marks omitted), not that he simply had a
‚conscious objective or desire to‛ sign thank you letters.
¶18 Nonetheless, because we are reversing Moore’s
convictions based on our analysis of Instruction 50, we need not
decide whether Instructions 23 and 43 were prejudicially
misleading or incomplete. See Crowley, 2014 UT App 33, ¶ 17, 320
P.3d 677 (explaining when errors in jury instructions warrant
reversal). Instead, we encourage the trial court on remand to
revisit the proper framing of ‚willfulness‛ in the jury
instructions, paying special attention to the problems identified
20130422-CA 13 2015 UT App 112State v. Moore
with Instruction 50 and to whether the inclusion of additional,
potentially ‚clarifying language‛ from Larsen would aid the jury.
II. Issues that May Arise on Remand4
¶19 Although we reverse Moore’s convictions and remand the
case for further proceedings based on the language of Instruction
50, there are additional, fully briefed issues before this court that
may arise on remand. I would therefore have this court exercise
its ‚discretion to address those issues for purposes of providing
guidance on remand.‛ State v. Low, 2008 UT 58, ¶ 61, 192 P.3d
867.
A. Expert Testimony
¶20 Moore challenges Lloyd’s expert testimony as including
legal conclusions, statements as to whether Moore’s actions were
illegal, and incorrectly defined terms of art.5
4. Part II of the decision is not a part of the majority opinion to
the extent Judge Voros and Judge Pearce disagree with the
propriety of reaching the issues that may arise on remand in this
case.
5. Moore also challenges another expert as having impermissibly
compared VesCor to Bernie Madoff and described VesCor as a
Ponzi scheme, despite the court’s order that the parties and
witnesses refrain from mentioning Bernie Madoff. Moore argues
that his trial counsel’s failure to object to this testimony
constituted ineffective assistance. To the extent Moore opposes
any future reference to Bernie Madoff or a Ponzi scheme that an
expert witness may make in a subsequent retrial, his counsel is
invited to make a proper objection at that time.
20130422-CA 14 2015 UT App 112State v. Moore
¶21 Expert witnesses may testify in the form of an opinion
and may offer opinion testimony on ultimate issues. See Utah R.
Evid. 702(a), 704(a). However, ‚*i+n a criminal case, an expert
witness must not state an opinion about whether the defendant
did or did not have a mental state or condition that constitutes
an element of the crime charged or of a defense.‛ Id. R. 704(b).
‚Rules 701 and 702 require, respectively, that the
opinions of lay and expert witnesses assist the trier
of fact. And Rule 403 provides for the exclusion of
evidence which wastes time. Thus, if a witness’s
opinion will do little more than tell the jury what
result to reach, it will be inadmissible.‛
Davidson v. Prince, 813 P.2d 1225, 1232 n.7 (Utah Ct. App. 1991)
(quoting 10 J. Moore & H. Bendix, Moore’s Federal Practice
§ 704.02, at VII-63 (1989)). ‚No ‘bright line’ separates permissible
ultimate issue testimony under rule 704 and impermissible
‘overbroad legal responses’ a witness may give during
questioning.‛ State v. Davis, 2007 UT App 13, ¶ 16, 155 P.3d 909(citation omitted) (collecting cases in which the reviewing court
attempted to draw the line between inadmissible and admissible
rule 704 testimony).
¶22 Nonetheless, this court has recognized that expert
witnesses who ‚tie their opinions to the requirements of Utah
law‛ are ‚quite clearly‛ offering impermissible legal
conclusions. State v. Tenney, 913 P.2d 750, 756 (Utah Ct. App.
1996); see also, e.g., Specht v. Jensen, 853 F.2d 805, 806 (10th Cir.
1988) (concluding that it is beyond the scope of permissible
expert testimony for an expert witness ‚to state his views of the
law which governs the verdict and opine whether defendants’
conduct violated that law‛); Hogan v. American Tel. & Tel. Co., 812
F.2d 409, 411 (8th Cir. 1987) (per curiam) (‚Opinion testimony is
not helpful to the factfinder if it is couched as a legal conclusion
20130422-CA 15 2015 UT App 112State v. Moore
. . . . Because the judge and not a witness is to instruct the
factfinder on the applicable principles of law, exclusion of
opinion testimony is appropriate if the terms used have a
separate, distinct, and special legal meaning.‛ (citations
omitted)); State v. Stringham, 957 P.2d 602, 607 (Utah Ct. App.
1998) (determining that the prosecutor’s ‚hypothetical question‛
posed to an expert witness that ‚consist[ed] of the exact actions
of which [the] defendant was accused‛ required the witness to
offer an impermissible legal conclusion); Davidson, 813 P.2d at
1231 (collecting cases and affirming the trial court’s decision to
exclude expert testimony that would have answered a specific
question on the verdict form that the jury needed to answer
‚based upon the judge’s definition of a legal term ‘negligence’‛).
Other jurisdictions have determined that expert witness
testimony ‚‘that encompasses an ultimate issue is generally
admissible when it alludes to an inference that the trier of fact
should make, or uses a term that has both a lay factual meaning
and legal meaning, and it is clear that the witness is using only
the factual term.’‛ 5 Handbook of Fed. Evid. § 704:1 (7th ed.)
(quoting Webb v. Omni Block, Inc., 166 P.3d 140, 144 (Ariz. Ct.
App. 2007)).
¶23 I am particularly troubled by Lloyd’s testimony defining
the terms ‚willful,‛ ‚material information,‛ ‚agent,‛ and
‚securities‛ and applying the terms ‚agent‛ and ‚securities‛ to
the facts of Moore’s case. I address Moore’s argument with
respect to each of these definitions in turn.
1. Willfulness
¶24 Moore argues that Lloyd incorrectly defined the term
‚willfulness‛ and that Lloyd’s use of the term amounted to an
impermissible legal conclusion. Lloyd testified, ‚In the context of
securities, willful means an intent to take an action.‛ Lloyd
explained that criminal liability requires only that the defendant
20130422-CA 16 2015 UT App 112State v. Moore
‚have . . . intend*ed+ to take the particular action‛ and that ‚it
doesn’t necessarily mean that they have an intent to defraud. It
just means they have an intent to sell the security, distribute the
paperwork, whatever it is that . . . involves the offer or sale of a
security.‛ Moore also argues that Lloyd offered legal conclusions
when he ‚expounded on the definition of ‘willfulness’‛ by
testifying ‚about the legal meaning of ‘reckless statement.’‛
Lloyd testified that ‚a reckless statement . . . in the securities
industry . . . is a statement that’s made in disregard of a
particular risk or series of risks or consequences or outcomes.‛
He further explained, ‚*T+o make a reckless statement is to make
a statement knowing that maybe there are risks or there are
consequences that affect that statement that you’re . . . going
ahead despite those risks.‛
¶25 Given our ruling on the willfulness instructions, I am
inclined to agree with Moore that Lloyd’s testimony defining the
term ‚willfulness‛ as it is used ‚*i+n the context of securities‛
law was admitted in error. To avoid this problem on remand,
expert witnesses should restrict their testimony defining terms of
art to definitions that are clearly based on the expert’s
understanding and experience in the industry, rather than the
expert’s understanding of Utah law.6 See Tenney, 913 P.2d at 756.
2. Material Information
¶26 Moore claims that Lloyd impermissibly stated a legal
conclusion when he testified that ‚information is material if a
reasonable person would consider it important in making a
decision as to whether or not to purchase that particular
security.‛ Moore also asserts that ‚Lloyd’s examples of material
6. I do not express an opinion on whether the testimony I
consider erroneously admitted also constituted prejudicial error.
20130422-CA 17 2015 UT App 112State v. Moore
information mirrored the State’s allegations.‛ Last, Moore argues
that Lloyd indicated that a seller of securities is required to
‚disclose all material information.‛
¶27 I am not troubled by Lloyd’s definition of ‚material
information.‛ His definition was broad and not couched in terms
of Utah law or the facts of Moore’s case. Cf. State v. Chapman,
2014 UT App 255, ¶ 21, 338 P.3d 230 (declining to find error in an
expert’s testimony defining what a security is in general because
the expert ‚did not tell the jury that the transaction at issue was
a security, couch his opinion specifically in terms of what is
required under Utah law, or otherwise tell the jury what
conclusion to reach‛). Lloyd’s list of examples of material
information was similarly generalized and did not explicitly
mirror the State’s allegations. Cf. State v. Stringham, 957 P.2d 602,
607 (Utah Ct. App. 1998). But see Chapman, 2014 UT App 255,
¶¶ 28–29, 32–34 (Pearce, J., concurring in part and concurring in
the result) (explaining that because ‚the questions presented to
the jury concerning materiality in this case were
straightforward,‛ the expert’s testimony on this point was ‚well
within the experience of the average layperson‛ and therefore
not helpful); id. ¶ 25 (Roth, J., concurring) (writing separately to
share in ‚Judge Pearce’s concerns regarding the admissibility of
the State’s expert testimony with respect to the materiality‛
element). Last, it was the prosecutor, not Lloyd, who implied
that a seller of securities has a duty to disclose all material
information. Lloyd responded broadly to the prosecutor’s
question and did so without indicating whether such a duty to
disclose necessarily exists. However, in conjunction with the
problems we identified in Instruction 50, I am concerned that
this statement and the statement’s implication of a scienter
requirement were not appropriate.
20130422-CA 18 2015 UT App 112State v. Moore
3. Agent and Security
¶28 Lloyd defined the term ‚agent‛ as ‚a person that effects
or attempts to effect a purchase or sale of security on . . . behalf
of an issuer. So someone acting on behalf of an issuer in
attempting or effecting a purchase or sale of securities.‛ He
provided the same definition later in his testimony and added,
‚*A+s we’ve learned in the course of the last couple of days,
there’s no question in my mind, in my experience that the
activities that have been described would be considered
[effecting] or attempting to [effect] purchases or sales of
securities.‛7
¶29 Similarly, Lloyd defined various types of ‚securities‛ and
testified that the transactions at issue were securities. Lloyd
offered his ‚opinion‛ that the documents and transactions at
issue in this case constituted securities, he identified particular
characteristics of the transactions that made them securities, and
he then identified what types of securities the transactions were.
¶30 Although Lloyd’s definition of ‚agent‛ is similar to the
definition provided in the jury instructions, I am nonetheless
troubled that his testimony addressed an element that the jury
needed to find for the licensing charges and ‚suppl*ied+ the jury
with no information other than [his] view of how its verdict
should read.‛ See Owen v. Kerr–McGee Corp., 698 F.2d 236, 240
7. In a footnote, Moore also challenges another expert’s
testimony describing the licensing requirements for sellers of
securities and that expert’s testimony describing Moore as not
licensed to sell securities. However, Moore stipulated that he did
not have a license, and the witness did not explicitly opine that
Moore was a seller of securities and was therefore required to be
licensed.
20130422-CA 19 2015 UT App 112State v. Moore
(5th Cir. 1983); see also Davidson v. Prince, 813 P.2d 1225, 1231
(Utah Ct. App. 1991). The fact that Lloyd explained what
securities are is not necessarily problematic. But I am concerned
that his testimony went too far by defining securities using the
facts of this case as illustrative examples of what constitutes a
security. Cf. Chapman, 2014 UT App 255, ¶ 20.
B. Restitution
¶31 Last, Moore argues that the trial ‚court abused its
discretion by (1) refusing to consider the mandatory factors for
court-ordered restitution . . . and (2) ordering Moore to pay
restitution for‛ the time-barred investments.
¶32 ‚Restitution should be ordered only in cases where
liability is clear as a matter of law and where commission of the
crime clearly establishes causality of the injury or damages.‛
State v. Laycock, 2009 UT 53, ¶ 29, 214 P.3d 104 (citation and
internal quotation marks omitted). The applicable statutory
framework lists six factors the court must consider in
‚determining the monetary sum and other conditions for court-
ordered restitution,‛ which includes considering six additional
conditions listed in the statute under the requirements for
complete restitution. See Utah Code Ann. § 77-38a-302(5)(b)–(c)
(LexisNexis Supp. 2014).
¶33 While I need not conduct a complete analysis of these
restitution arguments, I agree that the reasoning relied on by the
trial court in ordering court-ordered restitution could have been
clearer, more explicit, and more detailed. In its analysis of court-
ordered restitution, the court considered only Moore’s
educational background and work history and did so fairly
cursorily. Indeed, the court addressed Moore’s work history in
securities favorably, implying that once he finishes his prison
20130422-CA 20 2015 UT App 112State v. Moore
term for nine convictions of securities crimes, he could return to
the industry and earn a ‚pretty substantial income.‛
¶34 Moore also raises legitimate concerns regarding the trial
court’s inclusion of the time-barred investments in its calculation
of the restitution award because ‚*t+he statute requires that
responsibility for the criminal conduct be firmly established,
much like a guilty plea, before the court can order restitution.‛
State v. Mast, 2001 UT App 402, ¶ 18, 40 P.3d 1143 (citation and
internal quotation marks omitted). As discussed above, the jury
did not need to rely on the time-barred investments in order to
convict Moore of engaging in a pattern of unlawful activity and
Moore was otherwise not charged and convicted of securities
violations for these investments because the statute of limitations
had run on them. Rather than address whether the inclusion of
these investments amounted to error, I encourage the parties and
the court on remand to take measures that may prevent this
concern from reappearing, e.g., using a special verdict form.
CONCLUSION
¶35 Instruction 50 incorrectly imposed a duty to know and a
duty to disclose on securities sellers that is not an element in
Utah criminal securities law and undermines the willfulness
element required to sustain the four securities fraud charges and
four unlicensed agent charges brought against Moore.
Accordingly, we reverse Moore’s convictions on those eight
charges and his conviction for engaging in a pattern of unlawful
activity.8
8. We do not address Moore’s separate argument for reversal
based on cumulative error.
20130422-CA 21 2015 UT App 112