Justia White Collar Crime Opinion Summaries

Articles Posted in Colorado Supreme Court
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Steven Thompson was a real estate developer and sole member and manager of SGD Timber Canyon, LLC (“Timber Canyon”), a real estate company that held an interest in a number of undeveloped lots in Castle Rock, Colorado. To buy those properties, Timber Canyon initially obtained a $11.9 million loan from Flagstar Bank. The properties went into foreclosure in October 2009. In February 2010, Timber Canyon filed for bankruptcy; Flagstar Bank sought relief from the automatic stay to allow it to proceed with the foreclosure. In the spring of 2010, Thompson met John Witt (“John”), who had worked in the construction industry in Denver but wanted to become a real estate developer. John eventually began working with Thompson and signed a letter of intent indicating that John would eventually obtain an ownership interest in Thompson’s company. Shortly thereafter, and without disclosing the fact that the Timber Ridge properties were in foreclosure and subject to a forbearance agreement, Thompson obtained an “investment” from John’s parents, Thomas and Debra Witt (“the Witts”). Ultimately, the Witts agreed to increase their initial $400,000 investment to $2.4 million. At no point did Thompson disclose to the Witts that Timber Canyon's properties were already highly leveraged; the company was in bankruptcy, the properties were in foreclosure, and the properties had been valued at only $6.75 million (an amount significantly less than the $31 million value that Thompson had represented to the Witts during negotiations). When the Witts’ note ultimately came due in the winter of 2011, Thompson defaulted. The Witts filed a civil lawsuit against him and contacted law enforcement. Thereafter, the State charged Thompson with two counts of securities fraud and one count of theft. A jury convicted Thompson on all counts, and the court sentenced him to the Department of Corrections for twelve years on each of the securities fraud counts, to be served concurrently, and eighteen years on the theft count, to be served consecutively to the securities fraud counts. As pertinent here, Thompson argued on appeal: (1) because the note at issue was not a security, insufficient evidence supported his securities fraud convictions; (2) the trial court erred by tendering an incorrect jury instruction regarding the meaning of “security”; and (3) his theft conviction had to run concurrently with his securities fraud convictions. The issue this case presented for the Colorado Supreme Court's review was whether: (1) the promissory note at issue was a security under the "family resemblance" test; (2) any error in the jury instruction defining “security” was not plain; and (3) consecutive sentences were permissible because different evidence supported defendant Steven Thompson’s securities fraud and theft convictions. Finding the note at issue was indeed a security under Colorado law, and no other reversible error, the Supreme Court affirmed Thompson's convictions. View "Thompson v. Colorado" on Justia Law

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De Etta Wester-Gravelle worked as a certified nursing assistant for a company called Interim Healthcare. During the time period in question, the company assigned her to care for a patient, W.M., who had suffered a stroke and needed assistance with tasks like bathing. W.M.’s partner, E.G., was also in poor health and could not perform such tasks for W.M. Interim Healthcare assigned Wester-Gravelle to visit W.M. five times per week for two hours each day. At the conclusion of each shift, Wester-Gravelle was required to have either W.M. or E.G. sign Wester-Gravelle’s shift chart to verify that she had been there. The charts would then serve as a record pursuant to which Interim Healthcare would pay Wester-Gravelle for her work. Wester-Gravelle had been assigned to work with W.M. for several months when, in late July or early August of 2015, her supervisor, Lisa Conley, made a routine visit to W.M.’s house during a time when Wester-Gravelle had been scheduled to be there. When Conley arrived, however, Wester-Gravelle was not there. Conley performed routine tasks of her own that day, and in the course of her conversation with W.M. and E.G., they said that they had not seen Wester-Gravelle in several weeks. After an investigation, the matter was transferred to the Colorado Attorney General, who prosecuted Wester-Gravelle on one count of forgery. The issue this case presented for the Colorado Supreme Court's review was whether the court of appeals erred in concluding the prosecution had an obligation to elect the specific document or documents on which it would rely for conviction or, alternatively, that Wester-Gravelle was entitled to a "modified unanimity instruction" requiring the jurors to agree unanimously that she had committed the same underlying act of forgery or that she had committed all of the underlying acts. The Supreme Court concluded the trial court did not plainly err when it did not, sua sponte, require an election or give a modified unanimity instruction because any error was neither obvious nor substantial. The court of appeals' judgment was reversed and the matter remanded for consideration of Wester-Gravelle's remaining contentions on appeal. View "Colorado v. Wester-Gravelle" on Justia Law

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Petitioner John Halaseh petitioned the Colorado Supreme Court to review a court of appeals' remand order to his underlying appeal, which directed the district court to enter four convictions for class 4 felony theft in place of the single conviction of class 3 felony theft that was reflected in the charge and jury verdict. The appellate court reversed the class 3 felony on grounds that when the statutory authorization for aggregating separate acts of theft was properly applied, there was insufficient evidence to support a single conviction for theft of $20,000 or more. It also found, however, that there was sufficient evidence to support four separate convictions for aggregated thefts with values qualifying as class 4 felonies, and that substituting these four class 4 felony convictions for the vacated class 3 felony conviction was necessary to fulfill what it understood to be its obligation to maximize the effect of the jury’s verdict. The Supreme Court disapproved of the appellate court's judgment, finding no theft offense required the aggregation of two or more separate instances of theft, whether that aggregation were to be based on commission within a period of six months or on commission as a single course of conduct, was a lesser included offense of the class 3 felony of which Halaseh was actually charged and convicted. Further, no such offense was implicitly found by the jury, and therefore none could be entered in lieu of the reversed conviction without depriving the defendant of his right to a jury trial. The matter was remanded for further proceedings. View "Halaseh v. Colorado" on Justia Law

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William Lindsey persuaded six investors to advance roughly $3 million toward a new technology that he claimed would harness the energy of bioluminescent algae to light signs and panels. In soliciting these funds, Lindsey told his investors that he had already secured contracts to sell his lighting products to several large clients. As it turned out, neither the technology nor the contracts existed; Lindsey diverted the funds he collected to his own personal use. Trial setting was continued at least seven times in three years. David Tyler was Lindsey’s fourth attorney in this case, and judges had admonished Tyler and Lindsey there would be no more continuances. A month before trial, Tyler moved to withdraw from the case, but his motion was denied after a hearing in front of a different judge who found no irreconcilable conflict. On the eve of trial, Tyler filed another motion, this one challenging Lindsey’s competency. The factual assertions in this motion were the same factual assertions on which Tyler relied during the hearing on the motion to withdraw ten days earlier: Lindsey had failed to be completely forthright with him, to keep promises to furnish information and funds for an effective defense, and to diligently work and communicate with him. In all the years the case had been pending, this was the first time anyone had ever raised a question about Lindsey’s competency. During the hearing on the competency motion, just as during previous hearings, Lindsey was lucid and coherent, showing no signs of incompetency. Tyler believed that Colorado's competency statutes required the trial court to either make a preliminary finding regarding competency or indicate that there was insufficient evidence to do so. But the trial judge found the motion’s factual assertions had nothing to do with competency and did not support a good-faith doubt about Lindsey’s competency. Accordingly, the judge refused to postpone the trial. The case thus proceeded to a jury trial, where Lindsey was convicted of securities fraud and theft. Lindsey then appealed, and a division of the court of appeals vacated his convictions. Because the Colorado Supreme Court found no abuse of discretion by the trial court, it reversed the appeals court's judgment. View "Colorado v. Lindsey" on Justia Law

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Jared Cowen owned a semi-truck that needed extensive maintenance. To pay the $37,485.65 repair bill, Cowen borrowed $15,000 from his brother and wrote two checks from his company’s bank account, one for $9,327.65 and the other for $13,158.00. Cowen admitted at trial that he knew he did not have sufficient funds to cover the checks when he wrote them, and his bank records corroborated his testimony. Believing it had been paid in full when it received Cowen’s checks, the repair shop released the semi-truck to him. A few days later, it learned that both of Cowen’s checks had failed to clear and that Cowen had issued a stop-payment on them. Cowen was thereafter charged with two counts of fraud by check: one count for each of the checks. He defended against the charges by asserting that he did not intend to defraud the repair shop. The jury convicted Cowen of the charge related to the first check, but acquitted him of the charge related to the second check. As part of Cowen’s sentence, the State requested restitution in the amount of $22,485.65, the total amount of the two checks. Cowen objected to any restitution being imposed for pecuniary losses suffered by the repair shop as a result of the second check because he was acquitted of the charge involving that check. Following a hearing, the trial court granted the State's request, finding that they had proven by a preponderance of the evidence that Cowen had written both checks knowing he had insufficient funds in his company’s account to cover them. The trial court acknowledged Cowen’s acquittal of the charge related to the second check, but explained that it was “absolutely convinced . . . , by far more than a preponderance of the evidence,” that Cowen knew he had failed to secure the financing company’s loan to fund that check. The issue this case presented for the Colorado Supreme Court's review centered on whether Colorado’s restitution statutes authorized a trial court to order a defendant who has been acquitted of a charge to pay restitution for pecuniary losses caused by the conduct that formed the basis of that charge. A division of the court of appeals upheld the restitution order in an unpublished, unanimous decision. The Supreme Court disagreed with the appellate division, however, and reversed. View "Cowen v. Colorado" on Justia Law

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Steve Taylor unwittingly invested millions of dollars in what proved to be a massive Ponzi scheme. Before the scheme’s collapse, Taylor fortuitously withdrew his entire investment, plus nearly half a million dollars in profit. After the Ponzi scheme’s collapse, a court-appointed receiver brought what is commonly referred to as an “actual fraud” claim under the Colorado Uniform Fraudulent Transfer Act (“CUFTA”) section 38-8-105(1)(a), C.R.S. (2018), to claw back Taylor’s profits. As an innocent investor, Taylor argued he should be allowed to keep the money, contending (in the words of a statutory affirmative defense) that he provided “reasonably equivalent value” in exchange for his profits. A division of the court of appeals concluded that Taylor was not precluded as a matter of law from keeping some of the profit, because he may have provided reasonably equivalent value in the form of the time value of his investment. The receiver appealed. The Colorado Supreme Court determined Taylor could not keep the profit exceeding his initial investment based on the time value of money: under CUFTA, an innocent investor who profited from his investment in an equity-type Ponzi scheme, lacking any right to a return on investment, does not provide reasonably equivalent value based simply on the time value of his investment. View "Lewis v. Taylor" on Justia Law

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Petitioner Austin Veith pleaded guilty to theft and securities fraud. He asked the trial court to sentence him to probation instead of a term of incarceration. The trial court rejected his request for probation with no incarceration and sentenced Veith to ten years of incarceration on the theft count, and twenty-five years of probation on the securities fraud count. Veith did not object when the judge announced his sentence.  But, he did not sign the probation order acknowledging and accepting the terms and conditions of his sentence of probation. Instead, he filed a motion to correct his sentence pursuant to Crim. P. 35(a), arguing that the probationary portion of his sentence must be vacated because he did not consent to it. The trial court denied the motion, and Veith appealed.  The court of appeals affirmed in part and reversed in part, concluding that Veith had consented to the terms and conditions of the sentence of probation by requesting probation prior to the hearing, but that his consent did not include certain terms of probation added by the court. As a result, the court of appeals remanded the case to the trial court to remove the terms of probation from his sentence that Veith had not requested before sentencing.I t did not order any modification of the prison sentence. The Colorado Supreme Court granted certiorari to determine the legality of Veith’s sentence of probation, and reversed the appellate court's judgment. The Supreme Court held that a trial court cannot impose a sentence of probation without the defendant’s consent. In this case, Veith consented to probation in lieu of incarceration; therefore, the trial court exceeded the scope of Veith’s consent when it imposed a ten-year sentence of incarceration in addition to probation. The trial court lacked authority to impose the sentence of probation.  Accordingly, the Court vacated Veith’s sentence in its entirety, reversed the judgment of the court of appeals, and remanded the case to that court to return the case to the trial court for resentencing consistent with Veith’s plea agreement. View "Veith v. Colorado" on Justia Law