Opinion
No. A03-780.
Filed July 6, 2004.
Appeal from the District Court, Hennepin County, File No. 00117698.
Mike Hatch, Attorney General, and Amy Klobuchar, Hennepin County Attorney, Thomas A. Weist, Assistant County Attorney, (for respondent)
John M. Stuart, State Public Defender, Bridget Kearns, Assistant Public Defender, (for appellant)
Considered and decided by Kalitowski, Presiding Judge; Randall, Judge; and Wright, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellant Michael Edwards challenges his convictions of multiple counts of tax evasion, theft by swindle, and securities fraud. We find the district court did not err in refusing to sever the charges for trial. The district court's failure to give a Kates instruction did not unduly prejudice appellant, and the evidence is sufficient to support appellant's convictions as to victim Harstad. We affirm.
FACTS
In March 2002, Hennepin County Sheriff's Detective Gary Charboneau and Minnesota Department of Revenue Special Agent Cathy Boyko filed a criminal complaint against appellant Michael Edwards. The two law-enforcement agencies had been pursuing separate investigations into appellant's activities, and had joined together because it appeared their interests were related.
The complaint alleged that appellant had failed to file required personal and corporate tax returns and to pay taxes in 1996, 1997, 1998, 1999, and 2000. Using the "expenditure method" to reconstruct appellant's income in 1999 and 2000, Agent Boyko estimated that appellant obtained more than $900,000 from a series of investment frauds. Charboneau alleged that appellant had committed multiple acts of theft by swindle and securities fraud by portraying himself as an extremely wealthy investor and inviting victims to join him in one of two investment opportunities: "historical bonds" and a "prime bank trading program." Victims invested money by giving it to appellant, who used some for personal expenses and funneled some through two Florida companies. Eventually, most of the money returned to appellant through various channels.
When the promised returns on their investments never materialized, some investors began complaining to appellant, and one group of investors approached the police, which prompted the investigation. Appellant quickly used some of the money he had collected to pay back the complaining investors. By now, the investigation was nearly complete, and appellant was charged with six counts of tax evasion, six counts of theft by swindle, and seven counts of securities fraud. The complaint was later amended to include two additional counts, one each of theft by swindle and securities fraud.
Appellant moved to sever all charges for trial, arguing that the events leading to the charges occurred over multiple years and involved different people. Appellant argued that the charges could not constitute a single behavioral incident. The district court denied the motion, finding that all the offenses were so factually entangled that they could not properly be severed.
A jury trial began January 27, 2003. Experts for the state testified about their investigations and the type of scams appellant was alleged to have committed, and most of the "investors" testified as to the course of their dealings with appellant.
At the informal close of the state's case, appellant moved for judgments of acquittal on a number of counts based on improper venue and moved to dismiss several other counts based on insufficient evidence. The district court directed some acquittals based on improper venue; the remaining 15 counts were submitted to the jury.
The jury convicted appellant on all the remaining counts. Appellant was eventually sentenced to serve 78 months and pay large amounts of restitution. This appeal follows.
DECISION
I. Severance
Appellant argues that the district court erred by refusing to sever all the charged offenses for trial. Minn. R. Crim. P. 17.03, subd. 1, permits a defendant to be charged with more than one offense in the same complaint. But on the motion of either party, the district court is required to sever improperly joined offenses if "the offences or charges are not related." Minn. R. Crim. P. 17.03, subd. 3(1)(a). This court reviews the denial of a motion to sever under an abuse-of-discretion standard. State v. Dick, 638 N.W.2d 486, 490 (Minn.App. 2002), review denied (Minn. Apr. 16, 2002).
In State v. Profit, 591 N.W.2d 451, 458 (Minn. 1999), cert. denied, 528 U.S. 862 (1999), the Minnesota Supreme Court stated that offenses must be "part of a single behavioral incident or course of conduct" to be properly joined for trial. Id. To determine whether offenses constitute a single behavioral incident, this court must look at how the offenses are "related in time and geographic proximity and at whether the actor was motivated by a single criminal objective." Id. at 460.
Here, appellant is correct that his theft by swindle and securities fraud offenses took place over a long period of time and involved multiple victims, not all of whom were aware of each other. The presence of multiple victims and a long span of time in between offenses can lead to reversal for improper joinder. See e.g., Profit, 591 N.W.2d at 459 (stating that joinder is improper where crimes are committed against separate victims at separate times, with months in between). Nonetheless, appellant's crimes here are tightly interwoven. Expert testimony showed that appellant used money from some victims to pay back others, and tried to sell the same investment opportunities to multiple victims. Appellant intermingled the money gleaned from the various investment-scheme victims and created a situation in which his offenses could not reasonably be separated for trial. The evidence presented for each offense at separate trials would necessarily overlap with the evidence presented in the trial for other offenses. The district court did not abuse its discretion by refusing to separate the theft-by-swindle and securities-fraud offenses for trial. Nor was it an abuse of discretion for the district court to refuse to sever the tax offenses for trial, either from each other or from the theft and fraud offenses. This is true because money appellant obtained from his victims and used for his personal gain is attributable to him as income and created in him a duty to file income tax returns, which he did not do during the years in question. By causing some of his fraudulent activities to span multiple years, appellant ensured that the tax offenses could properly be joined to the theft and securities fraud cases in those years.
Multiple trials in this case would have been duplicative, time consuming, and the same evidence would have been presented repeatedly in each separate trial. The offenses were so factually intertwined and dependent on each other that they were properly joined for one trial. The district court did not abuse its discretion by refusing to sever the individual counts.
II. Jury instructions
Appellant next argues that the district court erred by failing to properly instruct the jury that it was to consider each of the offenses separately. Our supreme court has stated that, "for trial of all offenses joined under Minn. R. Crim. P. 17.03, subd. 1, the jury must be instructed to consider each of the charges separately." State v. Kates, 610 N.W.2d 629, 631 (Minn. 2000). First, appellant did not object to the jury instructions given at trial. Failure to timely object to jury instructions generally waives the right to challenge those instructions on appeal, unless the flaw in the instructions constitutes plain error. See State v. Baird, 654 N.W.2d 105, 109 (Min. 2002). The error must be plain and affect substantial rights. State v. Griller, 583 N.W.2d 736, 740 (Minn. 1998).
The district court here did not give the specific Kates instruction. That failure was error, and that error is plain. But, the error in this case does not affect substantial rights and does not require reversal. Griller, 583 N.W.2d at 741. The district court ensured that the jury clearly understood that the charges were to be considered separately; thus, the failure to give a Kates instruction is harmless error. Dick, 638 N.W.2d at 491.
The district court here twice gave a Spreigl-type instruction cautioning the jury not to convict appellant on the basis of the counts dismissed at the close of the state's case. The court also instructed the jury separately on each of the 15 remaining counts, going so far as to repeat the elements of the relevant offense for each count. And before reading the specific instructions for each tax count, the district court gave a general warning that the jury must "consider each count separately when determining whether the state has proven the four elements beyond a reasonable doubt." Importantly, the jury received a separate verdict form for each offense. Thus, although it was error for the district court not to give a specific Kates instruction to the jury, the district court took adequate action to warn the jury that it should consider each charge separately. We cannot find any substantial prejudice to appellant warranting a new trial.
III. Sufficiency of the evidence
Finally, appellant argues that the evidence presented at trial is insufficient to support his convictions for theft by swindle and securities fraud as to victim James Harstad. When considering a claim of insufficient evidence, our review is limited to a careful analysis of the record to determine whether the evidence, when viewed in the light most favorable to the conviction, is sufficient to allow the jurors to reach the verdict that they did. State v. Webb, 440 N.W.2d 426, 430 (Minn. 1989). We must assume that the jury believed the state's witnesses and disbelieved any evidence to the contrary. State v. Moore, 438 N.W.2d 101, 108 (Minn. 1989).
Appellant argues that Harstad's trial testimony showed that he willingly entered into a "private placement agreement" with appellant that outlined an investment plan. Harstad was promised that his $50,000 principal would be invested and within 90 days, he would see a return "in the millions, like 1.5 or more." After 90 days, the promised return had not materialized, and Harstad began to call appellant repeatedly in an attempt to investigate or regain his principal investment. Finally, more than a year later, appellant paid Harstad $55,000 through two checks. Harstad testified that he was "not unhappy" with the exchange and felt that he had been made whole.
Agent Boyko testified that her analysis showed that $30,000 of Harstad's investment went to the purchase of Galveston Railroad Bonds, $6,000 went to another company, $12,000 to appellant's company, and $15,000 was used as a down payment on a personal residence appellant purchased in Prior Lake, Minnesota. The money used to repay Harstad came from another "investor."
Appellant argues that because Harstad was made whole and is not currently unhappy with his dealings with appellant, the evidence does not support convictions for theft by swindle and securities fraud as to Harstad. We disagree. The state showed through Agent Boyko's testimony that only a fraction of Harstad's money was used in the manner promised and that a large amount of that money was used to assist appellant in buying a personal residence, a fact of which Harstad was unaware. Appellant only repaid Harstad after more than a year of Harstad's "persistence" in calling appellant, and one month after law enforcement conducted a search of appellant's home. Despite Harstad's ultimate satisfaction, the evidence shows that appellant obtained money from Harstad, used it for purposes other than those to which Harstad agreed (some purposes were purely personal), and later used money from another victim ala Ponzi to repay Harstad. The record is sufficient to support the jury's finding that appellant committed theft by swindle and securities fraud against Harstad.