Summary
applying rule 33.1 to an alleged violation of rule 3.08
Summary of this case from Madison v. StateOpinion
No. 05-16-00494-CR
05-30-2017
DEREK A. NELSON, Appellant v. THE STATE OF TEXAS, Appellee
On Appeal from the 416th Judicial District Court Collin County, Texas
Trial Court Cause No. 416-80609-2014
MEMORANDUM OPINION
Before Justices Lang, Myers, and Stoddart
Opinion by Justice Lang
Following a plea of not guilty, appellant Derek A. Nelson was convicted by a jury of securities fraud involving the amount of $100,000.00 or more. Punishment was assessed by the jury at nineteen years' imprisonment and a fine of $10,000.00.
In three issues on appeal, appellant contends (1) the evidence is insufficient to prove he "acted with the requisite mens rea" to support a conviction for securities fraud, (2) the trial court "erroneously instructed the jury that the State satisfies its burden of proving fraud in all transactions upon proof appellant committed fraud in only some transactions," and (3) "[t]he State's calling of the prosecutor-witness as an expert was structural error requiring reversal."
We decide appellant's three issues against him. The trial court's judgment is affirmed.
I. FACTUAL AND PROCEDURAL CONTEXT
At the time of the events in question, appellant owned and operated Capital Mountain Holding Corporation ("CMHC") and several other related businesses (collectively, the "CMHC Investment Program" or the "company"). The company's purported business plan was to buy homes at or shortly before foreclosure, make repairs and renovations, and then lease or sell the homes for an amount that would result in profit.
In addition to CMHC, the businesses in the CMHC Investment Program were Systems XXI, Act I, LLC ("Act I"); Systems XXI, Act II, LLC ("Act II"); and Homaide Real Estate Services Corporation ("Homaide").
In early 2014, appellant was indicted in this case. The indictment alleged in part that from early 2007 through 2009, appellant, acting directly and through agents, sold and offered for sale securities that consisted of "notes" payable by his businesses described above to specified "investors" for various amounts. Further, the indictment alleged appellant committed fraud in connection with the sale and offering of those securities by (1) "intentionally failing to disclose the profit and principal payments made to investors in the CMHC Investment Program were not generated from revenue and/or profits earned but instead were paid with funds received from other investors in the CMHC Investment Program; said information being a material fact"; (2) "intentionally failing to disclose that funds invested by previous investors in the CMHC Investment Program were used to pay the personal expenses of the defendant and members of his family; said information being a material fact"; (3) "intentionally failing to disclose the CMHC Investment Program was not earning sufficient profits to pay interest owed to investors in the CMHC Investment Program; said information being a material fact"; (4) "knowingly and intentionally representing the CMHC Investment Program was generating sufficient profit from the buying, rehabilitating, rental and selling of properties to meet the monthly interest payments as represented in the investors' notes in the CMHC Investment Program; said information being a misrepresentation of a relevant fact"; (5) "knowingly and intentionally representing the CMHC Investment Program was paying interest payments to investors based on profits of the CMHC Investment Program; said information being a misrepresentation of a relevant fact"; and (6) "knowingly and intentionally representing that the defendant would receive no compensation until one of the offerings within the CMHC Investment Program was fully funded, and that after such funding the defendant would only be compensated $24,000.00 annually for his services in connection with said offering; said information being a misrepresentation of a relevant fact." Additionally, the indictment stated "all of said amounts were obtained pursuant to one scheme and continuing course of conduct, and the aggregate amount that was obtained was $100,000.00 or more."
The eleven-page indictment listed dozens of investors and the amounts invested by each. Those amounts totaled several million dollars.
At trial, Keith Aurzada testified that in approximately November 2009, he was appointed as receiver for CMHC, Act I, and Act II in a federal civil action brought by the United States Securities and Exchange Commission. Aurzada stated it was his understanding that the three businesses were purportedly "raising funds from investors to purchase homes" that would be leased to tenants until the homes appreciated in value and could be sold at a profit. However, Aurzada testified the properties in question were not actually "being purchased." According to Aurzada, CMHC "would take the deeds to the properties," but "wouldn't pay off the mortgage that was on the property," and thus "the bank still had a lien on the home." He stated CMHC "would put a tenant in the property, start to collect rent and possibly pay a few of the mortgage payments," but the rental income "wasn't enough to cover the true expenses of the property." Aurzada testified CMHC and the other two businesses in question were funded by investors who were issued unsecured promissory notes that ranged from a three-month note at an interest rate of 10% per month to a five-year note at more than 18% annual interest. Further, he testified the offering documents presented to investors in connection with those promissory notes (1) identified appellant as the owner and manager of each of those three businesses and (2) stated in part that "[t]he manager is not currently compensated for his services" and, upon completion of the offering, appellant was to receive compensation at the annual rate of $24,000.00 for his duties as manager and president.
During Aurzada's testimony, numerous documents were admitted into evidence, including (1) copies of unsecured promissory notes executed by appellant and the three businesses described above for the benefit of persons listed in the indictment as investors; (2) bank records showing checks and wire transfers from those investors pursuant to the execution of those promissory notes; (3) offering documents respecting the three businesses in question; (4) photographs of appellant's residence at the time of the SEC action, a nine-bedroom home that included a swimming pool and sports court; (5) a transcript of appellant's testimony in a September 2009 "investigative proceeding" before the Texas State Securities Board; and (6) an October 2012 "profit and loss statement" showing Aurzada's "operations and activity as receiver."
Aurzada stated (1) when he took over as receiver, there was less than $3,000.00 in CMHC's accounts; (2) CMHC's portfolio included 86 residential properties, only one of which was owned "free and clear" of any mortgage; (3) he was able to recover approximately $350,000.00 by selling property of the three businesses in question, including the unencumbered house in CMHC's portfolio described above, several other houses encumbered by mortgages, a truck, a Rolex watch, a boat, and two jet skis; (4) appellant had donated approximately $1.6 million to his church, of which Aurzada was able to recover $300,000.00; (5) Aurzada was able to distribute a total of approximately $559,500.95 to investors, which amounted to a return of approximately "three cents on the dollar"; and (6) the three businesses described above were not profitable and the source of funds for "all the defendant's activities," including the donations to his church, was investor contributions. Additionally, Aurzada testified that appellant stated in his September 2009 testimony described above (1) the value of his "real estate portfolio" is "about a little over 30 million"; (2) some of the promissory notes held by investors are "past due" because "[w]e can't get a loan"; and (3) the investors "receive good portions of their principal back" and "know" that each promissory note "contains also equity." Further, Aurzada read aloud the following portion of appellant's September 2009 testimony:
We buy properties to hold based on the residual income. If we borrow money from an individual, we are using that money for purchasing assets to do our business in our business. . . . However, a good portion of those dollars are not being utilized, so we have principal reduction.Aurzada stated that testimony did not make sense to him and he did not understand appellant's explanations respecting his business operations.
On cross-examination, Aurzada testified the offering documents described above contained the following statements: (1) "[t]his offering involves a high degree of risk and substantial immediate dilution of the value of the investment," (2) "[i]ts units are suitable only for accredited investors of substantial financial means who have no need for liquidity and can afford to lose all of their investment," and (3) "[n]o representations or warranties of any kind are intended or should be inferred with respect to the economic return that may accrue to the investors." Further, Aurzada stated (1) the $559,500.95 that was distributed to investors was the amount that remained after more than $400,000.00 in fees pertaining to the receivership was paid to him and others and (2) during the receivership period, appellant was "cooperative" and "very nice."
On redirect examination, Aurzada testified appellant's business "was not operating at a profit" and when investors were paid interest or "profits," those funds came "from the stream of investor payments, not from the operation of the properties."
Next, the State presented the testimony of twenty-three of the investors described in the indictment as having been defrauded by appellant. That testimony included, in part, the testimony of twelve investors who each testified they were not told by appellant or anyone working for him that (1) appellant was going to use their investments to pay for his personal expenses and those of his family, (2) the CMHC Investment Program was not actually earning sufficient profits to pay the returns promised, or (3) new investor money would be used to pay returns to previous investors. Further, each of those investors stated they would not have invested if they had known any of that information.
Those twelve investors included the following: (1) Zunny Losoya testified she invested $90,000.00 in the company and subsequently received a check for approximately $10,000.00 from appellant, but was not able to get any more of her money back; (2) Janis Bates testified she invested $127,500.00 with the company and did not get any of that money back; (3) Mike Cox testified he invested approximately $44,000.00 in the company and received back approximately $1,500.00; (4) James Darren Cooper testified he and his wife invested approximately $50,000.00 and received back approximately $15,000.00; (5) Scott Connor Wiese testified he invested approximately $139,700.00 and got back approximately $73,500.00; (6) Clark Seymour testified he invested $30,000.00 in the company and did not get any money back from appellant, but received several hundred dollars from "the receivership company"; (7) John Sebastian testified he invested $170,000.00 in the company and received "at least one" interest payment, but "never received any principal back"; (8) Sharon Castora testified she invested "a little over $100,000" and received back approximately $2,000.00 from the company and $3,000.00 from the receiver; (9) James Tweet testified he invested approximately $230,000.00 and received back approximately $25,000.00; (10) Gary Dalrymple testified he invested $15,000.00 and did not receive any money back; (11) Shawn McCall testified he invested $190,000.00 and did not receive any money back; and (12) Sandra Young testified she invested $15,000.00 and did not receive any of that money back.
Additionally, James Ashby testified that after making several investments in the company in 2008 and receiving the promised returns, he and several friends subsequently invested a combined amount of $50,000.00 and did not receive any of that money back. Ashby stated he would have made that investment even if he had known appellant was "receiving a lot more than $24,000 a year" because he "assumed that [appellant's] money was also tied in there to make his money through his profits." Ashby testified his assumption was based on a conversation with appellant in which appellant stated he "was putting his own money in some of these properties and making a return."
Following the investors' testimony, the State presented the testimony of two experts. Letha L. Sparks testified she is employed with the Enforcement Division of the Texas State Securities Board and performs forensic accounting analysis on documents and bank records. She stated she examined numerous bank records and other documents pertaining to this case in order to determine "the source of funds and the uses of those funds." Several charts and spreadsheets prepared by her were admitted into evidence. According to Sparks, from 2007 through 2009, (1) the company received $37,453,742.00 in investor deposits and $7,662,820.00 in "non-investor deposits," i.e. funds from other sources; (2) approximately $20,600,000.00 was spent on "ordinary business operations"; (3) $19,763,995.00 was paid to investors; and (4) "the Nelson family" was paid $2,771,963.00, of which $2,684,113.44 went to appellant and his wife. Sparks testified that in her opinion, the company "could not work" because appellant was "paying out interest and principal payments to people before he's collecting the rents or enough rents to cover what he's promised to pay" and "the properties aren't valuable enough to collect enough rents to cover what he has already promised to pay to the investors."
On cross-examination, Sparks stated (1) appellant's donations to his church came from his personal checking account and thus were part of the $2.6 million paid to him and his wife and (2) although the company's rental income in 2007 totaled $657,000.00 and investor payments in that year totaled $224,000.00, appellant still "had no net income" because the company had other business expenses.
On redirect examination, Sparks testified (1) because business expenses from 2007 through 2009 totaled approximately $20,600,000.00 and funds collected from non-investor sources, including rent, totaled only $7,662,820.00, there was a "shortfall" of approximately $13,000,000 "just to service the properties," and (2) "the only other source that Mr. Nelson had to pay investors anything was new investor money."
The State's final witness was Joseph Oman. In a "voir dire examination" outside the jury's presence, Oman testified he is an assistant director of enforcement with the Texas State Securities Board. Further, Oman was asked about his relationship to a special prosecutor in the case, Dale Barron, who was currently employed by the Texas State Securities Board. Oman stated he and Barron are "coemployees" and he is not Barron's supervisor. Also, Oman testified Barron is "pretty much assigned to the Collin County District Attorney's Office" and "I supervise the attorneys in the Dallas office and the investigator." Appellant objected on several grounds to the admission of Oman's testimony and those objections were overruled by the trial court. Upon the jury's return to the courtroom, Oman testified that in his opinion, the promissory notes and other instruments appellant "was giving to these investors and selling to these investors" were "securities." Following Oman's testimony, the State rested its case.
Specifically, counsel for appellant stated in part "under 705, . . . we, respectfully, would object to him trying to render an opinion as to what a law is and whether or not the person on trial, either by conduct or by actions, violated the law." Additionally, counsel for appellant objected to Oman's testimony on the grounds that it lacked relevance, would invade the province of the jury, is "outside the scope of a witness testifying in the trial," and would constitute "bolstering."
During appellant's case in chief, Cortney Nelson testified she is appellant's daughter and is thirty years old. She stated she was responsible for the company's "accounts payable, payroll, and day-to-day office duties" and "saw firsthand this was a real live business."
Mike Jones testified he invested money in the company on several different occasions. He received his money back with interest on each occasion until his last investment, which resulted in a loss of $200,000.00. When asked if he felt appellant intentionally defrauded him, Jones stated, "I have no clue. He did everything he told me he was going to do. . . . Until this last time." On cross-examination, Jones stated he was not aware that appellant was paying him back with funds from other investors and he would have wanted to know that before investing.
Nola Phillips testified she is an accountant and has been doing taxes for approximately fifty years. She met appellant in approximately 2003. She stated he was a tax client and she rented office space to him. Phillips testified (1) it appeared to her that appellant "was running a real live business entity"; (2) she invested in the company and lost approximately $315,000.00; and (3) it is "possible" she received "finder's fees" from appellant for referring investors to him.
Appellant testified he is forty-eight years old. He stated that while he was operating the company, he employed two of his daughters, his wife, his brother, and his brother's wife. He testified he left high school during his senior year and later earned a "general education diploma" and took some classes at the University of Oklahoma. He stated (1) he formed CMHC in 2002 to "grow wealth" for himself, his family, and his friends by acquiring, leasing, and selling real estate properties, and (2) the company eventually had "financing" difficulties and the SEC took over. According to appellant, he "had no idea that there was something that could be possibly wrong" and it was not his intent "to rip these people off."
On cross-examination, appellant testified (1) he filed for bankruptcy in 1992 and again in 1999; (2) in 2001, an agreed judgment for more than $2 million was taken against him and was satisfied by him; (3) from 2007 through 2009, he paid commissions and "gratuities" to several individuals who referred new investors to the company; and (4) he paid $90,000.00 to be featured in a cover story in the spring 2009 issue of World Finance magazine. Additionally, appellant testified in part as follows:
Q. . . . So let me ask you this: If you're paying more money out in expenses than you're bringing in, in rents, sales, whatever you're doing with this realty to make money, if you're bringing in $13 million less than what you're paying out, how in the world can it ever work?
A. Equity, sir.
After the defense rested its case, a charge conference was held outside the jury's presence. Then, the charge of the court was read to the jury and closing argument commenced.
During the charge conference, appellant objected to the inclusion of a jury instruction that addressed "lack of consent." Specifically, counsel for appellant stated, "Lack of consent is not something they have to prove, so telling them they don't have to prove it whether by direct or circumstantial is not relevant to the charge that's in the indictment." The State agreed to "remove" the complained-of language. Also, appellant requested that the application paragraph list each investor described in the indictment and require that "the evidence must prove beyond all reasonable doubt each specific transaction." That request was denied by the trial court.
The charge of the court included two instructions respecting unanimity, which stated in part as follows:
The State has alleged in the indictment in paragraphs one through six, different manners and means by which the defendant, Derek A. Nelson, allegedly committed fraud in connection with the sale and offer for sale of securities. You are instructed that while you must agree that the State proved the defendant's guilt, beyond a reasonable doubt, by proving at least one of these manner and means as alleged in the indictment, it is not necessary that you find that the defendant committed the offense by all of the manner and means alleged in the six paragraphs contained in the indictment. Further, you do not have to agree among yourselves as to which manner and means by which the defendant allegedly committed fraud in connection with the sale and offer for sale of securities to these persons listed in the indictment. It is sufficient if you find by a unanimous verdict the State has proved the defendant committed the offense as alleged in the indictment by proof beyond a reasonable doubt of at least one of the manners and means by which the defendant is alleged to have committed fraud in connection with the sale and offer for sale of securities to those persons listed in the indictment.
. . . .
You are instructed when amounts are obtained pursuant to one scheme or continuing course of conduct, whether from the same or several sources, the conduct may be considered as one offense and the amount aggregated.
It is not necessary that the jury agree that the defendant committed fraud in the offer for sale or sale of securities to each of the transactions listed in the indictment. It is sufficient you unanimously agree that the proven transactions exceed the threshold amount of $100,000.00 and the state proves beyond a reasonable doubt that the defendant committed fraud in connection with the offer for sale or sale of securities, regardless of which transactions each juror believes to have occurred.
The State argued in part during closing, "All you have to agree to is he sold securities or offered securities in an amount of $100,000 or more—and we have proven that—beyond a reasonable doubt and that he committed fraud in connection therewith by either intentionally failing to disclose material fact or misrepresenting a relevant fact." Further, the State asserted,
It is sufficient if you unanimously agree that the proven transactions exceed the threshold amount of $100,000 and the State proves beyond a reasonable doubt that the defendant committed fraud in connection with the offer of sale or sale of securities regardless of which transactions each juror believes to have occurred. What we've charged here is securities fraud in the amount of $100,000 or more. That's all you have to agree on. Doesn't matter who, doesn't matter how, as long as it's fraud and it's $100,000 or more.
The jury found appellant guilty of "engaging in fraud in connection with the sale of a security or securities involving $100,000 or more, as charged in the indictment." Following the assessment of punishment described above, this appeal was timely filed.
II. SUFFICIENCY OF THE EVIDENCE
A. Standard of Review
We review a challenge to the sufficiency of the evidence under the standard set out in Jackson v. Virginia, 443 U.S. 307 (1979). Wilson v. State, 448 S.W.3d 418, 425 (Tex. Crim. App. 2014). We view the evidence in the light most favorable to the verdict and determine whether a rational factfinder could have found all the elements of the offense beyond a reasonable doubt. Id. In our review, we are mindful that the jury is the sole judge of the credibility and weight of the evidence. See, e.g., Montgomery v. State, 369 S.W.3d 188, 192 (Tex. Crim. App. 2012). "We will uphold the verdict unless a rational factfinder must have had reasonable doubt with respect to any essential element of the offense." Wilson, 448 S.W.3d at 425. "Circumstantial evidence is as probative as direct evidence in establishing the guilt of an actor, and circumstantial evidence alone can be sufficient to establish guilt." Merritt v. State, 368 S.W.3d 516, 525 (Tex. Crim. App. 2012) (quoting Hooper v. State, 214 S.W.3d 9, 13 (Tex. Crim. App. 2007)).
"[A]n inference is a conclusion reached by considering other facts and deducing a logical consequence from them." Hooper, 214 S.W.3d at 16. By contrast, "[s]peculation is mere theorizing or guessing about the possible meaning of facts and evidence presented." Id. Juries "are permitted to draw multiple reasonable inferences as long as each inference is supported by the evidence presented at trial," but "are not permitted to come to conclusions based on mere speculation or factually unsupported inferences or presumptions." Winfrey v. State, 393 S.W.3d 763, 771 (Tex. Crim. App. 2013); see also Hooper, 214 S.W.3d at 16-17 (stating "courts of appeals should . . . determine whether the necessary inferences are reasonable based upon the combined and cumulative force of all the evidence when viewed in the light most favorable to the verdict"). When the record supports conflicting inferences, we presume that the jury resolved the conflicts in favor of the verdict and defer to that determination. Merritt, 368 S.W.3d at 526 (citing Jackson, 443 U.S. at 326).
B. Applicable Law
Under the applicable version of the Texas Securities Act, any person who shall, in connection with the sale, offering for sale or delivery of, the purchase, offer to purchase, invitation of offers to purchase, invitations of offers to sell, or dealing in any other manner in any security or securities, directly or indirectly, "knowingly make any untrue statement of a material fact or 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 "engage in any act, practice or course of business which operates or will operate as a fraud or deceit upon any person" is guilty of a felony. Act of May 20, 2003, 78th Leg., R.S., ch. 108, § 3, 2003 Tex. Gen. Laws 147 (amended 2011) (current version at TEX. REV. CIV. STAT. ANN. art. 581-29(C)(3)-(4) (West Supp. 2016)). The terms "fraud" or "fraudulent practice" include "any misrepresentations, in any manner, of a relevant fact" or "an intentional failure to disclose a material fact." TEX. REV. CIV. STAT. ANN. art. 581-4(F) (West 2010). "[A]n omitted fact is material if there is a substantial likelihood that it would have assumed actual significance in the deliberations of a reasonable investor, in that it would have been viewed by the reasonable investor as significantly altering the total mix of available information used in deciding whether to invest." Bridwell v. State, 804 S.W.2d 900, 904 (Tex. Crim. App. 1991); accord Head v. State, 299 S.W.3d 414, 425 (Tex. App.—Houston [14th Dist.] 2009, pet. ref'd).
"A person acts intentionally, or with intent, 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." TEX. PENAL CODE ANN. § 6.03(a) (West 2011). "A person acts knowingly, or with knowledge, with respect to the nature of his conduct or to circumstances surrounding his conduct when he is aware of the nature of his conduct or that the circumstances exist." Id. § 6.03(b). "A person acts knowingly, or with knowledge, with respect to a result of his conduct when he is aware that his conduct is reasonably certain to cause the result." Id.
C. Application of Law to Facts
In his first issue, appellant contends the evidence is insufficient to prove he "acted with the requisite mens rea to sustain a conviction for securities fraud in an amount over $100.000.00." Appellant asserts in part "the record clearly indicates that the facts alleged in the State's indictment were material to those investors who testified." However, appellant argues that "[b]ased on [his] lack of education and experience, his motivation to donate money to charity and bring wealth to his friends and family, and his partial performance, a jury could only speculate to believe [he] intended to defraud investors."
The State responds that the evidence is sufficient to show appellant acted intentionally and knowingly when he failed to disclose or misrepresented material facts to investors because (1) "[a]ppellant's business was never profitable and could not make the promised payments to investors without using investor funds"; (2) the jury could conclude appellant "could not operate his business nearly $13 million in the red without knowing what he was doing"; and (3) the jury could conclude appellant "intentionally misled his investors regarding his using investor funds for personal expenses when he was entitled to only a $24,000 annual salary but spent over $2 million of investor funds on personal expenses." Additionally, the State asserts "[p]roof of any one of the six paragraphs would be sufficient to support the indictment."
We begin with appellant's argument that a rational factfinder could not have found beyond a reasonable doubt that, as alleged in the indictment, he "intentionally fail[ed] to disclose that funds invested by previous investors in the CMHC Investment Program were used to pay the personal expenses of [him] and members of his family; said information being a material fact," or "knowingly and intentionally represent[ed] that [he] would receive no compensation until one of the offerings within the CMHC Investment Program was fully funded, and that after such funding [he] would only be compensated $24,000.00 annually for his services in connection with said offering; said information being a misrepresentation of a relevant fact." Specifically, appellant asserts (1) the jury "could not rationally infer [his] intent to defraud investors when he donated so much money to churches and ministries" because "[s]omeone intending to defraud investors would keep as much money for himself as possible, not give away more than he kept" and (2) "Ashby's testimony demonstrates [appellant] could have made money from a return on his own investment, and any accidental misrepresentation would not have impacted his decision to invest."
The record shows (1) the offering documents described above stated appellant would be entitled to $24,000.00 annually when the offerings were fully funded; (2) appellant and his wife received $2,684,113.44 from the company during the two-year time period in question; (3) Aurzada testified the source of funds for "all the defendant's activities" was investor contributions; and (4) the twelve investors described above testified that the amount of appellant's compensation and his use of investor funds for personal expenses were material to them. Further, although Ashby testified that, based on a conversation with appellant, he "assumed" appellant invested his own money in the company, appellant cites no evidence in the record showing personal investments by him in the company. Additionally, appellant cites no authority, and we have found none, to support his position that donating a portion of the money in question to church ministries negates fraudulent intent. On this record, we conclude the evidence is sufficient to support a conviction for securities fraud based on appellant intentionally misrepresenting the amount he would be compensated and failing to disclose his use of investor funds for personal expenses. See Montgomery, 369 S.W.3d at 192 (jury is sole judge of credibility and weight of evidence); Merritt, 368 S.W.3d at 526 (when record supports conflicting inferences, we presume jury resolved conflicts in favor of verdict and defer to that determination).
Next, we address appellant's combined argument that a rational fact finder could not have found any of the remaining four allegations from the indictment beyond a reasonable doubt, i.e., that appellant (1) "intentionally fail[ed] to disclose the profit and principal payments made to investors in the CMHC Investment Program were not generated from revenue and/or profits earned but instead were paid with funds received from other investors in the CMHC Investment Program"; (2) "intentionally fail[ed] to disclose the CMHC Investment Program was not earning sufficient profits to pay interest owed to investors in the CMHC Investment Program"; (3) "knowingly and intentionally represent[ed] the CMHC Investment Program was generating sufficient profit from the buying, rehabilitating, rental, and selling of properties to meet the monthly interest payments as represented in the investors' notes in the CMHC Investment Program"; or (4) "knowingly and intentionally represent[ed] the CMHC Investment Program was paying interest payments to investors based on profits of the CMHC Investment Program." Specifically, appellant asserts in part (1) he "lacked the educational background to intentionally and knowingly defraud numerous investors out of millions of dollars while running what the State claims to be a shell corporation"; (2) his "performance of running a successful business and his early payments to investors clearly negated that any representation or promise he made was false at the time complainants surrendered any of the money to him"; (3) he "performed many of the services he had agreed to perform"; (4) "the record shows that [he] believed his representations about how he planned to use investment dollars to flip houses for profit"; (5) he "warned investors of the risks associated with investing in his programs"; (6) because "[r]evenues exceeded payments to investors" in 2007, "it is reasonable to conclude that he thought his business was doing very well" at that time; and (7) "he was the victim of a housing market downturn that negatively impacted his ability to generate revenues and pay interest to investors like he did in 2007."
In support of his arguments, appellant cites Cox v. State, 658 S.W.2d 668, 670-71 (Tex. App.—Dallas 1983, pet. ref'd). In that case, a woman contracted with Cox to perform kitchen remodeling and paid him in full. See id. at 670. Cox "performed a great deal of the services" agreed upon, but did not finish the remodeling. Id. Cox was convicted of theft of property. On appeal, this Court reversed. This Court (1) stated the issue was "whether the evidence was sufficient to warrant the finding that the representation of appellant induced complainant to pay him the money and at the time of taking it appellant had the intent to deprive her thereof" and (2) concluded "complainant's admission that appellant performed a great deal of the services that he said he did or that complainant agreed for him to do clearly negates that any representation or promise by appellant was false at the time complainant surrendered any of the money to him." Id. at 671.
In the case before us, appellant asserts that, like the defendant in Cox, he performed "many of the services he had agreed to perform" and "therefore, the evidence is insufficient to prove that his representations to the complaining witnesses were false at the time the complainants invested in CMHC." However, Cox involved services to be performed for one complainant, rather than a "scheme and continuing course of conduct," and is therefore distinguishable. See Stivers v. State, No. 12-14-00060-CR, 2016 WL 1600862, at *6 (Tex. App.—Fort Worth, Oct. 12, 2016, pet. ref'd) (mem. op., not designated for publication) (observing "[t]he evidence also suggests that to the extent Appellant [in securities fraud case] returned any money, he used those payments to keep disgruntled investors quiet"). Further, to the extent the company's "revenues" exceeded payments to investors in 2007, Sparks testified the company was still not profitable at that time because the company had other expenses. No evidence shows the company was generating a profit at any time from 2007 through 2009. Additionally, appellant's warnings about "risk" described above do not negate his intent to mislead investors as to the specific matters alleged in the indictment. Finally, appellant cites no authority, and we have found none, to support his position that his lack of "educational background" or professed belief that the company would eventually become profitable negated the required fraudulent intent as to the matters in question. On this record, we conclude a rational jury could have found the remaining four allegations from the indictment described above beyond a reasonable doubt. See Montgomery, 369 S.W.3d at 192; Merritt, 368 S.W.3d at 526.
We decide appellant's first issue against him.
III. JURY CHARGE ERROR
A. Standard of Review
We review alleged jury charge error in two steps. See, e.g., Cortez v. State, 469 S.W.3d 593, 598 (Tex. Crim. App. 2015). We first determine whether error exists in the charge. Id. Second, if there is error, we review the record to determine whether the error caused sufficient harm to warrant reversal. Id.; Ngo v. State, 175 S.W.3d 738, 743-44 (Tex. Crim. App. 2005). In assessing the degree of harm, we look at "the entire jury charge, the state of the evidence (including the contested issues and the weight of probative evidence), the arguments of counsel, and any other relevant information revealed by the record of the trial as a whole." Nava v. State, 415 S.W.3d 289, 298 (Tex. Crim. App. 2013); accord Almanza v. State, 686 S.W.2d 157, 171 (Tex. Crim. App. 1985) (op. on reh'g).
"If the error was preserved by objection, any error that is not harmless will constitute reversible error." Price v. State, 457 S.W.3d 437, 440 (Tex. Crim. App. 2015); see also Almanza, 686 S.W.2d at 171. "If the error was not preserved by objection, the error will not result in reversal of the conviction without a showing of egregious harm." Price, 457 S.W.3d at 440; accord Ngo, 175 S.W.3d at 743-44. "Egregious harm" is a difficult standard to meet and requires a showing that the defendant was deprived of a fair and impartial trial. Nava, 415 S.W.3d at 298. The record must disclose "actual rather than theoretical harm," and the error must have affected the very basis of the case, deprived the defendant of a valuable right, or vitally affected a defensive theory. Id.
B. Applicable Law
The Texas Securities Act provides in part, "When amounts are obtained in violation of this Act under one scheme or continuing course of conduct, whether from the same or several sources, the conduct may be considered as one offense and the amounts aggregated in determining the grade of the offense." TEX. REV. CIV. STAT. ANN. art. 581-29-2 (West 2010).
Jury unanimity is required in all felony cases in Texas. TEX. CONST. art. V, § 13; TEX. CODE CRIM. PROC. ANN. art. 36.29(a) (West Supp. 2011); Leza v. State, 351 S.W.3d 344, 356 (Tex. Crim. App. 2011). This requires the jury to "agree upon a single and discrete incident that would constitute the commission of the offense alleged." Cosio v. State, 353 S.W.3d 766, 771 (Tex. Crim. App. 2011) (quoting Stuhler v. State, 218 S.W.3d 706, 717 (Tex. Crim. App. 2007)). However, although the jury must unanimously agree about the occurrence of a single criminal offense, it is not required to be unanimous about the specific manner and means of how that offense was committed. Young v. State, 341 S.W.3d 417, 422 (Tex. Crim. App. 2011); see also Cosio, 353 S.W.3d at 771 (jury must reach unanimous verdict "about the specific crime that the defendant committed"). The phrase "manner or means" describes how the defendant committed the specific criminal act. Ngo, 175 S.W.3d at 745. "[G]enerally, adverbial phrases, introduced by the preposition 'by,' describe the manner and means of committing the offense." Sanchez v. State, 376 S.W.3d 767, 773 (Tex. Crim. App. 2012) (quoting Jefferson v. State, 189 S.W.3d 305, 316 (Tex. Crim. App. 2006) (Cochran, J., concurring)).
Alternate manner and means of committing a single offense may be charged in the same indictment. See, e.g., Kitchens v. State, 823 S.W.2d 256, 258 (Tex. Crim. App. 1991). Jury unanimity is not violated when the jury is disjunctively instructed on alternative means or theories of committing the same offense. Martinez v. State, 129 S.W.3d 101, 103 (Tex. Crim. App. 2004); see also Jefferson v. State, 189 S.W.3d 305, 313 (Tex. Crim. App. 2006) (due process does not require jury unanimity on a particular "act or omission" submitted as alternate means of committing conduct element of offense). Further, "[t]here is no requirement that the jury designate which of the alternate means of committing the offense they found to have been proven." Murchison v. State, 93 S.W.3d 239, 258 (Tex. App.—Houston [14th Dist.] 2002, pet. ref'd) (citing Kitchens, 823 S.W.2d at 258); accord Landrian v. State, 268 S.W.3d 532, 535 (Tex. Crim. App. 2008) (stating jury not required to "unanimously find the defendant committed that crime in one specific way or even with one specific act").
C. Application of Law to Facts
In his second issue, appellant contends the trial court "erroneously instructed the jury that the State satisfies its burden of proving fraud in all transactions upon proof appellant committed fraud in only some transactions." Specifically, appellant complains of the following language in the jury charge:
It is not necessary that the jury agree that the defendant committed fraud in the offer for sale or sale of securities to each of the transactions listed in the indictment. It is sufficient you unanimously agree that the proven transactions exceed the threshold amount of $100,000.00 and the state proves beyond a reasonable doubt that the defendant committed fraud in connection with the offer for sale or sale of securities, regardless of which transactions each juror believes to have occurred.Appellant asserts in part, "The literal reading of this instruction informs the jury that they must convict the defendant when the state proves two things: (1) the defendant and some of the individuals named in the indictment entered into transactions exceeding the threshold amount of $100,000.00, and (2) in some unspecified number of transaction [sic] the defendant committed fraud." Further, appellant contends, "[b]y this language, the jury may aggregate both fraudulent and non-fraudulent transactions in reaching the $100,000.00 threshold." Additionally, appellant asserts (1) because he "appears to have objected to this language in the jury charge," this error "should be subject to nothing more than simple harm analysis" and (2) even if he did not object, "[t]he entirety of the evidence and contested issues weigh in favor of a finding of egregious harm."
The State responds that the complained-of instruction (1) "clearly informed the jury that they must be unanimous that [a]ppellant sold securities over the threshold amount and used one of the alleged fraudulent manner and means" (emphasis original) and (2) "mirrors caselaw from the Court of Criminal Appeals and was not erroneous." Additionally, the State asserts "any error was harmless because the charge as a whole and the jury arguments clearly informed the jury how to resolve any ambiguity in the instruction, and the contested issues at trial did not involve whether specific investments were fraudulent but whether [a]ppellant acted fraudulently with regards to the entire scheme."
Even assuming without deciding that the jury instruction in question was erroneous, we disagree with appellant's position respecting harm. As described above, appellant's objection to the portion of the charge in question pertained to deleting language respecting "lack of consent." The record does not show an objection by appellant in the trial court that comports with his complaint on appeal. See, e.g., Wilson v. State, 71 S.W.3d 346, 349 (Tex. Crim. App. 2002) ("point of error on appeal must comport with the objection made at trial"). Therefore, appellant is not entitled to reversal unless the record shows he suffered egregious harm. Nava, 415 S.W.3d at 298; Johnson v. State, 416 S.W.3d 602, 614-15 (Tex. App.—Houston [14th Dist.] 2013, no pet.) (concluding jury charge issue was not preserved where issue on appeal did not comport with specific complaint made to trial court and therefore "egregious harm" standard was applicable).
In assessing egregious harm, we begin with the complete jury charge. See Nava, 415 S.W.3d at 298. "We may use common sense in assessing how the jury likely understood the charge." Id. at 300. As described above, the charge stated in part,
[Y]ou do not have to agree among yourselves as to which manner and means by which the defendant allegedly committed fraud in connection with the sale and offer for sale of securities to these persons listed in the indictment. It is sufficient if you find by a unanimous verdict the State has proved the defendant committed the offense as alleged in the indictment by proof beyond a reasonable doubt of at least one of the manners and means by which the defendant is alleged to have committed fraud in connection with the sale and offer for sale of securities to those persons listed in the indictment.Several pages after that statement, the complained-of instruction appeared. That two-sentence instruction (1) stated in the first sentence that the jury need not agree appellant "committed fraud" as to "each of the transactions" in the indictment and (2) stated in the second sentence that in order to convict appellant, the jury must unanimously agree that "the proven transactions exceed the threshold amount of $100,000.00." The term "proven transactions" in the second sentence, read in conjunction with the preceding sentence and the preceding portion of the charge described above, would most likely be construed as limiting the transactions that are subject to aggregation to those in which appellant "committed fraud." See id. (considering how jury charge "would most likely be construed" in analysis respecting allegedly ambiguous jury charge). Further, no portion of the charge expressly told the jury they could aggregate both fraudulent and non-fraudulent transactions in reaching the $100,000.00 threshold. See id. (noting that nothing in charge expressly told jury that offense could be established as argued by appellant).
During trial, appellant argued he did not act fraudulently as to any of the investors described above because he lacked the requisite mens rea. He did not attempt to distinguish any of those investors individually with respect to the elements of fraud.
At closing, the State argued in part, "All you have to agree to is he sold securities or offered securities in an amount of $100,000 or more—and we have proven that—beyond a reasonable doubt and that he committed fraud in connection therewith by either intentionally failing to disclose material fact or misrepresenting a relevant fact." (emphasis added). Also, the State asserted,
It is sufficient if you unanimously agree that the proven transactions exceed the threshold amount of $100,000 and the State proves beyond a reasonable doubt that the defendant committed fraud in connection with the offer of sale or sale of securities regardless of which transactions each juror believes to have occurred. What we've charged here is securities fraud in the amount of $100,000 or more. That's all you have to agree on. Doesn't matter who, doesn't matter how, as long as it's fraud and it's $100,000 or more.(emphasis added). Those statements support a conclusion that the jury understood that only fraudulent transactions were to be considered in determining whether the threshold amount had been met. See id. at 301-02.
Lastly, appellant argues "[a] final factor revealed by the record as a whole includes the State's failure to present testimony from about two-thirds of the victims named in the indictment." However, as described above, the live testimony from investors listed in the indicted demonstrated transactions in excess of $100,000.00.
Given the entire jury charge, the state of the evidence, and the arguments of counsel, we conclude the record does not demonstrate egregious harm. See id. at 302 (concluding no egregious harm from allegedly ambiguous jury instruction).
We decide appellant's second issue against him.
IV. "PROSECUTOR-WITNESS" AS EXPERT
A. Standard of Review
We review a trial court's decision to admit or exclude expert testimony for an abuse of discretion. See, e.g., Robinson v. State, 368 S.W.3d 588, 600 (Tex. App.—Austin 2012, pet. ref'd) (citing Sexton v. State, 93 S.W.3d 96, 99 (Tex. Crim. App. 2002)). We will uphold a trial court's ruling on the admissibility of an expert witness as long as it falls "within the zone of reasonable disagreement." Id.
B. Applicable Law
Rule 3.08 of the Texas Disciplinary Rules of Professional Conduct provides in part that generally "[a] lawyer shall not accept or continue employment as an advocate before a tribunal in a contemplated or pending adjudicatory proceeding if the lawyer knows or believes that the lawyer is or may be a witness necessary to establish an essential fact on behalf of the lawyer's client." TEX. DISCIPLINARY RULES PROF'L CONDUCT R. 3.04(a), reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit. G, app. A (West 2013) (Tex. State Bar R. art. X, § 9). Additionally, that rule states in part that "[w]ithout the client's informed consent, a lawyer may not act as advocate in an adjudicatory proceeding in which another lawyer in the lawyer's firm is prohibited by [rule 3.08] from serving as advocate." Id. R. 3.04(c).
To preserve a complaint for appellate review, a defendant must make a timely objection to the trial court, state with sufficient specificity the grounds for the ruling sought, and obtain an adverse ruling on his objection. TEX. R. APP. P. 33.1; Buchanan v. State, 207 S.W.3d 772, 775 (Tex. Crim. App. 2006); see also Wilson, 71 S.W.3d at 349 ("point of error on appeal must comport with the objection made at trial").
Structural error is a very limited class of errors that trigger an automatic reversal. United States v. Davila, 133 S.Ct. 2139, 2149 (2013). "A 'structural' error affect[s] the framework within which the trial proceeds, rather than simply an error in the trial process itself," and is not amenable to a harm analysis. Schmutz v. State, 440 S.W.3d 29, 35 (Tex. Crim. App. 2014) (quoting Jordan v. State, 256 S.W.3d 286, 290 (Tex. Crim. App. 2008)). "[W]e treat error as 'structural' only if the Supreme Court has labeled it as such." Lake v. State, No. PD-0196-16, 2017 WL 514588, at *2 (Tex. Crim. App. Feb. 8, 2017).
C. Application of Law to Facts
In his third issue, appellant contends "[t]he State's calling of the prosecutor-witness as an expert was structural error requiring reversal." Specifically, appellant complains as to the testimony of Oman, whom appellant describes as "a licensed attorney who works as a supervisor in the enforcement division of the Dallas branch of the Texas State Securities Board, the same entity that was prosecuting [a]ppellant." According to appellant, (1) Oman's testimony constituted a violation of rule 3.08 and (2) "Oman's presence as an expert witness and his testimony severely damaged and affected [a]ppellant's rights because the jury took his testimony as certainty and did not evaluate the stocks, investment contracts, evidences of indebtedness, and promissory notes independently." Further, appellant contends that because the error in question is "structural," the lack of an objection in the trial court is "immaterial."
The State responds in part that appellant did not preserve this complaint for appellate review and "violation of the attorney-witness rule is not structural error." Further, the State contends Oman's testimony did not violate the attorney-witness rule because he "was employed at a different office as the prosecuting attorney, was not a supervisor of the prosecuting attorney, and did not act as an attorney on this case in any way."
Appellant cites no Supreme Court authority, and we have found none, recognizing the error alleged by him as structural. Therefore, we decline to treat it as such. See Lake, 2017 WL 514588, at *2. Further, the record shows appellant's objections to Oman's testimony in the trial court do not comport with his complaint on appeal. See Wilson, 71 S.W.3d at 349. Consequently, we conclude that complaint presents nothing for this Court's review. See TEX. R. APP. P. 33.1; Buchanan, 207 S.W.3d at 775; see also Lawrence v. State, Nos. 05-13-01138-CR & 05-13-01139-CR, 2015 WL 1542134, at *13 (Tex. App.—Dallas Apr. 2, 2015, no pet.) (mem. op., not designated for publication) (concluding appellant failed to explain how complaint based on rule 3.08 was structural error and therefore complaint was forfeited when he failed to raise it in trial court).
We decide appellant's third issue against him.
V. CONCLUSION
We decide against appellant on his three issues. The trial court's judgment is affirmed.
/Douglas S. Lang/
DOUGLAS S. LANG
JUSTICE Do Not Publish
TEX. R. APP. P. 47.2
160494F.U05
JUDGMENT
On Appeal from the 416th Judicial District Court, Collin County, Texas
Trial Court Cause No. 416-80609-2014.
Opinion delivered by Justice Lang, Justices Myers and Stoddart participating.
Based on the Court's opinion of this date, the judgment of the trial court is AFFIRMED. Judgment entered this 30th day of May, 2017.