People v. Thompson
2018 COA 83
Colo. Ct. App.2018Background
- Steven C. Thompson (defendant) was sole member of SGD Timber Canyon LLC, which owned undeveloped Timber Ridge lots; SGD faced foreclosure and bankruptcy that Thompson did not disclose.
- Tom and Debbie Witt loaned Thompson $400,000 initially and later increased to $2.4 million (a “bridge loan”) based on a promissory note and guarantee promising repayment plus a $240,000 profit and 8% interest by January 2011, secured by Thompson’s residences and Timber Ridge lots.
- Thompson represented the investment as "no risk" and that collateral was valuable; in fact properties were heavily leveraged, Flagstar Bank foreclosed, and Thompson used funds for personal expenses and legal fees.
- Thompson defaulted; the Witts recovered only $70,000 after civil proceedings. Criminal charges: two counts of securities fraud (§ 11‑51‑501(1)(b) & (c)) and one count of theft (§ 18‑4‑401(1)(b)).
- Jury convicted on all counts. Thompson appealed: sufficiency of evidence (security and theft), jury instruction on “security,” admissibility of other-act evidence, multiplicity/double jeopardy (two securities counts), and sentencing concurrency.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the promissory note was a “security” supporting securities‑fraud convictions | The note met the Milne/Howey test and, under Reves-family‑resemblance factors, is a security | The note resembled short‑term/unconditional personal loans exempt from security presumption and thus was not a security | Note is a security under the family‑resemblance/Reves factors; sufficient evidence supports securities convictions |
| Jury instruction defining “security” | Instruction tracked statutory definition including “any note”; no objection at trial | Instruction should have submitted the security question to jury under the Reves/family‑resemblance framework (Mendenhall) | No plain error: law unsettled at trial, instruction not obviously erroneous |
| Multiplicity / double jeopardy of two securities counts | Separate statutory subsections alleged different conduct | Counts were alternative means of the same offense and multiplicitous | Although counts were multiplicitous under federal standard, law on unit of prosecution in Colorado was not well settled at trial; no plain error |
| Sufficiency of evidence for theft conviction | Witts showed deception, conversion, and intent to permanently deprive | Loan was unconditional and use of funds to improve collateral negates theft intent | Evidence sufficient: Thompson knowingly obtained and used funds to permanently deprive the Witts |
| Admissibility of other‑act evidence (similar prior transaction) | Prior act showed motive, intent, knowledge, modus operandi, rebutting mistake | Prior act was unduly prejudicial and not sufficiently similar | Trial court properly applied Spoto factors; admission not an abuse of discretion and limiting instruction mitigated prejudice |
| Sentencing concurrency (whether theft sentence must run concurrently) | N/A (People supported consecutive sentences) | Theft and securities convictions rested on identical evidence; concurrency required by statute | Different elements supported each conviction (securities: fraudulent offer/sale; theft: concealment/use to permanently deprive); consecutive sentence affirmed |
Key Cases Cited
- Reves v. Ernst & Young, 494 U.S. 56 (U.S. 1990) (adopts family‑resemblance test for when a note is a security)
- W.J. Howey Co., 328 U.S. 293 (U.S. 1946) (Howey test for investment contracts)
- Milne v. People, 690 P.2d 829 (Colo. 1984) (Colorado application of investment/notes analysis under Howey)
- Woellhaf v. People, 105 P.3d 209 (Colo. 2005) (unit‑of‑prosecution and multiple‑punishment framework)
- Quintano v. People, 105 P.3d 585 (Colo. 2005) (factors for determining whether offenses are factually distinct)
- Pedrie v. People, 727 P.2d 859 (Colo. 1986) (return of stolen property does not bar theft conviction)