345 P.3d 297
Mont.2015Background
- Himes appeals a Ravalli County judgment sentencing him to three concurrent ten-year terms with 90 days suspended, restitution, and costs after convictions for failure to register as a securities salesperson, failure to register a security, and fraudulent practices.
- Serata, a disabled veteran with limited investing experience, invested $150,000 after meeting Himes, who touted a start-up Duratherm venture supposedly producing solar panels.
- A Subscription Agreement purportedly granting Serata a 6% stake and related rights was issued, but Serata did not read it and trusted Himes; the ownership described included Duratherm-related entities and a “six percent” share.
- Duratherm’s Mexican operations and assets were misrepresented; Serata later learned no factory existed and funds passed to others, not to Duratherm.
- Egan’s investigation found no securities registrations for the entities or Himes, and Serata’s funds were used to pay third parties rather than to support Duratherm.
- Himes was charged with six felonies; he was convicted of three and sentenced as noted, with restitution tied to Serata’s loss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether security defined for jury was adequate | Himes argues the definition was too vague. | Himes claims the definition should have been clarified. | No plain error; definition based on statute was proper. |
| Whether the State proved Himes sold a security | State says instrument fits security under statute; stock-like features. | Himes contends evidence insufficient to show a security or profit-sharing agreement. | Sufficient evidence supported conviction under §30-10-103(22). |
| Whether mens rea requires more than willful | State says willfully suffices for violations of Securities Act. | Himes argues need for knowledge of illegality or other mental state. | Willfully properly defined; not strict liability. |
| Whether willfully instruction created strict liability | N/A | N/A | No, because jury was tasked with finding awareness of conduct, not intent to violate law. |
| Whether fraudulent practices instruction erred by importing an Admin Rule | State concedes rule not required; error harmless? | Conviction should be reversed if improper standard used. | Conviction for fraudulent practices reversed and remanded for new trial. |
Key Cases Cited
- Duncan v. State, 593 P.2d 1026 (Mont. 1979) (flexible definition of security to capture varied schemes)
- Landreth Timber Co. v. Landreth, 471 U.S. 681 (U.S. 1985) (significant characteristics of stock for securities analysis)
- Hudson, 327 Mont. 286 (2005 MT 142) (mirror statute language in jury instruction—proper)
- Erickson v. Fisher, 554 P.2d 1336 (Mont. 1976) (willful need not show malicious motive)
- State v. Yuhas, 358 Mont. 27 (2010 MT 223) (sufficiency of evidence standard for conviction)