State v. Kelson
345 P.3d 1136
Utah2014Background
- Kelson was convicted on six counts related to an investment scheme involving promissory notes and a letter of credit.
- The notes were issued to investors who were promised short-term, high returns but were not registered as securities nor sold under licenses.
- Kelson and co-owners deposited funds into S.D.C. Financial Services; some funds were used for Kelson's personal expenses.
- The State charged multiple securities offenses and a pattern of unlawful activity; trial relied on a stipulation to a jury instruction about notes being presumptively securities.
- Instruction 25 created a four-factor test and a presumption that a note is a security, with exceptions, which Kelson contends shifts burden of proof.
- Court of Appeals reversed five securities convictions due to ineffective assistance, prompting certiorari review by the Utah Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether instruction 25 burden-shifts proof | Kelson argues instruction 25 creates an evidentiary presumption shifting burden. | Kelson contends the instruction is a correct statement of law and not burden-shifting. | Instruction 25 is not a burden-shifting presumption; it accurately states Utah law. |
| Whether instruction 25 reflects Utah statutory definition of security | Kelson claims the instruction impermissibly shifts burden despite statute. | State argues instruction mirrors Utah Code §61-1-13(24)(a)(i)(A) and aligns with law. | Instruction 25 accurately reflects the statute’s presumption and limitations. |
| Plain error | Kelson asserts plain error due to the presumption shifting burden. | State argues no plain error because instruction is correct and permissible. | No plain error; convictions reinstated. |
Key Cases Cited
- Francis v. Franklin, 471 U.S. 307 (U.S. Supreme Court 1985) (due process limits evidentiary presumptions that relieve burden of proof)
- In re Winship, 397 U.S. 358 (U.S. Supreme Court 1970) (proof beyond a reasonable doubt for elements of crime)
- Reves v. Ernst & Young, 494 U.S. 56 (U.S. Supreme Court 1990) (note presumptions defining securities with seven exceptions and four factors)
- State v. Dunn, 850 P.2d 1201 (Utah 1993) (plain error standard in Utah criminal appeals)
- State v. Nicholls, 2009 UT 12 (Utah) (defendant burden to show counsel’s performance below objective standard)
- Maxfield v. Herbert, 2012 UT 44 (Utah) (note on interpretive transplant of terms from other sources)
- State v. Burkenshaw, 2010 UT App 245 (Utah Appellate Court) (consideration of Reves test in Utah criminal context)
- People v. McCall, 82 P.3d 351 (Cal. 2004) (interpretation of definitional presumption in criminal statute contexts)