STATE of Utah, Appellee, v. Roger Edward TAYLOR, Appellant.
No. 20130556
Supreme Court of Utah.
March 31, 2015.
2015 UT 42
¶ 27 In short, the State has failed to separately challenge the district court‘s dismissal of Kay II. Its arguments with regard to Kay II are entirely dependent upon our disposition of Kay I. Because we conclude that communications fraud is not a continuing offense and affirm the dismissal of Kay I, we also affirm the district court‘s dismissal of Kay II.
CONCLUSION
¶ 28 Communications fraud is not a continuing offense.
which the statute of limitations would begin to run on the date of the mailing. In this case, however, the State failed to argue on appeal that the e-mails constituted an independent basis for separate charges of communications fraud.
Rather, the State argued only that the e-mails continued the crimes charged in Kay I. Indeed, the State admitted at oral argument that a reversal in Kay II was entirely dependent upon a reversal in Kay I.
Joan C. Watt, Michael D. Misner, Salt Lake City, for appellant.
Justice PARRISH authored the opinion of the Court, in which Chief Justice DURRANT, Associate Chief Justice LEE, Justice DURHAM, and Judge ORME joined.
Due to his retirement, Justice NEHRING did not participate herein; Court of Appeals Judge GREGORY K. ORME sat.
Justice DENO G. HIMONAS became a member of the Court on February 13, 2015, after oral argument in this matter, and accordingly did not participate.
Justice PARRISH, opinion of the Court:
INTRODUCTION
¶ 1 Roger Taylor was charged with multiple counts of securities fraud and theft on the basis of his alleged operation of a Ponzi scheme. Mr. Taylor asked the district court to dismiss eight of the ten charges based on the applicable statutes of limitations. The district court concluded that securities fraud and theft are continuing offenses and evaluated the timeliness of the charges accordingly. On interlocutory review, we hold that securities fraud and theft are not continuing offenses and therefore remand the case to the district court to re-evaluate the timeliness of the charges in light of our holding.1
BACKGROUND
¶ 2 Mr. Taylor and Richard Smith are alleged to have operated a Ponzi scheme in which multiple investors lost large sums.2 They initiated the alleged scheme by founding an investment firm known as Ascendus Capital Management. Once clients deposited money with Ascendus, Mr. Taylor and Mr. Smith created false account statements reflecting investment gains to lure further funds from their clients. Later, Mr. Taylor and Mr. Smith founded the Franklin Forbes Composite Fund. They asked existing clients to transfer funds to Franklin Forbes, assuring them that the investment was safe. Mr. Taylor and Mr. Smith falsely represented that Franklin Forbes would be investing in Lyxor, a French asset-management company, and that the investment would be guaranteed by Societe Generale, a well-known and prestigious French bank. Instead, Mr. Taylor and Mr. Smith placed the funds in a larger Ponzi scheme in California, used some of the funds to pay other investors, and raided the remaining funds to pay personal expenses. Mr. Taylor and Mr. Smith again created false account statements showing investment gains to lull investors. Eventually, however, the Ponzi scheme collapsed and the “guaranteed” investments were lost.
¶ 3 On August 13, 2010, the State filed an information charging Mr. Taylor with two counts of securities fraud and one count of abuse, neglect, or exploitation of the elderly. One year later, on August 30, 2011, the State amended the information. Less than one month later, when the State failed to appear
¶ 4 Mr. Taylor filed a motion to dismiss, claiming that four of the five securities fraud charges and the four theft charges were time barred. The district court denied the motion as to the four securities fraud charges and three of the theft charges after ruling that securities fraud and theft are both continuing offenses for which the limitations period did not begin to run until Mr. Taylor sent the last false account statement to investors.
¶ 5 The four securities fraud charges at issue in this case are based upon four separate investments in Franklin Forbes. Counts 1 and 2 are based on two investments by A.D. She began investing through Ascendus as early as June 2003 and, over the years, invested about $600,000. On the basis of false information from Mr. Taylor, A.D. transferred her Ascendus investment to Franklin Forbes in February 2006. And in July 2006, she invested an additional $401,000. Mr. Taylor then sent A.D. false account statements showing investment gains through December 2007.
¶ 6 Counts 6 and 7 arise from similar transfers by other investors. The factual predicate for count 6 is an $800,000 investment by W.M. and K.M. that they moved from their Ascendus account to Franklin Forbes in February 2006. W.M. and K.M. received false account statements through May 2008. The factual predicate for count 7 is an investment by A.W., who transferred almost $1.8 million from Ascendus to Franklin Forbes in February 2006. A.W. received false account statements through April 2007.
¶ 7 The three theft charges at issue are based on Mr. Taylor‘s unauthorized use or withdrawal of funds from Franklin Forbes. Count 5 arises from Mr. Taylor‘s unauthorized use of funds from E.K. In March 2007, E.K. invested approximately $330,000 in Franklin Forbes with express direction that it be used for investment. But Mr. Taylor withdrew the funds soon thereafter and used them for another purpose. Mr. Taylor then sent E.K. false account statements showing investment gains through April 2008.
¶ 8 Counts 9 and 10 arise from Mr. Taylor‘s misuse and withdrawal of funds belonging to unknown investors. Count 9 arises from misuse of over $1.5 million removed from Franklin Forbes as late as January 2008. And Count 10 is based on a final withdrawal of funds from Franklin Forbes by Mr. Taylor as late as August 2008.
¶ 9 Following the district court‘s denial of his motion to dismiss, Mr. Taylor filed a petition for interlocutory review, which the court of appeals granted. It then certified the interlocutory appeal to this court. We have jurisdiction pursuant to
STANDARD OF REVIEW
¶ 10 The issue of whether securities fraud and theft are continuing offenses is one of statutory construction. We give no deference to the district court‘s ruling on such an issue and instead review it for correctness.3
ANALYSIS
¶ 11 The district court concluded that securities fraud, in violation of
¶ 12 We are asked to determine whether the criminal charges in this case are time barred. In general, “a prosecution for” a felony, misdemeanor, or infraction “shall be commenced within” four, two, or one year, respectively, “after it is committed.”4 If the State does not commence prosecution within this period, any criminal liability will expire. The limitations period begins to run when a crime is “committed.”5 A crime is committed when every “element of the offense” is met.6 But the Legislature has structured the elements of some offenses in such a way that a perpetrator continues to commit the offense so long as he continues to satisfy the elements. These offenses are considered continuing offenses. In the case of a continuing offense, while criminal liability attaches when every element is satisfied, the statute of limitations does not begin to run until the perpetrator ceases to satisfy the elements of the crime.7 At that point, the whole arc of criminal conduct is aggregated into a single criminal violation.
¶ 13 In determining whether a crime is a continuing offense, the United States Supreme Court looks to the intent of Congress. In Toussie v. United States, it recognized the inherent tension between the policies underpinning statutes of limitations—preventing prosecution of stale claims and motivating prompt investigation of crimes—and the imposition of criminal liability for proscribed acts.8 With that tension in mind, the Court reasoned that criminal statutes should not be interpreted to create a continuing offense “unless the explicit language of the substantive criminal statute compels such a conclusion, or the nature of the crime involved is such that Congress must assuredly have intended that it be treated as a continuing one.”9 Other states considering this question have looked to Toussie, either adopting its language or citing its reasoning.10
¶ 14 The Toussie analysis is generally consistent with our longstanding approach to statutory construction. Our objective in construing statutes is to effectuate the intent of the Legislature as expressed in the statutory text.11 Thus, to determine whether a criminal statute creates a continuing offense, we look to the plain meaning of the enacted text, considering that text in the context of the whole statute.12 And we harmonize the statute with related provisions of the code, including any applicable statutes of limitations.13
¶ 15 In sum, we respect the legislative policy choice reflected in a clear statute of limitations and will effectuate that protection except in those instances where we find
II. SECURITIES FRAUD IS NOT A CONTINUING OFFENSE
¶ 16 The district court concluded that securities fraud, in violation of
¶ 17 The Utah Uniform Securities Act, patterned after section 101 of the Uniform Securities Act of 1956, provides that
[i]t is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly to:
(1) employ any device, scheme, or artifice to defraud;
(2) make any untrue statement of a material fact or to 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
(3) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.14
The act contains a five year statute of limitations that expressly supercedes the general criminal statute of limitations.15
¶ 18 The text of the Utah Uniform Securities Act does not suggest that the Legislature intended securities fraud to constitute a continuing offense. To the contrary, the offense is anchored in the discrete events of an “offer, sale, or purchase of any security.”16 And subsection (2) similarly identifies the discrete acts of “mak[ing] any untrue statement [or] ... omitt[ing] to state a material fact.”17
¶ 19 In arguing that the Legislature intended securities fraud to constitute a continuing offense, the State points to subsections (1) and (3), which speak of “employ[ing] any ... scheme ... to defraud” and “engag[ing] in any ... practice[] or course of business which operates ... as a fraud.”18 It argues that these phrases give rise to a continuing offense. We disagree. While these phrases refer to activities that may continue for a period of time, their presence does not necessarily compel the conclusion that securities fraud is a continuing offense. Rather, they must be read in concert with the statutory requirement that any actionable fraud take place “in connection with the offer, sale, or purchase of any security.”19
¶ 20 The United States Supreme Court has construed similar language in a federal statute to require that any scheme to defraud be material to a purchase or sale of a covered security. In Chadbourne & Parke LLP v. Troice, the Court considered the scope of the statutory phrase “misrepresentation or omission of a material fact in connection with the purchase or sale of a covered securi-
¶ 21 By definition, an act occurring subsequent to a securities transaction cannot be material to the decision to engage in that transaction. It therefore cannot satisfy the elements of securities fraud. Thus, the language of the Utah Uniform Securities Act dictates that the commission of securities fraud terminates and the statute of limitations begins to run when the offer, sale, or purchase is complete, even if some of the activities listed in subsections (1) and (3) continue thereafter.24
¶ 22 Related Utah statutes also support our conclusion that the Utah Uniform Securities Act does not create a continuing offense. The discrete acts that often follow securities fraud in a broader arc of fraudulent conduct—like the false account statements in this case—are more appropriately charged under related statutes, such as the communications fraud statute,
¶ 23 In this case, the district court evaluated the timeliness of the securities fraud charges on the basis of its erroneous conclusion that securities fraud is a continuing offense. In light of our contrary holding, we remand this case to the district court to engage in a factual assessment to determine for each count of securities fraud when the offer, sale, or purchase took place and whether the charge was filed not more than five
¶ 24 In sum, we hold that securities fraud, in violation of
III. THEFT IS NOT A CONTINUING OFFENSE
¶ 25 The district court concluded that theft, in violation of
¶ 26 Under the Utah Criminal Code,
[a] person commits theft if he obtains or exercises unauthorized control over the property of another with a purpose to deprive him thereof.31
Theft is subject to the general criminal statute of limitations.32
¶ 27 We see nothing in the statutory language to suggest that theft is a continuing offense. The key actus reus elements of the offense—“obtain[ing] or exercis[ing]“—are discrete acts that are satisfied instantaneously.33 And the commission of the crime is complete when a person obtains or exercises that control with the requisite intent.34
¶ 28 In arguing that theft is a continuing offense, the State focuses on the statutory language indicating that a person commits theft if he obtains property with a “purpose to deprive.”35 The State reasons that a purpose to deprive may continue beyond the discrete act of obtaining or exercising control. But the phrase “purpose to deprive” simply defines the mens rea element.36 And that element either exists or does not exist at the time that the person obtains or exercises unauthorized control of another‘s property. That phrase does not suggest that the Legislature intended theft to constitute a continuing offense.
¶ 29 Related provisions of the code support the conclusion that theft is not a continuing offense. The acts of “dispos[ing],” “conceal[ing], sell[ing], [or] withhold[ing]” stolen property are more appropriately charged under the receiving stolen property statute,
¶ 30 In ruling that theft is a continuing offense, the district court analogized to the single larceny rule, which we recognized in
¶ 31 The district court‘s determination that the theft charges were timely was premised upon its erroneous conclusion that theft is a continuing offense. Because we reverse the district court on that issue, we remand this case to the district court to reassess the timeliness of the theft charges in light of our holding. That court is better able to determine for each theft count when Mr. Taylor obtained or exercised unauthorized control of another‘s property and whether the corresponding charge was filed within four years of that date.41
¶ 32 In sum, we hold that theft, in violation of
CONCLUSION
¶ 33 The district court concluded that securities fraud, in violation of