IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON STATE OF WASHINGTON,

v. Respondent, Cross-Appellant,

LAURANCE D. ANTHONE, Appellant, Cross-Respondent. No. 69716-1-1 (consolidated w/70010-3-1) DIVISION ONE

PUBLISHED OPINION FILED: October 20, 2014 o
9? ro

Becker, J. — In a securities fraud case, the defrauding of an individual investor is a separate unit ofprosecution even ifthe fraud is perpetrated through


### a group presentation orthrough a single document signed by more than one investor. We reverse the trial court's decision to dismiss three out ofeight counts


### as multiplicitous. We reject appellant's challenge to the sufficiency ofthe evidence. 

### After working inthe construction business for 17 years, Anthone left the trade to become a developer of real estate nearthe end of2002. Because he 

### had poorcredit, Anthone was unable to obtain traditional financing. He solicited developmentfunds personally from individual investors. Atinformational 

### meetings held at his office inTukwila, Anthone promised potential investors that he had a number of real estate projects in developmentthatwould yieldNo. 69716-1-1/2 

### substantial returns within a few months. As time went on, the projects remained undeveloped and Anthone's promises were not kept. The State charged Anthone with numerous counts of securities fraud 

### under RCW 21.20.010. Each count related to a different individual allegedly victimized byAnthone's fraudulent conduct. Five counts were dismissed before 

### or during trial. Of 10 counts that wentto thejury, 8 resulted in guiltyverdicts. The trial court then grantedAnthone's motion to dismiss counts 4, 5, and 6 as multiplicitous of count 3. Anthone was sentenced to concurrent 16 month sentences on the remaining 5 counts and was ordered to pay $208,000 in 

### restitution. His appeal challenges the sufficiency ofthe evidence to support all but the conviction on count 8. The State's cross appeal challenges the dismissal ofcounts 4, 5, and 6. MULTIPLICITY We first address the State's cross appeal. Multiplicity is the charging of a single offense in several counts. State v. Noltie. 116 Wn.2d 831, 847, 809 P.2d 190 (1991). Amultiplicitous indictment may implicate doublejeopardy if itresults inthe defendant receiving more than one sentence for the same offense. As well, itmay improperly prejudice a jury by suggesting that a defendant has committed several crimes, not one. United States v. Langford, 946 F2d 798, 802 (11th Cir. 1991), cert, denied, 503 U.S. 960 (1992). "When the Legislature defines the scope of a criminal act (the unit of prosecution), doublejeopardy protects a defendantfrom being convicted twice underthe same statute for committingjust one unit ofthe crime." State v.Adel,No. 69716-1-1/3
136 Wn.2d 629, 634, 965 P.2d 1072 (1998). Thus, the issue here is what unit of prosecution the legislature intended as the punishable act under RCW 21.20.010. The inquiry is necessary to assure thatthe prosecutor has not been arbitrary in dividing ongoing criminal conduct into units in orderto facilitate separate charges. Adel, 136 Wn.2d at 635. "Ifthe Legislature has failed to denote the unit ofprosecution in a criminal statute, the United States Supreme Court has declared the ambiguity should be construed infavor of lenity." Adel. 136 Wn.2d at 634-35, citing Bell v. United States. 349 U.S. 81, 84, 75 S. Ct. 620, 99 L Ed. 905(1955). Inthis case, Anthone was charged and convicted of numerous violations ofthe same statute, RCW 21.20.010. The statute criminalizes securities fraud in the following terms: It is unlawful for any person, in connection with the offer, sale, or purchase ofany security, directly or indirectly: (1) To employ any device, scheme, or artifice to defraud; (2) To make any untrue statement of a material fact or to omit to state a material fact necessary in orderto make the statements made, inthe light ofthe circumstances under which they are made, not misleading; or (3) To engage in any act, practice, or course of business which operates orwould operate as a fraud or deceit upon any person. RCW 21.20.010. The State elected to proceed againstAnthone only under subsection (2). The trial court ruled that counts 3 through 6 were multiplicitous, even 

### though four different investors were involved. The four investors signed a single investment agreement at the same meeting in response to the sameNo. 69716-1-1/4 

### representations about how their money would be used to develop property. The trial court concluded thatAnthone committed no more than one offense with 

### respect to these four investors. Accordingly, the court dismissed counts 4 

### through 6. The State contends that every time a defendantfraudulently sells or offers to sell a security to a different victim, a separate crime has occurred. The investors were Dalbir Bhuller (count 3), Balwant Singh (count4), 

### Harvinder Mangat (count 5), and Sarbjit Singh (count 6). Bhullersaw a sign 

### advertising Anthone's business, "MAQuikFraming," on a property in a neighborhood where he was interested inbuilding a home. Bhuller went to Anthone's office and said he wanted to buy a lot. Anthone said he was inthe 

### process of developing the propertyinto a number of lots to be known as Eden Estates. He represented Eden Estates as an investmentopportunity that Bhuller could invest in ifhe found other investors for the project. Inreturn forthe 

### promise of a substantialprofitwhen the lots were sold, each investorwould need to agree to payAnthone $5,000 upfront, $25,000 afterapproximately six weeks, and more after breaking ground. Anthone represented that everything on the 

### propertywas "almostdone" and he just needed "to payall the fees and everything and start breaking the ground." Bhuller recruited the otherthree investors, and together, they metwith 

### Anthone. Anthone presented them with a single "jointventure agreement." The 

### agreement characterized the investors asjointventurers and partnersin the development of Eden Estates. OnJune 1, 2004, Anthone and the investors 

### signed the agreement and each investorgaveAnthone $5,000.No. 69716-1-1/5 

### The State contends the transaction supports four counts ofsecurities fraud because each count involved a separate victim making a separate 

### investment. Relying on Langford, Anthone responds that only one countwas permissible because he sold a single security to a conglomerate ofbuyers. The defendant in Langford employed a scheme to inflate the price of a 

### private company artificially before its purchase by a single buyer. The government charged three counts ofsecurities fraud related to separate false statements made in a proxy statement, a telephone call, and a letter. Langford, 946 F.2d at 800. The court concluded that the convictions on those counts were 

### multiplicitous because allthree were "based on the same scheme to defraud and
on the same purchase ofsecurities." Langford, 946 F.2d at 804. Unlike in Langford, here the four counts at issue involved sales to different 

### investors. The fact that all four signed the same agreement does not justify 

### Anthone's description ofthem as a "conglomerate" that engaged in a single purchase. ItwasAnthone who insisted that Bhuller recruit additional investors, and itwasAnthone who prepared the agreementthatdefined them asjoint venturers. The agreementwas itself an instrumentofthe fraud. Itdoes not 

### obscure the realitythatAnthone directly or indirectly induced each investor into contributing personal funds. The term "sale" is defined broadly by statute: 

### "Sale" or "sell" includes every contract ofsale of, contractto 

### sell, or disposition of, a security orinterest in a security for value. "Offer" or "offer to sell" includes every attempt or offer 

### to dispose of, or solicitation ofan offer to buy, a security or interest in a security for value.No. 69716-1-1/6
RCW 21.20.005(14). The term "security" is also defined broadly. As relevant here, and as 

### reflected in a jury instruction, the definition includes any "certificate ofinterest or participation in any profit-sharing agreement," as well as any "investment of money or other consideration inthe risk capital of a venture with the expectation of some valuable benefit to the investor where the investor does not receive the right to exercise practical and actual control overthe managerial decision ofthe venture." RCW 21.20.005(17)(a); see Instruction 19. Notably, the definition applies "whetheror not the security is evidenced by a written document." Former RCW 21.20.005(12)(a) (2006), recodified as RCW 21.20.005(17)(a). The SecuritiesAct ofWashington, chapter 21.20 RCW, is interpreted broadly to protect investors, and its antifraud goals "should not be frustrated 

### merely because a scheme uses novel or atypical transactions." Kinney v. Cook, 159 Wn.2d 837, 846, 154 P3d 206 (2007). Looking to the broad definitions of "sale" and "security," we conclude the statute unambiguously makes each sale or offer to sell a security a separate unit ofprosecution. See United States v. Dioguardi, 492 F.2d 70, 83 (2d Cir.) ("Each transaction in a securities fraud case 

### constitutes a separate offense."), cert, denied, 419 U.S. 873 (1974). We further conclude the State employed an appropriate unit ofprosecution incounts 3 

### through 6 because each was based on a separate sale. Each investor made a separate investment inthe supposed "jointventure." The moneyAnthone received came from individuals, notfrom a single organized entity. The trialNo. 69716-1-1/7


### court's determination that counts 4 through 6 are multiplicitous ofcount 3 must accordingly be reversed. SUFFICIENCY OF THE EVIDENCE Anthone's appeal argues thatwith the exception ofcount 8, the evidence
was insufficient to prove that he committed securities fraud. Because this is a sufficiency challenge, we draw all reasonable inferences from the evidence in favor ofthe State. State v. Salinas, 119 Wn.2d 192, 201, 829 P.2d 1068 (1992). 

### The three subsections of RCW 21.20.010 state several ways in which securities fraud can be committed. The to-convict instructions show that the State elected to proceed at trial only underthe second subsection. For example, the to-convict instruction in count 3, involving Bhuller, required proofbeyond a reasonable doubt ofthe following elements: (1) That during a period oftime intervening between May 1, 2004 and August 5, 2005, the defendant, directly or indirectly, willfullymade an untrue statement of material fact to Dalbir Bhuller, or omitted to state a material fact to Dalbir Bhuller that was necessary in orderto make the statements made, in light ofthe circumstances underwhich they were made, not misleading; and (2) That the acts described in (1) were in connection with the sale of a security to Dalbir Bhuller; and (3) That the acts occurred inthe State ofWashington. Instruction 9; see RCW 21.20.010 (2). Forthe conviction on count 8, involving investor Kanwaljit Dulai, Anthone concedes there was sufficient evidence that he made untrue statements of material fact. Thejointventure agreement that Dulai signed represented Anthone as the property owner ofthe land thatthe venture would develop into
town homes. Anthone admits he was not the owner. He also concedes thereNo. 69716-1-1/8

was evidence that he represented that he and Dulai were the only people with a financial stake inthe property, when infact he had sold another investor a financial stake inthe same development. 

### For the remaining counts, Anthone argues there is no evidence that he made any untrue statements or omissions of a material fact. He points out instances where a particularwitness could not remember hearing him make any 

### particular statements that were untrue. Some witnesses could testify to receiving only a general impression aboutwhat was being promised. But taking the record

as a whole and all inferences in favor ofthe State, we conclude that for each investor there was sufficient evidence thatAnthone made material 

### misrepresentations of fact, directly or indirectly. 

### The State presented evidence thatAnthone made statements to the effect that his real estate projects were "readyto go" and he was aboutto "break 

### ground." The evidence showed, however, that at the time Anthone made these statements, Anthone had done next to nothing to prepare the land for 

### development. Trishah Bull, a plannerfor King County Departmentof 

### Development and EnvironmentalServices, testified that Anthone did notfile an application to develop Eden Estates until September9, 2004. This was three months after he promised itwas ready to go and accepted investments for the 

### purpose of completingit. Bull testified that the application had to be cancelled in January 2006 because, despite meetings withAnthone that were held to make himaware ofdeficiencies inthe application, he did not correct errors or supply requested information.

8No. 69716-1-1/9


### Anthone told Bhuller, Balwant Singh, Mangat, and Sarbjit Singh that 

### authorization to develop Eden Estates would be obtained shortly after he received their payments, when in fact he had barely begun the lengthy permitting 

### process. Bhuller testified thatAnthone represented thatthe investors' money would be used only to pay for municipal fees, excavate the property, and put in a sewer. In fact, according to a chartprepared by one ofAnthone's employees, his business plan was to use all but 15 percent ofthe invested cash to pay salaries, overhead, and profit. This employee also testified thatAnthone was unable to 

### obtain permits and never completed any of his development projects. 

### Anthone represented that projects would soon come to fruition, but he did
not disclose the existence ofwetlands that he knew would be a substantial 

### obstacle to development. Anthone held himselfout to investors as a contractor


### as wellas a developer, when in fact his contractors' license had been revoked 

### before he began soliciting investments. He held himself out as an experienced 

### developer andfailed to disclose that he had never completed a project. He made agreements to provide promissory notes and deeds of trust when he knew he was notin a position to give any security. Among other things, Anthone did not disclose that land he promised to provideas security was heavilyencumbered by senior lenders or not owned by him at all. 

### In short, the evidence was sufficient to supportthejury in finding, foreach 

### count on whichthere was a guilty verdict, thatAnthone misrepresented or omitted material facts relating to the sale of a security.No. 69716-1-1/10

STATUTE OF LIMITATIONS Anthone contends that the convictions on counts 2, 11, and 15 must be reversed because the State did not prove the offenses occurred within the fiveyear limitation period imposed by RCW 21.20.400(3). The to-convict instructions for counts 2, 11, and 15 added a temporal element related to the statute of limitations for securities fraud. Forexample, count 2 involved investor Philip Ross. The charging period for the count began
on July 11, 2003, the date that Ross invested withAnthone. Astatute of limitations issue existed because the charge on count 2 was notfiled untilAugust 5, 2008. To ensure thatAnthone was not convicted based on conduct outside 

### the five-year limitations period, thejury was instructed to convict only if at least
one materially misleading statement or omission "inconnection with"the sale of a 

### security to Phillip Ross occurred after August 4, 2003.1 The phrase "in

1 To convict LAURANCE D. ANTHONE ofthe crime of Securities Fraud as charged inCount 2, each ofthe followingelements ofthe crime must be proven beyond a reasonable doubt: (1) That during a period of time intervening between July 11, 2003 andAugust 5, 2005, the defendant, directly or indirectly,willfully made an untrue statement of material fact to Phillip Ross, or omitted to state a material fact to Phillip Ross that was necessary in orderto make the statements made, in light ofthe circumstances underwhich they were made, not misleading; and (2) Thatthe acts described in (1) were inconnection withthe sale of a security to Phillip Ross; and (3) Thatthe acts occurred inthe State ofWashington; and (4) That at least one act described in (1) inconnection with the sale of a security to Phillip Ross occurred afterAugust 4, 2003. Ifyou find from the evidence that each ofthese elements has been proved beyond a reasonable doubt, then itwill be your duty to return a verdict of guilty on Count 2. On the otherhand, if, afterweighing all the evidence, you have a reasonable doubt as to any one ofthese elements, then itwill be your duty to return a verdict of not guiltyas to Count 2.

10No. 69716-1-1/11
connection with" was defined to mean "acts or omissions occurring at or around the time ofthe offer or sale and acts occurring subsequentto the offer or sale 

### that 'lull'the investor into a false sense ofsecurity and that are designed to preventdetection of a defendant's fraud." Another instruction informed thejury that lulling "occurs when the defendant's activities induce the investor into a state ofpassive inactivity. Lulling ceases when a reasonable person knows or should have known ofthe defendant's fraudulent activities." Anthone does not assign errorto the instructions, which were based on
case law providing that where the prosecution is for a Ponzi-type scheme, a defendant's lulling activities that serve to perpetuate the fraud will toll the securities fraud statute of limitations. State v.Argo, 81 Wn. App. 552, 567-68, 915 P2d 1103 (1996). Underthe lulling doctrine, transactions that occur more 

### than five years before the filing ofthe information will not be time barred when the defendant's activities have lulled victims into a "state ofpassive inactivity." Argo, 81 Wn. App. at 567. Ina scheme like the one discussed in Argo, the statute oflimitations does not begin to run untilthe fraudulent activities cease. Argo. 81 Wn. App. at 568. 

### Underthe instructions received by thejury, count 2 was timely ifthe State 

### proved that between July 11, 2003, and August 5, 2003, there was at least one act or omission by Ross that lulled Ross into a state ofinactivity. The State met its burden with evidence that when Ross made his investment, Anthone 

### promised a return of$60,000 by October 17, 2003. A jury could findthatthis

11No. 69716-1-1/12 

### promise lulled Ross into a false sense ofsecurity and prevented him from detecting thatfraud had occurred until at least October 17, 2003. Count 11 involved Paulina Chhour, who invested $13,500 with Anthone on 

### July 22, 2003. Chhourtestified that she did not have any contactwithAnthone after signing the agreement on July 22, 2003. The information charging this countwas filed on October 14, 2008, more than five years later. The State thus had to prove thatAnthone lulled Chhour into inactivity between July 22 and October 15, 2003. The State met its burden with evidence thatAnthone 

### promised Ross she would receive a substantial return on her investment inthree 

### months. He thereby prevented detection ofthe fraud for at leastthree months. Count 15 involved FrederickWilson, who made an investment on August 

### 1, 2003. Anthone promisedWilson he would have a return on his investmenton December 2, 2003. The State filed the charge on January 5, 2009, more than 

### five years after the return date. However, there was evidence that after the return date, Anthone told Wilson that minor issues inthe development process 

### prevented payment and the project was going to take longer to complete than 

### originally anticipated. Wilson testified that Anthoneextendedthe completion date many times, advising patience. Wilson could not testifywith precision when these "lulling" communications occurred. Hisbestestimate was one to three months after December 2, 2003. Wilson's close friend and coinvestor, Dennis 

### Rossignol, testified that for at least "one to three monthsafter" the December 2, 2003, return date, Anthone continued to promise thatthe investmentwould be 

### reassigned to anotherproject. Ajurycouldfind that at least one act oromission

12No. 69716-1-1/13 

### that amounted to lullingoccurred within five years before the information was filed. The convictions on counts 2, 3, 11, and 15 are affirmed. The order 

### dismissing counts 4, 5, and 6 as multiplicitous ofcount 3 is reversed, and the 

### evidence supporting counts 4, 5, and 6 is held sufficient. The case is remanded forfurther proceedings consistentwith this opinion.

WE CONCUR:



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