SUMMARY

June 4, 2020

2020COA87

No. 18CA1769, Chan v. HEI Resources — Financial Institutions 

— Securities — Colorado Securities Act — Investment 

Contracts; Business Organizations — General Partnerships

A division of the court of appeals holds that when deciding 

whether an ostensible general partnership interest in a venture is a 

security under the Colorado Securities Act, the court must employ a 

strong presumption that it is not. The division also holds that when 

determining whether the general partners have sufficient experience 

with or knowledge of business affairs that they can intelligently 

exercise their partnership powers, venture-specific experience or 

knowledge should not always be regarded as required: general 

business experience and knowledge may be sufficient. In so 

holding on these two issues, the division disagrees with the prior 

The summaries of the Colorado Court of Appeals published opinions 

constitute no part of the opinion of the division but have been prepared by 

the division for the convenience of the reader. The summaries may not be 

cited or relied upon as they are not the official language of the division. 

Any discrepancy between the language in the summary and in the opinion 

should be resolved in favor of the language in the opinion.
court of appeals decision in this case, Rome v. HEI Resources, Inc., 

2014 COA 160. 
COLORADO COURT OF APPEALS 2020COA87

Court of Appeals No. 18CA1769

City and County of Denver District Court No. 09CV7181

Honorable Michael A. Martinez, Judge

Tung Chan, Securities Commissioner for the State of Colorado,

Plaintiff-Appellee and Cross-Appellant,

v.

HEI Resources, Inc., f/k/a Heartland Energy, Inc.; Charles Reed Cagle;

Brandon Davis; Heartland Energy Development Corporation; John Schiffner;

and James Pollak,

Defendants-Appellants and Cross-Appellees.

JUDGMENT REVERSED AND CASE

REMANDED WITH DIRECTIONS

Division V

Opinion by JUDGE J. JONES

Welling and Hawthorne*, JJ., concur

Announced June 4, 2020

Philip J. Weiser, Attorney General, Robert Finke, First Assistant Attorney 

General, Charles J. Kooyman, Senior Assistant Attorney General, Denver, 

Colorado, for Plaintiff-Appellee and Cross-Appellant

Thomas Law LLC, Jeffrey R. Thomas, Denver, Colorado for DefendantsAppellants and Cross-Appellees HEI Resources, Inc. and Charles Reed Cagle

Holland & Hart, LLP, Marcy G. Glenn, Denver, Colorado; Munck Wilson 

Mandala LLP, Shain A. Khoshbin, S. Wallace Dunwoody, Chase A. Cobern, 

Dallas, Texas; Munck Wilson Mandala LLP, Jennifer D. Jasper, Austin, Texas, 

for Defendants-Appellants Brand Davis and Heartland Energy Development 

Corporation
Law Offices of Otto K. Hilbert II, Otto K. Hilbert, II, Denver, Colorado, for 

Defendants-Appellants John Schiffner and James Pollak

Robinson Waters & O’Dorisio, P.C., Tracy L. Ashmore, Denver, Colorado, for 

Amicus Curiae National Federation of Independent Business

Ballard Spahr LLP, Theodore J. Hartl, Denver, Colorado; Kameron Hillstrom, 

Washington, D.C., for Amicus Curiae North American Securities Administrators 

Associations, Inc.

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. 

VI, § 5(3), and § 24-51-1105, C.R.S. 2019.
1

¶ 1 Plaintiff, Tung Chan, in his official capacity as Securities 

Commissioner for the State of Colorado, brought this enforcement 

action against defendants, HEI Resources, Inc. (HEI), f/k/a 

Heartland Energy, Inc.; Heartland Energy Development Corporation 

(HEDC); Charles Reed Cagle; Brandon Davis; John Schiffner; and 

James Pollack, for allegedly violating the Colorado Securities Act 

(CSA) in forming several oil and gas exploration and drilling joint 

ventures. The gist of the Commissioner’s position is that, 

notwithstanding that the investors are designated general partners 

in the joint ventures, their interests are securities (specifically, 

investment contracts) under the CSA and defendants violated 

certain requirements of the CSA when offering those interests. 

¶ 2 In 2013, following a partial summary judgment and a trial, the 

trial court found that the joint venture interests aren’t investment 

contracts and therefore aren’t securities under the CSA. The court 

reached that conclusion after applying the leading case in this field, 

Williamson v. Tucker, 645 F.2d 404 (5th Cir. 1981), which identifies 

three ways in which a party can overcome a strong presumption 
2

(the so-called “Williamson presumption”) that a general partnership 

interest isn’t an investment contract (the Williamson tests).1 

¶ 3 The Commissioner appealed, and a prior division of this court 

reversed and remanded. Rome v. HEI Res., Inc., 2014 COA 160 (HEI 

I). The division concluded that the Williamson presumption doesn’t 

apply in an action under the CSA and that the trial court erred by 

considering the partners’ general, rather than venture-specific, 

business experience under the second Williamson test. The division 

remanded to the trial court 

for redetermination of whether the joint 

venture interests are securities under the 

second and third Williamson factors and any 

other ‘catch-all’ economic realities, taking into 

consideration our rejection of the strong 

presumption that general partnership interests 

are not securities and our determination that 

 

1 As discussed more fully below, the Williamson tests are (1) 

whether the parties’ agreement leaves so little power to the partners 

that they are in reality limited partners; (2) whether the partner has 

so little experience with and knowledge of business affairs that he 

can’t intelligently exercise his powers; or (3) whether the manager 

has such unique entrepreneurial or managerial skills that he is, as 

a practical matter, irreplaceable. 
3

the relevant measure of business experience is 

experience in the business of the venture.

 

Id. at ¶ 61.2 

¶ 4 On remand, the trial court first determined that the general 

partners’ interests are investment contracts under the second and 

third Williamson tests and “other economic realities.” After taking 

additional evidence, the court later ruled that defendants had 

violated the CSA, enjoined them from engaging in securities-related 

activities in Colorado, and ordered certain defendants to pay 

restitution to the Commissioner. 

¶ 5 This time, both sides appeal — the Commissioner by way of 

cross-appeal.3 Though the parties raise a host of issues, we only 

need to address four raised by defendants: (1) whether the prior 

division erroneously departed from well-established federal 

securities law by rejecting the Williamson presumption; (2) whether 

 

2 The prior division referred to the Williamson tests as “exceptions” 

or “factors.” We refer to them as tests because they are 

independent bases for analyzing whether a general partnership 

interest is an investment contract. 

3 The Commissioner cross-appeals one aspect of the trial court’s 

liability determinations and several aspects of the trial court’s 

remedial rulings. But in light of our resolution of defendants’ 

appeal, we don’t need to address those issues. 
4

the prior division erroneously held that the partners must have 

venture-specific experience under the second Williamson test; (3) 

whether the trial court improperly focused on whether the partners 

themselves could fill the role of the managing partner under the 

third Williamson test; and (4) whether the trial court erred by 

finding that the general partners’ interests are investment contracts 

under “other economic realities.” 

¶ 6 For the reasons explained below, we agree with defendants 

that, contrary to the prior division’s holding, the Williamson 

presumption applies when general partnership interests are alleged 

to be investment contracts under the CSA. We also agree with 

defendants, again contrary to the prior division’s holding, that a 

collective lack of venture-specific experience isn’t dispositive under 

the second Williamson test; it is relevant, but what ultimately 

matters is whether the partners have sufficient collective knowledge 

and experience to intelligently exercise their powers. And we 

conclude that under the third Williamson test the question isn’t 

whether any of the general partners themselves could, if necessary, 

fill the role of the managing partner, but whether the managing 

partner is, considering the nature of the venture and the managing 
5

partner’s knowledge and experience, essentially irreplaceable. 

These three conclusions are consistent with prevailing federal law 

applying corresponding federal statutes, which the General 

Assembly and the Colorado Supreme Court have expressly directed 

us to follow unless inconsistent with the purposes and provisions of 

the CSA. Lastly, we conclude that, although the three Williamson 

tests aren’t exclusive, those tests account for economic realities, 

and the court should consider other economic realities only if they 

aren’t adequately accounted for under the Williamson tests. 

¶ 7 Accordingly, cognizant of our decision’s whiplash effect, but 

nevertheless convinced that the prior division’s decision is out of 

step with the applicable law, we reverse and remand to the trial 

court to determine, consistent with this opinion, whether the joint 

venture interests constitute investment contracts, based on the 

record developed to date. 

I. Background

¶ 8 Much of the relevant background is recounted in HEI I. The 

following, however, should give the reader enough to understand 

how we got to where we are now.
6

A. Historical Facts

¶ 9 Beginning in 2004, defendants solicited thousands of, in the 

trial court’s words, “wealthy, educated and sophisticated investors” 

nationwide by, in large part, cold-calling them and offering them 

interests in several oil and gas exploration and drilling joint 

ventures. If someone expressed interest in participating as a 

partner in a venture, they were sent an information package that 

included a “Confidential Information Memorandum” (CIM) and a 

“Joint Venture Agreement” (JVA).4 All parties acknowledge that, 

under the terms of the JVA, the joint ventures were organized as 

general partnerships under the Texas Revised Partnership Act, and 

that the partners ostensibly have significant management rights 

and responsibilities, such as the rights to call meetings, propose 

agenda items, access partnership records, receive business 

information, remove the managing partner, change the managing 

partner’s powers, and otherwise actively run the business by 

majority vote. The JVA also says the partners are jointly and 

 

4 These documents didn’t differ materially (for our purposes) from 

venture to venture. 
7

severally liable for any joint venture liabilities. The CIM delegates 

the venture’s day-to-day operations to either HEI or HEDC as the 

initial “managing venturer.” 

B. Litigation

¶ 10 In 2009, the Commissioner filed a complaint against 

defendants, alleging that they had violated the CSA by employing 

unlicensed sales representatives to offer and sell unregistered 

securities.

¶ 11 The court granted summary judgment for defendants on the 

first Williamson test in 2011. Two years later, after a seven-day 

trial, the trial court found that the joint venture interests aren’t 

investment contracts, and therefore aren’t securities, under the 

CSA. Specifically, the court ruled that the Commissioner had failed 

to overcome the Williamson presumption by showing that those 

interests are investment contracts under the second and third 

Williamson tests. 

¶ 12 On appeal, as previously discussed, a division of this court 

reversed and remanded. First, it concluded that the trial court 

erred by applying the Williamson presumption because Colorado 

hadn’t adopted it. The division rejected the Williamson 
8

presumption, reasoning that (1) the presumption is inconsistent 

with the governing economic realities test; (2) how the presumption 

applies is unclear; (3) it is based on a policy judgment, which is for 

the General Assembly, not the courts, to make; and (4) it isn’t 

necessary because the party claiming that the interests are 

securities ultimately bears the burdens of proof and persuasion 

anyway. Second, the division held that the trial court erred by 

considering the partners’ experience in business affairs generally, 

rather than their “collective experience” specific to the oil and gas 

exploration and drilling business under the second Williamson test. 

¶ 13 On remand, the trial court found that the joint venture 

interests are investment contracts because (1) the partners are 

incapable of intelligently exercising their partnership powers due to 

their relative collective inexperience with oil and gas exploration 

and drilling operations specifically (the second Williamson test); (2) 

the partners are dependent on HEI and HEDC’s unique managerial 

skills because none of the general partners themselves can capably 

step into the managing partner’s shoes even if they desire a change 

in managing partner (the third Williamson test); and (3) apart from 

the Williamson tests, the economic realities generally so indicate. 
9

Following a second trial, the court went on to find that defendants 

had violated the CSA and ordered injunctive relief and restitution. 

II. Discussion

¶ 14 One or more defendants variously contend that the trial court 

erred by (1) finding that the joint venture interests are securities; (2) 

finding that the statute of limitations of section 13-80-102(1)(i), 

C.R.S. 2019, doesn’t bar the Commissioner’s claims; (3) finding that 

the safe harbor of section 11-51-704(4), C.R.S. 2019, doesn’t 

immunize defendants from liability; (4) awarding the Commissioner 

restitution on behalf of out-of-state partners; (5) finding that 

defendants committed securities fraud by using unlicensed sales 

representatives to sell unregistered securities; (6) holding defendant 

Brandon Davis jointly and severally liable for restitution; and (7) 

granting the Commissioner’s request for an “obey-the-law” 

injunction. Because we reverse based on the first, threshold issue, 

we don’t address defendants’ other contentions. 

¶ 15 Defendants present four arguments relating to whether the 

general partnership interests are investment contracts. The first 

two — that the prior division erred by rejecting the Williamson 

presumption and by requiring venture-specific experience under the 
10

second Williamson test — and the fourth — that the trial court 

erred by finding that the interests are investment contracts when 

looking at the economic realities independent of the Williamson test 

— require us to revisit, to one degree or another, HEI I. The third —

that the trial court erred by limiting potential replacements of the 

managing partners to the general partners — wasn’t analyzed in 

HEI I. After considering whether the law of the case dictates that 

we follow HEI I, and concluding that it doesn’t, we turn to the 

arguments’ merits. 

A. The Law of the Case

¶ 16 The Commissioner argues that there is no basis under the law 

of the case doctrine to reconsider HEI I. We don’t agree.

¶ 17 “The doctrine of the law of the case is a discretionary rule of 

practice directing that prior relevant rulings made in the same case 

generally are to be followed.” Mining Equip. Inc. v. Leadville Corp., 

856 P.2d 81, 85 (Colo. App. 1993). Though the doctrine requires a 

trial court to follow an appellate court’s rulings on remand, Saint 

John’s Church in the Wilderness v. Scott, 2012 COA 72, ¶ 8, it “is 

merely discretionary when applied to a court’s power to reconsider 

its own prior rulings,” Grand Cty. Bd. of Comm’rs v. Colo. Prop. Tax 
11

Adm’r, 2016 COA 2, ¶ 24; accord People ex rel. Gallagher v. Dist. 

Court, 666 P.2d 550, 553 (Colo. 1983); Saint John’s Church in the 

Wilderness, ¶ 8. 

¶ 18 Indeed, 

a division of [the court of appeals] may review 

another division’s ruling in the same case if 

there is the possibility that “the previous 

decision is no longer sound because of 

changed conditions or law, or legal or factual 

error, or if the prior decision would result in 

manifest injustice.” 

Grand Cty. Bd. of Comm’rs, ¶ 24 (quoting Core-Mark Midcontinent, 

Inc. v. Sonitrol Corp., 2012 COA 120, ¶ 10); accord Saint John’s 

Church in the Wilderness, ¶ 8. For the reasons discussed below, 

reconsideration of the prior division’s decision is warranted. We 

turn, then, to the merits. 

B. Are the General Partnership Interests Investment Contracts?

1. Standard of Review

¶ 19 Whether an interest in a venture is an investment contract is a 

question of law that we review de novo. HEI I, ¶ 26; Joseph v. 

Viatica Mgmt., LLC, 55 P.3d 264, 266 (Colo. App. 2002); Straub v. 

Mountain Trails Resort, Inc., 770 P.2d 1321, 1323 (Colo. App. 1988). 

We also review de novo the trial court’s application of the governing 
12

legal standards to the facts of the case. HEI I, ¶ 26. But if we need 

to examine any of the trial court’s findings of historical fact, we 

review them for clear error. Id.

2. General Principles

¶ 20 We begin by covering familiar ground. The Commissioner’s 

complaint hinges on whether the general partnership interests are 

“investment contracts,” a species of security. See § 11-51-201(17), 

C.R.S. 2019. Because the CSA doesn’t define an “investment 

contract,” Colorado courts apply the three-part test set forth in 

Securities & Exchange Commission v. W.J. Howey Co., 328 U.S. 293 

(1946), as modified by United Housing Foundation, Inc. v. Forman, 

421 U.S. 837 (1975), cases addressing the meaning of investment 

contract under federal statute, to determine whether an interest in 

a venture is an investment contract. Toothman v. Freeborn & 

Peters, 80 P.3d 804, 811 (Colo. App. 2002). Under the Howey test, 

“an ‘investment contract’ is: (1) a contract, transaction, or scheme 

whereby a person invests his or her money (2) in a common 

enterprise and (3) is led to expect profits derived from the 

entrepreneurial or managerial efforts of others.” Toothman, 80 P.3d 

at 811 (citing People v. Milne, 690 P.2d 829, 833 (Colo. 1984)). 
13

¶ 21 This definition of investment contract “embodies a flexible 

rather than a static principle, one that is capable of adaptation to 

meet the countless and variable schemes devised by those who seek 

the use of the money of others on the promise of profits.” Id. 

(quoting Howey, 328 U.S. at 299). So in determining whether a 

certain transaction is an investment contract, “the substantive 

economic realities underlying the transaction” govern over its name 

or form. Viatica Mgmt., 55 P.3d at 266; see Forman, 421 U.S. at 

851-52. In other words, the label given to a particular interest isn’t 

determinative of whether it is an investment contract. See 

Williamson, 645 F.2d at 423 (“A scheme which sells investments to 

inexperienced and unknowledgeable members of the general public 

cannot escape the reach of the securities laws merely by labelling 

itself a general partnership or joint venture.”).

¶ 22 In this case, the only part of the Howey test at issue is the 

third part — whether the partners were dependent on the 

managerial efforts of others for their expected profits. Before getting 

into the law specifically applicable to that question, we pause to 

acknowledge the role federal securities law plays when interpreting 

the CSA. 
14

¶ 23 The Colorado Supreme Court has repeatedly said that while 

Colorado courts aren’t bound by federal law in interpreting the CSA, 

when provisions of the CSA parallel provisions of federal law, the

“federal authorities that interpret provisions parallel to the [CSA] 

are highly persuasive.” Milne, 690 P.2d at 833; accord, e.g., Cagle v. 

Mathers Family Tr., 2013 CO 7, ¶ 19; Goss v. Clutch Exch., Inc., 701 

P.2d 33, 34-35 (Colo. 1985); Lowery v. Ford Hill Inv. Co., 192 Colo. 

125, 129-30, 556 P.2d 1201, 1204 (1976). But that may understate 

the degree of deference we should afford federal authorities 

construing parallel provisions. For the General Assembly has said 

that “[t]he provisions of [the CSA] and rules made under [the CSA] 

shall be coordinated with the federal acts and statutes to which 

references are made in [the CSA] and rules and regulations 

promulgated under those federal acts and statutes, to the extent 

coordination is consistent with both the purposes and the 

provisions of [the CSA].” § 11-51-101(3), C.R.S. 2019. We take this 

to mean that if there is a prevailing federal judicial interpretation of 

a parallel federal provision, we should follow that interpretation 

unless some material difference in language or an underlying 
15

purpose or policy of the CSA affirmatively dictates otherwise. See 

Cagle, ¶¶ 20-27 (so applying federal case law). 

¶ 24 So what does federal authority have to say about the third 

Howey factor?

¶ 25 In the leading case, Williamson, the Fifth Circuit explained 

that the pertinent economic reality under the third Howey prong is 

whether “the power retained by the investors is a real one which 

they are in fact capable of exercising.” 645 F.2d at 419. Thus, “[s]o 

long as the investor has the right to control the asset he has 

purchased, he is not dependent on the promoter or on a third party 

for ‘those essential managerial efforts which affect the failure or 

success of the enterprise.’” Id. at 421 (quoting Sec. & Exch. Comm’n 

v. Glenn W. Turner Enters., Inc., 474 F.2d 476, 482 (9th Cir. 1973)). 

¶ 26 In recognizing that general partnership powers may be 

illusory, however, the court identified three tests for determining 

whether purported general partners are, in reality, dependent on 

the entrepreneurial or managerial skills of others. The party 

alleging that the interest is an investment contract must establish 

that 
16

(1) an agreement among the parties leaves so 

little power in the hands of the partner or 

venturer that the arrangement in fact 

distributes power as would a limited 

partnership; or (2) the partner or venturer is so 

inexperienced and unknowledgeable in 

business affairs that he is incapable of 

intelligently exercising his partnership or 

venture powers; or (3) the partner or venturer 

is so dependent on some unique 

entrepreneurial or managerial ability of the 

promoter or manager that he cannot replace 

the manager of the enterprise or otherwise 

exercise meaningful partnership or venture 

powers. 

Id. at 424.5 Many federal courts of appeals have expressly adopted 

these tests. See, e.g., Sec. & Exch. Comm’n v. Schooler, 905 F.3d 

1107, 1112 (9th Cir. 2018); Sec. & Exch. Comm’n v. Shields, 744 

F.3d 633, 644 (10th Cir. 2014); United States v. Leonard, 529 F.3d

83, 90-91 (2d Cir. 2008); Sec. & Exch. Comm’n v. Merch. Capital, 

LLC, 483 F.3d 747, 755-66 (11th Cir. 2007); Stone v. Kirk, 8 F.3d 

1079, 1086 (6th Cir. 1993); Rivanna Trawlers Unlimited v. 

Thompson Trawlers, Inc., 840 F.2d 236, 241 (4th Cir. 1988). As has 

 

5 The party claiming that the interest is an investment contract has

the burden of proof. See, e.g., Sec. & Exch. Comm’n v. Arcturus 

Corp., 928 F.3d 400, 410 (5th Cir. 2019); Banghart v. Hollywood 

Gen. P’ship, 902 F.2d 805, 808 (10th Cir. 1990).
17

this court. See, e.g., HEI I, ¶ 24; Feigin v. Dig. Interactive Assocs., 

Inc., 987 P.2d 876, 882 (Colo. App. 1999). 

¶ 27 On all this, the parties appear to agree; no party takes issue 

with Williamson’s characterization of the Howey test or with the 

three tests set forth in Williamson for determining whether an 

ostensible general partnership interest is actually an investment 

contract.6 The Commissioner and defendants part company, 

however, on secondary legal principles that put flesh on the bones 

of these general precepts. 

3. The Williamson Presumption

¶ 28 The strong presumption that a general partnership interest 

isn’t an investment contract — the presumption rejected by the 

division in HEI I — derives from the following passage in Williamson: 

[A]n investor who claims his general 

partnership or joint venture interest is an 

investment contract has a difficult burden to 

overcome. On the face of a partnership 

agreement, the investor retains substantial 

control over his investment and an ability to 

protect himself from the managing partner or 

hired manager. Such an investor must 

 

6 In 2011, the trial court ruled against the Commissioner on the 

first Williamson test. The Commissioner didn’t cross-appeal that 

ruling.
18

demonstrate that, in spite of the partnership 

form which the investment took, he was so 

dependent on the promoter or on a third party 

that he was in fact unable to exercise 

meaningful partnership powers.

645 F.2d at 424; see also id. at 425 (characterizing the presumption 

as “an extremely difficult factual burden”). The court said this after 

surveying federal cases dealing with similar interests; it summed up 

by saying, “the courts that have ruled on the issue have held that a 

general partnership or joint venture interest generally cannot be an 

investment contract under the federal securities acts.” Id. at 421. 

Although the court didn’t use the word “presumption” (as the HEI I 

division pointed out), the existence of the presumption is the logical 

conclusion from the court’s recognition of a “general” rule and 

imposition of “an extremely difficult factual burden” to overcome the 

general rule. Numerous federal circuit courts of appeals, including 

the Fifth Circuit itself, have so recognized. See, e.g., Shields, 744 

F.3d at 644; Merch. Cap., LLC, 483 F.3d at 755; Banghart v. 

Hollywood Gen. P’ship, 902 F.2d 805, 807-08 (10th Cir. 1990); 

Rivanna Trawlers Unlimited, 840 F.2d at 240-41; Youmans v. Simon, 
19

791 F.2d 341, 346 (5th Cir. 1986); Odom v. Slavik, 703 F.2d 212, 

215 (6th Cir. 1983).7

¶ 29 The presumption is justified, these courts say, based on the 

powers typically granted to general partners. These often include 

the powers to participate in the management and control of the 

partnership, act on behalf of the partnership, bind the partnership 

by their actions, remove a managing partner or entity, and dissolve 

the partnership. General partners are also individually liable for 

the partnership’s liabilities. Sec. & Exch. Comm’n v. Arcturus Corp., 

928 F.3d 400, 410 (5th Cir. 2019); Youmans, 791 F.2d at 346; 

Williamson, 645 F.2d at 421-22.

¶ 30 And because these partnership powers provide general 

partners with leverage and the ability to protect themselves, “[a]n 

investor who is offered an interest in a general partnership or joint 

venture should be on notice . . . that his ownership rights are 

significant, and that the federal securities acts will not protect him 

 

7 As have state courts, including the Colorado Court of Appeals. 

See, e.g., Joseph v. Mieka Corp., 2012 COA 84, ¶ 17; Ak’s Daks 

Commc’ns, Inc. v. Md. Sec. Div., 771 A.2d 487, 497 (Md. Ct. Spec.

App. 2001); State v. Kramer, 804 S.W.2d 845, 848 (Mo. Ct. App. 

1991).
20

from a mere failure to exercise his rights.” Williamson, 645 F.2d at 

422.

¶ 31 Recently, the Fifth Circuit summed up the rationale for the 

Williamson presumption as follows: 

[P]artners in a general partnership can guard 

“their own interests” with their “inherent 

[partnership] powers” and do not need 

protection from securities laws — they can “act 

on behalf of the partnership”; “bind their 

partners by their actions”; “dissolve the 

partnership”; and “are personally liable for all 

liabilities of the partnership.” General 

partners are, in short, “entrepreneurs, not 

investors.” 

Arcturus, 928 F.3d at 410 (citation omitted).8 

 

8 Another division of this court has expressed a similar rationale for 

the presumption: 

A general partnership provides its partners 

with an equal right in the management and 

conduct of the partnership business, and 

general partners are jointly and severally liable 

for the obligations of the general partnership. 

See §§ 7-60-115(1), 7-60-118(1), C.R.S. 2002. 

The Williamson ruling adheres to these 

principles in that a partnership interest is 

presumed not to be an investment contract to 

the extent that partners have a legal right to 

participate in the management of the 

partnership. 

Toothman v. Freeborn & Peters, 80 P.3d 804, 812 (Colo. App. 2002).
21

¶ 32 This strong presumption that general partnership interests 

aren’t investment contracts is widely applied by federal and state 

courts alike. See, e.g., Schooler, 905 F.3d at 1112; Shields, 744 

F.3d at 643; Rivanna Trawlers Unlimited, 840 F.2d at 242;9 Gordon 

v. Terry, 684 F.2d 736, 741 (11th Cir. 1983); Slavik, 703 F.2d at 

215; Sec. & Exch. Comm’n v. Shiner, 268 F. Supp. 2d 1333, 1340-44 

(S.D. Fla. 2003); Great Lakes Chem. Corp. v. Monsanto Co., 96 F. 

Supp. 2d 376, 391 (D. Del. 2000); Sec. & Exch. Comm’n v. Telecom 

Mktg., Inc., 888 F. Supp. 1160, 1165 (N.D. Ga. 1995); Kline Hotel 

Partners v. Aircoa Equity Interests, Inc., 725 F. Supp. 479, 481 (D. 

Colo. 1989); Power Petroleum, Inc. v. P & G Mining Co., Inc., 682 F. 

Supp. 492, 493-94 (D. Colo. 1988); Roark v. Belvedere, Ltd., 633 F. 

Supp. 765, 767 (S.D. Ohio 1985); McConnell v. Frank Howard Allen 

 

9 Contrary to the division’s assertion in Rome v. HEI Resources, Inc., 

2014 COA 160, ¶ 35 (HEI I), the Fourth Circuit hasn’t 

“inconsistently applied Williamson,” at least when it comes to 

general partnership interests. The case the division cited that 

didn’t apply the presumption, Bailey v. J.W.K. Props., Inc., 904 F.2d 

918 (4th Cir. 1990), dealt with an enterprise that “did not involve 

the formal structure and protection of a general partnership.” Id. at 

923 (distinguishing the contracts before the court from the general 

partnership interests at issue in Rivanna Trawlers Unlimited v. 

Thompson Trawlers, Inc., 840 F.2d 236 (4th Cir. 1988)). 
22

& Co., 574 F. Supp. 781, 786 (N.D. Cal. 1983); Westlake v. Abrams, 

565 F. Supp. 1330, 1343 (N.D. Ga. 1983); Nutek Info. Sys., Inc. v. 

Ariz. Corp. Comm’n, 977 P.2d 826, 830 (Ariz. Ct. App. 1998); Corp. 

E. Assocs. v. Meester, 442 N.W.2d 105, 107 (Iowa 1989); Ak’s Daks 

Commc’ns, Inc. v. Md. Sec. Div., 771 A.2d 487, 497 (Md. Ct. Spec. 

App. 2001); Bahre v. Pearl, 595 A.2d 1027, 1031 (Me. 1991); Russell 

v. French & Assocs., Inc., 709 S.W.2d 312, 314 (Tex. App. 1986).10

¶ 33 Indeed, apart from one case taking an even more extreme view 

of general partnership interests as shielded from the securities 

laws, we haven’t found any published decision of any court holding 

that there is no such presumption: the Williamson presumption is 

prevailing federal law.11 This makes HEI I a true outlier. And given 

 

10 The Williamson presumption isn’t without critics. See Kenneth L. 

MacRitchie, General Partnerships and Similar Interests as 

“Securities” Under Federal and State Law, 32 Lincoln L. Rev. 29 

(2004-2005); J. William Callison, Changed Circumstances: 

Eliminating the Williamson Presumption that General Partnership 

Interests are Not Securities, 58 Bus. Law. 1373 (Aug. 2003). But it 

apparently hasn’t waned in popularity despite that criticism. 

11 The Third Circuit follows a stricter approach. If a general 

partnership agreement gives the usual general partnership powers 

to the general partners, then the partnership “interest does not 

qualify as a security primarily because the role of a general partner, 

by law, extends well beyond the permitted role of a passive 

investor.” Goodwin v. Elkins & Co., 730 F.2d 99, 103 (3d Cir. 1984).
23

that we must coordinate Colorado securities law with federal 

securities law, and that the Commissioner points to no purpose or 

policy of the CSA counseling otherwise in this context, we conclude 

that the HEI I division erred by rejecting the Williamson 

presumption. See § 11-51-101(3); Cagle, ¶ 27. 

¶ 34 Nonetheless, the Commissioner argues that because Colorado 

courts have departed from federal law in the securities context, we 

should do so here. He cites only Viatica Management in support. In 

that case, the division concluded that units in a trust were 

investment contracts because the investors who bought the units 

“relied entirely” on the managerial efforts of others for profits. 55 

P.3d at 267. But contrary to the Commissioner’s assertion, the 

division didn’t reject any interpretation of federal law; it held that 

the case’s facts were distinguishable from those in the federal case 

on which the defendant relied. Id. at 266-67; see Cagle, ¶ 26 

(recognizing this basis for the holding in Viatica Management). And 

in any event, as we have just noted, the Commissioner doesn’t point 

to anything in the language of the CSA, or any policy underlying it, 

that dictates a course different from the one federal courts have 

charted for analyzing general partnership interests. 
24

¶ 35 That could be the end of the matter. But we nevertheless 

address HEI I’s four stated reasons for rejecting the presumption. 

a. Economic Realities

¶ 36 The prior division concluded that applying the presumption “is 

contrary to Colorado and federal law that requires courts to look at 

substantive economic realities, not form.” HEI I, ¶ 41. But the 

Williamson presumption reflects the economic realities of being a 

general partner; that status ordinarily carries with it considerable 

legal rights to control the venture. See Williamson, 645 F.2d at 424 

(“So long as the investor retains ultimate control, he has the power 

over the investment and the access to information about it which is 

necessary to protect against any unwilling dependence on the 

manager.”); Dig. Interactive, 987 P.2d at 881 (expressly recognizing 

that the Williamson framework is based on “economic reality”).

¶ 37 Courts applying the Williamson presumption don’t see any 

tension between it and the requirement to consider economic 

realities. To the contrary, they expressly acknowledge that 

economic realities control and see the presumption, and the tests 

that may be used to try to overcome it, as consistent with such 

realities. See, e.g., Arcturus, 928 F.3d at 410-11; Youmans, 791 
25

F.2d at 345-46; Slavik, 703 F.2d at 216; Telecom Mktg., 888 F. 

Supp. at 1165; Roark, 633 F. Supp. at 767; McConnell, 574 F. 

Supp. at 785-86; Meester, 442 N.W.2d at 107. 

b. Applying the Presumption

¶ 38 The prior division said that it isn’t clear how courts are 

supposed to apply the presumption because “no court has 

articulated the presumption in a manner that enables trial courts to 

reliably apply” it. HEI I, ¶ 42. But courts across the country have 

been applying the presumption for decades, and we haven’t found 

any cases expressing difficulty in applying it. Presumptions aren’t 

uncommon in the law (as HEI I notes). We don’t think it likely that 

courts would have any difficulty applying this one. At bottom, it 

sets a high burden of factual proof for the one seeking to overcome 

it, and thus the inquiry ultimately comes down to whether the 

degree of control possessed by the ostensible general partners is 

real or illusory. Trial courts are perfectly capable of making such 

judgments. 

c. Policy Judgment

¶ 39 The prior division also said that, because “the resolution of 

what weight a presumption has and whether it disappears upon 
26

presentation of sufficient rebuttal evidence depends on policy 

judgments,” it is the General Assembly’s prerogative to decide if it 

applies. Id. at ¶ 45. The General Assembly, however, has made a 

policy judgment: the CSA “shall be coordinated” with federal 

securities law “to the extent coordination is consistent with both the 

purposes and the provisions of this article.” § 11-51-101(3) 

(emphasis added). And the supreme court has held that the CSA’s 

purposes and provisions align with those of the federal securities 

acts. Cagle, ¶ 24. To put a finer point on it, the General Assembly 

has made a policy judgment to follow federal law, and the 

presumption is prevailing federal law. See id. at ¶¶ 20-27 (following 

federal case law interpreting federal statutes when interpreting the 

CSA). 

d. Necessity of the Presumption

¶ 40 The prior division believed that the presumption is “wholly 

unnecessary” because the party alleging that a general partnership 

interest is an investment contract carries the burden of proof and 

persuasion anyway. HEI I, ¶¶ 47-48. But the presumption 

provides a degree of certainty that is essential for business 

transactions. In forming or joining a general partnership, partners 
27

are put on notice that, so long as the partners’ powers are real, the 

securities laws won’t protect them, see Arcturus, 928 F.3d at 413 

(the joint venture agreements “clearly state that the venture is not a 

security, putting the investors ‘on notice’ that ‘federal securities 

acts’ will not protect them” (quoting Williamson, 645 F.2d at 422)), 

and the presumption also gives promoters notice of the regulatory 

requirements with which they must comply. In addition, the 

presumption serves as a guard-rail in assuring that securities laws 

aren’t turned into general antifraud provisions allowing general 

partners to sue their copartners or the managers for alleged 

securities violations. See Goodwin v. Elkins & Co., 730 F.2d 99, 

113 (3d Cir. 1984) (“[T]he federal securities laws are not properly 

invoked to protect one general partner from the deceit of his 

copartners.”) (Seitz, C.J., concurring); see also Landreth Timber Co. 

v. Landreth, 471 U.S. 681, 690 (1985) (the federal securities acts 

are intended to protect “passive” investors, not “active 

entrepreneur[s]”); Marine Bank v. Weaver, 455 U.S. 551, 556 (1982) 
28

(“Congress, in enacting the securities laws, did not intend to provide 

a broad federal remedy for all fraud.”).12

¶ 41 In sum, we conclude that where the parties’ agreement 

purports to give participants rights typical of those possessed by a 

general partner, see Shields, 744 F.3d at 644, there is a strong 

presumption that the general partnership interests aren’t 

investment contracts. Because it is undisputed that the JVA gives 

partners partnership powers, the Williamson presumption applies in 

this case. 

¶ 42 The trial court, bound of course by HEI I, didn’t apply the 

presumption. We therefore reverse the trial court’s judgment and 

remand for reconsideration. On remand, the court must make 

factual findings as to whether the interests are investment 

 

12 In fact, this case shows how the Williamson presumption can 

make a difference. Applying the presumption, the trial court found 

that the general partnership interests aren’t investment contracts. 

On remand, following the prior division’s direction not to apply the 

presumption, the trial court found, on the same record, that the 

general partnership interests are investment contracts. 
29

contracts under the second and third Williamson tests, applying the 

presumption, and based on the existing record alone.13 

¶ 43 We next examine other relevant legal principles that must 

guide the court in addressing the second and third Williamson tests.

4. Relevant Business Experience 

¶ 44 In HEI I, the division held that under the second Williamson 

test “there must be substantial collective experience in the specific 

business of the venture such that the partners, as a whole, need 

not rely solely on the promoters or third parties for the success of 

the venture or to meaningfully exercise their partnership powers.” 

HEI I, ¶ 58 (emphasis added). On remand, the trial court found 

that the general partners collectively lacked venture-specific 

experience. (Before the first appeal, the trial court found that the 

general partners had sufficient general business experience to 

protect their interests by meaningfully exercising their powers.) 

 

13 We realize that the trial court did this once before in 2013. But 

the court on remand took evidence in determining liability and 

remedies that may bear on these issues. And the court didn’t have 

the benefit of the guidance set forth below relating to the second 

and third tests. 
30

Defendants contend that the HEI I division erred by requiring 

collective venture-specific experience. We agree.

¶ 45 In Williamson, the Fifth Circuit said that the relevant inquiry 

under the second test is whether “the partner or venturer is so 

inexperienced and unknowledgeable in business affairs that he is 

incapable of intelligently exercising his partnership or venture 

power.” 645 F.2d at 424 (emphasis added). True, the Fifth Circuit, 

in Long v. Schultz Cattle Co., 881 F.2d 129, 134 n.3 (5th Cir. 1989), 

later said that “the knowledge inquiry must be tied to the nature of 

the underlying venture.” But that isn’t the same as saying that the 

venture-specific experience is required. Rather, it means only that 

“the investors’ expertise must be considered in relation to the 

nature of the underlying venture.” Id. at 135.14 

¶ 46 The Fifth Circuit much more recently addressed this issue in 

Arcturus. In discussing this statement from Long (a case which 

didn’t even involve a general partnership), the court said, “[t]his 

 

14 In a post-Long decision, the Fifth Circuit pointed out that Long 

didn’t involve a joint venture, and therefore the interests in that 

case didn’t enjoy the presumption of active involvement. Nunez v. 

Robin, 415 F. App’x 586, 591 (5th Cir. 1991). 
31

requirement . . . should not be read to suggest that investors 

necessarily need a specialized background. If the evidence shows 

that an investor can intelligently control his investment, then courts 

do not require specialized experience.” Arcturus, 928 F.3d at 417-

18 (emphasis added). 

¶ 47 So although venture-specific experience is unquestionably 

relevant, it isn’t necessarily required. What matters is whether, 

considering the nature of the business, the partners collectively 

possess sufficient knowledge and experience to intelligently exercise 

their powers. See, e.g., Robinson v. Glynn, 349 F.3d 166, 170-72 

(4th Cir. 2003) (specialized experience wasn’t required where 

investor, “a savvy and experienced businessman,” showed he was 

capable of managing his investment); Holden v. Hagopian, 978 F.2d 

1115, 1121 (9th Cir. 1992) (rejecting argument that partners 

weren’t able to intelligently exercise their partnership powers 

because they lacked specialized experience and stating that, 

instead, “[t]he proper inquiry is whether the partners are 

inexperienced or unknowledgeable in ‘business affairs’ generally”); 

Koch v. Hankins, 928 F.2d 1471, 1479 (9th Cir. 1991) (“While it is 

undisputed that none of the investors had prior experience in jojoba 
32

farming, that draws the question too narrowly.”); Deutsch Energy 

Co. v. Mazur, 813 F.2d 1567, 1570 (9th Cir. 1987) (even though “it 

appears to be an open question whether sophistication in one field 

of business will always transfer to another,” Williamson looks to an 

investor’s “level of general business expertise”); Youmans, 791 F.2d 

at 347 (specialized experience wasn’t required where the plaintiff, a 

physician who invested in real estate projects, had “also engaged in 

a number of business transactions not connected with [the 

defendants]”); Williamson, 645 F.2d at 425 (specialized experience 

wasn’t required where an investor’s experience on the Frito-Lay 

board was “business experience and knowledge adequate to the 

exercise of partnership powers in a real estate joint venture”).15

 

15 We recognize that Securities and Exchange Commission v. Shields, 

another case on which HEI I relied, says that “[t]he experience and 

knowledge referred to in Williamson ‘focus[es] on the experience of 

investors in the particular business, not the general experience of 

the partners.’” 744 F.3d 633, 647 (10th Cir. 2014) (quoting Sec. & 

Exch. Comm’n v. Merch. Capital, LLC, 483 F.3d 747, 762 (11th Cir. 

2007)). But as the Fifth Circuit recently made clear in Arcturus, 

that reading of Williamson is incorrect. 
33

¶ 48 Courts have considered the following nonexclusive factors to 

determine whether the partners possessed sufficient knowledge and 

experience: 

(1) Do the partners have prior business experience 

generally? See Arcturus, 928 F.3d at 419; Koch, 928 F.2d 

at 1479; Deutsch Energy Co., 813 F.2d at 1570; 

Youmans, 791 F.2d at 347. 

(2) What kind of prior business experience do the partners 

have, not just as investors but as businesspeople (such 

as by holding executive positions in organizations)? See 

Robinson, 349 F.3d at 171; Williamson, 645 F.2d at 424-

25.

(3) Are the partners otherwise financially sophisticated? See 

Arcturus, 928 F.3d at 420; Koch, 928 F.2d at 1479.

(4) Did the partners represent that they considered 

themselves experienced in business affairs generally? 

See Arcturus, 928 F.3d at 420; Holden, 978 F.2d at 1121.

(5) Do the partners have prior experience in the same type of 

enterprise? See Arcturus, 928 F.3d at 419; Deutsch 

Energy Co., 813 F.2d at 1570.
34

(6) Is the nature of the venture such that venture-specific 

experience is essential to enable the partners to 

intelligently exercise their powers? See Koch, 928 F.2d at 

1478-79.

(7) Did the partners consult advisors or legal counsel for 

advice or assistance, or have they indicated that they 

will? See Arcturus, 928 F.3d at 419; Robinson, 349 F.3d 

at 171; Banghart, 902 F.2d at 808 n.5; Rivanna Trawlers 

Unlimited, 840 F.2d at 242 n.10; Deutsch Energy Co., 813 

F.2d at 1570.

(8) Did the partners in fact exercise their partnership 

powers? See Arcturus, 928 F.3d at 419; Robinson, 349 

F.3d at 171; Koch, 928 F.2d at 1474; Rivanna Trawlers 

Unlimited, 840 F.2d at 242; Casablanca Prods., Inc. v. 

Pace Int’l Res., Inc., 697 F. Supp. 1563, 1567 (D. Or. 

1988). 

(9) Did the partners previously invest in one of the 

defendant’s businesses? See Arcturus, 928 F.3d at 420; 

Williamson, 645 F.2d at 425.
35

(10) How did the partnership acquire its members? See 

Arcturus, 928 F.3d at 418.

(11) To what extent do the partners have meaningful access to 

information about the venture? See Sec. & Exch. Comm’n 

v. Sethi, 910 F.3d 198, 205 (5th Cir. 2018); Shields, 744 

F.3d at 648.16

¶ 49 On remand, the trial court must make new factual findings 

under the second Williamson test, applying the strong presumption 

that a general partnership interest isn’t an investment contract and 

analyzing the partners’ collective experience under the foregoing 

factors and any other factors relevant given the nature of the 

venture. 

5. Replaceability of the Manager

¶ 50 Defendants also contend that the trial court erred by 

misconstruing the third Williamson test.17 Specifically, they argue 

that the court erred by narrowly focusing on whether any of the 

 

16 We don’t mean to imply that these factors are exclusive. 

Depending on the circumstances, other facts may be relevant to 

this inquiry. Some of these factors, such as access to information, 

may also be relevant to the analysis under the third Williamson test. 

17 The HEI I division didn’t address the third Williamson test.
36

general partners themselves possessed the skills necessary to 

replace the managing partner (HEI or HEDC); that is, whether any 

of them could step into the managing partner’s shoes. However, it 

isn’t entirely clear from the record if the court, in determining 

whether the partners were dependent on HEI and HEDC’s unique 

knowledge or abilities, considered only the partners themselves as 

potential replacements. 

¶ 51 We agree with defendants that any such focus would be “too 

narrow. Under this part of Williamson, investors must show that 

‘there is no reasonable replacement’ for the manager.” Holden, 978 

F.2d at 1123 (quoting Williamson, 645 F.2d at 423). Does the 

managing partner have “some particular non-replaceable 

expertise?” Williamson, 645 F.2d at 423. Or does the managing 

partner have some “unique understanding” of the subject of the 

venture? Id. Or does the managing partner have some “unusual 

experience and ability in running that particular business” without 

which the venture can’t succeed? Id. In short, are the partners “so 

dependent on a particular manager that they cannot replace him or 

otherwise exercise ultimate control?” Id. at 424. 
37

¶ 52 On remand, the trial court should again make findings on this 

test, applying the strong presumption and taking into account 

Williamson’s caution that what ultimately matters is whether the 

partners realistically could exercise their power to replace the 

manager if they wanted to do so. 

6. “Catch-All” Economic Realities

¶ 53 On remand, the trial court analyzed whether the interests are 

investment contracts by looking at “other economic realities” 

independently of the Williamson tests. It did so because the division 

in HEI I told it to determine whether the “interests are securities 

under the second and third Williamson factors and any other 

‘catch-all’ economic realities.” HEI I, ¶ 61.

¶ 54 On appeal, defendants challenge the trial court’s findings, 

arguing that the court “failed to separately evaluate the economic 

realities evidence that was particular to” the specific joint venture at 

issue, referred to as LO9, and “gave undue weight to certain facts 

that, in reality, had little or no bearing on the parties’ ability to 

exercise control.” They also argue that the court’s approach was, in 

certain respects, inconsistent with Williamson. 
38

¶ 55 Because the trial court (understandably following HEI I) didn’t 

apply the Williamson presumption, we must reverse its 

determination on this issue as well. To assist the court on remand, 

we offer the following guidance on the role of “other economic 

realities” in this context. 

¶ 56 In HEI I, the division said, “[o]ther economic realities 

underlying the transaction may also ‘give rise to such a dependence 

on the promoter or manager that the exercise of partnership powers 

[is] effectively precluded.’” Id. at ¶ 25 (quoting Williamson, 645 F.2d 

at 424 n.15). We don’t quarrel with the HEI I division’s conclusion 

that there may be considerations in addition to the three Williamson 

tests that bear on whether an ostensible general partnership 

interest is an investment contract. Williamson said so. Williamson, 

645 F.2d at 424 & n.15 (referring to the three tests as “example[s]” 

and noting that those were “the only factors relevant to the issue 

that are at all implicated by the facts of this case”); see also 

Arcturus, 928 F.3d at 411. But if facts — i.e., economic realities —

lead to the conclusion that the interests aren’t investment contracts 

under the Williamson tests, those same facts shouldn’t be 

repackaged under a “catch-all economic realities” test to reach a 
39

contrary conclusion, absent some articulable reason akin to the 

Williamson tests (and consistent with the underlying goal of the 

Williamson tests) to do so. Applying the “catch-all economic 

realities” in an amorphous way, untethered to the goal of 

determining whether the general partners’ power “is a real one 

which they are in fact capable of exercising,” Williamson, 645 F.2d 

at 419, would significantly impair the utility of the entire Williamson 

framework. 

¶ 57 The cases on which HEI I relied when discussing the economic 

realities test — Digital Interactive, Toothman, and Joseph v. Mieka 

Corp., 2012 COA 84 — actually don’t have much to say about 

looking outside the Williamson tests. 

¶ 58 In Digital Interactive, the division recognized the three 

Williamson tests and turned immediately to facts — such as who 

the interests were marketed to and the number of partners — that 

it thought relevant to those tests. 987 P.2d at 882. So did the 

division in Mieka Corp., ¶ 20 (looking to “the sophistication and 

vulnerability of the solicited investors” and the partners’ lack of 

expertise, among other things). 
40

¶ 59 Toothman involved a limited liability partnership, not a general 

partnership, and because of differences in the two forms of 

enterprise, the division rejected the entire Williamson framework. 

80 P.3d at 812-13. Its analysis of various facts therefore says little, 

if anything, about general partnerships, and certainly doesn’t 

support the notion that a court must always apply a general “other 

economic realities” test even when the economic realities-based 

Williamson tests are sufficient. 

¶ 60 All this is to say that (1) many, perhaps all, of the facts 

analyzed by the trial court as “other economic realities” are relevant 

to one or more of the Williamson tests and (2) if the economic 

realities of the case need to be accounted for in some way in which 

the Williamson tests prove inadequate, that needs to be articulated 

in terms of some relatively concrete principle that will assist the 

court in deciding whether the partners were “led to expect profits 

derived from the entrepreneurial or managerial efforts of others.” 

Toothman, 80 P.3d at 811; see Howey, 328 U.S. at 298-99; 

Williamson, 645 F.2d at 417-18. 
41

III. Conclusion

¶ 61 The judgment is reversed and the case is remanded to the trial 

court to redetermine whether the joint venture interests are 

investment contracts under the second and third Williamson tests, 

consistent with the views stated herein. We acknowledge the trial 

court’s commendable efforts in this case. And we acknowledge that 

it likely frustrates the court to be instructed to do one thing and 

then be told to do something else. But we have a duty to 

independently examine the appeal’s merits notwithstanding the 

prior division’s decision. Doing so leads us to conclude that the 

trial court must once more resolve the threshold issue of whether 

the interests in the joint ventures are investment contracts.18

JUDGE WELLING and JUDGE HAWTHORNE concur.

 

18 We decline defendants’ invitation to make this determination in 

the first instance.