Court Opinion

ID: 4284792
Source: CourtListenerOpinion
Date Created: 2018-06-15 15:07:10.958474+00
Date Added: 2024-06-11T14:35:31.215014
License: Public Domain

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.

                                                                   SUMMARY
                                                                June 14, 2018

                                2018COA83

No. 14CA1332, People v. Thompson — Crimes — Securities —
Fraud and Other Prohibited Conduct

     A division of the court of appeals applies the family

resemblance test, introduced in Colorado by People v. Mendenhall,

2015 COA 107M, to conclude that substantial evidence supports (1)

a decision that the promissory note is a security and (2) the

criminal conviction for securities fraud. The division further

concludes that the laws regarding the definition of a security and

the unit of prosecution for securities fraud were not well settled at

the time of defendant’s conviction, and, because these issues were

not raised before the trial court, any error with respect to these laws

was not obvious and does not constitute reversible error. The

division affirms the conviction and sentence for two counts of

securities fraud and one count of theft.
COLORADO COURT OF APPEALS                                       2018COA83

Court of Appeals No. 14CA1332
Douglas County District Court No. 12CR277
Honorable Paul A. King, Judge

The People of the State of Colorado,

Plaintiff-Appellee,

v.

Steven Curtis Thompson,

Defendant-Appellant.

                            JUDGMENT AFFIRMED

                                  Division III
                         Opinion by JUDGE RICHMAN
                          Webb and Fox, JJ., concur

                          Announced June 14, 2018

Cynthia H. Coffman, Attorney General, Nicole D. Wiggins, Assistant Attorney
General, Denver, Colorado, for Plaintiff-Appellee

Douglas K. Wilson, Colorado State Public Defender, Elizabeth Porter-Merrill ,
Deputy State Public Defender, Denver, Colorado, for Defendant-Appellant
¶1    Defendant, Steven Curtis Thompson, appeals the judgment of

 conviction entered upon jury verdicts finding him guilty of two

 counts of securities fraud and one count of theft. We affirm.

                            I. Background

¶2    The People charged defendant based on transactions he had

 entered into with the victims, Tom and Debbie Witt (the Witts).

 Defendant was the sole member of SGD Timber Canyon LLC, (SGD),

 which held an interest in sixty-three undeveloped lots in the Timber

 Ridge subdivision. By October 2009, these lots were in foreclosure,

 and in February 2010, SGD filed for bankruptcy. Defendant did not

 disclose either of these facts to the Witts when he negotiated the

 transactions that gave rise to this case.

¶3    The Witts loaned defendant $200,000 to acquire a lot in

 Timber Ridge and another $200,000 for construction of a home on

 the lot, with the understanding that the loans would be repaid with

 a profit share of as much as $400,000 when the home was sold to a

 prequalified buyer. In September 2010, the Witts wired $400,000

 to defendant’s accounts.

¶4    Later, at defendant’s urging, the Witts increased the loan

 amount to $2.4 million and converted their investment into a
                                   1
 “bridge loan” to defendant, who represented that the proceeds

 would be used for continued development of Timber Ridge.

 Defendant told the Witts that the investment would be “no risk” to

 them and that they would receive a guaranteed profit. He

 suggested that the investment was a “no brainer” because he would

 secure the loan with other valuable property he owned. The Witts

 agreed to the new arrangement because they felt it was a “safer

 opportunity.”

¶5    The Witts wired an additional $2 million to defendant’s

 account in October 2010, and the parties executed a promissory

 note and guarantee agreement. Pursuant to the documents,

 defendant agreed to repay the loan with a “profit” of $240,000, all

 bank fees, and 8% annual interest by January 2011. The

 promissory note was “secured by” defendant’s “primary and second

 residences,” with collateral to convert to twenty-four lots in Timber

 Ridge “upon closing and final purchase of Timber Ridge.”

¶6    Defendant did not tell the Witts that the collateralized

 properties were “heavily leveraged.” He incorrectly listed the

 address of his “second residence” on the note. He represented the

 value of the Timber Ridge development to be $31 million, but
                                   2
 mortgagee Flagstar Bank estimated the market value at $6.75

 million. He did not reveal that Flagstar had initiated foreclosure

 proceedings, which had been delayed by SGD’s bankruptcy petition.

 The Witts testified that they would not have given any money to

 defendant had they known his true financial condition.

¶7    Defendant used the money on items not related to Timber

 Ridge, including payment of his own attorney fees, checks made out

 to himself or for “cash,” and paying off the note on, and making

 improvements to, his “second residence.”

¶8    In December 2010, Flagstar Bank completed foreclosure

 proceedings. Defendant did not tell the Witts of the foreclosure and

 instead told them that he was “moving forward” with the property.

 But he never developed the property in Timber Ridge.

¶9    In January 2011, when the Witts’ note came due, defendant

 defaulted on the payment. He attempted to negotiate a new note

 with them, offering additional collateral, but the Witts refused.

 Defendant thereafter filed for personal bankruptcy, and his

 “primary residence” was sold at a public trustee sale. The Witts did

 not receive any money from the sale. Defendant eventually repaid

                                   3
  only $70,000 to the Witts. The Witts brought a civil suit against

  defendant, but did not recover any further monies from him.

¶ 10   The People charged defendant with two counts of securities

  fraud, under sections 11-51-501(1)(b) and (1)(c), C.R.S. 2017, and

  one count of theft under section 18-4-401(1)(b), C.R.S. 2017.

  Defendant’s theory of defense was that he lacked the mens rea for

  the charged offenses. He argued that he was unable to repay the

  Witts because his business plan had failed.

¶ 11   A jury found defendant guilty of all three counts. The trial

  court sentenced him to twelve years in the custody of the

  Department of Corrections for each of the securities counts, to be

  served concurrently, and eighteen years for the theft conviction, to

  be served consecutively to the other sentences.

¶ 12   On appeal, defendant claims that (1) insufficient evidence

  supports his securities fraud convictions; (2) the trial court erred by

  tendering an inaccurate jury instruction regarding the definition of

  a security; (3) insufficient evidence supports his theft conviction; (4)

  the trial court erred by admitting propensity evidence; (5) the two

  securities convictions must be merged; and (6) his sentences must

                                     4
  all run concurrently. We address and reject each contention in

  turn.

                  II. Sufficient Evidence of Securities Fraud

¶ 13      First, defendant claims that the evidence is insufficient to

  support his securities fraud convictions because the promissory

  note and guarantee he provided to the Witts do not constitute a

  security. The jury was instructed, as relevant here and pursuant to

  section 11-51-201(17), C.R.S. 2017, that security “means any note,

  . . . or . . . guarantee of. . . any of the foregoing.” Defendant

  correctly states that securities fraud cannot occur absent a security

  and argues that, despite the statutory definition, not all notes are

  securities. See People v. Mendenhall, 2015 COA 107M.

                          A. Definition of a Security

¶ 14      The securities fraud statute requires that fraud must be

  perpetrated in connection with the offer, sale, or purchase of any

  security. § 11-51-501(1). At the time of defendant’s trial, the test

  for determining whether a note was a security was “the presence of

  an investment in a common enterprise that is premised on a

  reasonable expectation of profits to be derived from the

  entrepren[e]urial or managerial efforts of others.” People v. Milne,
                                       5
  690 P.2d 829, 833 (Colo. 1984); see also Sec. & Exch. Comm’n v.

  W.J. Howey Co., 328 U.S. 293, 301 (1946) (“The test is whether the

  scheme involves an investment of money in a common enterprise

  with profits to come solely from the efforts of others.”). In Milne, the

  court concluded that the notes issued by the defendant were

  securities because the noteholders (1) “entrusted money with the

  defendant in return for ‘investment notes,’ with the expectation of

  receiving periodic interest payments in addition to repayment of the

  principal amount”; (2) “invested with the primary purpose of

  receiving profits”; and (3) “had no ability to control or manage the

  funds they invested or otherwise ensure that their promised return

  was actually paid.” 690 P.2d at 833-34.

¶ 15   The federal definition of securities, on which Colorado’s

  definition is based, is purposely broad “to regulate investments, in

  whatever form they are made and by whatever name they are

  called.” Reves v. Ernst & Young, 494 U.S. 56, 61 (1990).

  Recognizing “the virtually limitless scope of human ingenuity,

  especially in the creation of ‘countless and variable schemes devised

  by those who seek the use of the money of others on the promise of

  profits,’” Congress enacted a definition of “security” sufficiently
                                     6
  broad to encompass virtually any instrument that might be sold as

  an investment. Id. at 60-61 (citation omitted).

¶ 16   In 2015, the year after defendant’s trial, a division of this court

  held that the “family resemblance” test adopted by the Supreme

  Court in Reves applies to determine when a note is a security under

  the Colorado Securities Act (CSA). Mendenhall, ¶ 37.1

¶ 17   Under the family resemblance test, a note is presumed to be a

  security, but that presumption may be rebutted by a showing that

  the note strongly resembles instruments such as

            notes delivered in consumer financing; notes
            secured by a mortgage on a home; short-term
            notes secured by a lien on a small business or
            some of its assets; notes evidencing a
            “character” loan to a bank customer;
            short-term notes secured by an assignment of
            accounts receivable; notes which simply
            formalize an open-account debt incurred in the
            ordinary course of business; and notes
            evidencing loans by commercial banks for
            current operations.

  1In Reves v. Ernst & Young, 494 U.S. 56, 64 (1990), the Supreme
  Court did not overrule Securities & Exchange Commission v. W.J.
  Howey Co., 328 U.S. 293, 301 (1946), but distinguished it on the
  grounds that Howey addressed “investment contracts” rather than
  notes. The division in People v. Mendenhall, 2015 COA 107M, did
  not cite Milne or Howey or distinguish the facts of those cases. The
  People do not contest resolving this issue based on Mendenhall.
                                    7
  Id. at ¶ 33. This showing may be established by four factors, which

  we will describe and analyze below. See id. at ¶ 34.

                          B. Standard of Review

¶ 18   Defendant did not argue at trial that his promissory note was

  not a security, or that not all notes are securities. But he frames

  his claim on appeal as a sufficiency of the evidence claim and

  asserts that preservation is “not required.” Though he moved for

  judgment of acquittal, he only argued that the evidence was

  generally insufficient to support a finding of guilt on any of the

  charges. The People agree with defendant’s statement regarding

  issue preservation.

¶ 19   Ordinarily, a defendant may raise a sufficiency claim for the

  first time on appeal. People v. Garcia, 2012 COA 79, ¶ 35. When

  reviewing for sufficiency, we view the evidence in the light most

  favorable to the prosecution to determine if the conviction was

  supported beyond a reasonable doubt. Id. at ¶ 34. But defendant’s

  argument is no ordinary sufficiency challenge; rather, his claim is

  premised solely on a novel interpretation of the securities fraud

  statute.

                                     8
¶ 20   Some divisions of this court have held that when a defendant

  does not raise a sufficiency of evidence claim turning on a statutory

  interpretation in the trial court, his argument on appeal provides a

  basis for is reversal only if any error is plain. See People v. Kadell,

  2017 COA 124; People v. Maestas, (Colo. App. No. 11CA2084, Jan.

  15, 2015) (not published pursuant to C.A.R. 35(f)) (cert. granted Oct.

  26, 2015); People v. Lacallo, 2014 COA 78, ¶¶ 6, 20.

¶ 21   Other divisions have held that even in absence of preservation,

  we may reverse a conviction if it fails the substantial evidence test.

  See People v. McCoy, 2015 COA 76M, ¶ 37 (cert. granted Oct. 3,

  2016).

¶ 22   We need not resolve this conflict, because we conclude that

  even applying the broader substantial evidence test, defendant’s

  claim fails.

                                C. Analysis

¶ 23   Defendant does not argue that applying the definition of a

  security as it existed at the time of his trial — the “presence of an

  investment in a common enterprise that is premised on a

  reasonable expectation of profits to be derived from the

  entrepren[e]urial or managerial efforts of others” — was not
                                     9
  sufficiently established by the evidence. Milne, 690 P.2d at 833. He

  merely argues that his note was not a security (1) because it was for

  a term of less than nine months; and (2) it strongly resembles a

  note that is not a security under the family resemblance test,

  established in Colorado by Mendenhall, because it was an

  unconditional personal loan.

¶ 24   We reject defendant’s first argument. Under Reves, a note is

  presumed to be a security. 494 U.S. at 65. Citing a second circuit

  case, defendant argues that the presumption only applies if the

  note is for a period of longer than nine months. See Exch. Nat’l

  Bank v. Touche Ross & Co., 544 F.2d 1126 (2d Cir. 1976). But

  Reves explicitly declined to decide the question whether a note for a

  term of less than nine months was excepted from the presumption.
494 U.S. at 71. And Mendenhall makes no mention that the note

  must extend for at least nine months to be presumed a security.

  See Mendenhall, ¶ 32. Further, other circuit courts have held that

  the presumption does apply to notes maturing in less than nine

  months unless they are commercial paper. See, e.g., Sec. & Exch.

  Comm’n v. Reynolds Enters., Inc., 952 F.2d 1125, 1131-32 (9th Cir.

  1991) (finding nine-month exception does not apply to notes that
                                   10
  are “not commercial paper”); Holloway v. Peat, Marwick, Mitchell &

  Co., 900 F.2d 1485, 1488-89 (10th Cir. 1990) (holding that

  exception is limited to “prime quality negotiable commercial paper

  of a type not ordinarily purchased by the general public”); Sanders

  v. John Nuveen & Co., 463 F.2d 1075, 1079-80 (7th Cir. 1972)

  (same).

¶ 25   Nor do we agree with defendant’s argument that consideration

  of the family resemblance factors is sufficient to rebut the

  presumption that the promissory note is a security. Instead, we

  conclude that three of the four factors support a conclusion that the

  promissory note is a security.

¶ 26   The four factors are described as follows:

            First, we examine the transaction to assess the
            motivations that would prompt a reasonable
            seller and buyer to enter into it. If the seller’s
            purpose is to raise money for the general use
            of a business enterprise or to finance
            substantial investments and the buyer is
            interested primarily in the profit the note is
            expected to generate, the instrument is likely
            to be a “security.” If the note is exchanged to
            facilitate the purchase and sale of a minor
            asset or consumer good, to correct for the
            seller’s cash-flow difficulties, or to advance
            some other commercial or consumer purpose,
            on the other hand, the note is less sensibly
            described as a “security.”
                                    11
            Second, we examine the “plan of distribution”
            of the instrument, to determine whether it is
            an instrument in which there is “common
            trading for speculation or investment[.]”

            Third, we examine the reasonable expectations
            of the investing public: The Court will consider
            instruments to be “securities” on the basis of
            such public expectations, even where an
            economic analysis of the circumstances of the
            particular transaction might suggest that the
            instruments are not “securities” as used in
            that transaction.

            Finally, we examine whether some factor such
            as the existence of another regulatory scheme
            significantly reduces the risk of the
            instrument, thereby rendering application of
            the Securities Acts unnecessary.

  Reves, 494 U.S. at 66-67 (citations omitted).

¶ 27   With respect to the first factor, based on the Witts’ testimony

  alone, a reasonable jury could infer that defendant’s purpose was to

  raise money for the development of Timber Ridge properties and

  that the Witts’ interest was primarily to profit from advancing

  money to defendant. There was no suggestion that the Witts were

  purchasing a “minor asset” or a consumer good. The note promises

  that defendant will repay the $2.4 million, in addition to $240,000

                                   12
  profit, fees, and interest. (Emphasis added.) Under this factor, the

  note “is likely to be a ‘security.’” Id. at 66.

¶ 28   As to the second factor, the record does not include any

  evidence that the instrument obtained by the Witts was traded

  under a “plan of distribution.” But a transaction between only two

  entities may still be a security. See Nat’l Bank of Yugoslavia v.

  Drexel Burnham Lambert, Inc., 768 F. Supp. 1010, 1015-16

  (S.D.N.Y. 1991) (applying Reves).

¶ 29   With respect to the third factor, no evidence indicated the

  reasonable expectations of an “investing public,” but the Witts’

  expectation was that they would obtain a profit on their investment,

  plus interest, within a period of time. The Witts, as the investing

  public, would therefore reasonably view the transaction as an

  investment and the note as a security. See id. at 1016.

¶ 30   Finally, defendant suggests no “regulatory scheme,” and we

  are not aware of one, that so significantly reduced the investment

  risk as to make application of the CSA unnecessary. He suggests

  that the availability of a civil suit against him satisfies the Reves

  requirement of a “regulatory scheme,” but we disagree. Although

  civil suits provide a remedy for victims of fraud, the civil system
                                      13
  does not regulate the risks of a promissory note. Accordingly, we

  conclude that the fourth family resemblance factor weighs in favor

  of the presumption that the note is a security.

¶ 31   For these reasons, we conclude that the Witts’ investment,

  memorialized by the promissory note, was a transaction protected

  by the CSA. And it did not strongly resemble the family of

  transactions that are not securities.

¶ 32   In sum, we conclude that, after applying the four-factor test

  announced in Reves and adopted by Colorado in Mendenhall, the

  evidence, viewed as a whole and in the light most favorable to the

  prosecution, was “sufficient to support a rational conclusion that

  the defendant is guilty of [securities fraud] beyond a reasonable

  doubt.” McCoy, ¶ 37.

                III. Jury Instruction Defining “Security”

¶ 33   In instructing the jury, the trial court included the statutory

  definition of “security,” which includes “any note.” See

  § 11-51-201(17). Defendant did not object to the definition of

  security given to the jury, nor tender an alternative instruction.

  Nonetheless, defendant contends the trial court plainly erred by

                                    14
  denying “his right to a jury determination that the notes at issue

  were securities.” Mendenhall, ¶ 40. We disagree.

¶ 34   Plain error is error that is obvious. Obvious errors “must

  contravene (1) a clear statutory command; (2) a well-settled legal

  principle; or (3) Colorado case law.” Scott v. People, 2017 CO 16,

  ¶ 16 (quoting People v. Pollard, 2013 COA 31M, ¶ 40). “Moreover,

  an erroneous jury instruction does not normally constitute plain

  error where the issue is not contested at trial[.]” People v. Miller,

  113 P.3d 743, 750 (Colo. 2005). Because plain error requires that

  the error be obvious and any legal principles be “well settled,” we

  only consider the status of the law at the time of trial. People v.

  O’Connell, 134 P.3d 460, 465 (Colo. App. 2005).

¶ 35   Definitional jury instructions that accurately track the

  language of the applicable statute are generally proper and

  sufficient. People v. Houser, 2013 COA 11, ¶ 76.

¶ 36   Mendenhall was decided after defendant’s trial. Though

  federal case law concerning the Federal Securities Exchange Act of

  1934 and the Federal Securities Act of 1933 is persuasive, it does

  not settle the law governing the CSA. See United States v. McKye,

  734 F.3d 1104, 1110 (10th Cir. 2013) (“[T]he district court erred
                                     15
  when it instructed the jury that notes are securities.”); see also

  Reves, 494 U.S. at 63 (holding that not every note is a security). At

  the time of defendant’s trial, no Colorado case law directly

  addressed the issue of whether “any note” is a security.

¶ 37     Accordingly, we conclude that, at the time of defendant’s trial,

  the law was not well settled, and any error in the given jury

  instruction would not have been obvious or plain. See People v.

  Valdez, 2014 COA 125, ¶ 27 (“[W]here the law is unsettled, the trial

  court’s alleged error with respect to the law cannot constitute plain

  error.”); see also People v. Howard-Walker, 2017 COA 81M, ¶¶ 56-

  57 (finding no plain error on evidentiary issue where latest supreme

  court formulation occurred over a year after trial and no appellate

  case directly addressed particular issue raised) (cert. granted May

  21, 2018).

       IV. Two Convictions for Securities Fraud and Double Jeopardy

¶ 38     Defendant claims that his two convictions and sentences for

  securities fraud violated double jeopardy because they are

  alternative ways of committing the same offense, and therefore the

  two counts should be merged. But he did not raise this claim

                                     16
  before the trial court. As discussed in Part III, supra, the law is not

  well settled in this area, and we perceive no plain error.

                 A. Law of Merger and Double Jeopardy

¶ 39   We review de novo whether merger applies to criminal

  offenses. People v. Zweygardt, 2012 COA 119, ¶ 40. An

  unpreserved double jeopardy claim is reviewable for plain error.

  Reyna-Abarca v. People, 2017 CO 15, ¶¶ 45-46.

¶ 40   Unless a statute expressly authorizes multiple punishments

  for the same criminal offense, the Double Jeopardy Clauses of the

  United States and Colorado Constitutions prohibit “the imposition

  of multiple punishments for the same criminal conduct.” Woellhaf

  v. People, 105 P.3d 209, 214 (Colo. 2005); see U.S. Const. amends.

  V, XIV; Colo. Const. art. II, § 18. When a statute provides

  alternative ways of committing a single criminal offense, multiplicity

  concerns may materialize. Woellhaf, 105 P.3d at 214. In such

  cases, courts must determine “the legislatively prescribed unit of

  prosecution” and “whether the defendant’s conduct constitutes

  factually distinct offenses, that is, whether the conduct satisfies

  more than one defined unit of prosecution.” Id. at 211, 218-19.

                                    17
¶ 41   In determining whether offenses are factually distinct, we

  consider factors including the time and location of the events, the

  defendant’s intent, and whether the People presented the acts as

  legally separable. See Quintano v. People, 105 P.3d 585, 591-92

  (Colo. 2005). However, no one factor is dispositive and the inquiry

  ultimately focuses on “all the evidence introduced at trial to

  determine whether the evidence on which the jury relied for

  conviction was sufficient to support distinct and separate offenses.”

  Id. at 592.

¶ 42   If a defendant is convicted of multiplicitous counts, the proper

  remedy is to merge the multiplicitous convictions. See People v.

  Rhea, 2014 COA 60, ¶¶ 16-17.

                          B. Multiplicity Not Obvious

¶ 43   A person commits securities fraud in Colorado when, in

  connection with the offer, sale, or purchase of any security, he

                (b) . . . make[s] any untrue statement of a
                material fact or [omits] 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

                (c) . . . engage[s] in any act, practice, or course
                of business which operates or would operate
                as a fraud or deceit upon any person.
                                        18
  § 11-51-501(1).

¶ 44   Defendant was charged with one count of securities fraud by

  means of an untrue statement or material omission under section

  11-51-501(1)(b), and one count of securities fraud based on fraud

  by deceit under section 11-51-501(1)(c). Other than by

  incorporating the statutory language, the complaint does not

  specify what conduct supports the respective charges.

¶ 45   In closing argument, the prosecutor argued that defendant

  committed two separate offenses because (1) he did not disclose the

  foreclosure or the bankruptcy to the Witts; and (2) he took their

  money, put it in in his main bank account, and started to spend it.

  The jury instructions state the elements of each charge, but do not

  specify the conduct relating to each instruction. The jury returned

  one verdict as to each count, but the general verdict forms do not

  indicate what conduct supports each verdict.

¶ 46   We agree with defendant that the General Assembly prescribed

  only a single unit of prosecution for securities fraud. See People v.

  Abiodun, 111 P.3d 462, 466 (Colo. 2005) (holding that when the

  legislature joins “a number of acts . . . as a disjunctive series,”

                                     19
  rather than describing them in different provisions under different

  titles, it defines alternative means of committing a single offense).

  Thus, sections 11-51-501(1)(b) and (c) are alternative means of

  committing securities fraud.

¶ 47   Accordingly, defendant’s two convictions and sentences could

  be supported only if his alleged offenses were “factually distinct”

  under Quintano.

¶ 48   The evidence of defendant’s false statements and material

  omissions in obtaining the loans supports a conviction under

  section 11-51-501(1)(b). But the prosecution did not argue that

  there was a separate fraud or deceit supporting the section 11-51-

  501(1)(c) charge. Instead, the prosecution argued that the deceitful

  conversion of funds constituted the violation of subsection (c).

  Although the misleading act and the conversion of funds happened

  on separate days, perhaps giving defendant “time to reflect” on his

  behavior, Quintano, 105 P.3d at 592, the prosecutor did not clearly

  separate defendant’s misleading statements and omissions from his

  later misuse of the funds, each of which related to the same note

  and the same victims.

                                    20
¶ 49   We read federal law to require, as relevant here, a separate

  sale and a separate fraudulent statement in each count to support

  a multiple count indictment for securities fraud. See United States

  v. Langford, 946 F.2d 798, 804 (11th Cir. 1991) (reversing some of

  the defendant’s multiple convictions for securities fraud in a

  scheme against one victim because “each count of the indictment

  must be based on a separate purchase or sale of securities and

  each count must specify a false statement of material fact — not a

  full-blown scheme to defraud — in connection with that purchase

  or sale”); see also United States v. Regensberg, 604 F. Supp. 2d 625,

  629 (S.D.N.Y. 2009) (holding that two counts of securities fraud

  were not multiplicitous because each count embodied “groups of

  two separate transactions that are governed by different terms and

  conditions, involved different buyers, and occurred over different

  time periods”).

¶ 50   Applying the federal standard, we conclude that defendant was

  charged with and convicted of multiplicitous counts of securities

  fraud because the evidence showed a sale of one security, to one

                                   21
  investor based on one set of false or misleading statements.2 But

  no Colorado case, well-settled legal principle, or statutory command

  addressed the proper unit of prosecution under the Colorado

  securities law. Accordingly, we cannot conclude that in the absence

  of a motion it would have been obvious to the trial court that the

  two convictions were multiplicitous. We conclude that there was no

  plain error.

                     V. Sufficient Evidence of Theft

¶ 51   Defendant was charged with one count of theft under section

  18-4-401(1)(b). To support a conviction for that offense, the

  prosecution must prove that defendant (1) knowingly obtained,

  retained, or exercised control over something of value of another

  without authorization or by threat or deception; and (2) knowingly

  used, concealed, or abandoned it in a manner to permanently

  deprive the Witts of its use or benefit. See id.

  2 Had the separate counts charged a securities violation based on
  each of the Witts’ advances as part of a continuing fraud, multiple
  counts may have been supported, but that is not what was charged
  here. See Peoria Union Stock Yards Co. Ret. Plan v. Penn Mut. Life
  Ins. Co., 698 F.2d 320, 326 (7th Cir. 1983) (Where the contract was
  a continuing one that required periodic payments, fraudulent
  statements to keep contributions coming “was fraud in connection
  with the continuing sale of a security.”).
                                   22
¶ 52   Defendant argues that there was insufficient evidence that he

  knowingly used the Witts’ money in a manner to permanently

  deprive them of its benefit because the transaction was an

  unconditional personal loan and he used a portion of the proceeds

  to improve one of the properties offered as collateral on the note.

  Although this argument was not preserved, we address it for the

  reason described in Part II.B, supra. We are not persuaded.

¶ 53   The Witts testified at trial that they had agreed the money was

  to be used for the development of Timber Ridge, as a “no risk”

  investment in the project. And an investigator testified that

  defendant used the funds to pay his own attorney fees, to improve

  the house that his wife continued to occupy at the time of trial, and

  for other personal expenses.

¶ 54   Defendant’s argument that he failed to repay the Witts

  because they refused to release a lis pendens on his “second

  residence” is without merit because this supposed buyer did not

  surface until March 2013, well after defendant had defaulted on the

  loan to the Witts and after he was criminally charged. The

  argument does not affect this conclusion. See People v. Pedrie, 727

                                    23
P.2d 859, 863 (Colo. 1986) (holding that the return of stolen

  property is not a defense to a theft charge).

¶ 55   We conclude that, viewing this evidence in the light most

  favorable to the prosecution, it is sufficient to support a rational

  conclusion that defendant knowingly obtained the Witts’ money by

  deception and intended to permanently deprive them of it.

          VI. Admissibility of Evidence of Other Transactions

¶ 56   In a pretrial motion, the prosecution requested the trial court

  to allow evidence that in 2010 defendant had obtained money from

  another person under false pretenses by entering into an agreement

  to sell a lot in Timber Ridge that he did not own. The prosecution

  argued the evidence was relevant to show identity, knowledge,

  motive, intent, modus operandi, and lack of mistake or accident.

  Over defendant’s objection, the court ultimately allowed the

  evidence to show identity, knowledge, motive, and lack of mistake

  or accident, and gave the jury an instruction limiting use of

  witnesses’ testimony to those purposes.3

  3 When the prosecutor informed the court that the charge of theft in
  the case did not require intent, but only “a knowing use in a
  manner to permanently deprive,” the court reversed its position that
  the evidence would be admissible for intent.
                                    24
¶ 57   One witness testified that he had purchased lot 8 in the

  Timber Ridge subdivision in 2007, and another witness testified

  that he had paid defendant $120,000 for the same lot in 2010. The

  second witness also testified that when he asked for his money

  back, defendant responded with an expletive.4

               A. Applicable Law and Standard of Review

¶ 58   Under CRE 404(b), a defendant’s prior act cannot be admitted

  to prove the defendant’s character to show that he or she acted in

  conformity with that character on a particular occasion, but it can

  be admitted for other purposes if the trial court has determined that

  the prior act occurred, and that the evidence satisfies the four-

  prong test in People v. Spoto, 795 P.2d 1314, 1318 (Colo. 1990).

¶ 59   Under Spoto, the Rule 404(b) evidence must

            (1) relate to a material fact; (2) be logically
            relevant; (3) have a logical relevance that “is
            independent of the intermediate inference,
            prohibited by CRE 404(b), that the defendant
            has a bad character” and committed the crime
            charged because he acted in conformity with
            that bad character; and (4) have a probative

  4Defendant was convicted of theft by deception from this victim and
  his conviction was affirmed by a division of this court. People v.
  Thompson, (Colo. App. No. 13CA1413, Feb. 16, 2017) (not published
  pursuant to C.A.R. 35(e)).
                                   25
            value that is not substantially outweighed by
            the danger of unfair prejudice.

  Perez v. People, 2015 CO 45, ¶ 25.

¶ 60   That other act evidence may imply a defendant’s bad character

  does not preclude the evidence so long as it is offered for a

  permissible purpose. Spoto “does not demand the absence of the

  inference but merely requires that the proffered evidence be

  logically relevant independent of that inference.” People v. Snyder,

  874 P.2d 1076, 1080 (Colo. 1994).

¶ 61   Because defendant objected to the admission of the evidence,

  we review the trial court’s admission of other act evidence for abuse

  of discretion. The decision will not be disturbed unless it was

  arbitrary, unreasonable, or unfair. People v. Osorio-Bahena, 2013
COA 55, ¶ 21.

¶ 62   In ruling on the Rule 404(b) motion, the district court

  explicitly noted Spoto and engaged in the required four-part

  analysis for the offered purposes.

¶ 63   Defendant argues that the evidence was not logically relevant

  to prove identity, motive, knowledge, or absence of mistake. We are

  not persuaded.

                                    26
                               B. Analysis

¶ 64   Defendant’s explanation of his transaction with the Witts was

  that (1) it was a legitimate business deal; (2) he had no intention to

  defraud or deceive them; (3) he intended to perform according to the

  agreement; and (4) he was unable to do so because of unfortunate

  or unexpected business consequences beyond his control.

¶ 65   Evidence that the defendant had permanently deprived

  another investor of his money, by similar false promises and

  deceptive statements involving the same project, is logically relevant

  to prove that his motive was not to enter into a legitimate business

  agreement with the Witts, and that his inability to return the Witts’

  investment was not due to a mistake or accidental circumstances

  beyond his control.

¶ 66   We conclude that the probative value of introducing the prior

  act was not substantially outweighed by the danger of unfair

  prejudice, “especially because the court gave a limiting instruction.”

  People v. Cooper, 104 P.3d 307, 309 (Colo. App. 2004); see Garcia,

  ¶ 20 (“We presume that the jury followed the court’s [limiting]

  instructions, absent evidence to the contrary.”). We further

  conclude that the district court’s admission of the prior act evidence
                                    27
  was not so arbitrary, capricious, or unfair as to constitute an abuse

  of discretion. See People v. Torres, 224 P.3d 268, 274 (Colo. App.

  2009) (finding no abuse of discretion where trial court ruled that,

  considering the similarities between the two incidents, the probative

  value of the prior act was not substantially outweighed by its

  potentially prejudicial effect).

                               VII. Sentencing

¶ 67   Finally, defendant argues that his sentence for theft must run

  concurrently with the concurrent sentences for securities fraud

  because the crimes are based on identical evidence. We disagree.

                A. Standard of Review and Applicable Law

¶ 68   The parties agree that defendant did not preserve this issue for

  review. As such, we review for plain error. See Reyna-Abarca, ¶ 47.

¶ 69   Although a sentencing court generally has discretion to impose

  concurrent or consecutive sentences on a defendant convicted of

  multiple crimes, consecutive sentences are statutorily prohibited if

  identical evidence supported each count. § 18-1-408(3), C.R.S.

  2017. To determine whether the evidence is identical, a court must

  decide whether the convictions were “based on more than one

  distinct act and, if so, whether those acts were separated by time
                                     28
  and place.” People v. Glasser, 293 P.3d 68, 79 (Colo. App. 2011).

  The sentencing court’s decision will be overturned “only if the

  evidence supports no other conclusion than that the charges are

  based on identical evidence.” People v. Muckle, 107 P.3d 380, 383

  (Colo. 2005). Further, “the mere possibility that the jury may have

  relied on identical evidence in returning more than one conviction is

  not sufficient to trigger the mandatory concurrent sentencing

  provision.” Id.

                               B. Analysis

¶ 70   We agree with the People that the theft and securities fraud

  charges were not necessarily based on identical evidence, and

  therefore decline to disturb the sentencing court’s discretion.

¶ 71   The convictions for securities fraud were predicated on the

  misstatements and material omissions made by defendant to the

  Witts in connection with the sale of a security, an element of

  evidence for securities fraud not required for theft. Defendant’s

  retention and use of the funds obtained from the Witts for personal

  benefit knowingly permanently deprived them of its use, an element

  of evidence not required for securities fraud.

                                    29
¶ 72   In these circumstances, it is not the case that “the evidence

  supports no other conclusion than that the [theft and securities

  fraud] charges are based on identical evidence.” Id. Because

  different evidence supported each offense, we affirm the imposition

  of a consecutive sentence for the theft conviction.

                            VIII. Conclusion

¶ 73   The judgment and sentence are affirmed.

       JUDGE WEBB and JUDGE FOX concur.

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