State v. Williams

• Decision Date: 19 October 1990
• Docket Number: No. 89-211,89-211
• Citation: 581 A.2d 78,133 N.H. 631
• Parties: The STATE of New Hampshire v. David L. WILLIAMS.
• Court: New Hampshire Supreme Court

Page 78

581 A.2d 78

133 N.H. 631

The STATE of New Hampshire v. David L. WILLIAMS.

No. 89-211.

Supreme Court of New Hampshire.

Oct. 19, 1990.

John P. Arnold, Atty. Gen. (John S. Davis, Asst. Atty. Gen., on the brief and orally), for State.

James E. Duggan, Chief Appellate Defender, Concord by brief and orally, for defendant.

PER CURIAM.

The defendant, David L. Williams, was convicted of six class A felony counts of theft, RSA 637:3, :11, and seven class B felony counts of fraud, RSA 421-B:3, :24, after a jury trial in Superior Court (Murphy, J.). He was sentenced to six concurrent terms of imprisonment of five to ten years each for the theft convictions, and seven deferred, consecutive terms of imprisonment of three and one-half to seven years each for the fraud convictions. He is currently serving two consecutive terms of imprisonment of three years each for violations of federal securities law, and he is serving these federal terms concurrently with the State terms of imprisonment. Williams appeals the theft and fraud convictions, claiming that the trial judge improperly took away from the jury two important issues of fact. For the reasons stated below, we affirm the six theft convictions and overturn the seven fraud convictions.

Williams's convictions stem from his involvement with the "Blondheim" companies. He was an investment advisor and a financial planner, as well as the principal owner of Blondheim Investment Advisors, Inc. (BIA) and Blondheim Real Estate, Inc. (BRE). In addition, Williams was the managing general partner of twenty real estate limited partnerships, all of which owned and rented residential properties. Through BIA, Williams advised clients about investments such as real estate limited partnerships. He used BRE to manage his limited partnerships' rental properties.

In 1984, Williams created five "spin-off" limited partnerships. Each "spin-off" was formed in order to acquire rental properties owned by Williams's other limited partnerships. Williams's fraud convictions result from false and misleading statements he made while selling interests in these "spin-off" limited partnerships and assigning a promissory note in exchange for a cash contribution to one of the "spin-offs." The characteristics of the assigned note are the same as those of the limited partnership interests for purposes of the following analysis, and we will therefore refer to it as a limited partnership interest. At trial, the judge instructed the jury that the limited partnership interests at issue were securities for purposes of determining whether Williams committed securities fraud.

Williams was convicted of theft after the State proved he stole approximately $70,000 in tenant security deposits out of the BRE tenant escrow account. He illegally caused eight checks to be drawn on this account over the course of ten months: three for the purpose of paying property taxes, and the other five in order to pay various creditors. The State consolidated the charges relating to the first three unlawful takings listed above into one count.

On appeal, Williams makes two claims of trial court error. First, he argues that the trial judge's jury instruction, categorizing the limited partnership interests as securities, unlawfully took from the jury an issue of fact, as well as the determination of an element of the crime charged. Williams claims, therefore, that the trial court violated his right to a jury trial as guaranteed by part I, article 15 of the New Hampshire Constitution, and the sixth and fourteenth amendments to the United States Constitution.

We agree that the trial court's instruction to the jury was improper. The sixth and fourteenth amendments to the United States Constitution, as well as part I, article 15 of the New Hampshire Constitution, guarantee every criminal defendant the right to a jury trial. The fourteenth amendment and part I, article 15 have been interpreted as entitling a criminal defendant to a jury determination on all factual elements of the crime charged. See In re Winship, 397 U.S. 358, 363, 90 S.Ct. 1068, 1072, 25 L.Ed.2d 368 (1970); State v. Sands, 123 N.H. 570, 591, 467 A.2d 202, 215 (1983). For a defendant to be convicted of violating RSA 421-B:3, the State must prove beyond a reasonable doubt that she or he committed fraud "in connection with the offer, sale, or purchase of any security...." RSA 421-B:3. It follows that part of the State's burden in such a case as this is proving that the investment interests sold were securities. Whether or not the limited partnership interests here were securities was a question of fact for the jury, see United States v. Johnson, 718 F.2d 1317, 1323 (5th Cir.1983), and it was error for the judge to decide this question as a matter of law.

The State concedes it was error for the judge to decide this question as a matter of law, but argues in turn that this error was harmless beyond a reasonable doubt, see State v. Ruelke, 116 N.H. 692, 694, 366 A.2d 497, 498 (1976), and that we should therefore affirm Williams's fraud convictions. We disagree, because the harmless error analysis set forth in Ruelke does not apply to this case. While we have not previously addressed the issue of applying the harmless error doctrine to a case like this, federal courts have done so. In the following discussion, we rely on federal cases to decide Williams's federal constitutional claim, but we use these cases only to guide us in ruling on Williams's State constitutional claim. See State v. Ball, 124 N.H. 226, 233, 471 A.2d 347, 352 (1983).

In Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967), the United States Supreme Court articulated the harmless error doctrine and "rejected the argument that errors of constitutional dimension necessarily require reversal of criminal convictions." Rose v. Clark, 478 U.S. 570, 576, 106 S.Ct. 3101, 3104, 92 L.Ed.2d 460 (1986) (emphasis added). Instead, the Court has stated that only such constitutional errors as "necessarily render a trial fundamentally unfair ... require reversal without regard to the evidence in the particular case." Id. at 577, 106 S.Ct. at 3105. These errors include the introduction of a coerced confession, the complete denial of a defendant's right to counsel, adjudication by a biased judge, and the direction of a verdict for the prosecution in a criminal jury trial. Id. at 577-78, 106 S.Ct. at 3105-06. The harmless error doctrine does not apply to such errors. Id.

Because the error committed in this case is akin to the direction of a verdict for the prosecution on an element of the offense charged, it is a constitutional error requiring reversal without regard to the weight of the evidence. The trial judge determined that the limited partnership interests were securities. This "fact" was "essential to conviction" because Williams's securities fraud convictions "could stand only if the jury concluded that this fact was proved beyond a reasonable doubt." United States v. White Horse, 807 F.2d 1426, 1429 (8th Cir.1986); see RSA 421-B:3 (statute only applies to fraud committed "in connection with the offer, sale, or purchase of any security ..." (emphasis added)). Thus we can say that "error was committed because the jury, not the judge, must decide that every fact essential to conviction was established." United States v. White...