State v. Haas

• Decision Date: 31 October 1983
• Docket Number: No. 5700-PR,5700-PR
• Citation: 138 Ariz. 413,675 P.2d 673
• Parties: STATE of Arizona, Appellee, v. Jonathan L. HAAS, Appellant.
• Court: Arizona Supreme Court

Page 673

675 P.2d 673

138 Ariz. 413

STATE of Arizona, Appellee, v. Jonathan L. HAAS, Appellant.

No. 5700-PR.

Supreme Court of Arizona, In Banc.

Oct. 31, 1983.

Reconsideration Denied Jan. 17, 1984.

Robert K. Corbin, Atty. Gen. by William J. Schafer III, Jack Roberts, Asst. Attys. Gen., Phoenix, for appellee

Ross P. Lee, Maricopa County Public Defender and John Foreman, Phoenix, for appellant.

FELDMAN, Justice.

A jury convicted Haas (defendant) of five counts of fraudulent scheme and artifice, a violation of A.R.S. § 13-320.01. The imposition of sentence was suspended; defendant was placed on probation for ten years and ordered to make restitution by paying $27,500 in monthly payments of $230. By memorandum decision, the court of appeals reversed the convictions. (No. 1 CA-CR 4624, filed March 30, 1982.) We granted the State's petition for review. We affirm the convictions.

A complete statement of the facts will be set out in connection with our analysis of the legal issues raised by the defendant. The basic nature of the scheme which the State alleges is that Haas, a real estate agent and later a broker, was employed by two related corporations (State Investment and Valley Investment) to act on their behalf in the purchase of a large number of low-income, residential properties. There was a third corporation, Sigma Development and Trust (Sigma), related to State and Valley, but, at first, Haas did not know of its existence. Haas acted as an agent or broker for State and Valley over a period of several years. The method of operation was that Haas would consult listing books circulated in the real estate profession to locate properties which he thought would be of interest to Richard Rowe, the president of all three corporations. He would then submit these properties to Rowe or the vice-president, Patterson, and when directed by either of them, would draw offers in which State or Valley were listed as the buyer. Defendant then mailed the offer to the agent or broker who had taken While the deferred balance of the purchase price on the sale of real estate is customarily secured by mortgage or other security device giving the seller a lien on the property being sold, the offers prepared by defendant did not specifically provide for such security. Instead, they provided that the deferred balance was to be secured by a "money assignment," and "agreement assignment" or a "trust deed beneficial interest." None of these terms had any specific meaning and none were commonly used in the real estate business. Although the terms used in the offers resembled the terms for commonly used security devices which do provide the sellers with liens upon the property being sold, defendant's use of the terms was quite the opposite. The "money assignments" consisted of an assignment from buyer to seller of the buyer's interest in unsecured promissory notes made by Sigma or its employees to the buyer. The notes were sham and did not represent a valid indebtedness since the payor (usually Sigma) had never received any consideration from State or Valley for the execution of the note. The "agreement assignments" were similar and represented the buyer's assignment to seller of an agreement which Sigma had purportedly made to pay funds to the buyer. These agreements were also sham. The "trust deed beneficial interest" consisted of the assignment to the seller of buyer's "beneficial interest" in some other property which was neither identified nor mentioned in the offer. These "beneficial interests" were either sham or, in some cases, represented fourth or fifth mortgages on other properties and were uniformly without value.

the listing and who represented the seller. The offers were fairly uniform in nature; the earnest money was minimal, the down payment to be made on closing was low and the majority of the purchase price was to be paid in installments.

Thus, by paying only the small down payments, the buyer closed escrow on each of the transactions and obtained title free of any lien to the seller. State or Valley obtained the money for the down payment by borrowing against the very property which it was acquiring or on properties previously acquired. It was able to do this because the sellers failed to reserve a lien to secure payment of the deferred purchase price. The funds borrowed on each property in excess of the down payment, costs and commissions ¹ were used to pay corporate expenses and make monthly payments due on properties previously acquired. Of course, as more properties were acquired, more payments had to be made. Since the corporations were all under-capitalized, or not capitalized at all, funds for the ever-increasing amount of payments had to be obtained by buying more properties to use as collateral for borrowing more money.

As with most such schemes, the house of cards eventually fell and the buyers began to default on the monthly payments. As defaults occurred, the sellers and their agents and brokers found, to their surprise, that the sellers had no lien or other security upon the property sold, but, instead, had only worthless assignments or security devices upon which there was no possibility of ever realizing any recovery.

Haas was indicted, along with Rowe and Patterson, on 67 counts of securities fraud, sale of unregistered securities, failing to register as a dealer in securities, fraudulent scheme and conspiracy to commit the various crimes. Rowe died before trial. Patterson entered a plea of no contest to a conspiracy charge, and Haas stood trial. The State dismissed various counts, and the trial court granted judgments of acquittal on others. One count of conspiracy (to commit the crime of fraudulent scheme) and seven counts of fraudulent scheme were submitted to the jury. The jury acquitted Haas of the conspiracy charge and two of the counts of fraudulent scheme. It convicted him of five counts of fraudulent scheme, all of them on transactions which Defendant does not deny the basic outlines of the transactions, nor does he really argue the existence of a fraudulent scheme. He does argue, instead, his knowledge, participation and culpability under the statute as it existed at the time of the offenses that were charged.

had their inception subsequent to November 1976.

SUFFICIENCY OF THE EVIDENCE

Elements of the Crime

Defendant first claims that the evidence admitted at trial was insufficient to sustain a conviction under A.R.S. § 13-320.01. ² The statute provides, in part:

Any person who, pursuant to a scheme or artifice to defraud, knowingly and intentionally obtains or attempts to obtain money, property or any other thing of value by means of false or fraudulent pretenses, representations or promises is guilty of a felony ....

This statute was adapted from the federal mail fraud statute, 18 U.S.C. § 1341. See State v. Moses, 123 Ariz. 296, 599 P.2d 252 (App.1979). The federal statute provides:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises ... for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service ... shall be fined not more than $1,000 or imprisoned not more than five years, or both.

It is a general rule that a statute "adopted from another state will be presumed to have been adopted with the construction previously placed upon it by the courts of that state, and their decisions construing the statute will be construed as persuasive." Mileham v. Arizona Board of Pardons and Paroles, 110 Ariz. 470, 473, 520 P.2d 840, 843 (1974). This same rule applies to a federal statute adopted in Arizona. Arizona Civil Rights Division v. Olson, 132 Ariz. 20, 25-26, 643 P.2d 723, 728-29 (App.1982).

The federal mail fraud statute encompasses a broad range of fraudulent activities. Both the federal and state statutes proscribe a "scheme or artifice to defraud." This element is not defined according to any technical standard. United States v. Pearlstein, 576 F.2d 531, 535 (3d Cir.1978). The scheme need not be fraudulent on its face but "must involve some sort of fraudulent misrepresentations or omissions reasonably calculated to deceive persons of ordinary prudence and comprehension." Id. (emphasis supplied); United States v. Netterville, 553 F.2d 903, 909 (5th Cir.1977), cert. denied, 434 U.S. 1009, 98 S.Ct. 719, 54 L.Ed.2d 752 (1978); United States v. Bruce, 488 F.2d 1224, 1229 (5th Cir.1973), cert. denied, 419 U.S. 825, 95 S.Ct. 41, 42 L.Ed.2d 48 (1974). The statute requires proof of the specific intent to defraud. Pearlstein, 576 F.2d at 537; United States v. Payne, 474 F.2d 603, 604 (9th Cir.1973). The intent to defraud can be established by proving the defendant devised the fraudulent scheme or wilfully participated in it with knowledge of its fraudulent nature. Pearlstein, 576 F.2d at 537-38. "Fraudulent representations," as that term appears in § 1341, may be effected by deceitful statements or half-truths or even the concealment of material facts. United States v. Goldstein, 695 F.2d 1228, 1233 (10th Cir.1981), cert. denied, 462 U.S. 1132, 103 S.Ct. 3112, 77 L.Ed.2d 1367 (1983); United States v. Allen, 554 F.2d 398, 410-11 (10th Cir.), cert. denied, 434 U.S. 836, 98 S.Ct. 124, 54 L.Ed.2d 97 (1977); United States v. Curtis, 537 F.2d 1091, 1097 (10th Cir.), cert. denied, 429 U.S. 962, 97 S.Ct. 389, 50 L.Ed.2d 330 (1976); Williams v. U.S., 368 F.2d 972, 975 (10th Cir.1966). "Knowingly and Intentionally"

                Defendant argues with some force that there is a distinct difference between the federal statute and the Arizona version of that statute.  The federal statute proscribes schemes or artifices to defraud "or" for obtaining money or property by means of false or fraudulent pretenses,

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