Anderson A v. State Of Tex.

• Decision Date: 31 August 2010
• Docket Number: No. 14-08-01054-CR.,14-08-01054-CR.
• Parties: Kay J. ANDERSON a/k/a Kerine J. Anderson, Appellant, v. STATE of Texas, Appellee.
• Court: Texas Court of Appeals

322 S.W.3d 401

Kay J. ANDERSON a/k/a Kerine J. Anderson, Appellant,

v.STATE of Texas, Appellee.

No. 14-08-01054-CR.

Court of Appeals of Texas,Houston (14th Dist.).

Aug. 31, 2010.

Vivian R. King, Houston, for Appellant.

Bridget Holloway, Houston, for Appellee.

Panel consists of Chief Justice HEDGES and Justices YATES and BOYCE.

OPINION

ADELE HEDGES, Chief Justice.

Appellant, Kay J. Anderson a/k/a Kerine J. Anderson, was convicted of misapplication of fiduciary property and theft based on her handling of investment funds. She was sentenced to 20 years in prison on each conviction, the sentences to run concurrently. In three issues, appellant contends that (1) the evidence is legally and factually insufficient to uphold her convictions and (2) prosecution for the offense of theft was barred by the applicable statute of limitations. We affirm appellant's conviction for misapplication of fiduciary property, reverse appellant's conviction for theft, and render judgment of acquittal on the theft conviction.

I. BACKGROUND

Texoil Corporation, created in 1979, developed oil reserves and oil property. The company created 20 general partnerships; under these general partnerships, thousands of limited partnerships were created. The limited partnerships were capitalized by investors who each agreed to execute promissory notes payable to Texoil Corp. in the amount of $250,000. The terms of the promissory notes required the limited partnership investors to make annual contributions. For their $250,000 investment in Texoil Corp., the investors were entitled to tax deductions for the face value of the note.

Under the tax scheme, the limited partnership investors did not pay the full $250,000. In the first year, investors made minimal cash contributions but took a tax deduction on the full value of the note. In the following years, the investors did not make cash contributions but executed additional promissory notes to pay the required annual contribution. The investors continued to take tax deductions on the entire $250,000. Ultimately, the Internal Revenue Service determined that the limited partnerships were illegal tax shelters and disallowed tax deductions for the face value of the promissory notes. No further contributions or investments were made to Texoil Corp.

Appellant acquired Texoil Corp. in 1989. At the time, the limited partnership investors owed as much as one billion dollars on the promissory notes. In 1996, appellant created Texoil L.L.C. to liquidate the promissory notes. Five of the 20 general partnerships in Texoil Corp. were transferred to Texoil L.L.C, leaving Texoil Corp. with 15 of the general partnerships and Texoil L.L.C. with five. Appellant then attempted to collect on the approximately 4,000 limited partnership notes. Appellant claimed that she had planned to monetize the notes by (1) allowing the limited partnership investors to settle their Texoil debt for a fraction of the amount due, $50,000, and (2) buying a life insurance policy on the lives of these investors. ¹ Texoil Corp. and Texoil L.L.C. could immediately use the policies as collateral and would be paid cash proceeds, $250,000, upon each of the investors' deaths. Appellant persuaded the complainants, David Lamonica, Patricia Bond, and Charles Steinberg, to invest funds in Texoil L.L.C. in order to assist her collection of the limited partnership notes.

A. David Lamonica

David Lamonica, a licensed insurance producer, was the first complainant to invest in Texoil L.L.C.'s collection efforts. According to Lamonica, appellant represented that she owned Texoil Corp. and Texoil L.L.C. and that she was in possession of the thousands of limited partnership notes executed in the 1980s. Appellant explained to Lamonica that she had planned to monetize the notes by allowing the limited partnership investors to settle their Texoil debt for a fraction of the amount due and, in turn, obtain life insurance policies on the lives of the investors. Appellant offered Lamonica two investment opportunities: (1) 10% of the funds recovered by the limited partnership investors if Lamonica invested in appellant's collection efforts, and (2) commissions on any insurance policies he sold on the lives of the limited partnership investors.

In December 1998, Lamonica began a series of investments, which ultimately totaled $175,000 over the next year. With each investment, Lamonica demanded that the investment be used solely for collection efforts on the notes. Even though appellant and her attorney assured Lamonica that the notes were in appellant's possession and that his investments would be used for collection purposes, appellant never produced the notes, even upon Lamonica's demands. Furthermore, no settlement letters were sent to the original limited partnership investors, and no life insurance policies were obtained on the lives of the investors. After appellant failed to collect on the notes, Lamonica stopped investing in Texoil L.L.C. He later sued appellant for her handling of his $175,000 investment in Texoil L.L.C.

B. Patricia Bond

Patricia Bond was the second complainant to invest in Texoil L.L.C.'s collection efforts. According to Bond, appellant represented that she owned Texoil L.L.C. and was in possession of the thousands of limited partnership notes worth a billion dollars. In 1999, appellant offered Bond a 1% interest in Texoil L.L.C. and a return investment of $300,000 by the third quarter of 2000 in consideration of a $100,000 investment. Bond did not have $100,000 in cash but was able to use an interest in her ex-husband's retirement plan acquired during her divorce. Because Bond's interest was in a tax deferred retirement plan, if the $100,000 was not repaid to the plan within 90 days, severe tax penalties would be assessed. Appellant convinced Bond that she would be able to repay the $100,000 before the tax penalties were triggered and that she would receive three $100,000 payments by the third quarter of 2000. Based on appellant's representations, in August 1999, Bond withdrew the $100,000 from the retirement plan, invested in Texoil L.L.C, and waited for the return on her investment.

When Bond failed to receive the $100,000, she was unable to timely repay the plan; consequently tax penalties were assessed at $150,000. Bond never received any return on her investment. Lamonica later contacted Bond and persuaded Bond to join his civil suit against appellant.

C. Charles Steinberg

Charles Steinberg was the third complainant to invest in Texoil L.L.C.'s collection efforts. Appellant represented that she owned Texoil L.L.C. and was in possession of the thousands of limited partnership notes worth a billion dollars. Initially, Steinberg was approached to help contact the original limited partnership investors and communicate settlement offers. Through his company, AON, Steinberg would also assist in brokering the life insurance policies that were part of the settlement offers. Steinberg introduced appellant to Fleet Bank of Boston (“Fleet Bank”), which could monetize the notes.

Fleet Bank required $100,000 to monetize the notes. Because neither appellant nor Texoil L.L.C. had the funds, Steinberg paid $100,000 to appellant, who forwarded the payment to Fleet Bank. When the bank subsequently required an additional $100,000, Steinberg paid the second $100,000 to appellant, who did not forward this $100,000 to Fleet Bank. As a condition of a line of credit to appellant, Fleet Bank required copies of the life insurance policies obtained on the lives of the original limited partnership investors. Appellant rejected this condition. Fleet Bank returned $93,000 from the first $100,000 to appellant and made no further efforts to monetize the notes. No funds were returned to Steinberg.

After many attempts to recover his $200,000 investment, Steinberg obtained a promissory note from appellant in the amount of $200,000. Appellant did not pay the note. Thereafter, Lamonica contacted Steinberg and persuaded Steinberg to participate in a forced bankruptcy proceeding against Texoil L.L.C. In 2004, Lamonica, Bond, and Steinberg forced Texoil L.L.C. into Chapter 11 bankruptcy. During the bankruptcy proceeding, the trustee determined that the limited partnership notes were the only assets belonging to Texoil L.L.C. Accordingly, the bankruptcy judge ordered appellant to produce the notes to the trustee. Appellant attempted to produce the 20 general partnership notes but could not produce the limited partnership notes. She admitted that she was not in possession of the limited partnership notes and did not know their location.

D. Underlying Criminal Proceedings

In August 2005, a grand jury indicted appellant for (1) misapplication of fiduciary property, (2) theft, and (3) misrepresentation of material facts under the Texas Securities Act. Appellant pleaded not guilty, and her case was tried before the court. Prior to trial, appellant sought to quash the indictment for theft, arguing that it was barred by the applicable statute of limitations. The trial court denied her motion.

At trial, appellant disputed evidence that she told the complainants she possessed the limited partnership notes. According to appellant, she never solicited an investment from Bond, and she told Lamonica that she intended to collect only on the general partnership notes. After hearing testimony from the three complainants, the bankruptcy trustee, appellant, and security and accounting experts, the trial court found appellant guilty of misapplication of fiduciary property and theft. Appellant received two concurrent 20 year sentences for these convictions. The trial court found appellant not guilty of the securities fraud offense because it was barred by the statute of limitations.

In three issues, appellant contends that (1) the evidence is legally and factually insufficient to uphold her convictions, and (2) prosecution for the offense of theft was barred by the...