People v. Robb, No. 04CA2569.

• Decision Date: 16 April 2009
• Docket Number: No. 05CA1327.,No. 04CA2569.
• Parties: The PEOPLE of the State of Colorado, Plaintiff-Appellee and Cross-Appellant, v. Bruce Norman ROBB, Defendant-Appellant and Cross-Appellee.
• Court: Colorado Court of Appeals

215 P.3d 1253

The PEOPLE of the State of Colorado, Plaintiff-Appellee and Cross-Appellant, v. Bruce Norman ROBB, Defendant-Appellant and Cross-Appellee.

No. 04CA2569.

No. 05CA1327.

Colorado Court of Appeals, Div. III.

April 16, 2009.

Rehearing Denied June 4, 2009.

John W. Suthers, Attorney General, Alexander C. Reinhardt, Assistant Attorney General, Denver, Colorado, for Plaintiff-Appellee and Cross-Appellant.

Thomas K. Carberry, Denver, Colorado, for Defendant-Appellant and Cross-Appellee.

Opinion by Judge LOEB.

Defendant, Bruce Norman Robb, appeals the judgment of conviction entered on jury verdicts finding him guilty of one count of securities fraud and one count of computer crime. The People cross-appeal certain aspects of the trial court's restitution order.

We affirm Robb's conviction for securities fraud, reverse Robb's conviction for computer crime, and vacate his sentence on that count; and we affirm the restitution order in part, reverse it in part, and remand to the trial court to modify part of that order.

Direct Appeal

I. Background and Procedural History

Robb was a salesperson for Kidztime TV Inc. and its holding company and affiliate, Capital Funding Financial Group, located in Colorado.

Kidztime was created by owners and associates of an affiliate of the Children's Cable Network (CCN). Kidztime was intended to provide nonviolent television programming for children. This programming was to air on various cable stations in different geographical locales throughout the United States. Each Kidztime franchise was set up as an independent partnership.

Capital Funding paid sales commissions to its independent sales offices for selling general partnership interests in Kidztime and CCN. The independent sales offices would contact Capital Funding with sales leads for potential investors. Prospective partners were then provided with a sales brochure that included information about the partnership and with a partnership agreement. The brochure was known as the "green brochure." Computers were used as part of this process, including generating copies of the green brochure that were sent to potential investors. A typical investment was $10,000 for one partnership unit of one affiliate of Kidztime. A typical affiliate would raise somewhere between $500,000 and $750,000 through such sales of partnership interests.

Scott Severson and Ken King were responsible for incorporating Capital Funding. Beginning in 1995, Robb worked for Severson and King as one of Capital Funding's first commissioned salespersons. Robb left his position to pursue another job opportunity for a short period, but was asked to return as a salesperson for Kidztime, which he did. Shortly thereafter, Robb was offered his own independent sales office in Colorado, but he declined and instead became a lead salesperson at an independent sales office in Colorado, where he supervised a team responsible for sales of partnership interests. There was some dispute at trial about whether this Colorado office was actually Robb's own independent sales office. However, Robb testified he was a salesperson, not an owner of the independent sales office.

In Robb's role as salesperson, he contacted people to tell them about investment opportunities with Kidztime. Robb followed the same script all the salespeople used when giving his sales pitch. If he found an interested prospective investor, that person's name was given to a staff member at Capital Funding, who would then send out a copy of the green brochure to the potential investor. Robb received at least a fifteen percent commission for the units he succeeded in selling, including two units he sold to a family by the name of Meister and one to an individual by the name of Hoges.

The premise of the business model for Kidztime was that local affiliates would generate revenue through advertising, which would fund the ongoing costs of the programming and leasing access to the programming. Under the terms of the partnership agreement, approximately eighty-five percent of the money raised was dedicated to fundraising expenses and the costs of acquiring the programming. The remaining fifteen percent would serve as working capital for the affiliate. However, very few advertisements were sold. Because of this, the affiliates quickly ran out of money and could not continue to pay the leased access costs. After the advertising plan failed, the owners and operators of the organization attempted to conduct event-based marketing by sponsoring reading programs and then holding awards ceremonies in the hope that advertisers would pay to sponsor such an event. However, very little money was generated from the event-based marketing, and the affiliates ran out of money.

In 2001, a state-wide grand jury charged fourteen codefendants, including Robb, in an eighty-five-count indictment relating to the fraudulent sale of partnership interests during the period 1995-1998. Robb was charged with computer crime, transacting business as a sales representative without a license, employment of unlicensed sales representatives, conspiracy to commit securities fraud, three counts of securities fraud, and a violation of the Colorado Organized Crime Control Act.

Nine of the fourteen codefendants entered into plea agreements prior to trial. Robb pleaded not guilty, and he and the remaining codefendants were tried together in 2004.

At trial, an expert in federal and state securities law testified generally regarding the definition of a security and opined that a Kidztime partnership was a security, subject to securities regulations. Moreover, the expert testified that the "Risk Disclosure Statement" in the green brochure was misleading regarding whether Kidztime was subject to regulation, particularly because cease and desist orders enjoining the sale of Kidztime units had been issued in several other states. He further testified that certain financial projections in the brochure were misleading.

Before the case was submitted to the jury, the trial court granted Robb's motion for judgment of acquittal on a charge of securities fraud related to the sale of a partnership unit to Hoges. The jury convicted Robb of one count of securities fraud—course of business and one count of computer crime. The jury acquitted Robb of the remaining counts, including a count of securities fraud related specifically to the sale of two partnership units to the Meisters. Robb was sentenced to eight years probation on each of the two counts on which he was convicted, and six months work release and a ninety-day suspended sentence on the securities fraud count. The court also ordered Robb to pay $20,000 in restitution. This appeal and cross-appeal followed.

II. Sufficiency of the Evidence— Securities Fraud

Robb contends there was insufficient evidence to convict him of securities fraud— course of business. We disagree.

Robb filed a mid-trial motion for judgment of acquittal and also a post-trial motion for judgment of acquittal, or in the alternative, for a new trial, based on insufficient evidence of securities fraud. The trial court denied Robb's motions.

We review a sufficiency of the evidence claim de novo. See Dempsey v. People, 117 P.3d 800, 807 (Colo.2005); People v. Cook, 197 P.3d 269, 279 (Colo.App.2008).

"When assessing the sufficiency of the evidence in support of a guilty verdict, a reviewing court must determine whether any rational trier of fact might accept the evidence, taken as a whole and in the light most favorable to the prosecution, as sufficient to support a finding of the accused's guilt beyond a reasonable doubt." People v. Sprouse, 983 P.2d 771, 777 (Colo.1999).

When ruling on a motion for judgment of acquittal, the trial court must consider both the prosecution and the defense evidence. Id. at 778. Considering all the evidence, the trial court must determine whether, when viewed as a whole and in the light most favorable to the prosecution, that evidence is substantial and sufficient to support a conclusion by a reasonable person that the defendant is guilty of the crime beyond a reasonable doubt. See People v. Ramirez, 30 P.3d 807, 808 (Colo.App.2001); see also Dempsey, 117 P.3d at 807; Taylor v. People, 723 P.2d 131, 134 (Colo.1986). However, the determination of the credibility of witnesses is solely within the province of the jury. Sprouse, 983 P.2d at 778. Moreover, the jury must determine what specific weight should be accorded to various pieces of evidence and resolve conflicts in the evidence. Id.; see also Ramirez, 30 P.3d at 808. The court may not serve as a thirteenth juror. Sprouse, 983 P.2d at 778.

Here, the jury found Robb guilty of securities fraud—course of business, pursuant to section 11-51-501(1)(c), C.R.S.2008. The elemental jury instruction on this charge tracked the language of the statute and provided that the elements of securities fraud in the course of business are:

(1) That the defendant,

(2) in the state of Colorado, at or about the date and place charged,

(3) in connection with the offer, sale or purchase of any security,

(4) directly or indirectly,

(5) willfully,

(6) engaged in any act, practice or course of business, which operated as fraud or deceit upon any person.

Considering the evidence as a whole, and viewing it in the light most favorable to the prosecution, we conclude there was sufficient evidence to convict Robb of securities fraud in the course of business.

First, there was evidence, albeit somewhat conflicting, that Robb knew that cease and desist orders prohibited the sale of Kidztime units in various other states. In addition, there was also evidence presented, albeit again conflicting, from which a jury could conclude Robb was culpable for misrepresentations in the green brochure. Further, the evidence showed that Robb directly sold Kidztime units, and the jury found such units to be "securities." For example, Robb was the first salesperson for Severson and...