People v. Terranova, No. 75--790

Docket NºNo. 75--790
Citation38 Colo.App. 476, 563 P.2d 363
Case DateDecember 30, 1976
CourtCourt of Appeals of Colorado

Page 363

563 P.2d 363
38 Colo.App. 476, Blue Sky L. Rep. P 71,352
The PEOPLE of the State of Colorado, Plaintiff-Appellee,
v.
William M. TERRANOVA, Defendant-Appellant.
No. 75--790.
Colorado Court of Appeals, Div. I.
Dec. 30, 1976.
As Modified On Denial of Rehearings Feb. 24, 1977.

[38 Colo.App. 478]

Page 364

J. D. MacFarlane, Atty. Gen., Edward G. Donovan, Sol. Gen., Thomas P. Casey, Chief Appellate Deputy Dist. Atty., Lucy Marsh Yee, Deputy Dist. Atty., Denver, for plaintiff-appellee.

David A. Sorenson, Denver, for defendant-appellant.

STERNBERG, Judge.

Defendant William Terranova was charged in a five count information with the following offenses: (1) Theft, (2) Conspiracy to Commit Theft, (3) Fraudulent Practices in Connection with the Sale of Securities, (4) Sale of Securities Without a License, and (5) Sale of Unregistered Securities. Terranova was convicted by a jury on all five counts and he appeals alleging error on Counts 1, 3, 4 and 5. We affirm as to Counts 4 and 5, and reverse as to Counts 1 and 3.

The relevant facts are these: In late 1973, Terranova became involved with one James Westover in connection with the anticipated purchase of the Little King Ranch near Granby, Colorado. This ranch is an elaborate and luxurious development containing 117 acres upon which are located guest houses and other buildings, together with tenant recreational facilities capable of accommodating 120 people. Title to the ranch was held by a bank which had foreclosed on it at the time of the bankruptcy of its previous owner. Westover and a group of wealthy, and in some instances prominent, persons from this country and abroad became interested in purchasing the property and developing it into a private club for affluent members. To this end they formed a Colorado corporation, Little King Ranch, Limited, which was to acquire the property. Terranova became secretary and treasurer of the corporation.

Terranova, Westover, and others involved with the corporation met about five times with two individuals who were undercover agents for the [38 Colo.App. 479] Colorado Crime Strike Force. The agents masqueraded as underworld figures who had large sums of money to invest. Numerous representations were made to the agents regarding the ranch. Among these representations were the assignment of a grossly inflated value to the ranch, a claim that certain nationally prominent

Page 365

and wealthy individuals would be part of the organization, and a claim that 337 millionaires had been enlisted as members. Subsequently, Terranova and others offered to sell the agents a 'membership' in the ranch for $6,000 and stock in the Little King corporation 'worth' $42,000 at a fifty percent discount. The agents agreed to purchase $20,000 worth of stock.

A meeting was held to consummate the sale at which Terranova produced a stock certificate signed by him and the corporation's attorney who had allegedly received a power of attorney from the corporation's president. The agent testified that Terranova said the stock was registered, and the agent then called the corporation's attorney who verified the registration and said the stock could be sold. Having supposedly obtained the attorney's advice that the stock could be sold, the agent consummated the purchase and Terranova and others were arrested.

It is undisputed that no power of attorney had been obtained, that the stock was not registered, that it was valueless, and that Terranova did not have a security salesman's license. And, the corporation did not acquire title to the ranch.

SCIENTER

At trial, when the corporation's attorney was called to testify as to the advice he had given Terranova regarding the legality of the sale of the stock, his testimony was curtailed. This ruling was based on the judge's determination that scienter, I.e., intent to deceive, manipulate, or defraud, was not an element of Counts 3, 4 and 5 and thus reliance on advice of counsel was irrelevant.

That ruling is the basis of Terranova's first contention of error. We hold that scienter is an element of the crime charged in Count 3 (the Fraudulent Practices charge,) but that it is not an element of Count 4 (the Sale Without a License charge) and Count 5 (the Sale of Unregistered Securities charge).

The jury instruction relating to those counts read as follows:

'With respect to Counts Three, Four and Five, the offenses charged Are all crimes of strict liability, requiring no proof of specific intent. Intent to commit the crime need not be shown, only the intent to act. The voluntary commission of the forbidden act constitutes the crime charged. This is what is meant by the act of the defendant being done 'willfully.'

'The requirement for criminal liability of these crimes is the performance by a person of conduct which includes a voluntary act or the omission to perform an act which he is physically capable of performing.' (emphasis [38 Colo.App. 480] supplied)

Thus, if scienter is an element of any of the above counts the jury instruction was improper.

The statute under which Terranova was convicted in Count 3, C.R.S. 1963, 125--1--1, now § 11--51--123, C.R.S. 1973, provides that:

'(1) It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly:

(a) To employ any device, scheme, or artifice to defraud;

(b) To make any untrue statement of a material fact or to omit 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) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.'

This section is identical to § 101 of the Uniform Securities Act, which Act Colorado has adopted. In Uniform Securities Act § 101, 7 Uniform Laws Annot. 695 (Commissioner's Note), it is stated:

'This section is substantially the Securities & Exchange Commission's Rule X--

Page 366

10B--5, 17 Code Fed.Regs. § 240.10b--5 . . ..' 1

While there are no Colorado cases construing the pertinent section of our Uniform Securities Act, our Supreme Court, in interpreting other sections, has stated that, 'insofar as the provisions and purposes of our statute parallel those of the federal enactments, such federal authorities are highly persuasive.' Lowery v. Ford Hill Investment Co., Colo., 556 P.2d 1201, (announced November 15, 1976). See also Sauer v. Hays, 36 Colo.App. 190, 539 P.2d 1343 (1975). Consequently we look to Federal court interpretation of Rule 10b--5 and the nature of the intent required to sustain a violation of the rule.

Since the promulgation of Rule 10b--5, Federal court decisions have been at odds as to whether scienter was an element in a charge of violation of the rule. See Annot., 20 A.L.R.Fed. 227.

The recent case of Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976), however, appears to have resolved the inconsistencies previously present in this area. The specific issue resolved by the...

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29 practice notes
  • State v. Andresen, (SC 16437)
    • United States
    • Supreme Court of Connecticut
    • May 29, 2001
    ...security by an unlicensed person ... as it would be in a prosecution for a speeding violation.'" Id., 151, quoting People v. Terranova, 38 Colo. App. 476, 483, 563 P.2d 363 As noted previously, the criminal provisions of CUSA; General Statutes § 36b-28; prohibit "wilful" violations thereof.......
  • Allen v. Martin, No. 06CA1768.
    • United States
    • Colorado Court of Appeals of Colorado
    • June 12, 2008
    ...is not an absolute defense to the above [fraud] charges, but rather merely a factor for the jury to consider." People v. Terranova, 38 Colo.App. 476, 481, 563 P.2d 363, 366 (1976); see also People v. Hoover, 165 P.3d 784, 792 (Colo.App.2006)(citing Terranova with approval, but determining t......
  • People v. Drake, No. 84SA34
    • United States
    • Colorado Supreme Court of Colorado
    • January 11, 1988
    ...of a misdemeanor conviction for general impeachment purposes. See People v. Sasson, 628 P.2d 120 (Colo.App.1980); People v. Terranova, 38 Colo.App. 476, 563 P.2d 363 (1976). Under these circumstances, the trial court did not abuse its discretion in sustaining the prosecution's objection to ......
  • State v. Kreminski
    • United States
    • Supreme Court of Connecticut
    • June 26, 1979
    ...persons, it has been held that scienter or awareness of a licensing requirement is not essential for a violation. People v. Terranova, 38 Colo.App. 476, 482, 563 P.2d 363 (1977); State v. Burrow, 13 Ariz.App. 130, 132, 474 P.2d 849 (1970). "(S)tate of mind is of as little relevance in a cha......
  • Request a trial to view additional results
29 cases
  • State v. Andresen, (SC 16437)
    • United States
    • Supreme Court of Connecticut
    • May 29, 2001
    ...security by an unlicensed person ... as it would be in a prosecution for a speeding violation.'" Id., 151, quoting People v. Terranova, 38 Colo. App. 476, 483, 563 P.2d 363 As noted previously, the criminal provisions of CUSA; General Statutes § 36b-28; prohibit "wilful" violations thereof.......
  • Allen v. Martin, No. 06CA1768.
    • United States
    • Colorado Court of Appeals of Colorado
    • June 12, 2008
    ...is not an absolute defense to the above [fraud] charges, but rather merely a factor for the jury to consider." People v. Terranova, 38 Colo.App. 476, 481, 563 P.2d 363, 366 (1976); see also People v. Hoover, 165 P.3d 784, 792 (Colo.App.2006)(citing Terranova with approval, but determining t......
  • People v. Drake, No. 84SA34
    • United States
    • Colorado Supreme Court of Colorado
    • January 11, 1988
    ...of a misdemeanor conviction for general impeachment purposes. See People v. Sasson, 628 P.2d 120 (Colo.App.1980); People v. Terranova, 38 Colo.App. 476, 563 P.2d 363 (1976). Under these circumstances, the trial court did not abuse its discretion in sustaining the prosecution's objection to ......
  • State v. Kreminski
    • United States
    • Supreme Court of Connecticut
    • June 26, 1979
    ...persons, it has been held that scienter or awareness of a licensing requirement is not essential for a violation. People v. Terranova, 38 Colo.App. 476, 482, 563 P.2d 363 (1977); State v. Burrow, 13 Ariz.App. 130, 132, 474 P.2d 849 (1970). "(S)tate of mind is of as little relevance in a cha......
  • Request a trial to view additional results

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