Probst v. State

• Decision Date: 05 March 1991
• Docket Number: No. F-89-77,F-89-77
• Citation: 807 P.2d 279
• Parties: William Franklin PROBST, Appellant, v. STATE of Oklahoma, Appellee.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Criminal Appeals of Oklahoma

Page 279

807 P.2d 279

William Franklin PROBST, Appellant, v. STATE of Oklahoma, Appellee.

No. F-89-77.

Court of Criminal Appeals of Oklahoma.

March 5, 1991.

Rehearing Denied April 10, 1991.

An Appeal From the District Court of Canadian County; Edward C. Cunningham, District Judge.

WILLIAM FRANKLIN PROBST, Appellant, was tried in a non-jury trial for the crimes of Count I, Offer and Sale of Unregistered Securities; Count II, Failure to Register as Broker-Dealer or Agent; Count III, Fraud in the Offer and Sale of Securities; and Count IV, Embezzlement by Trustee, in Case No. CRF-87-429 in the District Court of Canadian County before the Honorable Edward C. Cunningham, District Judge. At the preliminary hearing, the Honorable Ken Dickerson, Special Judge of Canadian County, sustained the defendant's demurrer to all four counts. On a Rule 6 appeal by the State, the Honorable Edward C. Cunningham, District Judge, reinstated Counts I, II and III. The trial court set punishment at three years imprisonment and a fine of $5,000 on each count; sentences ordered to run concurrently. From this judgment and sentence Edward A. Reed, Danny K. Shadid, Oklahoma City, for appellant.

appellant has perfected his appeal. AFFIRMED.

Robert H. Henry, Atty. Gen., Sandra D. Howard, Asst. Atty. Gen., Oklahoma City, for appellee.

OPINION

JOHNSON, Judge:

WILLIAM FRANKLIN PROBST, appellant, was charged with the crimes of Offer and Sale of Unregistered Securities, in violation of 71 O.S.1981, § 301, Count I; Failure to Register as Broker-Dealer or Agent, in violation of 71 O.S.1981, § 201, Count II; Fraud in the Offer and Sale of Securities, in violation of 71 O.S.1981, § 101, Count III; and, Embezzlement by Trustee, in violation of 21 O.S.1981, § 1454, Count IV, in Case No. CRF-87-429 in the District Court of Canadian County. At the preliminary hearing, the Honorable Ken Dickerson, Special Judge of Canadian County, sustained appellant's demurrer to all four counts. However, on the State's Rule 6 appeal (now 22 O.S.1981, § 1089.1 et seq.), the Honorable Edward C. Cunningham, District Judge, reinstated Counts I, II and III. Appellant was represented by counsel in a non-jury trial. The trial court returned a verdict of guilty on all three counts and set punishment at three (3) years imprisonment and a $5,000.00 fine for each count. The trial court ordered the sentences to run concurrently. From these Judgments and Sentences, appellant appeals.

In his first assignment of error, appellant contends that the district court erred in reversing the decision of the preliminary hearing magistrate with regard to Counts I, II and III because the State failed to present sufficient evidence that a security existed. We will, therefore, review the evidence presented at the preliminary hearing.

Prior to any testimony, both parties stipulated that appellant was not registered with the Department of Securities as an investment advisor, agent, broker, or dealer nor was the Charlestown Limited Partnership registered with the Department of Securities. The first witness, Barbara Yanda, testified that on December 18, 1984, she and her husband hired appellant for his estate planning services. At this initial meeting, Mrs. Yanda gave appellant a check made payable to "Stonemark International" for $5,000.00 as the first installment for his fee. The Yandas met with appellant again on December 20, 1984, at which time they paid appellant $10,000 as the balance of his fee. This check was also made payable to "Stonemark International."

During this second meeting, appellant also informed the Yandas of some apartments being built in Edmond and advised them that if they invested in the apartments, they would receive back their investment and, in addition, some of the profit when the apartments were sold. At that time, Mrs. Yanda gave appellant a check for $100,000.00. This check was made payable to "Alexco" and was designated for the "Edmond Project." Mrs. Yanda admitted that she did not know if appellant owned Stonemark International nor did she know if he had any ownership interest in the corporation.

Next, Mary Jackson testified that she had been a secretary for Glen Vance at the Commercial Funding Corporation for fifteen years. During her tenure, she stated that she performed duties for many corporations which were located in the Commercial Funding Corporation building, including ALEXCO. Ms. Jackson testified that appellant moved into the building in 1981. She stated that she performed duties for appellant which included typing the articles of incorporation for Stonemark International. Ms. Jackson identified some minutes from a meeting of the directors of Stonemark, which listed appellant as the chairman. Ms. Jackson stated that in 1982/1983, Commercial Funding put Stonemark's estate planning services on its computer. She claimed that Commercial Funding and ALEXCO were connected in that the same principles were involved in both companies. Ms. Jackson testified that Stonemark moved out of the building in 1983, but that appellant came by approximately four times a week to pick up checks payable to Stonemark from ALEXCO and Commercial Funding. Ms. Jackson admitted that the checks were loans, but she was unaware whether any of the loans had ever been repaid. Ms. Jackson also stated that appellant frequently delivered checks to her that were to be invested in a specific partnership or joint venture. Finally, Ms. Jackson noted that estate planning services had been performed for the same people that appellant brought checks in on.

Michael Mulligan testified that on December 31, 1984, he was elected president of ALEXCO. He testified that as president, he had custody of the financial and business records of ALEXCO and also some documents from Commercial Funding, which he claimed was a subsidiary of ALEXCO. Mr. Mulligan also stated that he possessed some books and records of Stonemark International. During Mr. Mulligan's examination of the records of the various corporations, he analyzed a Charlestown partnership. Mr. Mulligan testified that Charleston was a limited partnership created with ALEXCO as the general partner, and designed to build and construct an apartment complex in Edmond. He also discovered that the option for the land on which the apartments were to be built had expired in November 1984. Based on his examination of the records, Mr. Mulligan testified that it was his belief that the Yandas' check had been included among the investors of the Charleston Project. Mr. Mulligan stated that based on his investigation, he found that a relationship existed between ALEXCO, Stonemark and Charlestown. He had concluded that Stonemark was the money raising arm of ALEXCO, and that the majority of the money raised for Charlestown was raised through Stonemark. Mr. Mulligan testified that it was fairly apparent that since the Stonemark had no money at that time, money was coming back to the corporation and used in matters unrelated to the Charleston Project. He estimated that approximately 20 percent of the funding raised through Stonemark went back to Stonemark. Mr. Mulligan further testified that on January 17, he received a telephone call from Glen Vance requesting that he meet Mr. Vance and appellant in the Liberty National Bank lobby. When he arrived, Mr. Vance and appellant had prepared cashier's checks and needed Mr. Mulligan to endorse them for ALEXCO. Mr. Mulligan testified that one of the checks was payable to appellant as his fee for developing the investor.

The Yandas both testified that they did not understand they would have to do anything as it related to the building of the project or the sale of same. They stated they signed papers but never received a copy of blank or signed papers. Glen Vance testified in actuality the investors had no managerial duties and he doubted if they were ever told that they had the right to exercise any control as it relates to the investment. Also, the court asked about the Yandas understanding as to what duty they had to assist in the management and again the parties stated they were not told of the right or duty to assist.

Several of the facts that stand out relating to this particular fraud come from testimony at the trial. It should be noted that the project never got off the ground and that the option to purchase the property expired and the land was not purchased. Further, Jesse Arvelos who went to work for Stonemark in 1982 as an auditor, testified that he worked closely with the appellant. He testified that the appellant found his customers from referrals or the county clerk's office and the land records. He further testified that he learned that typical customers were wealthy farmers. He further testified that as a part of the appellant's tax planning, he would suggest that the clients invest in a construction site or security. He stated that he never did an estate plan with the appellant where the clients were not also asked to invest in a project of some sort and further, that the appellant received a finders fee for putting money into these investments. Finally, the appellant's son, Rocky Probst, testified as to facts such as where his father obtained his clients, that is, as to referrals or from public courthouse records. Rocky stated that he had worked in the business with his father who wanted to show him how the business was performed; further, that the appellant did not explain to his clients the relationships between the various companies. He also testified that the Charlestown Associates was a "hokey adventure to raise money".

The appellant then interposed a demurrer to the State's evidence, and, after receiving argument from both sides, the court determined that Counts I, II and III must be linked to a security and in order to bind appellant over, the Edmond Project had to be linked to the Charleston Associates, a Limited Partnership. After a recitation of its view of the evidence, the...