State v. Brown

• Decision Date: 18 July 2019
• Docket Number: No. 20161036-CA,20161036-CA
• Citation: 447 P.3d 1250
• Parties: STATE of Utah, Appellee, v. Tonia Schnae BROWN, Appellant.
• Court: Utah Court of Appeals

447 P.3d 1250

STATE of Utah, Appellee,

v.Tonia Schnae BROWN, Appellant.

No. 20161036-CA

Court of Appeals of Utah.

Filed July 18, 2019

Debra M. Nelson, Attorney for Appellant

Sean D. Reyes, Salt Lake City, and William M. Hains, Attorneys for Appellee

Judge Michele M. Christiansen Forster authored this Opinion, in which Judges Gregory K. Orme and Diana Hagen concurred.

Opinion

CHRISTIANSEN FORSTER, Judge:

¶1 Tonia Schnae Brown appeals her convictions on three counts of securities fraud, second-degree felonies. We affirm.

BACKGROUND

¶2 Two Utah residents, Victim and Friend, were introduced to Brown by a mutual friend (Advisor). Brown had informed Advisor that she had made a substantial amount of money as a commercial real estate broker prior to the financial crisis of 2008 but had moved her funds to offshore accounts at that time because she was concerned about the United States' financial system. She claimed to have just under $50 million in an account at InterBank, a bank operating out of Saint Vincent and the Grenadines, as well as $300,000 in an account with the Bank of China in Hong Kong. Brown represented that she owed $59,500 in value added taxes (VAT) to the Hong Kong government and that her accounts were frozen until she paid the money.

¶3 Brown signed a promissory note stating that she would pay Victim $1 million when her accounts were unfrozen if Victim would send Brown the $59,500 for the VAT. Brown assured Victim that "there was no risk" and she could return her money "at any time." Victim took out a home equity loan in the amount of $59,500 and wired the money as directed by Brown.

¶4 Instead of delivering the promised $1 million, Brown delivered a letter to Victim, purportedly from the Bank of China, stating that the VAT had increased and that an additional $80,500 was needed to pay the VAT. Brown signed a new promissory note in which she committed to deliver $2 million in exchange for the total $140,000 needed to pay the VAT, and Friend loaned Brown the additional $80,500.

¶5 Once again, Victim and Friend received a letter, purportedly from the Bank of China, informing them that an additional $210,000 was needed to release the frozen funds. Brown urged Victim and Friend to provide the additional funds, but instead Victim contacted the Federal Bureau of Investigation, the Securities and Exchange Commission, and a private attorney to report that she and Friend may have been defrauded by Brown. Victim and Friend made various attempts to recover the funds from Brown but were unsuccessful.

¶6 Victim also made her own inquiries, reaching out to the Hong Kong Monetary Authority (HKMA) and government authorities in Saint Vincent and the Grenadines, as well as hiring attorneys in Hong Kong to look into the validity of Brown's claims. She learned that Hong Kong does not have a VAT and that the documentation Brown had provided from both the Bank of China and the HKMA were likely not authentic. Victim also discovered that there was no record of InterBank in Saint Vincent and the Grenadines and that the address on InterBank's letterhead—appearing on a document provided by Brown—was invalid.

¶7 The State charged Brown with three counts of securities fraud in connection with this incident, all second-degree felonies. Brown elected to represent herself in the criminal case. But before the trial court allowed Brown to proceed pro se, it conducted a full colloquy regarding Brown's education, her understanding of the charges, her understanding of the law, and her constitutional right to have counsel appointed. The court "strongly urge[d]" Brown not to represent herself, but she elected to do so anyway. The court then accepted Brown's waiver of counsel, finding that it was knowing, voluntary, and intelligent.

¶8 The State called a securities expert, Bryan Allen, to testify at trial. Allen testified that "securities laws impose a requirement on ... sellers of securities, to provide full and fair disclosure." He explained that disclosure is fraudulent if the seller fails to provide an investor with "all material facts related to the investment" or "omit[s] ... any information that would make the statements ... misleading." Allen further defined "material" as "any[thing] that a reasonable investor would find important in deciding to purchase ... or sell the security."

¶9 During his testimony, Allen provided a list of "examples of what might be considered material facts or information in the securities industry," including (1) relevant information about the seller's business or industry; (2) information about the parties involved in the transaction, including their experience and education as well as any negative information about them, such as prior convictions, judgments against them, or prior bankruptcies; (3) how the money would be used and how it would be expected to generate a return for the investor; and (4) the risks involved in the investment.

¶10 When asked about his experience, Allen acknowledged that he was not an international lawyer and was not an expert in Hong Kong law. However, he asserted that he knew "enough about international finance" to recognize if a transaction "doesn't seem quite right."

¶11 The State called Allen to the stand a second time after he had the opportunity to observe the other witnesses' testimonies at trial. At that point, Allen opined that specific statements and omissions made by Brown would be "important to the average reasonable investor," including (1) that she had earned $50 million brokering commercial real estate, (2) that she was required to pay a VAT in Hong Kong, (3) that she banked with InterBank, (4) that she had previously received information suggesting that InterBank did not exist, (5) that she had several unpaid civil judgments against her, and (6) that she asserted there was "no risk" involved in the investment.

¶12 Finally, the State submitted two exhibits that Allen had relied on in forming his opinions (collectively, the printouts): (1) a printout from the website of the Saint Vincent and the Grenadines Financial Services Authority publicly warning that InterBank "is not and has never been registered or licensed by the St. Vincent and the Grenadines Financial Services Authority" and that the Authority "is not aware of any such business housed" at the address listed on the documents provided to Victim and Friend, and (2) a printout from the Hong Kong Government website stating that it has no VAT. Brown did not object to the admission of the printouts, even when asked by the court if she did. Allen then read portions of the printouts aloud to the jury and stated that the information in them had helped him form the basis of his opinion as to whether the transactions in this case had characteristics of securities fraud.

¶13 After all the evidence was submitted, the trial court met with the prosecutor and Brown to go over each of the State's proposed jury instructions. Instructions 33, 34, and 35 concerned the definition of willfulness, how a seller's duty to investigate impacts willfulness, and the effect of ignorance of fact on a willfulness finding. When the court learned that the definition of willfulness contained in the proposed instructions was not based on the Model Utah Jury Instructions, the court questioned the prosecutor about the accuracy of the instructions and whether he was aware of any contrary case law. The prosecutor replied that his office had been using the same definition of willfulness "for years" and represented that it was consistent with Utah case law, specifically State v. Chapman , 2014 UT App 255, 338 P.3d 230, which the prosecutor stated was the most recent case on the subject. Brown affirmatively stated that she understood each instruction and did not object to any of them.

¶14 Following trial, the jury convicted Brown on all three counts, and Brown was sentenced to three concurrent terms of one to fifteen years in prison and ordered to pay restitution of $140,000. Accepting the help of appointed counsel, Brown now appeals.

ISSUES AND STANDARDS OF REVIEW

¶15 Brown first argues that the jury instructions incorrectly instructed the jury regarding her duty to investigate and how that duty impacted a finding that she acted willfully. This issue was not preserved below, and Brown therefore asks us to review it under the doctrines of plain error and exceptional circumstances.

¶16 Brown also argues that she should be granted a new trial as a result of allegedly inappropriate expert testimony and the erroneous admission of the printouts. As with her challenge to the jury instructions, this issue was not raised below, and Brown asks us to review it for plain error.

¶17 In order to prevail on grounds of plain error, an appellant must show that "(i) [a]n error exists; (ii) the error should have been obvious to the trial court; and (iii) the error is harmful, i.e., absent the error, there is a reasonable likelihood of a more favorable outcome for the appellant." State v. Dunn , 850 P.2d 1201, 1208 (Utah 1993). "Exceptional circumstances is a doctrine that applies to rare procedural anomalies. We apply this exception sparingly, reserving it for the most unusual circumstances where our failure to consider an issue that was not properly preserved for appeal would have resulted in manifest injustice." In re K.A.S. , 2016 UT 55, ¶ 19, 390 P.3d 278 (quotation simplified).

¶18 Finally, Brown asserts that the cumulative effect of these errors requires that she be granted a new trial. "Under the cumulative error doctrine, we will reverse only if the cumulative effect of the several errors undermines our confidence that a fair trial was had." Dunn , 850 P.2d at 1229 (quotation simplified).

ANALYSIS

I. Jury Instructions

¶19 On appeal, Brown challenges several of the trial court's instructions to the jury. Brown did not raise any objection to the jury instructions in the trial court but has asked us to review her challenges on appeal on grounds of plain error and exceptional...