State v. Collins

• Decision Date: 19 June 2007
• Docket Number: No. 25,942.,25,942.
• Parties: STATE of New Mexico, Plaintiff-Appellee, v. Joseph C. COLLINS, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

166 P.3d 480

2007 NMCA 106

STATE of New Mexico, Plaintiff-Appellee, v. Joseph C. COLLINS, Defendant-Appellant.

No. 25,942.

Court of Appeals of New Mexico.

June 19, 2007.

Certiorari Denied, No. 30,531, August 8, 2007.

Gary K. King, Attorney General, Santa Fe, NM, Joel Jacobsen, Assistant Attorney General, Albuquerque, NM, for Appellee.

Law Offices of Nancy L. Simmons, P.C., Nancy L. Simmons, Albuquerque, NM, for Appellant.

OPINION

PICKARD, Judge.

{1} Defendant appeals his convictions for multiple counts of securities fraud and the sale of unregistered securities, contrary to the New Mexico Securities Act of 1986, NMSA 1978, §§ 58-13B-1 to -57 (1986, as amended through 2004) (Securities Act). On appeal, Defendant raises five issues regarding (1) the district court's restitution order, (2) double jeopardy, (3) the six-month rule, (4) sufficiency of the evidence, and (5) conflict of interest. Finding no error, we affirm Defendant's convictions.

BACKGROUND

{2} This is the third appeal to this Court involving Defendant and the criminal and administrative proceedings resulting from Defendant's osteopathic practice in Alamogordo, New Mexico. See State v. Collins, No. 25,941 slip op. (N.M. Ct.App. April 16, 2007); State v. Kirby, 2003-NMCA-074, 133 N.M. 782, 70 P.3d 772. In 1985, Defendant opened an osteopathic clinic in Alamogordo. The clinic was financed by a number of Defendant's patients, who loaned him money and were issued promissory notes in return. Kirby, 2003-NMCA-074, ¶ 42.

{3} Defendant and his wife filed for bankruptcy in 1998. The bankruptcy action was challenged by thirty-nine people who had loaned money to fund Defendant's clinic and who had not been repaid. The debts were eventually discharged by the bankruptcy court. In discharging the debts, the bankruptcy court found that Defendant and his wife did not misrepresent their financial condition to those who had loaned money to the clinic.

{4} Defendant's actions also became the subject of an investigation and administrative proceeding by the Securities Division of the New Mexico Regulation and Licensing Department, the subject of which constituted the first of Defendant's appeals before our Court and is discussed in greater detail in Kirby. Defendant was also indicted on criminal charges for his conduct, and he was subsequently convicted on multiple counts of securities fraud and the sale of unregistered securities. His appeal of those convictions is the subject of this opinion.

DISCUSSION

{5} On appeal, Defendant first argues that the criminal proceedings against him were brought as an end-run around the provisions of federal bankruptcy law, which had provided for the discharge of Defendant's debts. As such, Defendant contends that the district court erred by ordering restitution to the noteholders as part of Defendant's judgment and sentence. Second, Defendant asserts that his convictions for securities fraud for each issuance of a promissory note and for each renewal or "rollover" of existing promissory notes violated double jeopardy. Defendant's third issue on appeal is that the district court erred by denying a motion to dismiss the charges against Defendant for violation of the six-month rule under Rule 5-604 NMRA. Fourth, Defendant contends that because promissory notes are not securities or investments in a business, the evidence was insufficient to support his convictions. Lastly, Defendant argues that the district attorney's office should have been disqualified for conflict of interest and that the district court's failure to do so necessitates the reversal of his convictions. We address each issue in turn, and we affirm.

Bankruptcy and Restitution

{6} As part of the district court's judgment and sentence, Defendant was ordered to pay restitution to the victims of his convictions. On appeal, Defendant contends that because the debts in question were previously discharged by a bankruptcy court years earlier, the district court erred by ordering restitution in the present case. We disagree.

{7} It is commonly recognized that "criminal restitution may generally be imposed despite a previous discharge of the underlying debts in bankruptcy[.]" Cabla v. State, 6 S.W.3d 543, 550 (Tex.Crim.App.1999) (Meyers, J., concurring). Indeed, our Court in State v. Muzio, 105 N.M. 352, 355, 732 P.2d 879, 882 (Ct.App.1987), recognized this very principle. In Muzio, the defendant passed a number of bad checks and subsequently filed for bankruptcy. Id. at 353, 732 P.2d at 880. The State then initiated criminal proceedings against the defendant under the Worthless Check Act, NMSA 1978, §§ 30-36-1 to -10 (1963, as amended through 1984). Muzio, 105 N.M. at 353, 732 P.2d at 880. The defendant was convicted of three of the six charges against him. Id. On appeal, the defendant argued "that the state criminal prosecution against him was improper under the Supremacy Clause of the federal constitution." Id. (citing U.S. Const. art. VI, cl. 2). The defendant also contended that the district court erroneously concluded that it lacked the power to order restitution when the court instead sentenced the defendant to a prison term. Id. at 355, 732 P.2d at 882.

{8} In rejecting the defendant's contention that the Supremacy Clause barred the criminal proceedings against him, our Court recognized that "[t]he provisions of the Bankruptcy Act are not so intrusive so as to pardon a bankrupt from the consequences of a criminal offense." Id. at 354, 732 P.2d at 881. We further concluded that "[t]he filing by a defendant for bankruptcy or the obtaining of a discharge in bankruptcy does not void a restitution order imposed as a condition of probation under a state criminal judgment." Id. at 355, 732 P.2d at 882.

{9} As such, we reject Defendant's contention in his brief in chief that the restitution order was barred by the earlier bankruptcy proceeding. Defendant argues, however, that even if the restitution order was permissible, the initiation of criminal proceedings against him and the restitution order imposed by his sentence demonstrate that the State prosecuted Defendant solely to collect upon his debts. As such, Defendant asserts that the restitution order was "nothing more than an attempt to perform an end-run around the purposes of bankruptcy law" and should therefore be reversed.

{10} In support of his contention that the restitution order in the present case was improper, Defendant argues that because violations of the Securities Act do not require a demonstration of actual criminal intent, the State's only interest in prosecuting Defendant must have been to seek compensation for Defendant's victims. Moreover, Defendant asserts that the judge's comments while imposing restitution further demonstrate that the order was merely an end-run around the bankruptcy code. We reject Defendant's contention.

{11} "The purpose of federal bankruptcy law is to relieve the honest debtor from the weight of oppressive indebtedness and permit him to start afresh free from the obligations and responsibilities consequent upon business misfortunes." Muzio, 105 N.M. at 354, 732 P.2d at 881 (internal quotation marks and citations omitted). In Muzio, our Court recognized that the purpose of the bankruptcy code differed from that of the Worthless Check Act, which was "a statute created to punish an evil intent and an evil action." Id. Although we recognize that a specific intent to defraud is not required for conviction under the Securities Act, see State v. Ross, 104 N.M. 23, 26, 715 P.2d 471, 474 (Ct.App.1986), we disagree with Defendant's assertion that such a fact demonstrates that the only purpose behind prosecutions for violations of the Act is to obtain recompense for investors who lose money. As recognized by our Court,

The Securities Act, as a whole, has remedial purpose. It is comprehensive. Its extensive regulatory and administrative provisions are aimed at protecting investors against unfair, deceptive, and fraudulent practices in the sale of securities....

The Act was written "with all encompassing strokes to protect the public," and to further "the legitimate governmental purpose of protecting the public from the many means promoters may use to separate the unwary from their money." In enacting the Act, our Legislature undoubtedly shared the legislative intent behind the Securities Exchange Act of 1934, which was "to insure honest securities markets and thereby promote investor confidence ... [and] to substitute a philosophy of full disclosure for the philosophy of caveat emptor and thus to achieve a high standard of business ethics in the securities industry."

Kirby, 2003-NMCA-074, ¶¶ 23-24 (citations omitted). Thus, beyond protecting individual investors, the Act protects a number of important governmental interests, including preserving honest markets and investor confidence, encouraging full disclosure to investors, and maintaining high standards of business ethics among those dealing in securities. See id.

{12} Moreover, criminal penalties under the Act are permitted only where an individual "willfully violates" its provisions. Id. ¶ 32 (citing § 58-13B-39(A)). Thus, the Act also serves to punish an individual for his or her willful or intentional behavior. See Kelly v. Robinson, 479 U.S. 36, 52, 107 S.Ct. 353, 93 L.Ed.2d 216 (1986) ("[T]he decision to impose restitution generally does not turn on the victim's injury, but on the penal goals of the State and the situation of the defendant."). "Society is benefited by punishment, including restitution, that is directly related to the offenses for which a defendant has been charged and convicted." Cabla, 6 S.W.3d at 545-46. We therefore reject Defendant's assertion that the sole purpose behind a criminal prosecution under the Act is to seek compensation for those harmed by Defendant's violations of the Act.

{13} Additionally, we reject Defendant's claim that the district court's comments during sentencing...