State v. Garrette

• Court: Missouri Court of Appeals
• Writing for the Court: CROW; PREWITT
• Citation: State v. Garrette, 699 S.W.2d 468 (Mo. App. 1985)
• Decision Date: 27 August 1985
• Docket Number: No. 13617,13617
• Parties: Blue Sky L. Rep. P 72,343 STATE of Missouri, Respondent, v. Robert J. GARRETTE, Appellant.

Page 468

699 S.W.2d 468

Blue Sky L. Rep. P 72,343

STATE of Missouri, Respondent, v. Robert J. GARRETTE, Appellant.

No. 13617.

Missouri Court of Appeals,

Southern District,

Division Three.

Aug. 27, 1985.

Motion for Rehearing or Transfer Denied

Sept. 18, 1985.

Application to Transfer Denied

Nov. 21, 1985.

David E. Woods, Public Defender, Poplar Bluff, for appellant.

William L. Webster, Atty. Gen., Henry T. Herschel, Asst. Atty. Gen., Jefferson City, for respondent.

CROW, Presiding Judge.

Robert J. Garrette ("defendant"), tried as a persistent offender, §§ 558.016, 558.021, Laws 1981, pp. 636-37, was found guilty by a jury of five counts of fraud in the sale of a security, in violation of § 409.101, ¹ and one count of offering an unregistered security for sale, in violation of § 409.301. The trial court sentenced defendant to 5 years' imprisonment on each count and ordered all sentences to run concurrently. Defendant appeals, briefing 28 assignments of error.

The issues we must decide are easier stated after a synopsis of the case.

All charges against defendant were based on conduct allegedly engaged in by him in connection with an enterprise in Wayne County, Missouri, in which Buffs Minks, Inc., and sundry allied companies raised and sold fur-bearing animals. The concept of the operation is illustrated by an advertisement that appeared in a newspaper circulated in Palos Park, Illinois (a Chicago suburb), in February, 1974.

The advertisement outlined five different investment plans, each of which called for a down payment followed by monthly installments over a specified number of years. "Plan 4," a representative example, carried a total cost of $2,800, payable by a down payment of $400 and monthly installments of either $100 for 24 months or $50 for 48 months.

The funds were to be used to purchase five minks--four females and one male--and to pay for their feed and care.

During the first year, the minks were expected to produce, in the aggregate, 16 offspring ("kits"). Four females would be kept from the offspring and the remaining offspring would be sold, the proceeds going into the investor's account to provide feed and care for the herd in the upcoming year, during which the herd would have, of course, the four original females and the four new females.

During this second year, the minks were expected to produce 32 kits, with 8 females to be retained from this new generation and the remaining offspring sold. The proceeds would again go into the investor's account to provide feed and care. At this point, the herd would have 16 females.

By the tenth year, following the same procedure and assuming the annual reproduction remained constant, the herd would contain 2,048 females which would, in that year, produce 8,192 kits. At the end of the tenth year, all kits would be sold, but the basic herd would remain intact. Proceeds from the sale of the kits (projected at $185,958.40) would be disbursed by paying the investor $23,600 and placing the remainder in his account for feed and care of the herd. Each year thereafter the investor would receive $23,600 as long as he left his basic herd intact.

The name "Breeders United Fur Farm & Services" ² appears at the foot of the advertisement, followed by this: "for more information Call Collect Mr. Garrette." A telephone number was supplied.

The advertisement lists the following features:

"NO SELLING! Our marketing secures the sales of all your animals and or pelts with a minimum average to you, by contract agreement.

"NO LABOR! We do all the work involved in raising your mink for you. On the job training for those who wish to learn how to raise mink.

"COVERED BY INSURANCE! All mink are covered by insurance to avoid any loss of your mink herd.

"SECURED INVESTMENT! Your money secured by Inventory of mink."

Although the record does not indicate when or where the investment plans were first offered for sale, the Securities Commissioner of Indiana, on April 30, 1974, entered an order styled, "In the Matter of: R.J. Garrette and Breeders United Fur Farm and Services." The order recited, among other things, that the Commissioner had reason to believe that the "named persons" may be offering or may be about to offer to residents of Indiana, securities in the form of investment contracts, that said securities were not registered for sale in Indiana, that none of the named persons were registered as broker/dealers with the Indiana Securities Division, that none of the named persons were registered as agents with the Indiana Securities Division, and that "the respondent has made untrue statements of a material fact or has omitted to state a material fact necessary in order to make the statements made in the light of circumstances under which they were made, not misleading."

The order prohibited defendant and Breeders United Fur Farm and Services, their officers, agents and employees from selling, causing to be sold, offering, or causing to be offered for sale, any such securities in Indiana.

The Indiana order did not stymie the enlistment of investors, however, as illustrated by the testimony of Gail Turner.

Ms. Turner explained that she became acquainted with defendant and his wife, Bonnie, in 1975, and was hired by Bonnie in September or October of that year for "[t]yping and answering the phone" at a mink farm at Clubb, Missouri. Appearing on a printed letterhead used by the business was this:

"Breeders United Fur Farms & Services

Highway 34

Clubb, Missouri 63934

Phone: (314) 495 2312".

During Ms. Turner's tenure at the farm, her duties increased. She began keeping records, working on publications issued by the business, and handling payments received from "associates." She explained that an "associate" was a person who bought a "mink plan" in one of "the different corporations." A journal was maintained for each corporation and an entry was made reflecting the date, amount and payor of each check received. A file was opened for each newly recruited associate.

Associates were kept informed about activities on the farm by newsletters. A newsletter headed "Breeders United Fur Farms & Services" and dated November, 1975, carried a picture of defendant, identifying him as "General Manager." Describing defendant's role in the operation, the newsletter stated:

"He controls the finances on all the corporations. He is President of Buffs Minks, Inc. Buffs Minks, Inc. handles the caring for all the mink belonging to all the corporations. The other corporations pay Buffs Minks, Inc. for all these services. Mr. & Mrs. R.J. Garrette own about 90% of Buffs Minks, Inc."

Ms. Turner testified that defendant continued to perform such duties in ensuing years, up through most of 1979. By then, investors were not confined to investing only in mink plans; fox plans were also available.

On February 6, 1980, Buffs Minks, Inc., filed a voluntary petition "for relief under Chapter 11 of the Bankruptcy Code" in the United States Bankruptcy Court, Eastern District of Missouri. A schedule accompanying the petition revealed that bank accounts had been maintained in the names of numerous companies including the following 14: Elgin Mink Breeders, Inc.; Brookfield Mink Breeders, Inc.; South Elgin Mink Breeders, Inc.; Blue Island Mink Breeders, Inc.; Oak Lawn Mink Breeders, Inc.; Park Forest Mink Breeders, Inc.; Earl Park Mink Breeders, Inc.; Bartlett Mink Breeders, Inc.; Orland Park Mink Breeders, Inc.; Lakeland Mink Breeders, Inc.; Silver Lake Fox Farms, Inc.; Bridgeview Fox Farms, Inc.; Black Oak Fox Farms, Inc.; and Highland Mink Breeders, Inc. The accounts were in banks in Piedmont, Fredericktown, Greenville, Marble Hill, Lutesville and Poplar Bluff.

Records in the office of the Commissioner of Securities of Missouri show that neither Breeders United Fur Farms & Services nor any of the 14 companies listed above were ever registered in Missouri to sell securities. Records in the office of the Secretary of State of Missouri show that the following companies were never registered as foreign or domestic corporations or under the "Fictitious Name Act" ³: Bartlett Mink Breeders, Inc.; Black Oak Fox Farms, Inc.; Bridgeview Fox Farms, Inc.; Highland Mink Breeders, Inc.; Lakeland Mink Breeders, Inc.; Orland Park Mink Breeders, Inc.; and Silver Lake Fox Farms, Inc.

The original information was filed against defendant December 14, 1981, in the Circuit Court of Wayne County. It contained counts numbered I through IX. It was superseded by an amended information filed August 29, 1983. The first seven counts of the amended information charged the same offenses, respectively, as the first seven counts of the original information. Count VIII of the original information was not carried forward in the amended information. Count IX of the original information was carried forward, with minor changes, as Count VIII in the amended information.

During the instruction conference, which was conducted after completion of the evidence, the State announced it was entering a "nolle pros" as to Count IV of the amended information. The trial court thereupon announced that for the purpose of instructing the jury, Count V of the amended information would be designated Count IV. The State also announced it was entering a "nolle pros" as to Count VI of the amended information. Consequently, the trial court designated Count VII of the amended information as Count V for instruction purposes. This resulted in Count VIII of the amended information being submitted to the jury as Count VI in the instructions.

What has just been explained is charted thusly:

Count Number  Count Number
                in Original    in Amended     Count Number
                Information   Information   for Instructions
                     I             I               I
                     II            II              II
                     III           III             III
                     IV            IV
                     V             V               IV
                     VI            VI
                     VII           VII             V
                     VIII
                     IX

...