State v. Kerekes

• Decision Date: 16 December 1980
• Docket Number: No. 16489,16489
• Citation: 622 P.2d 1161
• Parties: STATE of Utah, Plaintiff and Respondent, v. Richard Karl KEREKES, Defendant and Appellant.
• Court: Utah Supreme Court

Page 1161

622 P.2d 1161

STATE of Utah, Plaintiff and Respondent, v. Richard Karl KEREKES, Defendant and Appellant.

No. 16489.

Supreme Court of Utah.

Dec. 16, 1980.

Joseph C. Fratto, Jr., of Salt Lake Legal Defenders Association, Salt Lake City, for defendant and appellant.

Robert B. Hansen, Atty. Gen., Robert R. Wallace, Asst. Atty. Gen., Salt Lake City, for plaintiff and respondent.

STEWART, Justice:

Defendant appeals from his conviction by a jury of eleven counts of theft by deception in violation of U.C.A. § 76-6-405. ¹ We affirm.

There was sufficient evidence to justify the jury in believing the following: In 1976 defendant became involved with Rex Parsons and certain other persons in planning a scheme to sell vending machines. The price was to be paid in advance, but, except for some early deliveries to give the appearance of a legitimate business, the machines would not actually be delivered to investors. Such a scheme was established in Arizona, and subsequently a business enterprise known as Fruit Juice, Inc., and Fruit Juice of Salt Lake was incorporated in Utah. The business used a phone solicitation approach to find people willing to invest money to purchase and place one or more fruit juice vending machines that would yield a monthly profit. Employees were hired by defendant and others to make the calls and to follow up by meeting with interested persons. Office managers ran the day-to-day operation of the business. Defendant commuted from Arizona and spent one or two days a week at the Salt Lake City business offices.

Vending machines were sold and delivered to some investors. A number of people, however, signed contracts and paid for the machines but did not receive them. Eleven of these persons were complaining witnesses named in the information. They testified that when they became concerned about the business' failure to deliver their machines, they unsuccessfully tried to contact Fruit Juice, Inc., and eventually became aware that it was no longer conducting business. In fact, the office was closed down and business ceased in August 1977. Defendant was charged with and convicted of theft by deception.

Defendant asserts in the alternative that his conviction should be reversed, that he should be granted a new trial, or that he should be sentenced pursuant to the lesser violation of fraudulent business practices, § 76-6-507. He relies on the following four contentions: (1) testimony of co-conspirators was erroneously admitted; (2) testimony of accomplices was not corroborated; (3) defendant's punishment should have been based on § 76-6507 because it is more specific regarding the illegal conduct alleged and has a lesser penalty than theft by deception; and (4) the evidence was insufficient to support the jury's verdict.

We consider first defendant's challenge to the admission of the testimony of Rex Parsons and Howard Woodall, who are characterized as co-conspirators. Their testimony supported the State's characterization of Fruit Juice, Inc., as a front for a scheme to obtain money from investors and then leave town without delivering the promised machines. Parsons testified that he was the person who presented to defendant the idea to set up the scheme in Arizona, and later Parsons and defendant came to Salt Lake City to establish a similar operation. Woodall testified that he took part in some of the initial conversations in Arizona about the plan, but that he discontinued his contact with the defendant and Parsons and had no part in the subsequent operation, either in Arizona or Utah. Woodall's testimony as to his noninvolvement was uncontradicted.

Defendant contends that the damaging statements contained in the testimony of these two men, whom be characterizes as co-conspirators, lacked proper foundation and were inadmissible hearsay statements. Rule 63(9)(b), Utah Rules of Evidence, entitled "Vicarious Admissions," allows the admission of hearsay statements of co-conspirators made in the course of a conspiracy. ² Defendant properly asserts that the admissibility of hearsay statements of co-conspirators falling within this exception must be predicated upon independent evidence of the existence of the conspiracy, apart from co-conspirator hearsay declarations. State v. Erwin, 101 Utah 365, 120 P.2d 285 (1941).

Defendant has, however, improperly characterized the nature of the challenged testimony, and his objection to its admissibility is without merit. Parsons and Woodall testified primarily to statements constituting admissions by the defendant concerning his criminal intent. Out-of-court statements of a party are not subject to the foundational requirements of Rule 63(9) but are admissible pursuant to Rule 63(7), which embodies the age-old common law exception to the hearsay rule known as an admission of a party.

Defendant concedes the admissibility of testimony by the witnesses as to what they themselves did or said and as to what the defendant did or said. But defendant contends that the testimony of Parsons and Woodall was "tainted" when placed in context with testimony as to what persons other than the defendant or the witnesses were doing or saying during the course of the alleged conspiracy. Defendant has not, however, cited any objectionable testimony by Parsons or Woodall as to third-party out-of-court statements. The only statements attributed to third parties were volunteered by the witnesses, and no valid objection or motion to strike was made in response to them. These included out-of-court statements allegedly made by Bill Wilson, who had been involved in a similar scheme in Colorado, and an attorney named Dick Berry, who advised the group on incorporation requirements. These statements were made not to Utah investors but only within the small group of original organizers. In the absence of a valid objection or motion to strike, the admissibility of hearsay may not be raised on appeal.

Defendant further contends that the testimony of Parsons and Woodall regarding activities that took place in Arizona was inadmissible under Rule 55 of the Utah Rules of Evidence. ³ That rule proscribes evidence of another crime or civil wrong unless it is relevant to prove certain material facts, such as motive, intent, plan, or knowledge. State v. Daniels, Utah, 584 P.2d 880 (1978). Evidence of prior acts admissible under Rule 55 is also subject to a determination by the trial judge that its probative value is not outweighed by the possibility of undue prejudice. State v. Gibson, Utah, 565 P.2d 783 (1977).

It is the sound policy of the law that evidence of prior crimes may not be admitted to show the propensity of a defendant to commit another crime. But in situations where evidence of other crimes or wrongs is particularly relevant in proving a specific element of the crime for which the defendant is on trial, the evidence may be allowed for that purpose. See State v. Lopez, 22 Utah 2d 257, 451 P.2d 880 (1978), State v. Dickson, 12 Utah 2d 8, 361 P.2d 412 (1961).

As to the testimony regarding planning meetings which took place in Arizona, defendant's argument based on Rule 55 misses the mark. The testimony of Parsons and Woodall concerning discussions and meetings in Arizona related directly to the plan for the Salt Lake City operation, which itself gave rise to the criminal charges against defendant. This evidence is not governed by Rule 55 because it constituted an early step in the effectuation of the criminal scheme that was consummated in Salt Lake City.

Defendant also argues that evidence of the actual operation of the Arizona fruit juice business was subject to Rule 55 and that the State did not establish the required foundation for its admissibility. However, Parsons testified that he and the defendant were among those who intended to "take the money and run" once the business became established. They sold and delivered some machines to investors, but failed to deliver machines to others and kept the purchase price. The Arizona scheme was terminated when an associate absconded with the funds collected.

Evidence of defendant's prior acts similar to those charged in this case was admissible to establish defendant's intent and modus operandi. Such evidence need not necessarily rise to the level of a criminal offense. United States v. Simmons, 503 F.2d 831 (5th Cir. 1974).

The similarity of the Arizona scheme and the Salt Lake City activities, their proximity in time, and their peculiarity serve to establish defendant's intent and knowledge regarding the illegal nature of the operation. Therefore, this evidence was admissible under Rule 55. Cf. Weeks v. United States, 313 F.2d 688 (10th Cir. 1963).

Defendant further asserts that as a prerequisite to the admission of evidence of prior wrongdoing for any permissible purpose, it is necessary to show by clear and convincing proof the illegality of the prior act. ⁴ We do not find it necessary in this case to reach the issue of the burden of proof regarding evidence of prior wrongdoing. No instruction on the burden of proof was submitted by defendant and none was given to the jury. Defendant's failure to request a jury instruction or object to the lack of an instruction that evidence of prior bad acts must be shown by clear and convincing proof precludes the issue from consideration on appeal.

Defendant also contends that the testimony of Parsons and Woodall was accomplice testimony that was not corroborated as required by § 77-31-18, which, though later amended, was applicable to the present offense. Section 77-31-18 provided:

A conviction shall not be had on the testimony of an accomplice, unless he is corroborated by other evidence, which in itself and without the aid of the testimony of the accomplice tends to connect the defendant with the commission of the offense; and the corroboration shall not be sufficient, if it merely shows the commission of the offense or the circumstances thereof.

An accomplice, as...