State v. Lacount

• Citation: 750 N.W.2d 780,2008 WI 59
• Decision Date: 10 June 2008
• Docket Number: No. 2006AP672-CR.,2006AP672-CR.
• Parties: STATE of Wisconsin, Plaintiff-Respondent, v. Louis H. LaCOUNT, Defendant-Appellant-Petitioner.
• Court: Wisconsin Supreme Court

750 N.W.2d 780

2008 WI 59

STATE of Wisconsin, Plaintiff-Respondent, v. Louis H. LaCOUNT, Defendant-Appellant-Petitioner.

No. 2006AP672-CR.

Supreme Court of Wisconsin.

Argued January 16, 2008.

Decided June 10, 2008.

For the defendant-appellant-petitioner there were briefs by T. Christopher Kelly and Kelly, Habermehl & Bushaw, S.C.,

Madison, and oral argument by T. Christopher Kelly.

For the plaintiff-respondent the cause was argued by James M. Freimuth, assistant attorney general, with whom on the brief was J.B. Van Hollen.

¶ 1 N. PATRICK CROOKS, J

This is a review of a published decision of the court of appeals¹ that affirmed the Circuit Court for Brown County, Judge William M. Atkinson, presiding.

¶ 2 Petitioner, Louis H. LaCount (LaCount), seeks review of a published decision of the Court of Appeals, which affirmed LaCount's convictions in the Circuit Court for Brown County for securities fraud and for theft by a bailee of property valued at more than $2,500. The Respondent is the State of Wisconsin (the State).

¶ 3 There are four principal issues upon review. The first issue is whether the circuit court erroneously admitted an attorney's expert opinion testimony that LaCount had engaged in a securities transaction. The second issue is whether the evidence presented at trial sufficiently supported LaCount's conviction for securities fraud. The third issue is whether the circuit court erred by not suppressing the results of the search of the office of Gates, Paul & Lear, L.L.C. (GP & L), which was a search that allegedly exceeded the scope of the search warrant. The fourth issue is whether the circuit court's finding that LaCount was a habitual criminal violated his right to a jury trial on that issue.

¶ 4 We affirm the decision of the court of appeals. Doing so, we hold as follows: first, that the circuit court did not erroneously exercise its discretion in admitting the expert opinion testimony of Attorney David Cohen that LaCount had engaged in a securities transaction; second, that the evidence presented at trial was sufficient to support LaCount's conviction for securities fraud; third, that the circuit court did not err by allowing into evidence the results of the search of GP & L's office; and, fourth, that the circuit court's finding that LaCount was a habitual criminal did not violate LaCount's right to a jury trial on that issue.

I

¶ 5 LaCount was employed by GP & L as a debt negotiator and office manager. Between June 1998 and October 1999 LaCount was involved in three separate business transactions that led to the charges in question: first, the liquidation of the corporate assets of SMC Machine, Inc. (SMC); second, a purported investment of $64,000 by John Wills (Wills) in a real estate venture; and, third, the alleged misappropriation of funds that belonged to Mirr Tree Service (MTS).

¶ 6 Before LaCount's arrest, police executed a search warrant at the office of GP & L, and they seized approximately 500,000 pages of documents. The search warrant sought financial records that related to the clients that were named in the warrant's application, specifically SMC and CDM Machine Corporation. During their search, the police discovered additional evidence that related to MTS and to Wills, even though they were not named in the warrant. The evidence led to a ten-count complaint being filed by the State against LaCount, which included charges in regard to both MTS and Wills. After the preliminary hearing, one count was dismissed. LaCount was charged with the remaining nine counts in an information filed by the State. LaCount is appealing from his convictions on counts seven and nine.

¶ 7 Count seven alleged theft by bailee of property that was valued at more than $2,500. The property in question belonged to MTS, and the alleged crime occurred between March and October 1999. Under a March 1999 fee agreement, GP & L, through LaCount, took over the finances of MTS for payroll purposes and also to pay off creditors. Allegedly, GP & L issued "worthless" payroll checks and also "failed to pay employee insurance premiums...." GP & L apparently collected $772,520.20 on behalf of MTS. However, LaCount was accused of comingling that money with other GP & L accounts and of not paying out $289,303.79 as promised on MTS's behalf.

¶ 8 Count nine alleged securities fraud based on the purported sale of a security between March and April 1999 by LaCount to Wills and CPR, Inc. (CPR), a firm owned by Wills. Wills apparently met LaCount through GP & L's president, Al Nimmer. According to Wills, LaCount later approached him with a potential investment opportunity that related to the Northland Turkey Farms (Northland) property. LaCount allegedly told Wills that he was putting together a group of five investors to purchase a $350,000 bank mortgage on the Northland property, with each of the five investors contributing about $70,000. LaCount also allegedly told Wills that if, as expected, Northland could not pay off the mortgage in six months, the investors would develop the property and sell it for $750,000 to $1,000,000, with all five investors sharing in the profit. As a result, Wills purportedly gave LaCount $64,000, in addition to Wills allegedly contributing another $4,000 that represented what LaCount had promised to pay Wills back for a previous loan. The State alleged that LaCount did not disclose material facts to Wills about the deal including: first, that the property had two other mortgages on it, which totaled another $300,000; second, that the property's owner was not interested in selling it, and had never discussed with LaCount such a sale; third, that, contrary to LaCount's assertions, foreclosure was not imminent; and, fourth, that LaCount was currently on parole for previous theft convictions, with a condition that he not close business deals of more than $50. Wills alleges that he never recovered any of the $64,000² that he gave to LaCount for the investment.

¶ 9 LaCount made a motion to suppress the seized financial records that corresponded to the charges relating to MTS and to the investment by Wills. In so doing, he claimed that the seizures had exceeded the scope of the search warrant. After an evidentiary hearing, the circuit court denied that motion.

¶ 10 The circuit court granted LaCount's motion to sever count nine, so that a jury's consideration of the other counts would not be influenced by a jury's knowledge of LaCount's criminal convictions. LaCount's criminal convictions were significant in regard to count nine, because LaCount had a duty to inform potential clients of his criminal history and parole restrictions before he entered into a securities transaction with such clients.

¶ 11 LaCount also made a motion in limine to exclude the testimony of the State's expert witness, Attorney David Cohen (Cohen), who was the supervisory counsel for the Wisconsin Department of Financial Institution's Division of Securities. According to LaCount's argument, Cohen's expert testimony concerned the application of Wisconsin securities law to the presumed facts of LaCount's alleged real estate investment agreement with Wills. LaCount's motion was denied.

¶ 12 The jury found LaCount guilty of the securities fraud alleged in count nine.³ The circuit court sentenced LaCount to 11 years on count nine, which was the maximum sentence allowable after an enhancement for habitual criminality. The circuit court rejected LaCount's postsentencing argument that the circuit court's application of a penalty enhancer violated LaCount's right to a jury trial on that issue.

¶ 13 After LaCount's sentencing on count nine, LaCount reached a plea agreement with the State on the remaining charges. LaCount entered guilty pleas on four charges (counts one, three, four, and seven), and four charges were dismissed (counts two, five, six, and eight). On count seven, the theft by bailee charge involving MTS, the circuit court imposed a 15-year sentence,⁴ which was to be served concurrently with LaCount's 11-year sentence on count nine. The circuit court also sentenced LaCount to 15 years of concurrent probation (sentence withheld) for each of the remaining charges, to be served consecutively to LaCount's sentences.

¶ 14 LaCount appealed the circuit court's decision to the court of appeals. The court of appeals rejected all of LaCount's arguments and affirmed the circuit court. LaCount filed a petition for review of the court of appeals' decision, which we granted.

II

¶ 15 The first issue on review is whether the circuit court erroneously admitted an attorney's expert opinion testimony that LaCount had engaged in a securities transaction. We first address the standard of review for this issue. Whether to admit proffered "`expert'" testimony rests in the circuit court's discretion. State v. Shomberg, 2006 WI 9, ¶ 10, 288 Wis.2d 1, 709 N.W.2d 370 (citations omitted). On this issue, our review of a circuit court's use of its discretion is deferential, and we apply the erroneous exercise of discretion standard. Id., ¶¶ 10-11. The circuit court's exercise of discretion will not be overturned if the decision had "a reasonable basis," and if the decision was made "in accordance with accepted legal standards and in accordance with the facts of record." State v. Pharr, 115 Wis.2d 334, 342, 340 N.W.2d 498 (1983) (citation omitted). Furthermore, a reviewing court may search the record for reasons to sustain the circuit court's exercise of discretion. Id. at 343, 340 N.W.2d 498.

¶ 16 LaCount claims that the circuit court erred in admitting the testimony of the State's expert witness, Cohen, for two reasons. First, LaCount contends that the testimony was impermissible because Cohen testified on the legal definition of an investment contract, which allegedly invaded the province of the judge as the person having the exclusive responsibility for finding and interpreting the applicable domestic law. Second, LaCount alleges...