State v. Proctor
| Decision Date | 08 September 1998 |
| Docket Number | No. 2 CA-CR 96-0414, No. 2 CA-CR 96-0417. |
| Citation | 2 P.3d 647,196 Ariz. 557 |
| Parties | The STATE of Arizona, Appellee, v. Ronald Wayne PROCTOR and Robert James Olson, Appellants. |
| Court | Arizona Court of Appeals |
Grant Woods, Attorney General by Paul J. McMurdie and Christopher E. Avery, Tucson, for Appellee.
Susan A. Kettlewell, Pima County Public Defender by Creighton Cornell, Tucson, for Appellant Proctor.
Isabel G. Garcia, Pima County Legal Defender by Lois Yankowski, Tucson, for Appellant Olson.
¶ 1 Appellants Ronald Proctor and Robert Olson were convicted following a jury trial of one count of conspiracy and four counts of fraudulent scheme and artifice. The state alleged that eight real estate transactions constituted acts in furtherance of the conspiracy, four of which were the bases of the fraudulent scheme and artifice counts. In their consolidated appeals, both appellants contend that the fraudulent scheme and artifice statute is unconstitutional and that the trial court erred in ordering them to pay restitution. We affirm the convictions and the sentences imposed, but vacate the restitution order, remanding for a redetermination of the amount to be paid the victims.
¶ 2 Although there is no equivalent to Rule 28(g), Ariz.R.Civ.App. P., 17 B A.R.S., in the Arizona Rules of Criminal Procedure, because we find that only our resolution of appellants' challenges to the statute and the order of restitution meets the standards for publication in Rule 28(b), we publish that portion of our decision and address appellants' remaining issues in a simultaneously filed memorandum decision.
¶ 3 We view the evidence in the light most favorable to sustaining the verdicts and resolve all inferences against appellants. State v. Atwood, 171 Ariz. 576, 832 P.2d 593 (1992). So viewed, the evidence showed that, beginning in the early 1980s, Proctor and Olson engaged in numerous real estate transactions designed to defraud home sellers. With some variations, the general scheme was as follows. Either Proctor, who was a real estate broker, his housemate, or one of his employees would purchase vacant rural land near highway interchanges and subsequently convey the property to Olson, or Olson would purchase the property after Proctor had negotiated a purchase on Olson's behalf. Proctor would search the real estate listings to find homes for sale that the owners wanted to sell quickly or that had been on the market for some time, and in which the owners had substantial equity. Olson would offer to buy the home at or near the asking price, stating that he or one of his family members intended to live in the home. The offer would provide that the purchase price would be paid in part with cash with the balance to be paid by a trade of the vacant land, which Olson would claim was worth approximately one half to almost the entire asking price of the seller's home. Appellants used different methods of inflating the value of the vacant land, such as presenting an appraisal that relied on sales of or offers to purchase comparable properties either owned by Proctor or otherwise related to Proctor-Olson transactions.
¶ 4 In an apparent reference to a section of the Internal Revenue Code that permits the deferral of tax liability for gain realized on certain real estate transactions, Olson would often present an offer as a "1031" taxdeferred land exchange, stating he wanted to trade land rather than pay cash to avoid paying capital gains tax. The evidence revealed that neither appellants nor any of the sellers involved in the transactions were eligible to participate in such an exchange.
¶ 5 Uniformly, none of the homeowners initially wanted to trade his or her home for the vacant property. Olson would then try to make the offer more attractive either by suggesting he find a buyer for the land he was offering to trade, the buyer being Proctor, or by presenting Proctor as a buyer of the land in the initial offer.1 Appellants would present Proctor as an expert in truck stop development who intended to develop a truck stop on the property offered in trade or to resell it to other developers for this purpose. Many of the sellers testified they were impressed by Proctor's status as a "real estate professional." One seller believed Proctor was "[a] millionaire that knew everything about the land." In a letter to another seller's attorney, Proctor claimed his assets totaled nearly $1,500,000, although evidence was presented that he had virtually no assets and debts totaling $11,300, $4,500 of which he owed to Olson. ¶ 6 Proctor structured his offers to purchase the traded land so as to require only a small down payment with the balance of the purchase price to be paid by execution of a promissory note secured by a deed of trust on the land. The promissory note provided for interest-only payments at infrequent intervals, with the principal balance to be paid in a one-time "balloon" payment 18 to 36 months after the sale closed. The promissory notes Proctor gave were without recourse to him, i.e., he assumed no personal obligation to pay the debt, a detail most of the sellers and their real estate agents testified they did not know.
¶ 7 Proctor's offers were submitted to the sellers on standardized commercial real estate purchase contracts, which denoted their approval by the Arizona Association of Realtors and which Proctor had altered by adding in a short blank space at the end of a line in a section entitled, "Encumbrances and Impounds," the phrase: "Buyer's liability is limited to securing property." Neither Proctor nor Olson told any of the sellers or agents that Proctor's liability was limited to the vacant land. Most of the sellers and real estate agents testified they either were not aware that the purchase contracts, promissory notes, and related documents contained nonrecourse language or, if they were aware of the language, did not understand its significance. Also, unbeknownst to the sellers and their agents, Olson supplied Proctor with the cash used to purchase and market the vacant land they received in trade and helped finance Proctor's search for other properties and the operation of Proctor's business.
¶ 8 Shortly after Olson acquired the homes, usually within a few weeks after the close of escrow, he would resell them for cash at prices considerably less than he had paid to purchase them. Proctor never developed or sold any of the vacant parcels of land he bought from the sellers. Rather, he defaulted on the notes he had given in the transactions that were the subject of the criminal charges. Indeed, while Proctor was negotiating to purchase some of the vacant land parcels that later sellers had taken in trade, he was already in default on some of the notes he had given earlier. Many of the sellers foreclosed on the deeds of trust, regaining ownership of vacant land worth substantially less than they had been led to believe it was worth.
¶ 9 In 1990, the Cochise County Assessor contacted the Arizona Department of Real Estate after noticing out-of-the-ordinary real estate purchase and sales activity involving appellants. The assessor testified that Olson had provided some of the sellers with affidavits that valued the vacant land "unrealistically high."
¶ 10 Appellants were subsequently indicted on four counts of fraudulent scheme and artifice in connection with four transactions between 1985 and 1989 and one count of conspiracy to commit fraudulent scheme and artifice based on these four transactions and on four others that took place between 1987 and 1991. Following a 21-day jury trial, appellants were convicted on all counts and were sentenced to concurrent prison terms, the longest of which was 15.75 years, to be followed by seven years of probation. The court also ordered appellants to pay over $3,000,000 in restitution to the victims. This appeal followed.
¶ 11 Appellants contend that the fraudulent scheme and artifice statute, A.R.S. § 13-2310, is unconstitutionally vague, overbroad, and internally inconsistent and that the trial court erred in denying their motions for judgment of acquittal made on that basis. Section 13-2310 provides in relevant part:
Appellants argue that the language in subsection A requiring the state to show that the defendant received a benefit "by means of" fraudulent conduct is inconsistent with that of subsection B, which provides that the state is not required to show the victim relied on the fraudulent representations, promises, or material omissions. As a result, they contend, the statute is unconstitutionally vague and ambiguous. We disagree.
¶ 12 The primary rule of statutory construction is to determine and give effect to legislative intent. Mail Boxes v. Indus. Comm'n, 181 Ariz. 119, 888 P.2d 777 (1995). We determine legislative intent by reading the statute as a whole, giving meaningful operation to all its provisions, and by considering factors such as the statute's context, language, history, subject matter, effects and consequences, spirit and purpose. Wyatt v. Wehmueller, 167 Ariz. 281, 806 P.2d 870 (1991).
¶ 13 A brief review of the statute's history is helpful in addressing appellants' arguments. In State v. Haas, 138 Ariz. 413, 675 P.2d 673 (1983), the supreme court interpreted an earlier version of the statute, A.R.S. § 13-320.01.2 The court noted that § 13-320.01 was patterned after the federal mail fraud statute, 18 U.S.C. § 1341, stating that an...
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State v. Brown
...terms of a statute may not successfully challenge it for vagueness."); see also Kaiser, 204 Ariz. 514, ¶ 5, 65 P.3d 463, ¶ 5; State v. Proctor, 196 Ariz. 557, ¶ 26, 2 P.3d 647, ¶ 26 ¶ 18 A "narrow exception" to the traditional standing rule, however, is recognized in First Amendment cases. ......
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State v. Brown
...the terms of a statute may not successfully challenge it for vagueness."); see also Kaiser, 204 Ariz. 514, ¶5, 65 P.3d 463, ¶5; State v. Proctor, 196 Ariz. 557, ¶26, 2 P.3d 647, 126 (App. 1998). ¶18 A "narrow exception" to the traditional standing rule, however, is recognized in First Amend......
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..."We view the evidence in the light most favorable to sustaining the verdicts and resolve all inferences against [Martinez]." State v. Proctor, 196 Ariz. 557, ¶ 3, 2 P.3d 647, 649 (App. 1998). Martinez was indicted in 2007 after checks he issued for cash and services at several local busines......
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The State Of Ariz. v. Martinez
...¶2 "We view the evidence in the light most favorable to sustaining the verdicts and resolve all inferences against [Martinez]." State v. Proctor, 196 Ariz. 557, ¶ 3, 2 P.3d 647, 649 (App. 1998). Martinez was indicted in 2007 after checks he issued for cash and services at several local busi......