State v. Ramos

• Decision Date: 27 July 1993
• Docket Number: No. 13734,13734
• Parties: STATE of New Mexico, Plaintiff-Appellee, v. Mary RAMOS, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

Page 765

860 P.2d 765

116 N.M. 123

STATE of New Mexico, Plaintiff-Appellee, v. Mary RAMOS, Defendant-Appellant.

No. 13734.

Court of Appeals of New Mexico.

July 27, 1993.

Certiorari Denied Sept. 3, 1993.

[116 N.M. 125] Sammy J. Quintana, Chief Public Defender Sumita Mukhoty and Douglas W. Baker, Asst. Appellate Defenders, Santa Fe, for defendant-appellant.

Tom Udall, Atty. Gen., Mary Catherine McCulloch and Daniel F. Haft, Asst. Attys. Gen., Santa Fe, for plaintiff-appellee.

OPINION

DONNELLY, Judge.

Defendant appeals her convictions of eight counts of fraudulent practices contrary to Section 58-13B-30 of the New Mexico Securities Act of 1986 (Securities Act). NMSA 1978, Secs. 58-13B-1 to -56 (Repl.Pamp.1991). She contends that (1) the portions of the Securities Act she was convicted of violating are unconstitutionally vague and overbroad; (2) she was deprived of effective assistance of counsel; (3) her convictions are not supported by substantial evidence; and (4) the trial court erred in rejecting a proffered instruction, and that an instruction given by the trial court pursuant to SCRA 1986, 14-6008 was unconstitutional. We affirm.

FACTS

Defendant was the president of Ramos Homes & Land, Inc., a New Mexico corporation. During 1987, 1988, and 1989, while acting as an officer of the corporation, Defendant solicited funds from numerous individuals. On receipt of the funds, Defendant delivered, among other things, promissory notes that pledged prompt payment of the principal sums involved, together with high rates of interest. Although Defendant defaulted on the payment of several similar obligations, she continued to borrow money from other individuals without disclosing her true financial status or revealing that she had, in some instances, previously secured similar notes by executing mortgages on the same realty.

After receiving complaints from a number of individuals, the Securities Division of the State Regulation and Licensing Department concluded that Defendant was actively engaged in business as a mortgage broker and that she had failed to register as a broker under the Mortgage Loan Company and Loan Broker Act, NMSA 1978, Sections 58-21-1 to -27 (Repl.Pamp.1991).

In 1991 Defendant was charged under a criminal information with twenty counts of securities fraud, and one count of fraud contrary to NMSA 1978, Section 30-42-4 (Repl.Pamp.1989). The criminal information alleged, among other things, that Defendant withheld information concerning the true status of her financial condition and that she obtained money by fraud or device.

The State dismissed five of the charges in the information prior to trial. After a jury trial, Defendant was convicted on eight counts of securities fraud, acquitted on seven counts, and the jury was unable to reach a verdict on an additional count.

I. Constitutionality of Securities Act

Defendant contends that Section 58-13B-2(V) of the Securities Act violates both the state and United States Constitutions because of overbreadth, and that Sections 58-13B-2(V) and 58-13B-30 are unconstitutionally vague.¹ We separately examine each of these challenges. See State v. Gattis, 105 N.M. 194, 197, 730 P.2d 497, 500 (Ct.App.1986) (challenges of overbreadth and vagueness are distinct concepts). Although a statute may pass a vagueness test, it may, nevertheless, be held unconstitutional under an overbreadth challenge. See Van Sant v. State, 523 N.E.2d 229, 233 (Ind.Ct.App.1988).

Section 58-13B-30 provides:

In connection with the offer to sell, sale, offer to purchase or purchase of a security, a person shall not, directly or indirectly:

A. employ any device, scheme or artifice to defraud;

B. make an untrue statement of a material fact or fail to state a necessary material fact where such an omission would be misleading; or

C. engage in an act, practice or course of business which operates or would operate as a fraud or deceit upon a person.

Under Section 58-13B-2(V), unless the context requires otherwise, the term "security" is defined to include, among other things, "a note." Defendant asserts that, as applied herein, Sections 58-13B-2(V) and 58-13B-30 are unconstitutionally overbroad because the definition of "security" is so sweeping in its application that the statutes impermissibly criminalize even innocent transactions involving the execution and delivery of promissory notes evidencing indebtedness. We find this argument unpersuasive.

In Armstrong v. State, 811 P.2d 593, 598-99 (Okla.Crim.App.1991), the Oklahoma Court of Criminal Appeals considered and rejected an argument similar to that advanced by Defendant in the present case. Armstrong challenged the Oklahoma Securities Act, arguing, among other things, that the definition of the term "security" was constitutionally over-broad because it proscribed legal as well as illegal conduct, without establishing clear perimeters or lines of demarcation. The court turned aside this argument, noting that the legislature intended that the act have broad application, and:

The legislature wrote the Act with all encompassing strokes to protect the public against blue-sky promotions and promoters, and other stock transactions not otherwise covered by law. Nelson v. State, 355 P.2d 413 (Okla.Cr.1960). The Act as written fulfills the legitimate governmental purpose of protecting the public from the many means promoters may use to separate the unwary from their money. The Securities Act is not unconstitutionally vague or overbroad.

Id.

Defendant further argues that the definition of "security" under Section 58-13B-2(V) lacks sufficient specificity and is so broad that it does not bear any logical link to the legislative objective of promoting the general welfare. We disagree. As observed by this Court in State v. Dennis, 80 N.M. 262, 264, 454 P.2d 276, 278 (Ct.App.1969), "The Legislature is the proper branch of government to determine what behavior should be proscribed under the police power, and, thus, to define crimes...." A statute will be upheld as a proper exercise of the state's police power if the enactment is reasonably necessary to protect against wrongdoing or to preserve the public safety or general welfare. Id.; see also, State ex rel. Stratton v. Sinks, 106 N.M. 213, 218-19, 741 P.2d 435, 440-41 (Ct.App.1987). We thus conclude that Defendant has failed to demonstrate any violation of due process under either the United States Constitution or Article II, Section 18 of the New Mexico Constitution.

Other courts construing state securities legislation patterned after earlier versions of the Uniform Securities Act have also denied claims asserting that the legislation is void for overbreadth. See Armstrong, 811 P.2d at 598-99; People v. Milne, 690 P.2d 829, 835 (Colo.1984) (en banc); State v. Taubman, 78 Ohio App.3d 834, 606 N.E.2d 962, 968-69 (1992); Commonwealth v. Hoffman, 263 Pa.Super. 442, 398 A.2d 658, 662 (1979). See generally Davis v. Securities & Exch. Comm'n, 109 F.2d 6, 9 (7th Cir.) (upholding constitutionality of similar language in the federal securities act), cert. denied, 309 U.S. 687, 60 S.Ct. 889, 84 L.Ed. 1030 (1940). Defendant has not called our attention to any jurisdiction which has reached a different result in construing similar securities legislation. Thus, we deny Defendant's overbreadth challenge.

We turn next to Defendant's claim that Sections 58-13B-2(V) and 58-13B-30 are unconstitutionally vague. Specifically, Defendant asserts that her convictions for violating Section 58-13B-30 should be reversed because the latter section, when read in conjunction with Section 58-13B-2(V) defining "security," fails to provide fair and adequate warning to persons of ordinary intelligence that conduct of the type engaged in by her is criminally proscribed. She argues that this vice operated to deprive her of due process of law as guaranteed by the Fifth and Fourteenth Amendments to the United States Constitution and Article II, Section 18 of the New Mexico Constitution.

In order to satisfy the requirements of constitutional due process, a statute must provide fair and adequate warning to a person of ordinary intelligence of the conduct which is prohibited. Gattis, 105 N.M. at 197, 730 P.2d at 500; State v. Casteneda, 97 N.M. 670, 678, 642 P.2d 1129, 1137 (Ct.App.1982). The language of the statute must also describe the prohibited conduct with sufficient particularity so that it does not encourage arbitrary and discriminatory enforcement. State v. Brecheisen, 101 N.M. 38, 42, 677 P.2d 1074, 1078 (Ct.App.), cert. denied, 101 N.M. 11, 677 P.2d 624 (1984).

In reviewing a statute for constitutionality, a court presumes the statute is constitutional, State v. Riddall, 112 N.M. 78, 83, 811 P.2d 576, 581 (Ct.App.), cert. denied, 112 N.M. 21, 810 P.2d 1241 (1991), and the burden is upon the party attacking the constitutionality of an act to demonstrate its invalidity. City of Farmington v. Fawcett, 114 N.M. 537, 540, 843 P.2d 839, 842 (Ct.App.), cert. denied, 114 N.M. 82, 835 P.2d 80, and cert. quashed, 114 N.M. 532, 843 P.2d 375 (1992).

Constitutional challenges alleging that a statute is vague are generally premised upon either a facial challenge or a claim that the statute is invalid in its application to the defendant under the facts of that particular case. See State v. Archambeau, 820 P.2d 920, 928 (Utah Ct.App.1991). Because Defendant has not detailed the precise basis for this claim, we examine this challenge to the constitutionality of Sections 58-13B-2(V) and 58-13B-30 under both tests.

In reviewing a facial challenge alleging that provisions of a law are unconstitutionally vague, the court must initially determine whether the law " 'is impermissibly vague in all its applications.' " Archambeau, 820 P.2d at 928 (quoting Village of Hoffman Estates v. Flipside, Hoffman Estates, 455 U.S. 489, 495, 102 S.Ct. 1186, 1191, 71 L.Ed.2d 362, reh'g denied, 456 U.S. 950, 102 S.Ct. 2023, 72 L.Ed.2d 476 (1...