State v. Rivera

• Decision Date: 17 September 2009
• Docket Number: No. 27,168.,27,168.
• Citation: 223 P.3d 951,2009 NMCA 132
• Parties: STATE of New Mexico, Plaintiff-Appellee, v. Henry A. RIVERA, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

223 P.3d 951

2009 NMCA 132

STATE of New Mexico, Plaintiff-Appellee, v. Henry A. RIVERA, Defendant-Appellant.

No. 27,168.

Court of Appeals of New Mexico.

September 17, 2009.

Certiorari Denied, No. 31,983, November 3, 2009.

Gary K. King, Attorney General, Santa Fe, NM, Joel Jacobsen, Assistant Attorney General, Albuquerque, NM, for Appellee.

Hugh W. Dangler, Chief Public Defender, Susan Roth, Assistant Appellate Defender, Santa Fe, NM, for Appellant.

OPINION

SUTIN, Judge.

{1} Appellant filed a motion for rehearing requesting this Court to add certain authority to allow Appellant to pursue ineffective assistance of counsel in a later habeas proceeding. We have granted the motion. We withdraw the opinion filed on August 19, 2009, and we substitute this opinion in its place.

{2} Defendant Henry A. Rivera appeals from convictions of racketeering, fraud, securities fraud, and two other securities-related criminal offenses. Defendant obtained funds from investors for the stated purpose of making certain investments in real estate. In exchange for the funds delivered by the investors, Defendant gave promissory notes to those investors. The primary issues on appeal are claims of insufficient evidence to support his racketeering conviction and claims of double jeopardy with respect to his many securities-related convictions. Defendant also raises several other issues. We hold that there was insufficient evidence to convict Defendant of racketeering, and we reverse that conviction. We affirm Defendant's remaining convictions.

BACKGROUND

{3} Defendant told six investors that he would obtain a pool of capital and use it to buy investment properties from the Resolution Trust Corporation. Defendant obtained funds from these investors for that purpose and in return gave each of them a promissory note, pursuant to which Defendant would repay principal, with interest, within a short period of time. The notes were prepared on documents containing one of two letterheads, namely, Building for the Future or Henry A. Rivera Enterprises. The notes stated that "the undersigned Henry A. Rivera Enterprises" promised to pay the amounts indicated in the notes, and the notes were signed "Henry A. Rivera." Defendant failed to inform the investors that he had civil judgments against him, that he was having financial difficulties, and that some of his own properties had been foreclosed. According to a financial investigator with the attorney general's office, Defendant used funds received from newer investors to pay on notes of earlier investors. When a note became due, usually the investor rolled over his or her investment and interest, and Defendant would issue another note. In the long run, however, Defendant did not make good on the notes. Each investor lost a considerable sum of money.

{4} With respect to the transactions with the six specific investors, Defendant was indicted in August 1994 on several criminal offenses. The charges were ordinary fraud in violation of NMSA 1978, Section 30-16-6 (1987) (amended 2006); securities fraud in violation of NMSA 1978, Sections 58-13B-30 and -39 (1986) (repealed 2009); selling unregistered securities in violation of NMSA 1978, Sections 58-13B-20 (1986) (amended 1997 and repealed 2009) and Section 58-13B-39; and transacting business as a securities broker-dealer without a license in violation of NMSA 1978, Section 58-13B-3 (1986) (repealed 2009) and Section 58-13B-39. Defendant was finally arrested in October 2003, and the charges resulted in Defendant's conviction in April 2006 on four separate offenses as to each of the six investors, totaling convictions on twenty-four counts. Defendant claims on appeal that the six convictions for fraud violate double jeopardy, in that the Legislature did not intend to punish convictions for both fraud and securities fraud. He also claims that the six convictions for transacting business as a securities broker-dealer without a license and the six convictions for selling unregistered securities violate double jeopardy, in that the Legislature intended punishment only for one course of conduct each.

{5} Defendant also engaged in the same conduct with at least fourteen other investors who were given promissory notes and who suffered losses. With respect to these fourteen transactions, Defendant was convicted in April 2006 of one count of racketeering, in violation of NMSA 1978, Section 30-42-4(C) (1980) (amended 2002), which is contained in the Racketeering Act, NMSA 1978, §§ 30-42-1 to -6 (1980, as amended through 2002). Defendant claims on appeal that the State did not present sufficient evidence to prove the existence of an enterprise, which is an essential element for a racketeering conviction.

{6} Several witnesses in addition to the six investors testified for the State. An FBI special agent testified regarding Defendant's arrest by Mexican authorities on September 18, 2003, as well as the events that resulted in Defendant's transport to the United States the same day. The financial investigator, as mentioned earlier in this opinion, demonstrated that Defendant paid earlier investors with money received from newer investors and testified that Defendant did not actually invest the money in anything. A title company employee testified that Defendant's properties located within Taos County, New Mexico were highly mortgaged and also that investors who thought their loans were secured by collateral had been deceived because no mortgage was filed, because Defendant did not own the property he offered as collateral, or because the property was already encumbered by substantial prior mortgages. The director of the New Mexico Securities Division summarized the purposes of the Securities Act of 1986, NMSA 1978, §§ 58-13B-1 to -57 (1986, as amended through 2003) (repealed 2009), and gave definitions of a "security" and a "Ponzi scheme."

DISCUSSION

I. The Racketeering Issue

{7} Count 29 in the indictment charged Defendant with racketeering "[w]hile associated with an enterprise, namely[,] a sole proprietorship which on occasion operated in association with an entity known as Henry A. Rivera Enterprises and/or Building [f]or the Future in the purported operation of a real estate investment business." The indictment was not read or otherwise given to the jury. The elements instruction on the racketeering violation referred to the indictment count number but did not refer to the racketeering statute, and stated in pertinent part:

For you to find the [D]efendant guilty of racketeering, as charged in Count 29, the State must prove to your satisfaction beyond a reasonable doubt each of the following elements of the crime:

1. The Defendant was associated with an enterprise.

2. While associated with that enterprise, the Defendant intentionally, and, directly or indirectly, participated or conducted the affairs of the enterprise by engaging in a pattern of racketeering activity.

3. The pattern of racketeering activity includes two or more of the crimes of:

A. Fraud in excess of $20,000 as charged in Counts 1, 5, 9, 13, 21[,] and 25; and/or[]

B. Securities Fraud as charged in Counts 2, 6, 10, 14, 22[,] and 26[.]

Defendant argues that the State failed to establish that he associated with others in a common purpose and that the State thereby failed to prove the element of an "enterprise" necessary for a racketeering conviction.

A. Standard of Review

{8} Whether Defendant's activities constituted an association with others has been analyzed by this Court employing both statutory interpretation analysis using a de novo review and then a sufficiency of the evidence review of the particular facts in each case. See State v. Rael, 1999-NMCA-068, ¶¶ 5-12, 127 N.M. 347, 981 P.2d 280 (determining whether the defendant's association with others constituted an enterprise is a matter of statutory interpretation and a question of law requiring de novo review, and holding that the evidence of an enterprise was insufficient to convict the defendant), rev'd on other grounds sub nom. Rael v. Blair, 2007-NMSC-006, 141 N.M. 232, 153 P.3d 657; State v. Wynne, 108 N.M. 134, 136-38, 767 P.2d 373, 375-77 (Ct.App.1988) (appearing to review de novo what the Legislature intended as the requirements for establishing an enterprise, and to review under a sufficiency standard whether the prosecution's proof was sufficient); State v. Hughes, 108 N.M. 143, 146-51, 767 P.2d 382, 385-91 (Ct.App.1988) (same).

B. The Law of Enterprise

{9} Section 30-42-4(C) states that "[i]t is unlawful for any person employed by or associated with any enterprise to conduct or participate, directly or indirectly, in the conduct of the enterprise's affairs by engaging in a pattern of racketeering activity." "Enterprise" is defined in the Racketeering Act as "a sole proprietorship, partnership, corporation, business, labor union, association or other legal entity or a group of individuals associated in fact although not a legal entity and includes illicit as well as licit entities[.]" Section 30-42-3(C).

{10} The State was required to prove the existence of an enterprise as well as a "pattern of racketeering activity." Hughes, 108 N.M. at 150, 767 P.2d at 389. Thus, "an enterprise must be more than an individual who conducts his own affairs through a pattern of racketeering." Rael, 1999-NMCA-068, ¶ 16, 127 N.M. 347, 981 P.2d 280 (internal quotation marks and citation omitted). "The existence of an enterprise at all times remains a separate element which must be proved by the [g]overnment." Hughes, 108 N.M. at 149, 767 P.2d at 388 (internal quotation marks and citation omitted).

{11} The Racketeering Act is similar to and based on the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68 (1994, as amended through 2009). Rael, 1999-NMCA-068, ¶ 11, 127 N.M. 347, 981 P.2d 280; Hughes, 108 N.M. at 148, 767 P.2d at 387. A RICO "enterprise" is defined as "includ[ing] any individual,...