State v. Shafer
| Decision Date | 21 February 1985 |
| Docket Number | No. 7631,7631 |
| Citation | 1985 NMCA 18,102 N.M. 629,698 P.2d 902 |
| Parties | , Blue Sky L. Rep. P 72,253 STATE of New Mexico, Plaintiff-Appellee, v. Donnie SHAFER and H.D. Berry, Defendants-Appellants. |
| Court | Court of Appeals of New Mexico |
Defendants each appeal from convictions on four felony charges: three counts of unlawful offer to sell or sale of an unregistered security in New Mexico, contrary to NMSA 1978, Section 58-13-4 (Cum.Supp.1983), and one count of conspiracy, contrary to NMSA 1978, Section 30-28-2 (Repl.Pamp.1984).
Seven allegations of error are raised on appeal. We discuss: (1) failure to take judicial notice; (2) claim of error as to jury instructions; (3) scope of cross-examination; (4) claim of cumulative error; and (5) propriety of sentences. Other issues listed in the docketing statement but not briefed are deemed abandoned. State v. Chavez, 100 N.M. 730, 676 P.2d 257 (Ct.App.1983), cert. quashed, 100 N.M. 689, 675 P.2d 421 (1984). Affirmed in part and reversed in part.
Defendants Shafer and Berry, along with S. Stewart Shelton, incorporated SBS Development, Inc., a Texas corporation. The corporation sought to develop and sell corporate securities allegedly to develop a perpetual motion machine which would generate electricity. Texas counsel assisted in the incorporation.
Three New Mexicans, Manuel Quintana, Ken White, Jr., and Bryon Fillpot, viewed a demonstration of the machine in New Mexico. Defendants Berry and Shafer, together with Bobby Shiplett, an incorporator of SBS Development, Inc., and one of the designers of the machine were present. Defendants discussed the prospects for the machine and the purchase of corporate stock with Quintana, White, and Fillpot. Following the demonstration Quintana contacted Shiplett about purchasing shares of stock in SBS. Ken White, Jr., a commodities broker in Clovis, was contacted by one of defendants' employees who attempted to sell him stock in the corporation. Neither White nor Fillpot purchased stock in SBS.
Defendants testified that it was their understanding, following consultation with an attorney in Texas, that their actions would not constitute violations of the New Mexico criminal or securities laws if all of the sales of the corporate stock of SBS took place in Texas or if the stock qualified for exemptions. Defendants stated that all of the transactions involving sales of corporate stock were set up so that investors' checks would be sent to Texas and the stock would be issued in Texas.
Following a jury trial, defendants were convicted of three counts of unlawful offer to sell or sale of unregistered securities and one count of conspiracy based on defendants' activities in New Mexico. Defendants were acquitted of charges of fraud and offering to sell or sale of securities not registered in New Mexico to Pete Ross.
Defendants made photocopies of a portion of Texas securities law (Tex.Rev.Civ.Stat.Ann. art. 581-5 (Vernon 1964)), and requested that the trial court take judicial notice of them. The trial court denied judicial notice of the statute because the copies were not properly authenticated. See State v. McDonald, 222 Kan. 494, 565 P.2d 267 (1977); see also State v. Ramirez, 89 N.M. 635, 556 P.2d 43 (Ct.App.1976), overruled on other grounds, Sells v. State, 98 N.M. 786, 653 P.2d 162 (1982). The portion of the exhibit offered does not contain the introductory paragraph of the statute. The exhibit was also confusing. Judicial notice of a law which is incomplete or confusing is properly refused. Eg. State v. Kraul, 90 N.M. 314, 563 P.2d 108 (Ct.App.), cert. denied, 90 N.M. 637, 567 P.2d 486 (1977) (); see also NMSA 1978, Evid.R. 201 (Repl.Pamp.1983).
Defendants also argue that the court's refusal to take judicial notice of the statute was an abuse of discretion because their Texas counsel told them that they had complied with Texas law as long as the securities were sold in Texas.
New Mexico follows the rule that good faith reliance on the advice of counsel is not a defense to a charge of selling unregistered securities. State v. Sheets, 94 N.M. 356, 610 P.2d 760 (Ct.App.), cert. denied, 94 N.M. 675, 615 P.2d 992 (1980); see also People v. Terranova, 38 Colo.App. 476, 563 P.2d 363 (1977); People v. Clem, 39 Cal.App.3d 539, 114 Cal.Rptr. 359 (1974). This is so because scienter is not an element of the crime of offering to sell or selling unregistered securities. State v. Sheets; See also Section 58-13-4.
Reliance on an attorney's advice is not a defense to the crime of selling or offering to sell unregistered securities. Thus, the accuracy of the advice given to defendants by Texas counsel relying upon Texas law is irrelevant. The court in State v. Sheets, held that the sale of unregistered securities is not a crime requiring proof of specific intent. All that is required is a willful or purposeful act of offering to sell or selling an unregistered security. The state is only required to prove that the defendant acted intentionally in the sense that he was aware of what he was doing. State v. Sheets; see also People v. Clem.
(a) Defendants requested an instruction that Berry believed he was selling his own personal stock and hence was not generally offering to sell or selling stock. There was no evidence that any of the transactions for which defendants were in fact actually convicted related to any of Berry's personal stock in SBS. A defendant is not entitled to a defense instruction if there is no evidence to support it, see State v. Branchal, 101 N.M. 498, 684 P.2d 1163 (Ct.App.1984), or if the counts upon which he was convicted did not relate to the matters embraced in the profferred instruction.
(b) The trial court refused to give defendants' requested instruction that New Mexico was required to give full faith and credit to the laws of Texas. Defendants claim that the exemptions specified under Texas securities laws should have been applied in the instant case and Texas laws should be given full faith and credit. The fact that some of the steps leading up to the sale of securities took place in Texas does not mean that Texas law governs or is controlling under the facts of this case. Cf. People v. Sears, 138 Cal.App.2d 773, 292 P.2d 663 (1956) (). New Mexico prohibits offering unregistered securities for sale within this state including every attempt to sell or solicit offers to buy securities. NMSA 1978, Sec. 58-13-2(D) (Repl.Pamp.1984). (c) Defendants also requested a defense instruction that they believed they had engaged in sales or solicitations of securities only in Texas. The trial judge correctly denied the requested instruction. Defendants' understanding or belief concerning the propriety of their acts went to their knowledge or intent. Knowledge or intent is not an element of a charge of soliciting to sell or selling unregistered securities under New Mexico law. All that is necessary is a willful act of selling or offering to sell an unregistered security that is required to be registered in this state. Mistake of fact is not a defense. Cf. State v. Fuentes, 91 N.M. 554, 577 P.2d 452 (Ct.App.), cert. denied, 91 N.M. 610, 577 P.2d 1256 (1978) ().
(d) The trial court refused defendants' requested instruction that isolated transactions, pledges, and sales, where the number of securities holders does not exceed twenty-five, are exempt from the securities laws.
NMSA 1978, Section 58-13-30 (Cum.Supp.1982) states:
Except as expressly provided in this section * * * Sections 58-13-4 through 58-13-28 NMSA 1978 do not apply to:
A. any isolated transaction, whether effected through a broker-dealer or not;
* * *
* * *
G. any transaction executed by a bona fide pledgee without any purpose of evading the Securities Act of New Mexico;
* * *
* * *
J. the issuance and sale by any corporation organized under the laws of this state of its securities at a time when the number of security holders does not, and will not, in consequence of the sale exceed twenty-five and:
(1) the seller reasonably believes that all buyers are purchasing for investment; and
(2) no commission or other remuneration is paid or given directly or indirectly for soliciting any prospective buyer * * *
Defendants initially contend that there was evidence that all of the transactions resulting in their convictions were isolated within the meaning of Section 58-13-30(A). An isolated transaction under this section is one that is "unique; occurring alone or once; sporadic, not likely to recur." See State v. Sheets, 94 N.M. at 365, 610 P.2d at 769 (quoting Besser Co. v. Bureau of Revenue, 74 N.M. 377, 394 P.2d 141 (1964)). The record shows no isolated transaction regarding the sale or offer to sell securities. See Nelson v. State, 355 P.2d 413 (Okl.App.1960). Instead the evidence shows that between June and December of 1982, over $150,000 worth of stock in the corporation was sold. Of the twenty-three sales of stock listed on the corporation's books, seven took place in New Mexico.
Defendants do not argue that any transaction involving the offenses for which they were convicted pertained to a bona fide pledgee. The instructions containing this exemption would have therefore injected an incorrect issue into the case and were properly refused as confusing and partially incorrect. See State v. Stettheimer, 94 N.M. 149, 607 P.2d 1167 (Ct.App.1980); see also State v. DeSantos, 89 N.M. 458, 553 P.2d 1265 (1976).
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