State v. Slemmer, 17146-1-I

• Decision Date: 27 April 1987
• Docket Number: No. 17146-1-I,17146-1-I
• Parties: STATE of Washington, Respondent, and Cross Appellant, v. Glenn Lee SLEMMER, Appellant, and Cross Respondent.
• Court: Washington Court of Appeals

Page 48

48 Wn.App. 48

738 P.2d 281

STATE of Washington, Respondent, and Cross Appellant, v. Glenn Lee SLEMMER, Appellant, and Cross Respondent.

No. 17146-1-I.

Court of Appeals of Washington Division 1.

April 27, 1987.

Publication Ordered June 2, 1987.

Reconsideration Denied June 5, 1987.

[738 P.2d 283] Rita Griffeth, Washington Appellate Defender, Seattle, for appellant and cross-respondent Glenn Lee Slemmer.

Lynn S. Prunhuber, Deputy Pros. Atty., Seattle, for respondent and cross-appellant State.

RINGOLD, Acting Chief Judge.

The defendant, Glenn Lee Slemmer, was found guilty by a jury of one count of first degree theft and two counts of securities fraud. He appeals the judgment and sentence imposed and raises several assignments of error. The State cross-appeals the suppression of a deposition . We affirm the judgment, but remand for a redetermination of the amount of restitution ordered.

Slemmer met a retired couple at his church in 1980, and they helped him move to Seattle. Slemmer told them that in Vancouver, B.C. he had invested $5,000 in stock options which increased in value to $50,000 in 1 year. On January 25, 1981, the couple and Slemmer formed a partnership named Growth Unlimited (G.U.) to invest in stock options. The couple, as an initial capital investment, supplied $25,000 and Slemmer supplied the expertise. The partnership agreement provided that all 3 were to make purchase and sale decisions, but Slemmer actually made all the decisions.

Slemmer set up an account for G.U. with a brokerage firm. Under the partnership agreement Slemmer was to inform the couple each week as to what trading had been done. He failed to inform them that by February 27, 1981, the G.U. account had lost $2,717.70. Had the couple known of these losses, they would not have made additional investments and would have withdrawn their funds. Slemmer continued to conceal losses from the couple and the couple continued to invest additional funds.

On August 26, 1981, Slemmer told the couple for the first time that they had lost money, but said it was only $10,000. G.U. had actually lost $77,348. On September 2, 1981, Slemmer and a broker that he had been using met with the couple and informed them that the G.U. account had only $15,000 left from a $105,000 investment. Slemmer stated, however, that he could recoup the losses with further investments. The couple, feeling they had little choice and based on Slemmer's promise, decided to leave the $15,000 in the G.U. account. Slemmer continued to lull the couple into believing they were doing well. The couple met with Slemmer on January 13, 1982, and he stated the G.U. account was down to $5,000, when only $62 remained.

While Slemmer was involved with G.U., he was also giving lectures to small groups about stock options. Several persons who attended his lectures decided to invest in stock options and have Slemmer advise them. They formed an investment club called Profit Design Group (PDG).

As with G.U., Slemmer set up an account for PDG with a brokerage firm. Slemmer had control of the PDG account and could make decisions on which stock options to buy or sell. He was not authorized to withdraw money from the account for his own benefit. Nonetheless, Slemmer withdrew money from the PDG account to make payments on real estate he owned.

Slemmer made false representations to the members of PDG and lost all the money in their account. At a meeting between Slemmer and the PDG members on September 16, 1982, Slemmer revealed the losses and admitted he had lied and made improper withdrawals from PDG's account. One of the PDG members tape-recorded this meeting without Slemmer's knowledge.

The trial court granted Slemmer's motion to suppress the tape recording at trial, but over Slemmer's objection, permitted the PDG members to testify about the September 16, 1982, meeting.

TAPE-RECORDED MEETING

Slemmer contends that the meeting between him and the PDG members was tape-recorded in violation of RCW 9.73, ¹ which protects against the unauthorized recording of private conversations. He argues that under State v. Williams, 94 Wash.2d 531, 543, 617 P.2d 1012, 24 A.L.R. 4th 1191 (1980), witnesses should not be allowed to testify about statements which were recorded in violation of RCW 9.73. The State responds that the recorded meeting was not a private conversation as defined in RCW 9.73.030(1)(b); therefore, the recording was permissible as well as any testimony regarding the recording.

While RCW 9.73.030 prohibits the recording of private conversations, the statute does not define those terms. In the absence of a statutory definition the terms must be given their ordinary and usual meaning. State v. Forrester, 21 Wash.App. 855, 861, 587 P.2d 179 (1978). The courts have defined the word private in this context to mean:

"secret ... intended only for the persons involved (a conversation) ... holding a confidential relationship to something ... not open or in public."

Forrester, at 861, 587 P.2d 179 (quoting) Webster's Third Intern'l Dictionary (1969); accord State v. Bonilla, 23 Wash.App. 869, 872, 598 P.2d 783 (1979).

"To determine whether or not a ... conversation is private, the court must consider the inherent or reasonable expectations of the participants as manifested by the facts and circumstances of each case." Forrester, 21 Wash.App. at 861, 587 P.2d 179. The trial court found:

The minutes of Profit Design Group which summarized their meetings were available to anyone, within or outside of Profit Design Group, and all of the participants of the September 16, 1982 meeting knew that.

Finding of Fact 4.

At the September 16, 1982 Profit Design Group meeting, Yvonne Tate took minutes on a large legal-sized yellow pad. Glenn Slemmer was seated four or five feet away from Yvonne Tate, and he knew she was taking minutes.

Finding of Fact 5.

All the participants in the September 16, 1982 meeting knew that the substance of their conversation at that meeting was available to outside people, but Glenn Slemmer did not know that a verbatim record of that meeting was being made.

Finding of Fact 6.

Slemmer did not have a reasonable expectation of privacy in the meeting between himself and the PDG members. Slemmer was aware that one of the PDG members took minutes of the meeting. These minutes were part of the public business records of the group, which could be revealed by the members to any person outside the group. Because the taped conversation was not private, it was not error to allow the witnesses to testify about the meeting. See Forrester; Bonilla. Likewise, the tape should not have been excluded from evidence. ²

EXPERT TESTIMONY

Sheryl Cain and James Bishop, both licensed securities traders, testified for the State. Cain testified that options trading was risky and that no more than 15 percent of a person's assets should be invested in options. Cain also testified that clients at her firm were provided risk disclosure statements when they traded in options. Bishop testified that prospective options clients were given a more thorough series of questions about their objectives and financial security than persons merely investing in securities or bonds. This testimony came in over an objection by defense counsel as to its relevance.

Slemmer contends that the testimony was not relevant because he was not a licensed security dealer. ³ He argues that the professional standards of a licensed dealer should not be applied to a lay person giving advice about stock picks.

Slemmer was charged with violating RCW 21.20.010 which states:

It is unlawful for any person, in connection with the offer, sale or purchase of any security, directly or indirectly:

(1) To employ any device, scheme, or artifice to defraud;

(2) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or

(3) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

The trial court's decisions regarding relevancy of evidence should not be overturned on appeal absent manifest abuse of discretion. State v. Mak, 105 Wash.2d 692, 702, 718 P.2d 407, cert. denied, --- U.S. ----, 107 S.Ct. 599, 93 L.Ed.2d 599 (1986). Slemmer told the members of PDG that he had turned $20,000 in the G.U. account into $89,000 in 3 months. ⁴ He encouraged PDG members to make further investments with him by giving glowing reports. The testimony by the securities traders was relevant to show that Slemmer's representations were misleading. Slemmer's failure to discuss the risks and hazards of options trading, while focusing on the benefits that could be obtained, is evidence that Slemmer was acting contrary to RCW 21.20.010(2). The trial court did not abuse its discretion by admitting Cain's and Bishop's statements regarding the risks in options trading.

ELEMENT OF INTENT TO PERMANENTLY DEPRIVE

Slemmer diverted money from the PDG account to make payments on his property. Based upon this activity, Slemmer was charged with violating RCW 9A.56.030(1)(a) and 9A.56.020(1)(a) and (b). RCW 9A.56.030(1)(a) provides that: "A person is guilty of theft in the first degree if he commits theft of: (a) Property or services which exceed(s) one thousand five hundred dollars in value ..." RCW 9A.56.020(1)(a) and (b) provide (1) "Theft" means: (a) To wrongfully obtain or exert unauthorized control over the property or services of another or the value thereof, with intent to deprive him of such property or services; or (b) By color or aid of deception to obtain control over the property or services of another or the value thereof, with intent to deprive him of such property or services ...

RCW 9A.56.020(1)(a) includes both theft by taking and theft by embezzlement. State v. Vargas, 37 Wash.App. 780, 782, 683 P.2d 234 (1984). RCW...