Dunham v. Shiff

RONALD DUANE DUNHAM, Petitioner, v. STAN SHIFF, et al., Respondents.

Case No.: 18cv0863 GPC (LL)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

June 5, 2019

ORDER DENYING PETITION FOR WRIT OF HABEAS CORPUS

I. INTRODUCTION

Petitioner Ronald Duane Dunham, a state prisoner proceeding pro se with a Petition for Writ of Habeas Corpus pursuant to 28 U.S.C. § 2254 ("Petition" or "Pet."), challenges his conviction for various financial crimes in San Diego Superior Court case no. SCD246838. The Court has read and considered the Petition, [ECF No. 1], the Answer and Memorandum of Points and Authorities in Support of the Answer [ECF No. 27-1], the Traverse [ECF No. 39], the lodgments and other documents filed in this case, and the legal arguments presented by both parties.¹ For the reasons discussed below, the petition is DENIED.

II. FACTUAL BACKGROUND

This Court gives deference to state court findings of fact and presumes them to be correct; Petitioner may rebut the presumption of correctness, but only by clear and convincing evidence. See 28 U.S.C. § 2254(e)(1) (West 2006); see also Parle v. Fraley, 506 U.S. 20, 35-36 (1992) (holding findings of historical fact, including inferences properly drawn from these facts, are entitled to statutory presumption of correctness). The state appellate recounted the facts as follows:

Cherokee Village was a small northeastern city in the State of Arkansas, with a population of around 4,500 people. The area contained approximately 20,000 undeveloped lots, typically purchased and sold by individuals. The suburban improvement district (SID) maintained the community's roads and amenities (golf courses, lakes, and recreation centers) and provided for its safety needs. Lot owners were required to pay an annual improvement district tax or assessment to the SID; otherwise, the SID could initiate enforcement proceedings that would result in the lots' foreclosures.

At any given time, thousands of lots were in a state of tax delinquency, and the SID experienced continuing financial difficulties as a result. In 2002, two longtime inhabitants of Cherokee Village, Eben Daggett and Ron Rhodes, formed American Land Company (ALC). ALC wished to sell tax delinquent lots to new owners who would pay their taxes, thereby generating revenue for the SID. In November 2002, ALC entered a contract with the SID in which the SID granted ALC the exclusive right to market and sell foreclosable tax delinquent lots (delinquent lots). ALC agreed to pay the SID 5 percent of the gross sales price of any delinquent lot that ALC sold. The contract automatically renewed for five-year terms.

ALC began marketing and selling delinquent lots through an online auction, eBay. On eBay, "the market priced the lots," i.e., the highest bidder would obtain a listed lot. Later, ALC also sold delinquent lots to "dealers," or people who wished to purchase more than 10 lots at a time. According to Rhodes, between 2002 and 2007, the highest price for a general lot, around one-third of an acre in size, was about $3,000 or $3,500.

In 2004, Dunham became interested in Cherokee Village, and Rhodes and Daggett met with him to discuss the dealer program. They explained to him ALC's contract with the SID, including how ALC was able to obtaingood title to the delinquent lots and market/sell them. The trio also discussed the prices the lots would sell for on the open market. Dunham wanted to market lots in California.

In March 2004, Dunham proposed a purchase agreement to ALC (letter of intent), which ALC firmly rejected. Dunham sought to obtain 1,000 delinquent lots from the SID's inventory of lots on certain specified terms, including: (1) ALC would cease "all sales and marketing efforts" of lots on the Internet; (2) ALC would agree to a noncompetition agreement; and (3) ALC would give Dunham the exclusive right to market and sell the SID's inventory of delinquent lots for a certain time period. In response, ALC refused to cease its Internet sales; would not agree to not compete under any circumstances; and refused to give Dunham exclusive marketing rights. ALC never subsequently altered its marketing practices and continued selling delinquent lots on eBay. The effect of ALC's continued sales of delinquent lots on its own terms was to compete on pricing. Dunham obtained from ALC two options to purchase a block of 400 lots for $1,000 each.

At the outset, Dunham focused his efforts on selling lots to the victims, but before long, he also sold membership interests in Gold Coast Real Estate Fund, LLC (GCREF), a company he managed. Dunham convinced some of the victims to contribute their purchased lots to GCREF in return for an interest in GCREF. The proposed business of GCREF, according to its private placement memorandum (PPM), included the sales of lots and development of homes in Cherokee Village. Dunham arbitrarily valued lots and interests in GCREF, and on four or five occasions directed his administrative assistant to falsify investors' signatures on required documentation.

Dunham represented to the victims that he controlled in excess of 5,000 lots and that once he controlled all the lots, he was going to build environmentally friendly homes, run a big media campaign, and mark up the prices of the lots. Dunham offered the victims more than just a "dirt lot" in Cherokee Village; he offered a "package of development," i.e., the professional services of Dunham's company to finance, build homes, and/or sell the lots. Dunham did not, however, inform any of the victims of the ALC-SID contractual arrangement described ante. Although the PPM warned of general investment risks, it did not disclose to investors the ALC-SID contract, ALC's exclusive marketing rights, and Dunham's unsuccessful attempts to obtain ALC's rights.

Douglas Fisher and Purvey Martin, paid agents of Dunham, induced almost all of the victims to invest with Dunham. Fisher and Martin were insurance agents by trade with little or no experience in real estate investments; Dunham persuaded both of them to invest in Cherokee Village lots. Dunham told Fisher and other investors: (1) he owned a "broker dealer" firm on Wall Street; (2) he had done about 4,000 real estate deals and was extremely successful in real estate; and (3) he had gained invaluable real estate experience while growing up from his family's business. Fisher was highly impressed by Dunham's apparent success and would relay Dunham's background and plans to his insurance clients.

Dunham regaled Fisher and Martin with his development plans, including a national marketing campaign using celebrity Ed McMahon as a spokesperson. Dunham assured them that his marketing and development plans would increase lot values in a short period of time. He held investor events in his office, on a yacht, and in a La Costa hotel. Dunham did not tell Fisher and Martin anything about the ALC-SID contract, ALC's ability to sell delinquent lots and its practice of doing so on eBay, and ALC's refusal to agree to a noncompetition agreement or to grant him the exclusive right to market delinquent lots. As a result, neither Fisher nor Martin informed their clients and friends about those facts; had they known, they would not have invested in Cherokee Village or recommended the investment to others.

Beverly D.'s Lots (Grand Theft, Elder Theft, and Securities Fraud, Counts 1-3) and Promissory Note (Grand Theft and Elder Theft, Counts 4-5)

In 2006, Fisher suggested to his client, Beverly D., a widowed homemaker, that she invest in Cherokee Village. Fisher informed her of what Dunham had said about the project and Dunham's considerable success and experience in real estate. Furthermore, Beverly was told that it would take only one year to achieve a profit, she did not need to do anything but hang on to the investment, there would be an Ed McMahon "publicity program," and Dunham's company would sell the lots for her. In March 2006, Beverly invested $68,999 for nine lots. Beverly attended Dunham's yacht party, where she was introduced to Ed McMahon and where Dunham referred to the attendees as his "family." She continued paying taxes on the lots every year. She did not at any time know the lots' market value and did not know how to sell them. She knew nothing about ALC or its activities; she trusted Fisher and relied on his investment advice.

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In October 2006, Beverly was persuaded to invest more money with Dunham. Fisher took her to Dunham's office, where Dunham advised her to borrow $350,000 using the equity in her home and give the money to him to invest. Her home was already paid off, and Beverly was reluctant to invest such a large sum of money and incur a new debt. Dunham assured her that she needed a mortgage interest tax deduction and he would invest the money in GCREF and other real estate. She wire-transferred $350,000 to a bank account for the benefit of "Ron Dunham/Gold Coast Partners." In exchange, Dunham gave Beverly a promissory note with a two-year maturity and stated interest rate of 12 percent.

In October 2008, Beverly called Dunham to get her money back, but he claimed not to have the money to repay her. He wanted to renegotiate the terms of her note and stretch out its due date for up to five years. Dunham's failure to pay Beverly back felt like a "crime to [her]," but she did not think about calling the police. In terms of her specific knowledge of facts, she knew only that he had not paid her back when he originally said he would. Beverly hired a lawyer to communicate with Dunham about repayment, but the lawyer advised her against accepting Dunham's terms. Subsequently, a friend told Beverly about the Gaston & Gaston (Gaston) law firm; she first spoke to a Gaston lawyer in late May or June 2009. Beverly ultimately joined a civil lawsuit led by Gaston in order to get repaid. As of Dunham's trial, she still owned her lots and had not been repaid.

Raymond and Caroline M.'s Lots (Grand Theft, Elder Theft, and Securities Fraud,

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