Hicks v. State

315 Ga.App. 779

728 S.E.2d 294

12 FCDR 1629

HICKS

v.The STATE.

No. A12A0998.

Court of Appeals of Georgia.

May 3, 2012.

Angela Brown Dillon, for Hicks.

Robert D. James Jr., Deborah D. Wellborn, for The State.

ELLINGTON, Chief Judge.

A DeKalb County jury found Darryl Hicks guilty beyond a reasonable doubt of engaging in a pattern of racketeering activity in violation of the Georgia RICO (Racketeer Influenced and Corrupt Organizations) Act ¹ and nine counts of violating the Georgia Securities Act of 1973. ² Following the denial of his motion for a new trial, Hicks appeals, contending that the evidence was insufficient, that the trial court erred in denying his plea in bar and his motion for a mistrial, and that he received ineffective assistance of counsel. For the reasons explained below, we affirm.

1. Hicks contends that “[t]he evidence was insufficient to show that an investment contract existed as defined and required by the [Securities Act] and that such contract was sold by [him].”

The indictment charged that, in 2000 and 2001, Hicks violated the Securities Act as to three groups of victims and that, as to each group, he violated the same three provisions of the Securities Act. First, the indictment charged that Hicks “unlawfully and willfully offer[ed] for sale and did sell a security, to wit: an investment contract, ... which security was not subject to an effective registration statement pursuant to OCGA § 10–5–5(a)(1)–(3) [ (2000) ].” ³ Second, the indictmentcharged that Hicks “unlawfully and willfully offer[ed] for sale and did sell a security, to wit: an investment contract, ... when [he] was not registered as a salesman of securities pursuant to OCGA § 10–5–3(a) [ (2000) ].” ⁴ Third, the indictment alleged that Hicks, in connection with an offer to sell and sale of a security engaged “in an act, practice, and course of business that would operate and did operate as a fraud and deceit upon [the victims].” ⁵ Finally, in ten paragraphs, the indictment charged Hicks with engaging in a pattern of racketeering based on his transactions with the victims.⁶

At trial, the State adduced evidence that showed that Hicks, acting as the president of DNH Enterprises, Inc., met with the victims in 2000, representing himself to be a licensed trader, which he was not. Hicks presented the victims with a booklet of information entitled “Private Banking & Secured Financial Programs” and invited them to participate as investors. Hicks, verbally and in the booklets, described two programs, a bank debenture trading program and a foreign currency trading program. According to Hicks, through his management, the victims' investment would generate huge returns. For example, one program required the investor to hold $500,000 on deposit for ten weeks and would return to the investor $800,000 gross every week, with a net return (after paying the “Program Manager” or the “Bank Trader” and Hicks' company) after ten weeks of $2.8 million. Hicks encouraged the victims to pool their funds, so that they could satisfy the large minimum amounts supposedly required for participation. The agreement between Hicks and the victims entitled Hicks to 50 percent of the profits as a commission for his help and expertise.

Initially, the victims, at Hicks' direction, opened accounts at SunState FX. After a few months of low returns, however, the victims, again at Hicks' direction, withdrew their funds from SunState FX and transferred the money to him, ostensibly for him to hold for a few months until the next debenture program opened up. About the time the victims were supposed to start receiving returns on their investment, Hicks stopped communicating with them and left the country. The victims did not receive the promised return of their initial investment or any profits.

In challenging the sufficiency of the evidence, Hicks contends that the booklets that he prepared and distributed to the victims “are the only documents that refer to an investment and they do not meet the requirements for a security under Georgia law[,]” and, therefore, “[t]he evidence was insufficient to show that a contract or security existed that [met] the requirements of OCGA § 10–5–2 [ (a) ] (26) and (31) [ (2000) ].” In addition, he contends that there was no evidence that he kept any of the victims' money for his personal use and, therefore, that there was no evidence that he sold any securities. These arguments lack merit.

In addition to stocks and bonds, the Securities Act defined “security” to include a great variety of investment vehicles and arrangements, including any “investment contract[.]” OCGA § 10–5–2(a)(26) (2000). The term investment contract, however, is not comprehensively defined in the Securities Act.⁷ In applying the Securities Act, the Supreme Court of Georgia adopted the definition that pertains to federal securities laws, originally articulated in Securities & Exchange Comm. v. W.J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946). See Dunwoody Country Club, etc. v. Fortson, 243 Ga. 236, 238–239, 253 S.E.2d 700 (1979); Ga. Market Centers v. Fortson, 225 Ga. 854, 858, 171 S.E.2d 620 (1969). The Howey test “for whether a particular scheme is an investment contract ... look[s] to whether the scheme involves [ (1) ] an investment of money [ (2) ] in a common enterprise [ (3) ] with [an expectation of] profits to come solely from the efforts of others.” (Citation and punctuation omitted.) Securities & Exchange Comm. v. Edwards, 540 U.S. 389, 393(II), 124 S.Ct. 892, 157 L.Ed.2d 813 (2004).

The [United States] Supreme Court has long espoused a broad construction of what constitutes an investment contract, aspiring to afford the investing public a full measure of protection. The investment contract taxonomy thus embodies a flexible rather than a static principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits.

(Citations and punctuation omitted.) Securities & Exchange Comm. v. SG Ltd., 265 F.3d 42, 47(II)(A) (1st Cir.2001). See also United Housing Foundation v. Forman, 421 U.S. 837, 852(II)(B), 95 S.Ct. 2051, 44 L.Ed.2d 621 (1975) (“The touchstone [of a security] is the presence of an investment in a common venture premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.”). In addition, an investment scheme may constitute an investment contract, even when the purported instrument does not in fact exist, as is often the case with investment fraud. See Local 875, etc. v. Pollack, 992 F.Supp. 545, 564(II)(C) (E.D.N.Y.1998) (The fact that the prime bank note that the defendants purported to sell to investors “existed nowhere but in the minds of the defendants [did] not remove th[e] case from the purview of [the federal Securities Exchange Act of 1934, 15 USC § 78j (b), and Rule 10b–5 promulgated thereunder, 17 CFR § 240.10b–5]. A fraud in connection with the purchase or sale of a fraudulent security is no less actionable for its fictitious quality.”) (footnote omitted).

Here, the evidence authorized the jury to find that all three prongs of the Howey test were satisfied. First, the victims parted with their money in anticipation of investment gains. Second, there was a common enterprise, because the victims' funds were pooled to reach the minimum amounts for participation set by Hicks. Third, the expectation of profits rested solely on the efforts of others (the “Program Manager” or “Bank Trader”). See Securities & Exchange Comm. v. SG Ltd., 265 F.3d at 48–55(III). In addition, the evidence authorized the jury to find that Hicks acted as a dealer or salesperson who would receive a percentage of the returns as a commission. Consequently, Hicks' sufficiency challenge fails.

2. Hicks contends that the State failed to obtain a valid indictment within the statute of limitation and, therefore, that the trial court erred in denying his plea in bar.

The record shows that none of the victims were aware of Hicks' fraud before April 19, 2001. A grand jury returned an indictment on April 14, 2005, within the applicable statute of limitation, which charged Hicks with one RICO count and nine counts of violating the Securities Act.⁸ On November 30, 2007, the trial court granted the State's request to enter a nolle prosequi order. On December 17, 2007, the grand jury returned a second indictment, charging Hicks with the same ten counts.

Under Georgia law, if the State obtains an indictment within the time allowed, and a nolle prosequi is later entered as to the first indictment, the State may re-indict the defendant within six months after the entry of nolle prosequi, regardless of the intervening expiration of the initial limitation period. Carlisle v. State, 277 Ga. 99, 100–101, 586 S.E.2d 240 (2003); Sallie v. State, 276 Ga. 506, 513–514(12), 578 S.E.2d 444 (2003).⁹ Because the State re-indicted Hicks within six months of the entry of the nolle prosequi, the trial court did not err in denying his plea in bar. Alexander v. State, 192 Ga.App. 211, 212, 384 S.E.2d 436 (1989).

[315 Ga.App. 784]3. Hicks contends that his trial counsel rendered ineffective assistance by consenting to the State's nolle prosequi rather than insisting that the trial court rule on his special demurrer.

In order to prevail on a claim of ineffective assistance of counsel, a criminal defendant must show that counsel's performance was deficient and that the deficient performance so prejudiced the client that there is a reasonable likelihood that, but for counsel's errors, the outcome of the trial would have been different. Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984)[.] The criminal defendant must overcome the strong presumption that trial counsel's conduct falls within the broad range of reasonable professional conduct.

(Citations and punctuation omitted.) Robinson v....