State v. Gray

286 Or.App. 799

401 P.3d 1241

STATE of Oregon, Plaintiff-Respondent,

v.Randy GRAY, Defendant-Appellant.

A156613.

Court of Appeals of Oregon.

Argued and submitted May 31, 2016.

July 19, 2017

Zachary Lovett Mazer, Deputy Public Defender, argued the cause for appellant. With him on the opening brief was Ernest G. Lannet, Chief Defender, Criminal Appellate Section, Office of Public Defense Services. Randy Gray filed the supplemental brief pro se.

Michael S. Shin, Assistant Attorney General, argued the cause for respondent. With him on the brief were Ellen F. Rosenblum, Attorney General, and Paul L. Smith, Deputy Solicitor General.

Before Tookey, Presiding Judge, and DeHoog, Judge, and Sercombe, Senior Judge.^*

DEHOOG, J.

Defendant, a financial advisor, persuaded a number of his clients to invest in a stalled housing development that he knew to be deeply in debt. He did not fully disclose the project's financial condition and stated that their investments would be used for construction and earn them a substantial return; instead, the money went to existing creditors, to defendant, and to his associates. Construction did not resume, and defendant's clients—now alleged to be his victims—recovered only a fraction of their money. In defendant's view, however, he had merely recruited investors for a promising-but-indebted construction project, only to see a sound business venture doomed to failure by the unexpected collapse of the housing market.

A jury rejected defendant's view and found him guilty of 16 counts of aggravated theft in the first degree, ORS 164.057,¹ based on a theory of theft by deception. See ORS 164.015(4) ; ORS 164.085. Defendant appeals those convictions and raises three assignments of error.² We write to discuss only defendant's first and third assignments of error.³ Defendant's first assignment of error challenges the denial of his motion for judgment of acquittal on statute of limitations grounds and argues that, under a proper construction of the theft statutes, the alleged thefts were completed more than three years before the commencement of his prosecution.⁴ In his third assignment of error, defendant argues that the trial court erred in excluding evidence that he had partially repaid and offered other assistance to several of his former clients, conduct that defendant contends would have been probative of his lack of criminal intent. As we explain below, we conclude that defendant did not preserve his first assignment of error, and we therefore decline to review it. On defendant's third assignment of error, however, we conclude that the trial court erred in excluding defendant's evidence and that its error was not harmless. We therefore reverse and remand.

We take the following facts from the evidence presented at defendant's trial. In mid-2008, defendant met a previously successful homebuilder, Derek Dunmyer. Through his construction company, Dunmyer had started a new housing development project, but had exhausted all available cash and credit before completing the project. At the time, Dunmyer's company was approximately $7 million in debt and was delinquent on multiple credit obligations, including debts owed to private investors who held liens on the development property. Dunmyer personally owed an additional $3 million in debts that included past-due income taxes and mortgage payments.

Defendant and his business partner, Scott Whitney, spoke with Dunmyer and determined that the development project could be completed profitably if they could raise $3.5 million in additional capital. Accordingly, defendant and Whitney agreed to form a management company, MTC, through which they would raise the necessary money and oversee the project. In exchange for those services, MTC would receive $100,000 immediately and earn as much as $1 million over five years. As part of their plan, defendant prepared a cash flow assessment indicating that the project would remain "very feasible," even if the housing market were to experience a moderate decline. Defendant and Whitney knew that Dunmyer had a history of neglecting his financial obligations and of commingling corporate and personal assets. Thus, to ensure the success of the venture, they required Dunmyer to agree that MTC would retain control of the money and would use it primarily to pay off existing debts so that the development could move forward.

Defendant and Whitney separately owned and operated an investment advisory firm, Zurcrowner, and agreed that defendant would approach a number of their clients and recommend that they invest in Dunmyer's development project. Defendant told each client he approached essentially the same thing: Their money would finance a successful homebuilder and be used to obtain land and build homes. Their investment would earn 12 percent annual interest and be paid back in full in five years, except for those investors who opted instead to receive monthly payments over a five-year period. Most of the victims recalled being assured that they would have a security interest in the development property and that defendant and Whitney would retain control of the money. Several victims remembered being told that Dunmyer and his construction company would be involved, but only two remembered hearing that some of the money would be used to restructure existing debt. For his part, defendant testified that he had told his clients about the general financial condition of the project and the plans to pay down existing debt; he acknowledged, however, that he did not disclose that some of his clients' money would go directly to MTC, or that any of the money would go to pay Dunmyer's delinquent taxes.

In July and August 2008, defendant's clients signed documents authorizing the proposed investments and executed wire orders directing that funds be transferred out of their existing investment accounts. The last such document was signed on August 19, 2008, but none of the wire orders were submitted until August 26, and no actual transfer of funds occurred until August 29. In accordance with MTC and Dunmyer's agreement, those funds were used to pay down existing debts, to satisfy Dunmyer's tax obligations, and to clear a lien against the development property. MTC also received the agreed-upon initial payment of $100,000, with $50,000 going directly to defendant. Although MTC directed those transactions, Dunmyer subsequently gained independent control of the funds that he had agreed to let MTC manage. As a result, Dunmyer was able to pocket the proceeds from the sale of one house, as well as money that had been specifically earmarked to pay contractors. When the economy collapsed shortly thereafter, the development project failed, with no additional houses having been built. Defendant eventually acknowledged to his clients that the development company was in default and advised them that they had the option of foreclosing on the property. They ultimately did so, in a largely unsuccessful effort to recover their investments.

Five clients who had chosen to receive monthly interest payments testified that they had received at least four payments following the transfer of their funds to MTC. One of the clients acknowledged that, after receiving those initial four payments from the bank administering the loans, he continued to receive checks from one of defendant's companies for some undetermined time. Another of those clients testified that she received monthly payments for considerably longer than four months, and perhaps until as late as July 2011, but she did not identify the source of those payments.

As a result of the failed investment scheme, a grand jury indicted defendant and Whitney on August 25, 2011, on allegations of theft, racketeering, and unregistered sales of securities.⁵ In relevant part, the indictment charged 16 substantially identical counts of aggravated theft in the first degree, as follows:

"AGGRAVATED THEFT IN THE FIRST DEGREE ORS 164.015(1), (4) /164.057(1)(b)/ 164.085(1)(a)(b) (F/B)

"The Defendants, Scott Whitney and Randy Gray, on or about August 29, 2008, in Linn County, Oregon, did unlawfully and knowingly commit theft of money, of a total value of $50,000 or more, the property of [a named victim]."

Although the indictment appears to have charged defendant alternatively under ORS 164.015(1) ("[t]akes, appropriates, obtains or withholds such property") and ORS 164.015(4)("[c]ommits theft by deception as provided in ORS 164.085"),⁶ the state proceeded at trial only on a theft by deception theory.

In defendant's first assignment of error, he contends that the trial court erred in denying his motion for judgment of acquittal because the statute of limitations had lapsed before prosecution commenced on August 25, 2011. As noted, the statute of limitations for aggravated first-degree theft is three years, ORS 131.125(8)(a),⁷ and "starts to run on the day after the offense is committed," ORS 131.145(1). On appeal, defendant argues that any theft that he may have committed was committed within the meaning of ORS 131.145(1) when his clients authorized the use of their money and signed the corresponding wire orders. Because the last of defendant's clients to sign those documents did so on August 19, 2008, defendant contends that any resultant theft was "complete" more than three years before the commencement of prosecution on August 25, 2011. The state responds that the issue is unpreserved, because defendant did not argue at trial that he had completed his thefts before August 25, 2008. Instead, when defendant argued for a judgment of acquittal, the parties and the court all shared the understanding that the offenses had been committed on August 29, 2008, the date that the funds actually left the victims' investment accounts. And, as the state notes, the focus of defendant's argument at that time was that the state had produced no evidence showing that he had personally engaged in any conduct on that date—or any other date within the...