State v. Hixon

534 P.3d 235

STATE of New Mexico, Plaintiff-Appellee,

v.Joel HIXON, Defendant-Appellant.

No. A-1-CA-38640

Court of Appeals of New Mexico.

Filing Date: April 4, 2023

Certiorari Denied, July 13, 2023, No. S-1-SC-39903

Raúl Torrez, Attorney General, Emily Tyson-Jorgenson, Assistant Attorney General, Santa Fe, NM, for Appellee

Bennett J. Baur, Chief Public Defender, Mary Barket, Assistant Appellate Defender, Santa Fe, NM, for Appellant

MEDINA, Judge.

{1} Defendant Joel Hixon appeals his convictions of fraud (over $20,000) ( NMSA 1978, § 30-16-6(F) (2006) ); conspiracy to commit fraud (over $20,000) ( Section 30-16-6(F) and NMSA 1978, § 30-28-2 (1979) ); securities fraud ( NMSA 1978, § 58-13C-501 (2009) ); sale of a security by an unlicensed agent ( NMSA 1978, § 58-13C-402(A) (2009) ); and offer or sale of an unregistered security ( NMSA 1978, § 58-13C-301 (2009) ). Defendant argues: (1) it was reversible error to deny Defendant's request to instruct the jury on a higher level of intent for securities fraud, sale of an unregistered security, and sale of a security by an unlicensed agent; (2) it was fundamental error to allow the jury to convict Defendant on legally insufficient grounds for securities fraud; (3) it was fundamental error to fail to instruct the jury on the legal definitions of "effect" and "agent" for sale of a security by an unlicensed agent; and (4) there was insufficient evidence to support his convictions for fraud and conspiracy to commit fraud. For reasons stated below, we affirm.

BACKGROUND

{2} The following facts are based on evidence presented during Defendant's trial. In 2009, Defendant met Dain Schult (his codefendant at trial, and defendant in the related case. See State v. Schult , A-1-CA-38693, mem. op., 2021 WL 3739174 (N.M. Ct. App. Aug. 24, 2021) (nonprecedential)). Schult told Defendant about his company, American Radio Empire, Inc. (ARE)¹ , and that he intended to purchase local radio stations and put their programming on the internet. Schult needed investors for his company, and was selling securities that guaranteed either a repayment on the money invested or stock options in ARE. Defendant and his wife invested $1,500 dollars, and Defendant knew he would earn a "finder's fee" or "consultant fee" if Defendant brought other investors into ARE.

{3} Defendant encouraged his friends and associates to invest in ARE, including Frank Orphey, Daniel Worley, and Stephen Smith. Defendant pitched ARE to the potential investors, and either introduced or referred each person to Schult to make investments. Each investor was told that the securities purchased gave stock options in the company and that the investment would be used to take the company public and to purchase radio stations. Orphey and Smith knew that Defendant was likely receiving some amount of compensation for referring them to Schult. Worley was unaware that Defendant would be compensated.

{4} Orphey invested $25,000 in three payments. On the day of Orphey's third payment, Defendant received $1,000, and an additional $500 a few days later. Worley invested $29,600 in three payments. Defendant received $400 the day after the first payment and $3,600 the day of the second payment. A few days after the second payment, Defendant received an additional $2,000. Smith invested $10,000 in one payment. Defendant received $2,000 the day of the investment, $200 the following day, and an additional $1,800 about two weeks later.

{5} In 2011, Defendant approached Laura and Curt Miller (collectively, the Millers) about ARE and encouraged them to invest. Like the other investors, Defendant introduced the Millers to Schult. Defendant hosted both the Millers and Schult at his home to discuss investing in ARE. The Millers then met with Schult in Texas to further discuss the investment. The Millers decided to invest $25,000. The same day the Millers invested, Defendant received $12,500—$5,000 labeled as a "finder's fee" and $7,500 labeled as a "consulting fee."

{6} Laura Miller testified that she was told the investment would be used to take the company public, pay attorney fees, and overhead. Defendant told Laura that ARE needed $25,000 and that Defendant had personally invested $25,000. Laura testified that she was not aware Defendant would receive compensation for her investment, much less half of her investment, and had she known, she would not have invested her money. Laura also testified that she did not receive repayment, interest, or stock for her investment, even after contacting both Defendant and Schult. In 2015, Laura filed a complaint with the Securities Fraud Division.

{7} Curt Miller testified that Defendant similarly told him that Defendant had personally invested $25,000 and that this amount was the minimum required to invest in ARE. Like Laura, Curt was told that the money would be used to take the company public. Curt stated that his decision to invest would have been affected if he had been aware Defendant only invested $1,500 and that Defendant would be compensated from their investment.

{8} Financial records for ARE showed that over a six-year period, ARE received $532,744.84 from investments into the company, out of a total income of $556,776.51. During that time period, Schult received $277,866 in payments from ARE into his personal account. From January 2010 to June 2011 ARE paid Defendant just over $30,000. The financial records also revealed that Defendant found more than the four investors that Defendant originally indicated. The financial records showed additional investments into ARE and additional transfers into Defendant's account.

{9} According to the State's financial analysis expert, the majority of investors and debts were paid off using money obtained from new investors—a practice commonly referred to as a Ponzi scheme. The expert testified that only $24,372.72, or a little more than 4.3 percent of the money in ARE's account, was spent on multimedia-related expenses, with the majority of the remainder being spent by Schult on a variety of personal or tangential expenses. Only $56,990.72, or less than 10.18 percent of total income, was paid back out to investors under the terms of the securities Schult and Defendant sold.

{10} Although not part of the record, Defendant tendered jury instructions that added the term "purposefully" or "willfully" to the instructions for securities fraud, sale of an unregistered security, and sale of a security by an unlicensed agent. Defendant argued that out-of-state authority and NMSA 1978, Section 58-13C-508 (2009) supported his position that the appropriate mens rea for those crimes was specific intent, rather than general intent. The district court denied Defendant's jury instructions and provided the jury with a general criminal intent instruction for the securities offenses.

{11} The jury convicted Defendant of one count of fraud (over $20,000); one count of conspiracy to commit fraud (over $20,000); one count of securities fraud; one count of sale of a security by an unlicensed agent; and one count of offer or sale of an unregistered security. This appeal followed.

DISCUSSION

{12} We begin by addressing Defendant's argument that he was entitled to jury instructions requiring a higher level of intent for the securities offenses. We hold that the plain language of the securities criminal penalty statute only requires a general intent instruction, and therefore the district court did not commit reversible error by denying Defendant's instructions. We next address Defendant's other challenges to the jury instructions, and hold that the jury instructions did not create fundamental error. We then address Defendant's arguments that there was insufficient evidence to support his convictions for fraud and conspiracy, and hold that there was sufficient evidence to convict Defendant.

I. Jury Instructions

{13} The standard of review we apply to jury instructions depends on preservation. "If the error has been preserved we review the instructions for reversible error. If not, we review for fundamental error." State v. Benally , 2001-NMSC-033, ¶ 12, 131 N.M. 258, 34 P.3d 1134. "Under both standards, we seek to determine whether a reasonable juror would have been confused or misdirected by the jury instruction." Id. (internal quotation marks and citation omitted). We consider jury instructions on review as a whole, not singly. See State v. Montoya , 2003-NMSC-004, ¶ 23, 133 N.M. 84, 61 P.3d 793. To the extent that we must interpret the law, we do so de novo. See State v. Ochoa , 2008-NMSC-023, ¶ 10, 143 N.M. 749, 182 P.3d 130.

{14} Defendant first argues that the jury should have been instructed on a greater level of intent for securities fraud, sale of an unregistered security, and sale of a security by an unlicensed agent. Defendant next argues that there was fundamental error in the securities fraud instruction because the instruction allowed the jury to convict Defendant on legally insufficient grounds for that crime. Finally, Defendant argues that the jury should have been instructed on the legal definitions of "effect" and "agent" for the sale of a security by an unlicensed agent. Because Defendant preserved his argument that the jury instructions for the securities offenses should require a higher level of intent, we review it for reversible error. See Benally , 2001-NMSC-033, ¶ 12, 131 N.M. 258, 34 P.3d 1134. We review the remaining arguments for fundamental error. See id.

A. The District Court Did Not Err in Refusing Defendant's Instructions for Securities Fraud, Sale of an Unregistered Security, and Sale of a Security by an Unlicensed Agent

{15} Defendant contends that the denial of his tendered jury instructions for the securities offenses was reversible error because we should impose a higher level of intent for those crimes than general criminal intent. "A jury instruction is proper, and nothing more is required, if it fairly and accurately presents the law." State v. Laney , 2003-NMCA-144, ...