Home-buying business engaged in theft by deception
Several cases of securities fraud have recently been discovered in Iowa. In this case, the defendant appealed his multiple convictions for ongoing criminal conduct, first-degree theft, securities fraud, transacting business as an unregistered broker/dealer, and sale of unregistered securities. The defendant argued that the trial court judge erred in several ways, namely by failing to instruct the jury on the identity of the victims of some of the theft charges and improperly defining the elements of securities fraud in Iowa. Further, the defendant argued that the trial court judge erred in denying his proposed jury instructions and did not tailor the intent instructions to each individual charge. But the trial court judge denied the defendant’s motion for judgment of acquittal.
The defendant’s business centered upon buying homes from “distressed buyers” and then selling the houses at higher prices. In the beginning, the defendant bought these houses on contract, but then began to structure his purchases around real estate lease option agreements. These agreements created a trust in the name of the seller with the defendant’s company as the trustee. The arrangement was that the defendant would sell the home to a buyer on contract with full payment due in twelve months, then make monthly payments on the on the pre-existing mortgage, paying off the mortgage with the help of a lender within twelve months. However, the defendant used the borrowed money for other purposes and continued to make the monthly mortgage payments.
In 2000, the defendant signed a document with the Iowa Securities Bureau, agreeing to stop soliciting public investment funds. Despite these assurances, the defendant continued to solicit investors, promising them secure investments and a fifteen percent return. The defendant never recorded the investors’ interests in the property, as he promised. Subsequently, the trial court convicted him of seventeen counts of criminal conduct.
On appeal, the defendant argued that the trial court’s jury instructions failed to identify the victims of his theft by name. The court found that the crime of theft by deception does not require the identity of the victim as a material element. This type of theft is a catch-all category “to encompass the full and ever changing varieties of deception.” The crime only requires proof of the deception, not that the deception was made directly to a particular victim.
As to the commission of securities fraud by the defendant, the court denied the defendant’s argument that the trial court improperly failed to instruct the jury that the defendant must have specifically intended to defraud. The court stated that the statute focuses on whether the defendant “willfully engaged in an act, practice, or course of business to defraud or deceive” and specific intent is only a secondary concern that the legislature sought to address.
The court ruled that it was proper to deny the defendant’s motion for judgment of acquittal, because there was sufficient evidence of deception in the record. There were six instances where the defendant failed to pay of pre-existing mortgages on the property as promised. Seeking to avoid detection, he continued to pay the monthly amounts due. State v. Wolford, No. 7-579/06-0691, 2007 Iowa App. LEXIS 1133 (Iowa Ct. App., Oct. 24, 2007).