District Court, Farmington Department The Honorable Michael
G. Allphin No. 111700523
G. Williams, Attorney for Appellant.
D. Reyes and William M. Hains, Attorneys for Appellee.
Jill M. Pohlman authored this Opinion, in which Judges
Gregory K. Orme and Stephen L. Roth concurred.
Lane D. Bird appeals a restitution order, arguing that the
trial court erred when calculating the restitution amount. We
After creating a skin care product and establishing a company
to manufacture it, Omar Bonada arranged for Bird to help
distribute the product. Eventually, Bonada and Bird together
decided to dissolve Bonada's company and incorporate two
companies in its place: Clarcon Labs Inc. and Clarcon
Distribution Inc. (collectively, Clarcon).
In early 2007, Bird approached his neighbor (Neighbor) and
his wife (collectively, Victims) about an investment
opportunity in Clarcon. By March 2007, Bird had convinced
Victims to invest a total of $247, 000. In exchange for this
capital investment, Victims would acquire stock in Clarcon
and thereby receive a share of future profits.
In convincing Victims to invest in Clarcon, Bird omitted many
material facts and made numerous untrue statements. For
example, Bird did not tell Victims about any of Clarcon's
debts, and he did not disclose that he had prior tax liens
and civil judgment liens against him, or that he had received
two prior discharges in bankruptcy. Bird also falsely claimed
that he had invested $500, 000 of his own money in Clarcon so
that Victims would feel like Bird had "skin in the
Bird also led Victims to believe that their capital
investment would be used to update production equipment to
support the company's growth. Instead, a large portion of
Victims' $247, 000 investment was used to pay debts and
salaries while another portion was transferred to Powerslide,
another of Bird's business ventures, purportedly to repay
a loan from Powerslide. On June 1, 2007, shortly after
Neighbor and Bonada discovered the funds transfer to
Powerslide, Clarcon terminated Bird's involvement in the
After Bird left, Clarcon was dissolved and Neighbor and
Bonada formed a new company, Clarcon Biological Chemistry
Laboratory Inc. (CBCL), to produce and market the same
product. When CBCL gained access to Clarcon's financial
records, Neighbor discovered that Clarcon was mired in debt.
It had high overhead expenses and "[v]irtually nothing
in sales."Over the next two years, Victims tried to
make CBCL succeed and invested another $193, 000 into the
venture. Notwithstanding those efforts, CBCL never made a
profit. And eventually, the Food and Drug Administration (the
FDA) found CBCL's product to be contaminated with
bacteria, which led to federal authorities recalling and
seizing the product inventory in the summer of 2009. Neighbor
and Bonada dissolved CBCL shortly thereafter.
In 2011, Bird was charged with securities fraud and theft.
After a bench trial, the trial court acquitted Bird of theft
but found him guilty of securities fraud, a second degree
felony. The trial court fined Bird $10, 000 and ordered him
to serve one to fifteen years in prison, but it suspended
both the fine and the prison term. The court then sentenced
Bird to 180 days in jail and placed him on probation.
As a condition of probation, the trial court ordered Bird to
pay restitution to Victims. The State requested complete and
court-ordered restitution in the amount of $247, 000, which
represented Victims' original investment in Clarcon. Bird
objected, arguing that "no restitution [should] be
ordered as [Victims] have not suffered an actual loss"
resulting from Bird's criminal activities. Victims
suffered no pecuniary damages, Bird argued, because Neighbor
retained Clarcon's product inventory and fixed assets
that together exceeded the value of Victims' principal
investment. In his objection, Bird urged the court to rely on
his supporting documents and the testimony at trial in
considering his objection. He did not request a hearing on
Without further proceedings, the trial court issued a written
ruling and order on the State's request for restitution.
In its ruling, the court found that Victims had "relied
on [Bird's] representations and invested a principal sum
of $247, 000" in Clarcon, on which they "did not
receive a return." The court concluded that they would
not have suffered pecuniary damages but for Bird's
criminal conduct and that their damages "have a
sufficient causal nexus in fact and in time with [Bird's]
securities fraud." The court further found, however,
that Bird had presented undisputed evidence that Neighbor
"absorbed all of the assets of Clarcon . . . when
forming" CBCL and that those assets had a total
estimated value of $82, 276.83. Because the State had not
presented any contrary evidence, the court credited the value
of the assets against the amount of Victims' principal
The court next addressed Bird's attempt to seek further
credit against the amount of Victims' principal
investment based on the value of the product inventory. Bird
estimated the product inventory "as having a value into
the millions of dollars." Although Neighbor testified at
trial, based on what he was told by Bird, that the estimated
retail value of the product inventory was $1.5 million to $2
million in the spring of 2007, other witnesses testified that
the product inventory had a retail value of $500, 000 at that
time. But because federal authorities seized the product
inventory in 2009 due to safety concerns, the ...