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State v. Squires

Court of Appeals of Utah

June 27, 2019

State of Utah, Appellee,
Lamont Boyd Squires, Appellant.

          Fourth District Court, Provo Department The Honorable Fred D. Howard No. 121400198

          Clemens A. Landau, Troy L. Booher, and Freyja R. Johnson, Attorneys for Appellant

          Sean D. Reyes and William M. Hains, Attorneys for Appellee

          Judge Jill M. Pohlman authored this Opinion, in which Judges Kate Appleby and Diana Hagen concurred.

          POHLMAN, JUDGE

         ¶1 Lamont Boyd Squires, on behalf of his employer, convinced his uncle (Uncle) to pledge real property as collateral for a loan to be used as part of a larger financial transaction. After the transaction failed and Uncle's collateral was lost, Squires was charged with and convicted of communications fraud and a pattern of unlawful activity. Squires appeals, contending that his trial counsel was constitutionally ineffective for not objecting to jury instructions for communications fraud and for not making a hearsay objection. He also contends that there was insufficient evidence to convict him of engaging in a pattern of unlawful activity. We conclude that his counsel was not ineffective and therefore affirm his communications fraud convictions. We reverse, however, Squires's conviction for engaging in a pattern of unlawful activity and remand with instructions to enter a judgment of acquittal on this count.


         The Transaction

         ¶2 Squires was a construction manager for Fitz Roy LLC, a real estate investment company that also built "spec" houses.[2]Squires oversaw the construction process, while his boss, Stephen Anderson, lined up investors for projects and exclusively handled the company's finances. During the financial crisis of 2008, Anderson learned of a "really good opportunity" to buy distressed developments in the Teton Valley, finish them, and sell them for a profit. To get funding to pursue this project, Anderson contacted Dincom, a lender. Dincom was willing to loan approximately $10 million, paid in monthly million-dollar disbursements, but required a $660, 000 cash deposit.

         ¶3 Squires knew Fitz Roy did not have enough money for the cash deposit, but he also knew that Uncle had unencumbered property that could help secure the loan. Wanting to become a partner in Fitz Roy, Squires told Anderson about Uncle, and the two devised a plan. Squires subsequently contacted Uncle early in 2008 with a proposal to use Uncle's property as collateral for a hard money loan, which in turn would be used as the $660, 000 deposit for the Dincom loan. Squires promised Uncle that the first disbursement from Dincom would be used to free his property. According to Squires, Fitz Roy would need Uncle's property for "two to three weeks at the most," though Squires knew that ninety days was standard in the industry. In addition, Squires told Uncle that Fitz Roy would pay him a fee for use of his property.

         ¶4 Squires and Uncle did not talk about the transaction's possible risks. Uncle said that he needed "to get some more information," but he wanted to help his nephew because "[i]n [their] family [they] help each other." He was under the impression that Fitz Roy was "flourishing," even though it "didn't have that much free cash," and understood that, under Squires's proposal, the $660, 000 deposit would be kept in escrow in case the Dincom loan did not fund and, if it did, the "very, very first payment was supposed to . . . free up [his] property." Squires guaranteed to Uncle "over and over again" that there "would be nothing to worry about."

         ¶5 Over the next few weeks, Uncle looked into the deal. He contacted the escrow company handling the transaction and also asked a neighbor experienced in international trading about the process. Uncle, however, found himself needing to address a pressing family concern and told Squires to use another option to get the funding. Despite having told Uncle that Fitz Roy had other alternatives for obtaining funding, Squires now told Uncle that they had no other options and the investors were threatening to back out. Uncle testified at trial that Squires pressured him and said they "had to make a decision quick." Uncle thought, "[W]ell, okay, I guess I'm going to have to stay with it."

         ¶6 In late March, Uncle and Anderson signed the necessary paperwork. Uncle testified that he "didn't really have time" to look at the documents and trusted Squires "that everything was going to be taken care of." The documents provided that repayment of the hard money loan for $660, 000 would be due in ninety days-not two to three weeks as Uncle had been told. The documents also provided that in exchange for the use of Uncle's property as collateral, Fitz Roy would pay Uncle $100, 000, with 25% paid immediately and the rest due in ninety days. Fitz Roy also agreed to provide Uncle with a construction loan so that he could construct a new building on his property. After signing the papers with Anderson, Uncle was again promised, this time by Dincom representatives, that it would "only take two weeks" for the loan to fund.

         ¶7 After three weeks and still no word from Squires, Uncle called Squires "to see if everything was done." Squires told Uncle that Dincom could not finance the whole loan, so Fitz Roy was securing other options to get the total amount of money it needed. In fact, the day before Dincom's first disbursement was due, a Dincom employee called Anderson with a request to change the loan's terms. After first demanding a return of the $660, 000 in escrow, Anderson renegotiated the loan, accepting an initial disbursement of roughly half the original agreed-upon amount. Squires knew that Anderson was working with Dincom and "that there was a hiccup" in funding the loan. In a conversation with Uncle, Squires told Uncle that "it's taking a little longer [than expected] but everything's fine." He did not tell Uncle that they had received a disbursement from Dincom or that the amount of the disbursement was less than originally anticipated.

         ¶8 Anderson did not put any of the partial disbursement toward repaying the hard money loan secured by Uncle's property. Because there were "other obligations that [he] had to pay," and because he had ninety days to pay the hard money loan, Anderson's plan was to conduct business as usual. He made payments for, among other things, credit cards, business materials, and Squires's salary, and also transferred funds to "personal accounts."

         ¶9 By this time, Uncle had started construction on his new building, and Squires helped him with the engineering. Uncle frequently called Squires about construction, but the discussion often turned to the loan. Squires told Uncle that "everything's fine, it's moving along," assuring him that "things were going just exactly like [Squires and Anderson] promised."

         ¶10 In May, Fitz Roy continued looking for additional funding, and it used some of the Dincom money for investment opportunities. Anderson wired $200, 000 to an investment trader to obtain more money, and another $104, 000 to the escrow company on the Dincom loan to obtain a loan from investors in Seattle. Fitz Roy lost the $104, 000, and most of the $200, 000 was returned by the trader and sent to Dincom "to stimulate Dincom into fulfilling" the loan agreement. Also during this time, Anderson "talked extensively" with Dincom trying to convince it to fund the loan. Dincom made no disbursement in May or June. Squires knew that Anderson was pursuing other funding and that Dincom did not disburse funds in June, though he thought Dincom made a disbursement in May.

         ¶11 Construction on Uncle's building proceeded, and Uncle was ready to order trusses. Uncle had money on a line of credit he was saving "just in case they didn't get the money" from Dincom, but he also needed to order the trusses so they would arrive on time. He asked Squires whether he needed to save that money or whether he could order the trusses, and Squires told him, "[G]o ahead and keep spending the money." Uncle was "constantly contacting" Squires about the loan, and Squires responded that "everything's fine." Squires also told Uncle that the hard money lender was cooperating and not charging extra fees because it "kn[ew] the situation" they were in.

         ¶12 By July, now several months out from entering the loan, "the story was getting a little more complicated." Dincom informed Anderson that it could not fund the loan and sent $290, 000 to Fitz Roy and told Anderson to treat it as a return of escrow. Anderson protested, but there was nothing he could do because "Dincom was going under." In an attempt to salvage what he could, Anderson used $250, 000 to acquire a loan from another investment company. That loan "ended up being [a] scam," and Anderson lost the money.

         ¶13 Squires knew that Dincom had returned some of the escrow money and had discussed the potential loan with Anderson. Around this time, Squires told Uncle that Fitz Roy had $5 million in a bank account but that it was "complicated." Squires, at Anderson's direction, presented a letter to Uncle showing that there was $5 million in the bank account, but Squires later learned that the letter was forged. After the ninety days to repay the hard money lenders had passed, Squires "realized that something was really going wrong." As things got more complicated, Squires told Uncle to talk directly with Anderson. Through August, Uncle and Squires did not talk.

         ¶14 Things changed in September when the hard money lender called Uncle and told him it was foreclosing on his property. According to Uncle's trial testimony, the hard money lender informed Uncle that Squires had not "been communicating with [it]" and that Squires had "spent the money back in May and [had not] been telling the truth." Uncle asked Squires about his conversation with the lender, and Squires got "pretty angry" and told him, "[E]verything's okay, everything's safe and secure and it's just a bunch of lies." Squires said that "people go bankrupt all the time" and made Uncle feel that Squires "was chewing [him] out for not being a man." Uncle apologized.

         ¶15 Uncle and his family eventually sat down with Squires and Anderson to talk about what had happened. Uncle believed the "deposit was still supposed to be safe and secure," so he asked Squires about it. Squires told him that Fitz Roy spent the money on "cabinets and carpet."

         ¶16 Uncle lost his property. He was forced to sign it over to his brother and another nephew, who purchased the property to save it from foreclosure. Uncle also had to sell his house because of a $300, 000 debt on his line of credit that he could not afford. The deal was "exactly opposite of everything that [Squires] had promised."

         Procedural History

         ¶17 The State charged Squires with five counts of communications fraud and one count of a pattern of unlawful activity.[3] See Utah Code Ann. § 76-10-1801 (LexisNexis 2017) (communications fraud); id. § 76-10-1603 (pattern of unlawful activity). A jury convicted Squires on four of the five communications fraud counts and on the pattern of unlawful activity count. The court sentenced Squires to a prison term not to exceed fifteen years on each count, suspended the sentence, and placed him on probation. It also ordered Squires to pay court-ordered restitution of $30, 000, though Squires stipulated that the complete restitution amount was $400, 000.

         ¶18 Squires filed a motion to arrest judgment and a motion for a new trial, both of which challenged the jury instructions and the sufficiency of the evidence.[4] The trial court denied the motions.

         ¶19 As for the jury instructions, the court rejected Squires's argument that communications fraud requires specific intent to defraud. The court noted that the statute itself "specifies the mens rea required-a person may be convicted for communications fraud if 'the pretenses, representations, promises, or material omissions made or omitted were made or omitted intentionally, knowingly, or with a reckless disregard for the truth.'" (Quoting Utah Code section 76-10-1801(7).) Reasoning that the statute recognizes "knowingly" and "recklessly" as mental states, the court determined that Squires "mistakenly concludes [c]ommunications [f]raud to be a specific intent crime." The court also rejected the argument that the word "devise" in the statute "connotes a specific intent to defraud." It concluded that "it is possible for a person to knowingly or recklessly form, plan, invent, or calculate a scheme or artifice to obtain money, property, etc., from another without having specific intent to defraud." So concluding, and having examined the jury instructions as a whole, the court determined that the jury was properly instructed.

         ¶20 As for the sufficiency of the evidence on the pattern of unlawful activity charge, the trial court noted that the statute requires "'three episodes of unlawful activity, which episodes are not isolated, but have the same or similar . . . characteristics.'" (Quoting Utah Code section 76-10-1602(2).) Relying on the four communications fraud counts on which Squires was convicted, the court concluded Squires "engaged in at least three separate but related episodes of unlawful activity." See Utah Code Ann. § 76-10-1602(4)(hhhh) (listing communications fraud as an example of unlawful activity). The court also concluded that there was "sufficient evidence at trial that [Squires] was engaged in an enterprise," as required by the statute. It noted that Squires worked for Fitz Roy, communicated to Uncle in his capacity as Fitz Roy's construction manager, and made "repeated misrepresentations" to obtain Uncle's property on Fitz Roy's behalf. The court also rejected Squires's assertion that an enterprise "must be an ongoing association for the purpose of engaging in a ...

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