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State v. Randall

Court of Appeals of Utah

July 11, 2019

State of Utah, Appellee,
v.
Dee Allen Randall, Appellant.

          Third District Court, Salt Lake Department The Honorable Mark S. Kouris No. 141906717

          Nathalie S. Skibine and Wojciech S. Nitecki, Attorneys for Appellant

          Sean D. Reyes and Nathan D. Anderson, Attorneys for Appellee

          Judge David N. Mortensen authored this Opinion, in which Judges Michele M. Christiansen Forster and Kate Appleby concurred.

          OPINION

          MORTENSEN, JUDGE

         ¶1 For many years Dee Allen Randall cheated investors out of millions of dollars in a classic Ponzi scheme.[1] Financial carnage for Randall's victims followed. The ill-gotten money is gone. On balance, the victims and their families will suffer from the burden and effects of Randall's fraud forever. After Randall was charged with a number of crimes, he pled guilty to four counts of securities fraud and one count of engaging in a pattern of unlawful activity. He was sentenced to prison. Months later, the sentencing court held a hearing and determined that both complete and court-ordered restitution should be set at $10.2 million, although the record reflected that investors may have been fleeced out of over $36.8 million.[2] Randall appeals the restitution determination. We affirm.

         BACKGROUND

         The Crime

         ¶2 Over about a ten-year period, Randall ran a Ponzi scheme that defrauded more than 500 investors out of over $36.8 million. He sold investors private placement securities in one of his several companies (Horizon Entities).[3] These securities (Horizon Notes), on which Randall promised a return of nine to seventeen percent annually, were promissory notes issued by Horizon Entities.[4] But the companies composing Horizon Entities were failing; financial audits revealed that they had been operating at a loss for years and were not expected to survive another. To keep Horizon Entities afloat, Randall commingled funds among his companies and used new investor money to pay old investors. In fact, Randall admitted to running a "legal Ponzi scheme" during his bankruptcy proceedings. The director of the Utah Division of Securities described Randall's scheme as "probably one of the two or three most egregious cases of securities fraud that [he had] seen in the state." The State charged Randall with eighteen counts of securities fraud and one count of a pattern of unlawful activity.

         The Plea Agreement

         ¶3 Just weeks before trial, Randall pled guilty to four counts of securities fraud and one count of engaging in a pattern of unlawful activity. The State dismissed the remaining counts. The victims of the securities fraud counts to which Randall pled guilty-two individuals and two couples-were named in the plea agreement. The pattern of unlawful activity count to which Randall pled guilty did not identify specific victims but stated that "commencing on or about June 2009 and continuing through at least April 2011, [Randall] engaged in conduct which constituted the commission of at least three episodes of unlawful activity" involving securities fraud. Randall acknowledged that he "may be ordered to make restitution to any victim or victims of [his] crimes, including any restitution that may be owed on charges that are dismissed as part of a plea agreement." The plea agreement further specified,

[Randall] agrees to an order of "complete" restitution pertaining to all victims, whether named or unnamed, in an amount to be determined by the Court. The defendant acknowledges that the State will seek restitution in the approximate amount of $36.8 million for investors listed in the attached spreadsheet[[5] . . . . The State acknowledges that the defendant may dispute restitution for investors listed therein, and the parties agree that the Court shall determine whether the Pattern of Unlawful Activity statute, [Utah Code sections 76-10-1601 to -1609], permits restitution pertaining to all such investors. . . . [Randall's] "court-ordered" restitution shall be determined in accordance with [Utah Code section] 77-38a-302(2)(c).[[6]

(Emphasis added.)

         ¶4 At the plea hearing, Randall admitted that he "recklessly made . . . material omissions" in representing the investments he offered to the defrauded investors and that he "engaged in a pattern of activity which involved . . . paying . . . old investments with new invested money in at least three instances." Randall's counsel, however, noting that there was no agreement regarding restitution, asked for a post-sentencing hearing.

         Sentencing

         ¶5 At the sentencing hearing, Randall asked the court to suspend any prison sentence and place him on probation so that he could "work to repay what . . . he took unlawfully." He submitted a repayment plan that contemplated the distribution of $1.4 million to defrauded investors over a period of fifteen years. Randall further stated, "Look, I'm guilty. . . . I did this. Investors lost money, because of my actions, my omissions." He admitted that he did not disclose to investors how poorly his businesses were doing, because "people would not have invested" had they known the truth. He further stated, "I am so deeply sorry for every single investor, not only those who are sitting here, but others that are not." (Emphasis added.) He added, "I am committed to work every day of my life. . . . I am determined to do whatever I can to see that they all get as much money as they can before the day I die." While admitting that he would be unlikely to "pay the entire restitution," Randall noted that he could "at least pay the restitution to begin with ...


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