Kenneth Paul Lawrence v. State ( 2015 )

Affirmed and Opinion Filed April 2, 2015
Court of Appeals
S In The
Fifth District of Texas at Dallas
No. 05-13-01138-CR
No. 05-13-01139-CR
KENNETH PAUL LAWRENCE, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 380th Judicial District Court
Collin County, Texas
Trial Court Cause Nos. 380-80745-2011, 380-80746-2011
MEMORANDUM OPINION
Before Justices Francis, Lang-Miers, and Whitehill
Opinion by Justice Whitehill
A jury found Kenneth Paul Lawrence guilty of money laundering and engaging in
organized criminal activity for his role in soliciting investors for a biodiesel project in Hunt
County, Texas. In four issues on appeal, Lawrence contends that (i) the evidence is insufficient
to support his convictions, (ii) the non-accomplice evidence does not connect him to the
offenses, (iii) the trial court erred in allowing testimony from the State Securities Board
supervisor who is a lawyer, and (iv) his Sixth Amendment right to confront witnesses was
violated because he was not present for some witnesses depositions.1 The State asks that we
1
Lawrence asserts these four issues in separate briefs for each of the two convictions. We address both convictions in this opinion and refer
to the issues collectively to include the points raised in both briefs.
reform the judgment in cause number 05-13-01138 (engaging in organized criminal activity) to
reflect that the sentence was suspended rather than executed. We conclude that the evidence is
sufficient to support the convictions and the non-accomplice testimony tends to connect
Lawrence to the offenses. Lawrence’s remaining issues were not preserved for our review. We
reform the judgment for engaging in organized criminal activity and affirm the trial court’s
judgments as reformed.
I. BACKGROUND
This case involves money laundering and engaging in organized criminal activity by
soliciting funds from investors, many of whom were elderly and living on a fixed income, to
construct a biodiesel plant in Hunt County, Texas. According to the indictments, the offenses
were committed in Collin County between August 1, 2008 and September 30, 2009.
Lawrence, along with Ricky Knowles, John Riddle, Casey Vanloon, and Gene Nichols,
solicited over $846,000 from twenty-one investors. The investors were promised high returns,
and some were told they were purchasing an annuity rather than an ownership interest in a
biodiesel plant. The investors were also told that the investment was “protected” by insurance.
The plant was never built and the investors ultimately lost their money. Knowles, Riddle,
Vanloon, and Nichols collectively received $481,168.83 of the investor funds. Lawrence’s
company received $266,079.76 of investor funds, of which only $40,000 was applied to the
biodiesel plant.
Lawrence was charged with theft, engaging in organized criminal activity, money
laundering, and securities fraud. Knowles, Riddle, and Vanloon each signed a voluntary
confession and plea agreement, confessing to engaging in organized criminal activity by
participating with each other and Nichols to commit money laundering and theft over $200,000.
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Knowles, Riddle, and Vanloon each testified at Lawrence’s trial.2 The jury found Lawrence
guilty of money laundering and engaging in organized criminal activity, and acquitted him of
theft and securities fraud. The jury assessed Lawrence’s sentence at five years’ imprisonment for
money laundering and a ten year probated sentence for engaging in organized criminal activity.
Lawrence Energy’s Biodiesel Project.
The evidence admitted at trial established that in 2003, Lawrence and Knowles worked
for the same company selling unregistered oil and gas securities. The State Securities Board
investigated Lawrence for selling unregistered oil and gas securities, and Lawrence agreed to
stop. Lawrence filed bankruptcy in 2004.
Knowles later started his own company, Knowles Consulting. Lawrence also started a
company with his brother-in-law. Lawrence’s company, L&C Consultants (“LCC”), sold
interests in oil wells, some of which were dry, abandoned wells that had been drilled years
before. In 2007, three investors won a judgment against Lawrence for selling unregistered oil and
gas securities. Lawrence left LCC and started a new company, Lawrence Energy.
At Lawrence Energy, Lawrence began working with Sunx Energy to build a biodiesel
plant in Hunt County, Texas (the “Sunx Project”). To this end, in the summer of 2008, Lawrence
sent Sunx $20,000 through Lawrence Energy. Lawrence was also raising money for other
projects, including a project to build a carbonization plant through a company called “Green
Diversion.”3
In the interim, Knowles Consulting was investigated by the State Securities Board, and
was also the subject of a lawsuit by investors who claimed they never received a return on their
investment. Knowles began looking for other work.
2
Nichols pled guilty and received an eight-year sentence, but the record does not reflect the specific crime he was charged with having
committed.
3
Lawrence was a managing member of Green Diversion. Green Diversion was a sewer-waste and cow-manure carbonization company.
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The Greenway Fronting Group.
Lawrence knew that Knowles was looking for other work. Although he was aware that
Knowles had been investigated for selling unregistered securities, he suggested that Knowles sell
the Sunx Project to investors. Lawrence also told Knowles that the project materials were
prepared and the project would produce “somewhat of an instant income.” Lawrence told
Knowles “he wanted x amount of dollars back.” Knowles did not recall the total, but believed
Lawrence wanted “eight hundred and something thousand dollars” for the Sunx Project.
Consequently, Knowles and his friend Riddle formed Greenway Energy Partners to be the Sunx
Project fund-raising arm. The plan was for investor money to go to Greenway and then to
Lawrence Energy. Once Lawrence Energy had the money, Lawrence was supposed to send it to
Sunx. The investors were not told about Lawrence Energy or Lawrence, but were instead led to
believe that Greenway would provide the money directly to Sunx. Greenway was not registered
to sell securities.
Vanloon also raised money for the Sunx Project through Greenway. Vanloon, a friend of
Knowles, previously worked at an insurance agency where he and his friend Nichols sold
annuities. But Vanloon surrendered his insurance license after the Texas Board of Insurance
investigated the company’s practice of moving investors to new annuities each year to generate
more commissions for the insurance agents.
When Greenway was formed, Knowles did not want his name associated with the
company because of the prior securities investigation. Riddle, who worked with Knowles during
the securities investigation, did not want his name associated with Greenway either. So Knowles
contacted Vanloon, and Vanloon agreed to be Greenway’s owner. When Vanloon joined
Greenway, he also brought along his friend Nichols. Thus, Knowles, Riddle, Vanloon, and
Nichols began selling the Sunx Project through Greenway.
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Riddle ran Greenway’s day-to-day operations and wrote all of its checks. When
Greenway first started, it shared an office suite with Lawrence. Although Greenway’s office
eventually moved across the hall, Riddle still spoke with Lawrence on a daily basis.
Lawrence gave Greenway all of the materials it needed to sell the Sunx Project to
investors, including a prospectus with information about Sunx that was readily available on the
internet. The prospectus did not mention Lawrence or Lawrence Energy.
Lawrence also gave Greenway a copy of an existing joint venture agreement between
Lawrence Energy and a company called Green Diesel, and told Riddle to change the name
“Lawrence Energy” to “Greenway.” The new joint venture agreement was to be provided to
investors in the Sunx Project, but it did not mention Sunx, Lawrence, or Lawrence Energy.
Selling the Sunx Project.
Although the cost to own and operate a Sunx biodiesel plant was $750,000, the
Greenway joint venture agreement says that Greenway was attempting to raise $3,294,000 by
selling thirty joint venture units at $109,800 per unit. Investors were solicited from cold call lists
Lawrence and Knowles had from their oil and gas dealings as well as from the list of clients to
whom Nichols and Vanloon previously sold annuities.
Knowles testified that Lawrence told him the investors would receive an 80-100% return
on their investment. But according to Knowles, “the real appealing part” was the insurance
policy Lawrence told him about. Investors were told the project was backed by a Fireman’s
Fund-issued insurance policy that would guarantee a 33% return on investment if the plant shut
down or stopped production. Many of the investors received a letter from Greenway (the
“Greenway Letter”) that stated:
In regards to the Bio-Diesel Plant that Greenway Energy Partners is
building in Hunt County, Texas, your investment is backed by an
Insurance Policy (Firemen’s Fund), provided by SunX Energy to
Greenway Energy Partners. Greenway Energy Partners has extended this
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policy to all of it [sic] clients. What this means to you, is that you can
expect to receive a 33% return each year. This is the amount that the
insurance policy will cover for the next five years.
Greenway solicited and collected funds from investors from August 2008 through August
2009. Lawrence’s uncle, however, testified that by the end of 2008 Lawrence was frustrated with
Sunx and having serious concerns about the investment’s profitability. Nonetheless, toward the
end of Greenway’s operations in 2009, Lawrence still approached Vanloon and asked him
whether there were any other investors Vanloon could “go see or talk to.” Lawrence said they
were only fifty to sixty thousand dollars away from starting the plant. Vanloon found an
additional investor, but weeks passed and Vanloon heard nothing about the plant getting started.
Greenway eventually stopped functioning because the salesmen ran out of potential
investors to call. Although Greenway received $846,421.60 in investor funds, the biodiesel plant
was never built and the investors lost all of their money.
The Investors.
Four of the twenty-one individuals who invested in the Sunx Project testified by
deposition at trial. These individuals included James Willis, Herman Peace, Billie Nevill, and
Alma Sparks. Another investor, Garland Downing, testified live.
Willis
Willis, who was seventy-eight years old when deposed, testified that Nichols sold him the
interest in the Sunx Project. But Willis was led to believe that Greenway was an annuity
company, and he was just rolling his existing annuity into a new one. Three months before he did
so, Nichols visited him to discuss investing in biodiesel. Willis told him “without any doubt
whatsoever [he] wanted nothing to do with anything like that.”
Willis invested over $151,000 in what he believed was an annuity. Nichols told him, “It’s
insured. We’re looking at no risk on this.” When Willis made the investment, Nichols visited his
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home with another man and told Willis to sign the contract that would be “sent in” with his
check. Nichols told Willis he would bring him a copy of the contract later.
The “contract” Willis and other investors eventually received was the Greenway joint
venture agreement. Willis also received the Greenway Letter stating that he would receive a
minimum annual return of 13.5% guaranteed for the next five years.
Willis became suspicious and began calling Greenway. He recorded telephone
conversations with Nichols and Riddle, as well as a telephone conversation he had with
Lawrence. The recorded conversation with Lawrence was admitted into evidence and played for
the jury.
In the recorded conversation, Willis told Lawrence that he (Willis) had been deceived. He
thought he was investing in another annuity, and did not want anything to do with investing in
biodiesel. Willis explained that such an investment was too risky for him because of his age and
health problems. Throughout the conversation, Lawrence attempted to convince Willis that the
Sunx Project was a good investment. At one point, Lawrence told Willis, “[t]he interest–payout
is astronomical.” Lawrence also told Willis, “There are very few people privileged to own this.
You don’t appreciate what you own. I’ve got people banging on my door to get this that can’t get
it.” When Willis asked about the guarantee that he would not lose money that Nichols told him
about, Lawrence responded:
There’s no guarantee in anything. But what he’s probably referring to is
that once the plant is up and running, okay, Sunx has a [sic] insurance
policy that they’re going to put in place, now it’s not in place yet, okay,
because the plants aren’t up and running, but there’s an insurance policy
for when if a plant, let’s say for instance we don’t get our shipment of oil
one day, then our plants aren’t running that day, well, our insurance will
kick in and still pay us as if we were still running our plant. That’s the
only thing I can guess that he was referring to.
When Willis asked about a refund, Lawrence initially told him the funds had been sent to
him, not Sunx. Willis asked, “Who are you?” Lawrence replied that he was the plant operator
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and Greenway was to pay him for the plant. Lawrence stated, “Once I get it, all funds are
distributed to Sunx. We don’t hold on to the funds.” When Willis insisted he should get a refund
because he had been deceived, Lawrence told him, “I know these guys, they are straightforward
guys. They are not crooks, they are not bad guys.” Later in the conversation, Lawrence said,
“They are straightforward men and I chose to do business with them because of that.”
Willis continued to press for a refund, and Lawrence told him he would have to take that
up with Greenway. But at one point, Lawrence told Willis, “I told them if it comes down to it, I
will happily put in a request for a refund from Sunx, but they will have to take a 40% loss.”
Willis never received a refund, and lost the entire amount of his investment.
Nevill
When deposed, Nevill was almost eighty-three years old, was retired, and was living on
social security. She had previously bought an annuity from Vanloon. But at Vanloon’s request,
she withdrew that money and money from her IRA to invest in Greenway. She also signed a
document allowing Riddle to answer any questions concerning the liquidation of her annuity.
She did not know Riddle and signed the document without reading it.
Nevill recalled Vanloon telling her something about a biodiesel plant and that she was
going to double her money. Nevill stated, “He was making it sound so good.” Nevill invested
$15,191 in Greenway.
Although requested, she never received any information about the company she had
invested in. She did, however, receive a copy of the Greenway Letter stating that her investment
was backed by the Fireman’s Fund insurance policy. By the time she received the letter, Nevill
had “already figured [Vanloon] was just somebody that just took my money, and did whatever he
wanted to with it and had a hi-ho time.” Nevill asked for her money back, but Vanloon told her
that was not possible because it had already been invested. Nevill lost all of her investment.
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Sparks
Sparks was eighty-seven years old and living on social security when she testified. Sparks
made a $30,000 investment in Greenway. She knew Vanloon because he had sold her an annuity.
She held the annuity for about a year, and then Vanloon showed up at her door one day to “sell
[her] something with Greenway.” Vanloon told her the investment was “protected” with
insurance from Fireman’s Fund that would cover the 33% interest for five years. Sparks’s main
selling point was the interest she was supposed to make on the investment. Sparks did not
receive a copy of the Greenway joint venture agreement or the prospectus until after she had
invested her money with Greenway. Sparks also received a copy of the Greenway Letter.
About a year after her investment, Sparks tried to call Vanloon but could not reach him
because all of the telephone numbers he gave her were disconnected. Sparks testified that she
would not have invested had she known a large portion of the money would be used to pay the
Greenway salesmen’s or Lawrence’s personal expenses, or that it would be applied to any of
Lawrence’s other projects. Sparks lost her entire investment.
Peace
Peace was one of the annuity clients Nichols persuaded to invest in Greenway. Peace was
eighty-eight years old when deposed, and had just lost his wife when Nichols sold him the
investment. Nichols told him that Greenway was a good investment because it was almost no
risk and “it had insurance.” Peace invested $30,000 from benefits he received on his wife’s
death. He did not receive a copy of the prospectus until about a month after he made the
investment. He also received a copy of the Greenway Letter.
Peace invested in December 2008. In January 2009, he demanded his money back
because he could not get any of his calls through to Greenway and “there was a Better Business
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rating of ‘F.’” Peace said that it “became evident that [Greenway] wasn’t what it purported to
be.” Peace lost his entire investment.
Downing
Garland Downing was seventy-nine years old during trial. He had previously bought an
annuity from Vanloon. Vanloon later contacted him “to invest money and get more interest out
of it.” Downing knew he was investing in a biodiesel plant, and wrote a check to Greenway for
$67,276. Vanloon told him he would make a thirteen to fifteen percent return on the investment.
Downing testified he was never told about Lawrence or that investor money would be spent on
Lawrence’s personal expenses. Downing never received any return on his investment, nor has his
money been returned.
Sixteen Additional Investors
In addition to the Nevill, Sparks, Peace, Downing, and Willis investments, State’s exhibit
seventeen shows sixteen additional investors who provided Greenway with investment funds
ranging from $3,000 to $137,000. There is no indication that these funds were ever used for the
Sunx Project or returned to any of the investors.
The Greenway Investigation.
In April 2009, the State Securities Board sent Greenway a letter asking for information
about the investments. Lawrence gave Riddle a letter prepared by a lawyer on another occasion
and suggested that Riddle use the letter to form a response. The Greenway response dated May
13, 2009, signed by Vanloon, stated that Greenway was not offering or selling securities “such
that its business would be subject to the purview of the Securities Board.” The response further
said that Greenway was in the process of dissolution and declined to produce the requested
information.
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In May 2009, the daughter of William Breedlove, a Greenway investor, contacted a
Fireman’s Fund fraud investigator. That investigator, Thomas Petersik, testified that the daughter
had received an email from Sunx saying that Sunx had no association with Greenway and she
was concerned that there was no insurance policy backing up her father’s investment. Petersik
testified that he found no Fireman’s policies for Greenway, Sunx, Lawrence Energy, Green
Diesel, or LCC. He further testified that while Fireman’s did offer business interruption
insurance, he was not aware of any such policy that would guarantee a return to investors every
year for five years. Petersik called Vanloon, and Vanloon admitted that Greenway had no
insurance policy with Fireman’s.
On May 29, 2009, Petersik sent Greenway a cease and desist letter that referenced the
Greenway Letter to investors and Vanloon’s admission that the information in the Greenway
Letter letter was false. Petersik’s letter told Vanloon, as a Greenway principal and managing
partner, to “cease and desist from any representations that Fireman’s . . . has any association
through insurance coverage or otherwise with Greenway . . . or its business operations.”
Despite the warnings and investigations, Greenway continued to solicit and receive
investments through August 2009.
The Accounting.
Eliza Lujan, a State Securities Board enforcement division examiner, testified about her
examination of Greenway’s and Lawrence Energy’s bank records. Greenway’s account received
$846,421.60 in investor funds. Of that amount, Riddle received $174,611, Knowles received
$168,700, Vanloon received $81,628.60, Nichols received $56,229.23 and $266,079.76 went to
Lawrence Energy.4
4
The remaining $99,173 was attributed to various line items, some of which appear to be business expenses such as rent, and other items
that are not explained such as “Jessica Vanloon People.” Some $7,000 went to the Stafford Law firm to settle a lawsuit debt owed by Nichols.
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The $266,079.76 Lawrence Energy received was over 31% of all investor funds. The first
Greenway payment to Lawrence Energy in February 2009 was for $90,000. Of this amount,
Lawrence sent $40,000 to Sunx. This was the only time he sent any of the investor funds to
Sunx. The remaining $50,000 was spent on his various personal expenses, placed in a joint
account with his mother, sent to a relative, and used to obtain cash.
On May 13, 2009, Greenway sent Lawrence Energy $100,000. Two days later, Lawrence
sent $100,000 to Carbon Diversion.5 None of these funds went to Sunx.
Greenway sent Lawrence Energy $50,000 on June 2, 2009 and an additional $15,000 on
July 28, 2009. One week later, Lawrence wired $50,000 to Green Diversion. None of these funds
went to Sunx.
Of the $846,421.60 in received investor funds, only $40,000 made it to Sunx.
Accomplice Testimony.
Knowles, Riddle, and Vanloon signed voluntary confessions and plea agreements,
confessing to engaging in organized criminal activity by participating with each other and
Nichols to commit money laundering and theft over $200,000. Knowles, Riddle, and Vanloon
each testified at trial.
Knowles
In addition to providing background information on his previous relationship with
Lawrence and Greenway’s formation, Knowles testified that all of the information concerning
the Sunx Project, including the insurance policy, came from Lawrence. Knowles sold the
investment to only one investor, Gary Weddle. Knowles told Weddle that it was a guaranteed
investment based upon the Fireman’s Fund policy. Everything he told Weddle came from (i)
Lawrence and (ii) the prospectus Lawrence prepared and provided. Lawrence told Knowles they
5
Carbon Diversion is a Hawaiian company involved in turning yard waste and tires into carbon products.
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should use the Fireman’s policy to entice potential clients. Knowles admitted giving Weddle the
impression that Greenway was directly involved with Sunx.
Knowles ultimately left Greenway because Lawrence kept changing the project. Initially,
Lawrence said the idea was to build one biodiesel plant, then two. Eventually Lawrence said it
was up to ten plants. Thus, everyone’s capital would be held until there was enough money to
build all of the plants.
Knowles testified that a portion of the investor money went to people at Greenway and to
“pay bills.” The rest went to Lawrence, who was supposed to forward the money to Sunx.
Knowles had no idea whether Lawrence sent any money to Sunx. At the time, Knowles believed
that Sunx was a valid company. He later learned that the company “had some problems.”
Riddle
Riddle testified that Lawrence put the prospectus together. The joint venture agreement
was sent to investors so that they could participate in the Sunx Project. When money came in to
Greenway from an investor, the salesperson would get paid, a percentage would go to Greenway,
and then a percentage would go to Lawrence Energy. Lawrence was then supposed to send the
funds to Sunx. Lawrence told the people at Greenway that “this is the way it would work.”
When the State Securities Board investigated Greenway, Lawrence gave him the form he
used to prepare a response. Riddle admitted that the Greenway response said Greenway was in
the process of dissolving, but there was no dissolution.
Riddle did not think that Lawrence had any contact with the investors before they
invested, and he did not believe the investors knew who Lawrence was. But he did have
Lawrence call Willis when Willis began to complain.
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Vanloon
Vanloon testified that he joined Greenway when Riddle introduced him to Lawrence.
When he joined Greenway, he was led to believe that Lawrence had his own customer base and
would also be contacting customers. Lawrence gave Vanloon all of the information about the
Fireman’s Fund insurance policy that he used to solicit investors. Vanloon testified that
everything was intended to be legitimate and he did not intend to commit theft or money
laundering.
Expert Testimony.
Joseph Oman, an attorney and assistant director of the State Securities Board, testified for
the State without objection. Oman was a lawyer from the same office as the three special
prosecutors who tried the case, and he provided expert testimony on securities law.
II. ANALYSIS
A. Was the Evidence Sufficient to Support Lawrence’s Convictions?
Lawrence’s first issue contends that the evidence was insufficient to support his
convictions for engaging in organized criminal activity and money laundering. In assessing the
sufficiency of the evidence, we review all the evidence in the light most favorable to the verdict
to determine whether any rational trier of fact could have found the essential elements beyond a
reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 319 (1979). We defer to the jury’s
credibility and weight determinations because the jury is the sole judge of the witnesses’
credibility and the weight to be given their testimony. See Isassi v. State, 330 S.W.3d 633, 638
(Tex. Crim. App. 2010). We may not substitute our judgment for that of the fact finder. See
Brooks v. State, 323 S.W.3d 893, 899 (Tex. Crim. App. 2010).
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1. Was The Evidence Sufficient to Support Lawrence’s Conviction for Engaging in Organized
Criminal Activity?
A person commits the offense of engaging in organized criminal activity if, (i) with the
intent to establish, maintain, or participate in a combination or in the profits of a combination or
as a member of a criminal street gang, (ii) the person commits or conspires to commit one of the
crimes identified in the statute. See TEX. PENAL CODE ANN. §71.02(a) (West Supp. 2014); see
also Nguyen v. State, 1 S.W.3d 694, 697 (Tex. Crim. App. 1999). The crime charged in this case
was theft. See TEX. PENAL CODE ANN. §31.03 (West Supp. 2014).
Because direct evidence is rarely available to prove the existence of an agreement,
circumstantial evidence suffices and is almost always needed. Nwosoucha v. State, 325 S.W.3d
816, 831 (Tex.App.—Houston [14th Dist.] 2010, pet. ref’d). The jury may therefore infer an
agreement among a group working on a common project when each person’s action is consistent
with realizing the common goal. Id.
In support of his argument that he did not enter into a combination for the purpose of
committing theft, Lawrence claims that one of the accomplices testified that he was not aware of
the fraudulent manner the funds were acquired and there is no evidence that he “directly
defrauded any investor.”6 Despite Lawrence’s contentions, the evidence shows that Lawrence
collaborated, in combination with Nichols, Knowles, Riddle, and Vanloon to raise money for the
Sunx Project according to the plan Lawrence devised and set into motion. Lawrence also decided
how the money would flow from investors to Greenway to Lawrence Energy, gave Greenway
the prospectus and joint venture agreement, and let Greenway use his offices to start its
operations. Furthermore, Lawrence generated the idea of using the Fireman’s Fund policy as a
sales pitch for potential investors. Lawrence gave Greenway a list of potential clients to contact,
6
Lawrence does not identify the specific testimony or provide citations to the record.
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and pressured the salesmen to find more investors. And when Riddle told him that the Securities
Board was starting to look into things, Lawrence provided a form letter to lead the Securities
Board to believe Greenway was dissolving.
The jury heard testimony concerning Lawrence’s prior business dealings, including his
difficulties with the Securities Board and the judgment entered against him in the lawsuit with
former investors. The jury also heard testimony that Lawrence knew of Knowles’s prior
difficulties with the Securities Board, and selected him to lead the salesforce. In fact, Lawrence
told Knowles the Sunx Project would provide “somewhat of an instant income.”
Although Lawrence had doubts about the biodiesel plant within two to three months of
his initial investment, he pressured Greenway to solicit additional investors and he continued to
receive Greenway generated funds through August 2009. From March 2009 through August
2009, Greenway solicited ten more investors, and Lawrence knew that the investor money was
not being applied to the Sunx Project. Instead, after the $40,000 wire transfer to Sunx in
February 2009, all investor funds Lawrence Energy received were used for Lawrence’s personal
expenses, his relatives, and his other projects. For example, when Lawrence received $100,000
in investor funds in May 2009, he applied the funds to his carbonization project. Lawrence knew
that investors should have been told about the new project because Vanloon testified Lawrence
was “going to send something to let people know.” Nothing was ever sent, and the investors
were never told that Lawrence was using their money for numerous other purposes besides the
Sunx Project.
Lawrence also points to the disclaimer language in the prospectus as evidence that he did
not know of the fraud. This argument is not persuasive. Lawrence does not explain how language
in the prospectus, that investors were not given until after they had invested, somehow
demonstrates that he did not know about the fraud. Moreover, the prospectus’s warning language
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says only that “participation as a joint venture . . . involves a high degree of risk.” The prospectus
does not warn that Lawrence and his accomplices would appropriate investor funds for
themselves.
Lawrence further contends that each accomplice denied the wrongdoing necessary to
establish a “combination,” and that the potential investors were given “completed mutilated
versions of Lawrence’s original information.” But it was the jury’s job to resolve any conflicts in
the evidence, and the jury was free to accept or reject any and all of the evidence presented by
either side. TEX. CODE CRIM. PROC. ANN. art. 38.04 (West 1979); Wesbrook v. State, 29 S.W.3d
103, 111 (Tex. Crim. App. 2000). Considering all the evidence in the light most favorable to the
verdict, we conclude that the jury was rationally justified in finding guilt beyond a reasonable
doubt and that the evidence is sufficient to support Lawrence’s conviction for engaging in
organized criminal activity. See Isassi, 330 S.W.3d at 638.
2. Was The Evidence Sufficient to Support Lawrence’s Conviction for Money Laundering?
The essential elements of a money laundering offense under penal code section
34.01(a)(1) are that a person: (i) knowingly; (ii) acquire or maintain an interest in, receive,
conceal, possess, transfer, or transport; (iii) the proceeds; (iv) of criminal activity. See TEX.
PENAL CODE ANN. §34.02(a)(1) (West 2011). The Penal Code specifically provides that
“criminal activity” includes any offense that is classified as a felony in Texas. TEX. PENAL CODE
ANN. §34.01(1)(A) (West 2011). Here, the criminal activity was theft. See TEX. PENAL CODE
ANN. §31.03.7 The indictment alleged that Lawrence committed money laundering when he
knowingly acquired an interest in and possessed $200,000 or more that was generated from the
commission of a theft in the amount of $200,000 or more. TEX. PENAL CODE ANN. §34.02(a)(1);
(e)(4).
7
The theft indictment is not included in the record.
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Lawrence does not dispute that over $200,000 in investor funds were sent to him or that
the money was in his possession. Instead, he claims he did not know the money was obtained by
theft. Sufficient evidence establishes otherwise.
The evidence shows that Lawrence knew about Knowles’s prior securities investigations.
Because Greenway occupied the same office building and temporarily the same office as
Lawrence Energy, and because Riddle spoke with Lawrence on a daily basis, the jury could
reasonably infer Lawrence knew Greenway was structured with Vanloon as the owner to keep
Riddle’s and Knowles’s involvement from investors. Indeed, from his close proximity to and
interaction with Greenway, the jury could rationally infer that Lawrence knew what Greenway
and its members did regarding the Sunx Project.
Moreover, when he gave Riddle the joint venture agreement and prospectus for the Sunx
Project, Lawrence told him to change “Lawrence Energy” to “Greenway.” Neither document
mentioned Lawrence or Lawrence Energy. Thus, Lawrence knew the investors were unaware of
his involvement in the project. In fact, when Lawrence spoke to Willis after he complained about
the investment, Willis had to ask Lawrence who he was.
Despite the investors’ lack of knowledge about Lawrence’s involvement, the record
shows that he was the Sunx Project mastermind. He suggested that Riddle and Knowles solicit
investors. He provided the joint venture agreement and prospectus. He told the Greenway
members that money would flow from investors to Greenway, from Greenway to Lawrence
Energy, and then from Lawrence Energy to Sunx. And he generated the phantom Fireman’s
Fund policy sales pitch that Greenway used to lure investors.
Lawrence, however, insists there is no evidence he knew that investors were being misled
about the insurance policy or told the investment was guaranteed. But when Willis asked him
about Nichols’s representation that Willis would not lose any of his investment, Lawrence
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immediately identified the Fireman’s Fund policy as the likely source of Nichols’s reference.
The Greenway members testified that all of the information about the Sunx Project came from
Lawrence, including the information about the insurance policy.
The investors testified that the alleged insurance was material to their decision to invest.
For example, Peace said that he would not have invested had he known the investment was not
insured. Similarly, Nevill testified she would not have “given him” her money had she known it
was not protected.
The documents Lawrence prepared for Greenway were also misleading. None of the
documents mention Lawrence, Lawrence Energy, or any of Lawrence’s other projects. None of
the documents reflect that investor funds will be utilized to pay salesman commissions, personal
expenses, or to invest in other projects. In fact, the joint venture agreement states that Greenway
was attempting to raise $3,294,000 by selling thirty joint venture units at $109,800 per unit. But
the investors did not purchase $109,000 units, and the cost of the single biodiesel plant originally
planned was $750,000. Lawrence also told Knowles $800,000 was required for the project.
These inconsistencies are, at best, misleading.
Although it was after the fact, Lawrence also deceived Willis when he told him how the
investor funds were allocated. When Willis requested a refund, Lawrence told him the funds
were distributed to Sunx when he received them. But of the $266,079 in investor funds Lawrence
Energy received, only $40,000 was sent to Sunx.
Even though Lawrence early on had doubts and concerns about the Sunx Project, he
continued to collect investor funds from Greenway and encouraged the Greenway salesmen to
solicit more investments. Moreover, his claimed lack of awareness that the money was stolen
fails to address why he used the money as he did. Assuming arguendo that Lawrence was
unaware of representations made to the investors concerning the insurance and returns, at a
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minimum he knew the investors were told the money was for the Sunx Project and that the
money was to go to Sunx. Yet only $40,000 of the funds he received were sent to Sunx while he
divested substantial sums to his personal use and to the “Green Diversion” project.
Based on the foregoing, we conclude that the evidence is sufficient to allow rational
jurors to determine beyond a reasonable doubt that Lawrence was guilty of money laundering.
We decide Lawrence’s first issue against him.
B. Does the Non-Accomplice Evidence Connect Lawrence to the Crimes for Which he was
Convicted?
Lawrence’s second issue argues that the non–accomplice testimony fails to connect him
to money laundering or engaging in organized criminal activity. An accomplice is a person who
participates in the offense before, during, or after its commission with the requisite mental state.
Smith v. State, 332 S.W.3d 425, 439, 442 (Tex. Crim. App. 2011) (internal citations omitted). An
accomplice must have engaged in an affirmative act that promotes the commission of the offense
that the accused committed. See id. A witness who is indicted for the same offense or a lesser
included offense as the accused is an accomplice as a matter of law. Cocke v. State, 201 S.W.3d
744, 747 (Tex. Crim. App. 2006). Here, the court instructed the jury that Knowles, Riddle, and
Vanloon were Lawrence’s accomplices as a matter of law.
The code of criminal procedure provides that a conviction cannot stand on an accomplice
witness’s testimony unless the testimony is corroborated by non-accomplice evidence that tends
to connect the accused to the offense committed. See TEX. CODE CRIM. PROC. ANN. art. 38.14
(West 2011). Evidence that the offense was committed is insufficient to corroborate an
accomplice witness’s testimony. Id. Regarding the appropriation of property, the theft statute
provides that “the actor’s knowledge or intent may be established by the uncorroborated
testimony of the accomplice.” See TEX. PENAL CODE ANN. §31.03(c)(2) (West Supp. 2014).
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The accomplice–witness rule creates a statutorily imposed review and does not derive
from federal or state constitutional principles that define the usual factual and legal sufficiency
standards. Druery v. State, 225 S.W.3d 491, 498 (Tex. Crim. App. 2007). To weigh the
sufficiency of the corroborative evidence, we disregard the accomplice’s testimony and examine
the remaining portions of the record to ascertain whether there is evidence tending to connect the
accused with the commission of the crime. Solomon v. State, 49 S.W.3d 356, 361 (Tex. Crim.
App. 2001); Maynard v. State, 166 S.W.3d 403, 410 (Tex. App.—Austin 2005, pet. ref’d). Thus,
the question here is whether there is evidence tending to connect Lawrence with the offenses
without considering the testimony of Knowles, Riddle, and Vanloon.
We review a claim that accomplice–witness testimony is insufficiently corroborated in
the light most favorable to the verdict. See Hernandez v. State, 939 S.W.2d 173, 176 (Tex. Crim.
App. 1997). Because the standard is “tendency to connect,” rather than a rational-sufficiency
standard, the corroborating evidence need not be sufficient by itself to establish guilt beyond a
reasonable doubt. Id. “Circumstances that are apparently insignificant may constitute sufficient
evidence of corroboration.” Malone v. State, 253 S.W.3d 253, 257 (Tex. Crim. App. 2008). Also,
“[t]here need only be some non–accomplice evidence tending to connect the defendant to the
crime, not to every element of the crime.” Joubert v. State, 235 S.W.3d 729, 731 (Tex. Crim.
App. 2007). Nor is the evidence required to link the defendant directly to the crime. Matter of
C.M.G., 905 S.W.2d 56, 58 (Tex. App.—Austin 1995, no writ). If the combined weight of the
non-accomplice evidence tends to connect the defendant to the offense, article 38.14 is fulfilled.
Cathey v. State, 992 S.W.2d 460, 462 (Tex. Crim. App. 1999).
Ignoring the accomplice testimony, we conclude that the evidence tends to connect
Lawrence to the offenses of money laundering and engaging in organized criminal activity. For
example, Lawrence’s telephone conversation with Willis tends to connect Lawrence to the
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charged offenses. During this conversation, Lawrence discussed the Fireman’s Fund policy and
suggested Nichols was referring to this policy when he told Willis his investment was
guaranteed. It is reasonable to infer Lawrence would not have mentioned the insurance policy in
the context of a discussion about investment guarantees unless he was aware that the policy was
being described to investors as a guarantee.
Although he knew otherwise, throughout his conversation with Willis, Lawrence
repeatedly told Willis that the Greenway men were honest, straight forward men who had “never
been in trouble.” He also told Willis that the Sunx Project investment was an excellent
investment that people were lining up and begging to participate in. And when Willis requested a
refund, Lawrence told him the funds had gone to Sunx. Lawrence knew that these statements
were false, and the statements corroborate that investors were being deceived. Furthermore,
Lawrence’s statements about the “astronomical interest” and the soundness of the investment
comport with the investors’ testimony about the high rate of return they were told to expect.
Lawrence’s bank accounts also connect him to the offenses. The money trail
demonstrates the flow of money from investors to Greenway to Lawrence Energy and shows
collaboration with the Greenway members regarding investor funds. The bank records also show
that investors were deceived because only $40,000 of investor funds Lawrence Energy received
from Greenway were applied to the Sunx Project. The remaining investor funds Lawrence
Energy received were diverted for Lawrence’s personal use and his other projects without the
investors’ knowledge. In fact, Lujan, the Securities Board examiner, testified that Lawrence
spent $50,000 of the first $90,000 that came to him for his own purposes. When considered
without the testimony of Knowles, Riddle, and Vanloon, the non-accomplice evidence
reasonably connects Lawrence to the offenses and corroborates the accomplice witness
testimony. We resolve Lawrence’s second issue against him.
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C. Was it Error to Allow the Expert Testimony of the Prosecutor’s Supervisor?
Lawrence’s third issue asserts that the trial court erred in allowing Oman to testify as an
expert witness because he is employed by the same office as the special prosecutors in this case.
The essence of Lawrence’s complaint is that Oman should have been disqualified under the rule
of professional conduct that precludes an attorney from acting as an advocate and a witness in
the same proceeding. See Tex. Disciplinary Rules Prof’l Conduct 3.08. The State responds that
the issue has not been preserved for our review.
To preserve a complaint for appellate review, a defendant must make a timely objection
to the trial court, state with sufficient specificity the grounds for the ruling sought, and obtain an
adverse ruling on his objection. TEX. R. APP. P. 33.1; Buchanan v. State, 207 S.W.3d 772, 775
(Tex. Crim. App. 2006).
Lawrence concedes no objection was made at trial, but argues an objection was not
required because the issue involves structural error. Lawrence confuses the concept of “structural
error,” which has to do with harm analysis, with the concept of “systemic requirements,” which
have to do with preservation of error. See Mendez v. State, 138 S.W.3d 334, 339 (Tex. Crim.
App. 2004).
“A ‘structural’ error affect[s] the framework within which the trial proceeds, rather than
simply an error in the trial process itself,’” and is not amenable to a harm analysis. Schmutz v.
State, 440 S.W.3d 29, 35 (Tex. Crim. App. 2014) (quoting Jordan v. State, 256 S.W.3d 286, 290
(Tex. Crim. App. 2008). All structural errors must be founded on a violation of a federal
constitutional right, but not all violations of federal constitutional rights amount to structural
errors. See United States v. Davila, 133 S. Ct. 2139, 2149 (2013); Arizona v. Fulminante, 499
U.S. 279, 306–08 (1991) (noting harmless-error analysis has been applied to a wide range of
[constitutional] errors and recognizing that most constitutional errors can be harmless).
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In Davila, the court explained that structural error is a very limited class of errors that
trigger an automatic reversal. These errors include denial of counsel, denial of self-
representation, denial of a public trial, and the failure to convey to a jury that guilt must be
proved beyond a reasonable doubt. Id. A structural error is not subject to a harmless error test.
Mendez, 138 S.W.3d at 339.
On the other hand, a systemic (or absolute) requirement is “a law that a trial court has a
duty to follow even if the parties wish otherwise.” See Mendez, 138 S.W.3d at 340. Systemic
requirements are not necessarily constitutional. Id. at 341. For example, jurisdiction, which is not
constitutional, is a systemic requirement. Id. A systemic requirement is distinguished from a
“waivable right” and a “forfeitable right.” Id. at 340. A waivable right is a right that must be
implemented by the system unless expressly waived. Id. A forfeitable right is a right that is to be
implemented upon request. Id. Rule 33.1 of the rules of appellate procedure (requiring an
objection in the trial court) applies to all complaints except those that involve rules that are
“waivable only” or “systemic” requirements. Mendez, 138 S.W.3d at 342; see also Landers v.
State, 402 S.W.3d 252, 255 (Tex. Crim. App. 2013).
With regard to structural error, Lawrence fails to explain how the rules of professional
conduct rise to the level of a federal constitutional right,8 and we note that disqualification of an
attorney is not on the short list of errors that are recognized as structural. See Davila, 133 S.Ct. at
2149; see also Johnson v. U.S., 520 U.S. 461, 468–69 (1997). There is also nothing to suggest
that the rules of professional conduct are systemic requirements. Therefore, Lawrence forfeited
his complaint about disqualification when he failed to raise it in the court below. See TEX. R.
APP. P. 33.1; Mendez, 138 S.W.3d at 342. Lawrence’s third issue is overruled.
8
Although Lawrence argues that the rule “has obvious over-tones and implications with regard to the Sixth Amendment Right to
Confront,” Lawrence provides no authority to support the proposition that the alleged error is structural.
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D. Was Lawrence’s Right to Confront Witnesses Violated?
Lawrence’s fourth issue contends he was deprived of his Sixth Amendment right to
confront witnesses because he was not present for “at least two and possibly up to four”
depositions of the witnesses and there is no indication that he knowingly waived his right to be
present. Lawrence acknowledges that the depositions were properly ordered and applied for and
that notice was given to his counsel.
The Confrontation Clause provides that “[i]n all criminal prosecutions, the accused shall
enjoy the right . . . to be confronted with the witnesses against him.” U.S. CONST. amend. VI.
This procedural guarantee is applicable in both federal and state prosecutions, Pointer v. Texas,
380 U.S. 400, 406 (1965), and bars the admission of testimonial statements of a witness who
does not appear at trial unless the witness is unavailable to testify and the defendant had a prior
opportunity to cross-examine him. Crawford v. Washington, 541 U.S. 36, 59 (2004).
A defendant always has the burden of raising a Confrontation Clause objection.
Melendez-Diaz v. Massachucetts, 557 U.S. 305, 327 (2009). The right of confrontation is thus a
right that is subject to the usual rules of procedural default. Anderson v. State, 301 S.W.3d 276,
280 (Tex. Crim. App. 2009). Here, Lawrence did not object to the depositions when they were
introduced at trial.
Lawrence admits the record is silent as to the reasons for his failure to attend the
depositions, and he seems to suggest that there must be an affirmative waiver of the right of
confrontation on the record. But this court has held that the right of confrontation is a forfeitable
right—not a right that must be affirmatively waived. See Deener v. State, 214 S.W.3d 522, 527
(Tex. App.—Dallas 2006, pet. ref’d). As a result, the right must be preserved by a timely and
specific objection at trial. Id.
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Lawrence further asserts that article 39.025(g) of the code of criminal procedure is
unconstitutional. See TEX. CODE CRIM. PROC. ANN. art. 39.025(g). Article 39.025(g) provides
that a defendant’s failure to attend a deposition or request a continuance constitutes a waiver of
the defendant’s right to be present at the deposition. Lawrence also raises this argument for the
first time on appeal. Because Lawrence failed to raise his Sixth Amendment or article 39
arguments in the trial court, the issue was not preserved for our review. See TEX. R. APP. P. 33.1.
Lawrence’s fourth issue is overruled.
E. Reformation of the Judgment.
The State observes that the second page of the judgment in cause number 05-13-01138-
CR (engaging in organized criminal activity) improperly reflects that the sentence is executed
rather than suspended, and requests that we correct the judgment. An appellate court has the
power to correct and reform a judgment “to make the record speak the truth when it has the
necessary data and information to do so.” Asbury v. State, 813 S.W.2d 526, 529 (Tex. App.—
Dallas 1991, pet. ref’d).
The record reflects that when the judge pronounced the sentence, the court assessed
punishment at ten years’ imprisonment and then stated, “[t]he imposition of the sentence is
suspended and the defendant is placed on community supervision for a period of 10 years.” The
first page of the judgment correctly recites that the sentence of confinement was suspended. The
second page does not. Because the judgment does not accurately reflect the sentence that was
pronounced, we reform the judgment in cause number 05-13-01138-CR to reflect that the
sentence was suspended. As reformed, we affirm the trial court’s judgment.
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III. CONCLUSION
Having resolved all of Lawrence’s issues against him, we reform the judgment in cause
number 05-13-01138-CR to reflect that the sentence was suspended. As reformed, we affirm the
trial court’s judgment. The judgment in cause number 05-13-01139-CR is also affirmed.
Do Not Publish
TEX. R. APP. P. 47
131138F.U05
/Bill Whitehill/
BILL WHITEHILL
JUSTICE
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
KENNETH PAUL LAWRENCE, Appellant On Appeal from the 380th Judicial District
Court, Collin County, Texas
No. 05-13-01138-CR V. Trial Court Cause No. 380-80745-2011.
Opinion delivered by Justice Whitehill.
THE STATE OF TEXAS, Appellee Justices Francis and Lang-Miers
participating.
Based on the Court’s opinion of this date, the judgment is reformed to reflect that the
sentence is suspended. As reformed, the judgment of the trial court is AFFIRMED.
Judgment entered April 2, 2015.
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
KENNETH PAUL LAWRENCE, Appellant On Appeal from the 380th Judicial District
Court, Collin County, Texas
No. 05-13-01139-CR V. Trial Court Cause No. 380-80746-2011.
Opinion delivered by Justice Whitehill.
THE STATE OF TEXAS, Appellee Justices Francis and Lang-Miers
participating.
Based on the Court’s opinion of this date, the judgment of the trial court is AFFIRMED.
Judgment entered April 2, 2015.
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