State v. Kay , 349 P.3d 690 ( 2015 )

This opinion is subject to revision before final
publication in the Pacific Reporter
2015 UT 43
IN THE
S UPREME C OURT OF THE S TATE OF U TAH
STATE OF UTAH ,
Appellant,
v.
ROCKIE J. KAY,
Appellee.
No. 20120299
Filed March 31, 2015
Second District, Ogden Dep’t
The Honorable Ernest W. Jones
No. 111901338
Attorneys:
Sean D. Reyes, Att’y Gen., John J. Nielsen, Asst. Att’y Gen.,
Salt Lake City, for appellant
Samuel A. Hood, Ogden, for appellee
JUSTICE PARRISH authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE DURHAM , and JUDGE ORME joined.
Due to his retirement, JUSTICE NEHRING did not participate herein;
COURT OF APPEALS JUDGE GREGORY K. ORME sat.
JUSTICE DENO G. HIMONAS became a member of the Court on
February 13, 2015, after oral argument in this matter, and
accordingly did not participate.
JUSTICE PARRISH , opinion of the Court:
INTRODUCTION
¶1 The State appeals the district court’s dismissal of two
criminal cases filed beyond the statute of limitations. In two
separate cases, the State charged Rockie Kay with multiple counts of
communications fraud and one count of a pattern of unlawful
activity, all second-degree felonies. The district court dismissed the
first case, Kay I, on statute-of-limitations grounds after holding that
communications fraud is not a continuing offense. The district court
dismissed the second case, Kay II, as an improper prosecution of the
STATE v. KAY
Opinion of the Court
“same substantive offenses as . . . the previous case” for which the
district court had already determined that the statute of limitations
had run. We agree with the district court that communications fraud
is not a continuing offense and that the State therefore commenced
its prosecution against Mr. Kay after the statute of limitations had
run. Accordingly, we affirm the dismissal of both cases.
BACKGROUND
¶2 In June 2006, Terry and Tonya Fowles entered into a
construction contract with Mr. Kay to build and finance the
construction of their home. They made an initial payment of $50,000
to Mr. Kay, and he obtained financing through a construction loan.
During construction, Mr. Kay approached the Fowleses on three
separate occasions and asked them for additional money so he could
make payments on the construction loan. Mr. Kay told the Fowleses
that paying him cash would save them interest on the loan. The
Fowleses wrote three additional checks to Mr. Kay, one in July and
two in November 2006. In total, the Fowleses paid Mr. Kay
$135,000.
¶3 In April 2007, Mr. Kay finished building the home, and Mr.
and Mrs. Fowles moved in. They attempted to contact Mr. Kay
multiple times to settle payment on the construction loan and to
close on additional financing for the home, but Mr. Kay avoided
them. Once the Fowleses threatened to contact an attorney, Mr. Kay
responded. He explained that he had delayed responding because
he was embarrassed to inform them of cost overruns that would
necessitate an additional payment of $30,000 before they could close
on the home.
¶4 Unsatisfied with Mr. Kay’s response, Mr. and Mrs. Fowles
filed a civil suit against him in November 2007 and scheduled
mediation in March 2008. A few weeks before the mediation, Mr.
Kay sent the Fowleses two e-mails stating that he was “still working
on getting closed,” and that meeting with a mediator was
unnecessary. However, the parties did meet for the mediation,
during which Mr. Kay admitted that, instead of expending the
Fowleses’ $135,000 to build the home, he had spent it on business-
related expenses, including salaries and overhead costs. Mr. Kay
sent the Fowleses three subsequent e-mails in May and June 2008
suggesting that he would eventually meet with them to close on
their home. But he never did, and the construction lender foreclosed
on the Fowleses’ home in June 2008.
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Opinion of the Court
¶5 In July 2008, the Fowleses reported Mr. Kay’s fraudulent
actions to local police. However, the Box Elder County Attorney’s
Office declined to file charges against Mr. Kay at that time. The
Attorney General’s Office eventually brought charges against Mr.
Kay in June 2011 (Kay I), and again in February 2012 (Kay II).
¶6 The information in Kay I alleged four counts of theft by
deception on the basis of Mr. Kay’s admission that he used the
Fowleses’ four checks to fund his own business rather than to build
their home. The information included one count of a pattern of
unlawful activity spanning from June 6, 2006, when Mr. Kay
received the first check, to June 16, 2008, when the Fowleses’ home
was lost to foreclosure. The count of a pattern of unlawful activity
was predicated on the four counts of theft by deception.
¶7 The State later amended the information to replace the four
counts of theft by deception with four counts of communications
fraud, one for each of the four checks that Mr. Kay had obtained
from the Fowleses. The State also amended the charge of a pattern
of unlawful activity to predicate it on communications fraud. The
district court dismissed the State’s charges, concluding that the
communications fraud was committed in 2006 when Mr. Kay took
the Fowleses’ checks. Thus, the Kay I information, which was not
filed until June 2011, was filed outside of the four-year statute of
limitations. The legal predicate for this conclusion was the district
court’s holding that communications fraud is not a continuing
offense that continued during the period in which Mr. Kay
attempted to conceal his fraudulent activity. Because the
communications fraud charges were time barred, the district court
also dismissed the charge of a pattern of unlawful activity, which
was predicated on the untimely communications fraud charges.
¶8 Two days later, on February 23, 2012, the State filed Kay II,
charging Mr. Kay with five counts of communications fraud on the
basis of five e-mails Mr. Kay had sent to the Fowleses in 2008. The
information in Kay II again included one count of a pattern of
unlawful activity that the State alleges began on June 6, 2006, when
Mr. Kay took the Fowleses’ first check, and ended on June 18, 2008,
after they lost their home to foreclosure. The district court dismissed
Kay II with prejudice, concluding that Kay II was an improper
attempt “to prosecute Defendant for the same substantive offense as
in [Kay I].” The State timely appealed both cases. The court of
appeals consolidated both cases and certified the appeal to us. We
have jurisdiction pursuant to section 78A-3-102(3)(b) of the Utah
Code.
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STATE v. KAY
Opinion of the Court
STANDARD OF REVIEW
¶9 The issue of whether communications fraud is a continuing
offenses is one of statutory construction. We give no deference to
the district court’s ruling on this issue and instead review it for
correctness. State v. Lusk, 2001 UT 102, ¶¶ 10–11, 37 P.3d 1103.
ANALYSIS
¶10 The State appeals from the district court’s dismissal of two
separate cases against Mr. Kay. We address each case in turn.
I. THE DISTRICT COURT CORRECTLY DISMISSED KAY I
¶11 The State argues that the district court erred when it held
that the charges against Mr. Kay were time barred. It contends that
communications fraud is a continuing offense and that, by
concealing his fraudulent scheme, Mr. Kay continued to commit
communications fraud. The State argues this prevented the statute
of limitations from beginning to run until March 2008 when Mr. Kay
admitted his fraudulent conduct. Specifically, the State points to the
fact that Mr. Kay continued with the construction of the Fowleses’
home through 2007, thereby concealing his misappropriation of the
funds. The State further alleges that Mr. Kay acted to conceal the
fraud when he solicited an additional $30,000, purportedly to
complete work on the home, in late 2007.1
A. Communications Fraud is Not a Continuing Offense
¶12 In cases involving a continuing offense, the statute of
limitations does not begin to run so long as the offense continues.
Here, and in a companion case issued today, State v. Taylor, 2015 UT
42, ___ P.3d ___, we address an issue of first impression: when does
a criminal offense qualify as continuing, thereby delaying the
commencement of the limitations period.
1
The State did not argue below that Mr. Kay’s ongoing work on
the home and request for an additional $30,000 continued the
alleged fraud. On appeal, the State acknowledges this, but nonethe-
less asserts that it may rely on that argument here because it is
entitled to raise new authority to support the argument it did assert
below—that the fraud was continuing. The State’s argument
misapprehends our preservation requirement. Though a party is
entitled to rely on new legal authority on appeal, see Torian v. Craig,
2012 UT 63, ¶ 20, 289 P.3d 479, it may not raise new factual theories
for the first time on appeal. We will not reverse the district court on
the basis of facts that were never presented to it.
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Opinion of the Court
¶13 We begin with an overview of our statute-of-limitations
law. Section 76-1-302(1)(a) of the Utah Code provides that a felony
prosecution “shall be commenced within four years after it is
committed.” A crime is committed when every element of the
statutory definition is satisfied. See Russell Packard Dev., Inc. v.
Carson, 2005 UT 14, ¶ 20, 108 P.3d 741 (“[A] statute of limitations
begins to run upon the happening of the last event necessary to
complete the cause of action.” (internal quotation marks omitted)).
¶14 Many crimes are complete at the moment of a single,
discrete act. For example, the crime of assault is complete when a
perpetrator commits an act “with unlawful force or violence[] that
causes bodily injury to another.” UTAH CODE § 76-5-102(1)(c). Other
crimes, however, are continuing. When a crime is continuing, the
statute of limitations does not begin to run until the criminal conduct
ceases. A classic example of a continuing offense is possession. See
State v. Lawrence, 312 N.W.2d 251, 253 (Minn. 1981).
¶15 To determine whether an offense is continuing, we turn first
to the operative statute,2 which in this case is the communications
fraud statute. See UTAH CODE § 76-10-1801. As with any question of
statutory interpretation, our primary goal is to effectuate the intent
of the Legislature. State v. Watkins, 2013 UT 28, ¶ 18, 309 P.3d 209.
The best evidence of the Legislature’s intent is the statute’s plain
language. Marion Energy, Inc. v. KFJ Ranch P’ship, 2011 UT 50, ¶ 14,
267 P.3d 863. Further, “we interpret[] statutes to give meaning to all
parts, and avoid[] rendering portions of the statute superfluous.”
Watkins, 2013 UT 28, ¶ 23 (alterations in original) (internal quotation
marks omitted).
¶16 Utah’s communications fraud statute makes it a crime to
devise[] any scheme or artifice to defraud another or
to obtain from another money, property, or anything
of value by means of false or fraudulent pretenses,
representations, promises, or material omissions, and
. . . communicate[] directly or indirectly with any
person by any means for the purpose of executing or
2
This approach to statutory construction is generally consistent
with the approach adopted by the United States Supreme Court and
other courts in determining whether a criminal statute creates a
continuing offense. See Toussie v. United States, 397 U.S. 112, 114–15
(1970); State v. Taylor, 2015 UT 42, ¶ 13, ___ P.3d ___; People v. Thoro
Prods. Co., 70 P.3d 1188, 1193–94 (Colo. 2003)
5
STATE v. KAY
Opinion of the Court
concealing the scheme or artifice.
UTAH CODE § 76-10-1801(1). The language of the statute is
unambiguous: communications fraud is complete the moment a
perpetrator “communicates directly or indirectly with any person by
any means for the purpose of executing or concealing” a devised
fraudulent scheme. Id. The crime is complete when the
communication is made.
¶17 Moreover, even if the elements of the crime did not
sufficiently define when communications fraud is complete, the
Legislature has conclusively answered the question. Subsection (5)
of the communications fraud statute provides, “Each separate
communication made for the purpose of executing or concealing a
scheme or artifice described in Subsection (1) is a separate act and
offense of communication fraud.” Id. § 76-10-1801(5). This provision
explicitly states the Legislature’s intent that each separate act of
communications fraud is a distinct, complete crime.
¶18 The State argues that subsection (1)’s reference to “scheme
or artifice” compels the conclusion that communications fraud is a
continuing offense inasmuch as “schemes continue as long as they
are in operation.” But the State’s argument ignores the requirement
that a perpetrator commit both elements of communications fraud.
The first element speaks in terms of planning the offense and the
second in terms of executing it. And the formulation of a scheme to
defraud does not extend the crime once the scheme has been
executed. While the scheme speaks to the planning or “overall
design to defraud,” State v. Bradshaw, 2006 UT 87, ¶ 12, 152 P.3d 288,
it is the overt act of communicating that is the “gist of the offense.”
United States v. Blosser, 440 F.2d 697, 699 (10th Cir. 1971). Without
the overt act of communicating, the mere formulation of a scheme
cannot be the basis of a communications fraud charge against the
perpetrator. In short, if the actual communication falls outside the
statute of limitations, the State cannot rely on the presence of a
predicate scheme to extend the limitations period.3
3
Utah’s communications fraud statute borrowed the term
“scheme or artifice” from the federal mail fraud statute. State v.
Bradshaw, 2006 UT 87, ¶ 11, 152 P.3d 288. Federal courts’ interpreta-
tions of that term are therefore helpful, and the vast majority of
federal appellate courts have held that the limitations period for mail
fraud begins on the date of mailing, not when the scheme ends. See,
(continued...)
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Opinion of the Court
¶19 Ample authority recognizes that an ongoing criminal design
or scheme is not the same as a continuing offense. Each are specific
terms of art, the meaning of which does not depend on “everyday
notion[s]” or “ordinary meaning.” United States v. McGoff, 831 F.2d
1071, 1078 (D.C. Cir. 1987). A scheme is a predetermined plan
comprising “a series of separate fraudulent acts” linked by a common
design. Bradshaw, 2006 UT 87, ¶ 17 (emphasis added). Thus,
although a scheme may contemplate multiple criminal acts, each
separate crime is separately chargeable. The specific criminal act
may be complete, even if the fraudulent scheme is not. And any
additional conduct in furtherance of the scheme does not extend the
statute of limitations for an already completed offense; rather, the
additional conduct constitutes an additional chargeable offense.
¶20 The State acknowledges that a single scheme may result in
multiple counts of communications fraud. But it nevertheless asks
us to characterize these multiple counts as a continuing crime. This
position is inconsistent with the continuing offense doctrine. A
continuing offense is one that is “charged and punished as one crime
from beginning to end”; it involves an indivisible, unlawful practice.
United States v. Kubick, 205 F.3d 1117, 1129 (9th Cir. 1999). If
communications fraud were a continuing offense, Mr. Kay could be
charged with only a single count of the crime after all the fraudulent
conduct had ceased. But that is not how the State charged the
conduct and that is not what the statutory language dictates. The
statutory language defines each fraudulent communication as a
separate, complete offense and the State’s information charged Mr.
Kay with multiple counts of communications fraud.4
3
(...continued)
e.g., United States v. Bennett, 765 F.3d 887, 894 (8th Cir. 2014); United
States v. Siddons, 660 F.3d 699, 705 (3d Cir. 2011); United States v.
Gray, 367 F.3d 1263, 1269–70 (11th Cir. 2004); United State v. Crossley,
224 F.3d 847, 859 (6th Cir. 2000); United States v. Kimler, 167 F.3d 889,
894 n.6 (5th Cir. 1999); United States v. Barger, 178 F.3d 844, 847 (7th
Cir. 1999); United States v. United Med. & Surgical Supply Corp., 989
F.2d 1390, 1398 (4th Cir. 1993); United States v. Eisen, 974 F.2d 246,
263–64 (2d Cir. 1992); United States v. Niven, 952 F.2d 289, 293 (9th
Cir. 1991); United States v. Blosser, 440 F.2d 697, 699 (10th Cir. 1971).
4
Although the State charged Mr. Kay with multiple counts of
communications fraud, it sought to cast the separate charges as
continuing offenses by alleging that the fraudulent communications
(continued...)
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STATE v. KAY
Opinion of the Court
¶21 The State further argues that by continuing construction of
the Fowleses’ home and making false excuses for not meeting to
close on the home, Mr. Kay concealed his fraud. According to the
State, these acts of concealment extended the statute of limitations.
But whether the crime is continuing depends not on the specifics of
Mr. Kay’s conduct, but on the elements of the statutory offense. So,
even if building the home or avoiding contact with the Fowleses
were part of the scheme, that would not extend the limitations
period.
¶22 The State expresses concern over situations where the
concealment of a fraudulent scheme prevents victims from becoming
aware that they have been harmed. But the Legislature has
addressed this concern in another statute. The State may bring
charges for concealed fraud crimes “within one year after a report of
the offense has been filed.” UTAH CODE § 76-1-303(1). This statute
ameliorates concerns about fraudsters concealing their crimes and
lulling their victims into a sense of security until the statute of
limitations has run. In this case, however, the State cannot claim the
benefit of this statute because the Fowleses reported Mr. Kay to the
Perry Police Department in July 2008, but the State did not file
charges until June 2011.
¶23 We conclude that communications fraud is complete when
a fraudulent communication is made. Accordingly, communications
fraud is not a continuing offense. The district court correctly
dismissed the charges against Mr. Kay on the grounds that they
were barred by the statute of limitations. Mr. Kay allegedly
committed the four counts of communications fraud between June
and November 2006, but the State did not commence prosecution
until July 2011, almost a year after the expiration of the four-year
limitations period. And because the pattern of unlawful activity
charge was predicated on the four charges of communications fraud,
the district court correctly dismissed all of the charges in Kay I.
4
(...continued)
commenced “on or about June 6, 2006 and continu[ed] through June
18, 2008.” But whether a crime is continuing depends solely on the
statutory language, not “the conduct charged by the prosecutor [or]
the language of the [information] in a particular case.” United States
v. Yashar, 166 F.3d 873, 877 (7th Cir. 1999).
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Opinion of the Court
II. THE STATE HAS FAILED TO INDEPENDENTLY
CHALLENGE THE DISTRICT COURT’S DISMISSAL OF KAY II
¶24 Two days after the district court dismissed Kay I, the State
refiled charges in Kay II. In the Kay II information, the State charged
Mr. Kay with five counts of communications fraud on the basis of
the e-mails he sent between March and June 2008. It also charged
Mr. Kay with one count of a pattern of unlawful activity on the basis
of the communications fraud charges. Mr. Kay again moved to
dismiss the charges as barred by the statute of limitations. The State
opposed dismissal on the grounds that Mr. Kay’s e-mails were
designed to “lull” the Fowleses into thinking the parties could
resolve the dispute, and that he therefore could not rely on the
statute of limitations as a defense.
¶25 The district court dismissed the new charges against Mr.
Kay, concluding that the evidence presented in Kay II was the same
evidence presented in Kay I and that Kay II was merely “an attempt
by the State to prosecute [Mr. Kay] for the same substantive offenses
as in the previous case.” See UTAH R. CRIM . P. 25(d) (“An order of
dismissal . . . based upon the statute of limitations[] shall be a bar to
any other prosecution for the offense charged.”).
¶26 On appeal, the State’s opening brief addressed the sole
issue of whether communications fraud is a continuing offense
under Utah law.5 The State made no effort to independently
challenge the district court’s dismissal of Kay II. Instead, it argued
only that “should this Court agree with the State that the charges in
this case are continuing offenses, then [Mr. Kay’s arguments] will
not apply because . . . [Kay I] would be reinstated, and there would
be no need for [Kay II].” And the State did not respond to Mr. Kay’s
argument that the order of dismissal in Kay I on the basis of the
5
We do not foreclose the possibility that an e-mail sent for the
purpose of executing or concealing a fraudulent scheme could give
rise to a separate charge of communications fraud for which the
statute of limitations would begin to run on the date of the mailing.
In this case, however, the State failed to argue on appeal that the e-
mails constituted an independent basis for separate charges of
communications fraud. Rather, the State argued only that the e-
mails continued the crimes charged in Kay I. Indeed, the State
admitted at oral argument that a reversal in Kay II was entirely
dependent upon a reversal in Kay I.
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STATE v. KAY
Opinion of the Court
statute of limitations barred any subsequent prosecution of the same
offense.
¶27 In short, the State has failed to separately challenge the
district court’s dismissal of Kay II. Its arguments with regard to Kay
II are entirely dependent upon our disposition of Kay I. Because we
conclude that communications fraud is not a continuing offense and
affirm the dismissal of Kay I, we also affirm the district court’s
dismissal of Kay II.
CONCLUSION
¶28 Communications fraud is not a continuing offense. UTAH
CODE § 76-10-1801. The statute of limitations begins running when
the fraudulent communication is made. In Kay I, the statute of
limitations had run for the charged crimes. In Kay II, the State failed
to challenge the district court’s dismissal, instead relying on the
same argument it made in Kay I. We therefore affirm the dismissal
of both cases.
10