State v. Squires , 446 P.3d 581 ( 2019 )

2019 UT App 113THE UTAH COURT OF APPEALS
STATE OF UTAH,
Appellee,
v.
LAMONT BOYD SQUIRES,
Appellant.
Opinion
No. 20161032-CA
Filed June 27, 2019
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
State v. Squires
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.
BACKGROUND 1
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
1. “On appeal, we review the record facts in a light most
favorable to the jury’s verdict and recite the facts accordingly.
We present conflicting evidence only as necessary to understand
issues raised on appeal.” Mackin v. State, 2016 UT 47, ¶ 2 n.1, 387
P.3d 986 (cleaned up).
2. Spec houses are “built without preexisting construction
contracts in anticipation of eventual sale to the public.” Shell v.
Schollander Co., 369 P.3d 1101, 1102 (Or. 2016).
20161032-CA 2 2019 UT App 113State v. Squires
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
20161032-CA 3 2019 UT App 113State v. Squires
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.
20161032-CA 4 2019 UT App 113State v. Squires
¶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
20161032-CA 5 2019 UT App 113State v. Squires
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
20161032-CA 6 2019 UT App 113State v. Squires
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.
3. Anderson was also charged with the same counts and pleaded
guilty to a third degree felony.
20161032-CA 7 2019 UT App 113State v. Squires
¶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
4. New counsel represented Squires in his pursuit of post-trial
relief. Squires relied on the doctrine of manifest injustice to
argue errors in the jury instructions. See Utah R. Crim. P. 19(e).
20161032-CA 8 2019 UT App 113State v. Squires
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 course of unlawful activity.” (Emphasis in original.)
Relying on Utah caselaw, the court concluded that “an enterprise
is simply an ongoing organization functioning as a continuing
unit for the purpose of engaging in a course of conduct.”
¶21 The trial court therefore denied Squires’s motions and
sustained his convictions. Squires appeals.
ISSUES AND STANDARDS OF REVIEW
¶22 Squires contends that his trial counsel was
constitutionally ineffective for not objecting to certain jury
instructions on communications fraud. He also contends that
trial counsel was constitutionally ineffective for not objecting to
what he characterizes as Uncle’s hearsay statements at trial. “An
ineffective assistance of counsel claim raised for the first time on
appeal presents a question of law.” State v. Ott, 2010 UT 1, ¶ 16,
247 P.3d 344 (cleaned up).
¶23 Finally, Squires contends that the trial court erred in
denying his motion to arrest judgment and motion for a new
trial because the evidence at trial was insufficient to convict him
of a pattern of unlawful activity. “When the [trial] court denies a
motion to arrest judgment and for a new trial, we review that
20161032-CA 9 2019 UT App 113State v. Squires
decision for an abuse of discretion, but we review the legal
standards applied by the [trial] court in denying such a motion
for correctness.” State v. Newton, 2018 UT App 194, ¶ 18, 437 P.3d
429 (cleaned up), cert. granted, 437 P.3d 1249 (Utah 2019).
ANALYSIS
I. Ineffective Assistance of Counsel
¶24 Squires contends that his trial counsel was
constitutionally ineffective in two ways: (A) he failed to object to
the jury instructions on communications fraud and (B) he failed
to object to out-of-court statements as hearsay.
¶25 To demonstrate ineffective assistance of counsel, Squires
must show that his “counsel’s performance was deficient” and
that “the deficient performance prejudiced the defense.”
Strickland v. Washington, 466 U.S. 668, 687 (1984). As should be
obvious from a two-part test, “a failure to prove either element
defeats the claim.” State v. Horvath, 2018 UT App 165, ¶ 30, 436
P.3d 191 (cleaned up). Thus, if we conclude that Squires’s
counsel was not deficient, we need not address prejudice. Cf.
State v. Reid, 2018 UT App 146, ¶ 19, 427 P.3d 1261 (“Because
both prongs of the Strickland test must be met to establish
ineffective assistance of counsel, we need not always address
both prongs.” (cleaned up)).
¶26 “‘Judicial scrutiny of counsel’s performance [is] highly
deferential’ and includes a strong presumption that counsel
‘rendered adequate assistance and made all significant decisions
in the exercise of reasonable professional judgment.’” State v.
Reigelsperger, 2017 UT App 101, ¶ 92, 400 P.3d 1127 (quoting
Strickland, 466 U.S. at 689–90). Counsel is not required “to seek
resolution of every unsettled legal question that might bear on
the proceeding” or “to make every novel argument” that new
20161032-CA 10 2019 UT App 113State v. Squires
counsel for the defendant might fashion on appeal. Id. “[T]he
proper standard for attorney performance is that of reasonably
effective assistance.” Strickland, 466 U.S. at 687.
A. Communications Fraud
¶27 Utah’s communications fraud statute criminalizes false or
fraudulent communications, including material omissions, that
are made “for the purpose of executing or concealing [a] scheme
or artifice” “to defraud another or to obtain from another . . .
anything of value.” Utah Code Ann. § 76-10-1801(1), (7)
(LexisNexis 2017). 5 Squires’s main theory at trial and on appeal
is that he did not intend to defraud Uncle. Rather, Squires asserts
that he wanted the transaction to succeed. He thus contends that
to “avoid the over-criminalization of failed transactions” the
communications fraud statute requires the State to prove specific
intent to defraud. He also contends that the fraud must relate to
a “presently existing fact.” Because, in Squires’s view, the jury
instructions in his case did not inform the jury on these
important concepts, he asserts that his trial counsel was
constitutionally ineffective in not objecting to the instructions or
requesting different ones. 6 We address each argument in turn.
5. Because the statutory provision in effect at the relevant time
does not differ in any material way from the provision now in
effect, we cite the current version of the Utah Code.
6. Squires nominally advances arguments under the plain error
and manifest injustice doctrines. The State counters that
although Squires introduces these doctrines, he never applies
them to his claim, “focusing instead exclusively on ineffective
assistance.” Squires does not rebut this argument. We therefore
examine his claim exclusively through the ineffective assistance
of counsel lens.
20161032-CA 11 2019 UT App 113State v. Squires
1. Specific Intent to Defraud
¶28 Squires argues that the communications fraud statute
requires specific intent to defraud and, to support his position,
points to the statute’s use of the legal term of art “scheme or
artifice.” Relying on the statute’s language, Utah caselaw, and
analogous federal law, Squires asserts that “‘no reasonable
lawyer would have found an advantage’ in failing to properly
identify ‘scheme or artifice’ and its relationship to intent to
defraud.” (Quoting State v. Barela, 2015 UT 22, ¶ 27, 349 P.3d
676.)
¶29 “To establish a claim of ineffectiveness based on an
oversight or misreading of law, a defendant bears the burden of
demonstrating why, on the basis of the law in effect at the time
of trial, his or her trial counsel’s performance was deficient.”
State v. Dunn, 850 P.2d 1201, 1228 (Utah 1993). We conclude that
Squires’s interpretation of the statute is not dictated by its plain
language and that neither Utah nor federal caselaw settles the
question. Thus, trial counsel was not deficient in not insisting on
other language in the jury instructions. See State v. Bruun, 2017
UT App 182, ¶¶ 68, 72–75, 405 P.3d 905 (declining to deem
counsel ineffective in deciding not to move for dismissal of
certain counts when neither state nor federal law was settled on
the issue); State v. Edgar, 2017 UT App 53, ¶ 18, 397 P.3d 670(“Counsel cannot be faulted for failing to advance a novel legal
theory which has never been accepted by the pertinent courts.”
(cleaned up)).
¶30 First, the plain language. The communications fraud
statute provides:
(1) Any person who has devised 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,
20161032-CA 12 2019 UT App 113State v. Squires
representations, promises, or material
omissions, and who communicates directly or
indirectly with any person by any means for the
purpose of executing or concealing the scheme
or artifice is guilty of:
...
(d) a second degree felony when the value of
the property, money, or thing obtained or
sought to be obtained is or exceeds $5,000 . . . .
Utah Code Ann. § 76-10-1801(1) (LexisNexis 2017). Subsection (7)
further provides that a “person may not be convicted under this
section unless the pretenses, representations, promises, or
material omissions made or omitted were made or omitted
intentionally, knowingly, or with a reckless disregard for the
truth.” Id. § 76-10-1801(7).
¶31 Under the plain language of section 76-10-1801, there are,
at least arguably, two types of intent that may establish
communications fraud: intent either (1) “to defraud another or”
(2) “to obtain from another money, property, or anything of
value by means of” fraudulent statements or omissions. See id.
§ 76-10-1801(1) (emphasis added); see also State v. Norris, 2007 UT
6, ¶ 17, 152 P.3d 293. Squires insists that the “State’s burden of
proof is the same whether it is charging a scheme or artifice to
defraud or a scheme or artifice to obtain money or property.”
But this “is to disregard what ‘or’ customarily means.” See
Loughrin v. United States, 573 U.S. 351, 357 (2014); see also State v.
Martinez, 896 P.2d 38, 40 (Utah Ct. App. 1995) (describing “or” as
a disjunctive particle that is used to “delineate[] alternative
ways” a defendant can be criminally liable).
¶32 The State charged Squires under the second variant—
Squires hatched a plan with Anderson to use Uncle’s property,
20161032-CA 13 2019 UT App 113State v. Squires
and Squires executed that plan by means of fraudulent
statements and omissions. Importantly, under this variant, the
State still has to prove a criminal mens rea. Subsection (7)
requires that the “pretenses, representations, promises, or
material omissions made or omitted were made or omitted
intentionally, knowingly, or with a reckless disregard for the
truth.” Utah Code Ann. § 76-10-1801(7). Thus, under the second
variant, the statute requires proof that Squires devised a scheme
or artifice to obtain money and then lied or omitted necessary
information to carry out the scheme or artifice, but it does not
necessarily require proof of Squires’s specific intent to defraud.
Because a plausible plain reading of the statute supports the
district court’s instruction, trial counsel was not constitutionally
deficient in failing to insist on other instructions. 7
¶33 Second, Utah caselaw. No authoritative case has settled
the issue here, namely, whether both variants of
communications fraud require that the actor harbor specific
intent to defraud. Squires points to three cases that he asserts
support requiring an intentional mens rea for communications
fraud. Because “the instructions presented to the jury failed to
include this essential mens rea for the ‘scheme or artifice’
element,” Squires contends that his trial counsel was ineffective
7. Squires’s challenge to the jury instructions is viewed through
the lens of ineffective assistance of counsel, and thus we need
not definitively resolve what the statute actually means. We
decide only that because specific intent to defraud is not plainly
required to prove the second variant of communications fraud,
Squires’s trial counsel was not deficient in not insisting
otherwise. Cf. State v. Brocksmith, 2018 UT App 76, ¶ 16, 424 P.3d
1122 (“[A] defendant is not deprived of the effective assistance of
counsel merely because his attorney does not advance every
conceivable non-frivolous argument.”).
20161032-CA 14 2019 UT App 113State v. Squires
in not objecting to them. None of the cases Squires cites,
however, establish that his trial counsel was constitutionally
deficient.
¶34 In State v. Stringham (Stringham I), 957 P.2d 602 (Utah Ct.
App. 1998), this court reversed a conviction for communications
fraud because the trial court failed to instruct the jury on the
applicable mens rea. Id. at 608–09. But in that case, we reversed
because the jury instructions failed to give “the mens rea
requirement embodied in subsection (7) of the statute.” Id. at 608.
We rejected the argument that “the jury divined that [the]
defendant had to act intentionally because such a level of
volition is inherent in the concept of ‘devising a scheme.’” Id. at
609 (cleaned up). Yet we required nothing more than what
subsection (7) provides. See id. at 608–09. As explained,
subsection (7) requires that a defendant’s fraudulent statements
or omissions be “made or omitted intentionally, knowingly, or
with a reckless disregard for the truth.” Utah Code Ann.
§ 76-10-1801(7). And the jury instructions here, as opposed to
those in Stringham I, copied subsection (7) nearly word for word.
¶35 Next, in State v. Bradshaw, 2006 UT 87, 152 P.3d 288, the
supreme court held that the term “scheme or artifice” is “an
established term of art” that “refers to the overall design to
defraud one or many by means of a common plan or technique.”
Id. ¶¶ 11–12 (cleaned up). But even if the court’s single reference
to a “design to defraud” would lend support to the argument
that both variants of communications fraud require specific
intent, it does not clearly settle the issue such that trial counsel
here was constitutionally deficient in not arguing for a specific-
intent instruction. 8
8. This court in State v. Stringham (Stringham II), 2001 UT App 13,
17 P.3d 1153, mentioned “intent to defraud” in an explanatory
(continued…)
20161032-CA 15 2019 UT App 113State v. Squires
¶36 Finally, in State v. Bird, 2015 UT 7, 345 P.3d 1141, the
supreme court explained that jury instructions “must identify
the mens rea implicated by the statutory language, must include
a mens rea for all elements, and must distinguish between
general and specific intent.” Id. ¶ 17. That does not answer,
however, whether communications fraud requires specific intent
to defraud. Cf. id. ¶ 22. The Bird court confronted a similar
problem in determining whether the “attempt to flee or elude”
element of a failure-to-respond charge required intent or some
lesser mental state. Id. ¶ 23 (cleaned up). It concluded that “an
‘attempt to flee or elude’ requires an intentional mental state.”
Id. It reasoned that the “act of fleeing or eluding requires a
conscious decision to escape or avoid” and that “one could not
recklessly flee from a peace officer.” Id. But not so here. Indeed,
we agree with the trial court 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.” Therefore, Utah’s caselaw
does not clearly establish that communications fraud requires
specific intent to defraud such that Squires’s trial counsel was
constitutionally deficient in this case.
¶37 Third, federal caselaw. Squires directs us to federal cases
in which courts have “interpreted the phrase ‘scheme or artifice’
to require proof of specific intent.” The State points out in
rebuttal that the federal law is not settled in its own right. We
agree with the State.
¶38 Utah’s communications fraud statute is modeled after the
federal mail and wire fraud statutes. See Bradshaw, 2006 UT 87,
(…continued)
parenthetical to a case from the Second Circuit. Id. ¶ 19. Again,
this fleeting reference does not establish that communications
fraud in both variants requires the specific intent to defraud.
20161032-CA 16 2019 UT App 113State v. Squires
¶ 11. Our supreme court has said that federal law may be
“instructive . . . in our efforts to interpret the Utah statute.” Id.;
see also Utah Stream Access Coal. v. Orange St. Dev., 2017 UT 82,
¶ 21, 416 P.3d 553 (explaining that a legislature’s “use of an
established legal term of art incorporates the cluster of ideas”
surrounding the term (cleaned up)). And some federal courts
interpret the phrase “scheme or artifice” in the mail
fraud statutes to require specific intent to defraud. See, e.g.,
United States v. McNeive, 536 F.2d 1245, 1247 (8th Cir. 1976).
But the United States Supreme Court more recently rejected a
specific-intent requirement for bank fraud, another statute
modeled after the mail fraud statute with strikingly similar
language to Utah’s communications fraud statute. Loughrin v.
United States, 573 U.S. 351, 356–57, 359–60 (2014). There are,
of course, differences between the communications fraud
statute and the bank fraud statute, just as there are differences
between the communications fraud statute and the mail
fraud statute. What those differences mean in this case, however,
is not clear. Accordingly, Squires’s trial counsel was
not constitutionally deficient in not unraveling this knot in
federal law.
¶39 In sum, given the unclear state of the law, Squires cannot
demonstrate that his trial counsel was constitutionally deficient
in not objecting to the jury instructions or requesting different
ones. See State v. Bruun, 2017 UT App 182, ¶¶ 68, 72–75, 405 P.3d
905.
2. Presently Existing Fact
¶40 Squires also argues that the “instructions failed to advise
the jury that a defendant must be reckless about the truth of a
‘presently existing fact.’” He exclusively cites civil cases to
support the proposition that fraud must relate to presently
existing facts. True enough, the civil standard provides that
20161032-CA 17 2019 UT App 113State v. Squires
a misrepresentation of intended future
performance is not a representation concerning a
“presently existing fact” upon which a claim for
fraud can be based unless [the plaintiff] can prove
that [the defendant], at the time of the
representation, did not intend to perform the
promise and made the representation for the
purpose of deceiving [the plaintiff].
Republic Group, Inc. v. Won-Door Corp., 883 P.2d 285, 292 (Utah Ct.
App. 1994). We conclude, however, that Squires’s trial counsel
was not constitutionally deficient in not arguing to import the
civil standard for fraud into the jury instructions for criminal
fraud.
¶41 As explained, “counsel cannot be faulted for failing to
advance a novel legal theory which has never been accepted by
the pertinent courts.” State v. Edgar, 2017 UT App 53, ¶ 18, 397
P.3d 670 (cleaned up). Here, Squires fails to direct us to a single
criminal case adopting the civil standard for fraud. More
importantly, in enacting Utah Code section 76-10-1801, the
legislature chose various ways in which an individual could
commit the second variant of communications fraud. Section
76-10-1801 lists “false or fraudulent pretenses, representations,
promises, or material omissions” as ways to perpetrate
communications fraud. There is no indication in the statute that
the legislature imported the civil standard for fraud requiring a
“presently existing fact.” Ultimately, we need not and do not
decide whether the statute incorporates the civil standard. We
note only that it is Squires’s burden to demonstrate “why, on the
basis of the law in effect at the time of trial, his . . . trial counsel’s
performance was deficient.” State v. Dunn, 850 P.2d 1201, 1228
(Utah 1993) (emphasis added). Without any support in caselaw
or the plain language of the statute, Squires has not
demonstrated deficient performance here. We therefore reject his
challenge to the jury instructions.
20161032-CA 18 2019 UT App 113State v. Squires
B. Hearsay
¶42 Hearsay is an out-of-court statement offered to prove the
truth of the matter asserted in the statement and is generally
inadmissible at trial. Utah R. Evid. 801(c); id. R. 802. Squires
contends that his counsel was constitutionally ineffective for not
objecting on hearsay grounds to testimony from Uncle about
what the hard money lender told him. Uncle testified at trial that
the hard money lender called him and said that Squires had not
“been communicating with [it]” and that he “spent the money
back in May and [had not] been telling the truth.” Uncle then
testified that after hearing this, he called Squires and related
what the lender had said, to which Squires replied it was “just a
bunch of lies” and that “people go bankrupt all the time.” No
objection was made by Squires’s trial counsel, and the trial court
gave no limiting instruction. Whether or not Uncle’s testimony
constituted inadmissible hearsay, we conclude that counsel’s
decision not to object was an exercise of professional judgment
that does not amount to deficient performance.
¶43 “When viewing the variety of circumstances faced by
defense counsel, a conscious choice not to object to arguably
inadmissible testimony may, at times, fall within the range of
legitimate decisions regarding how best to represent a criminal
defendant.” State v. Gray, 2015 UT App 106, ¶ 44, 349 P.3d 806(cleaned up). Particularly when trial testimony is unanticipated
and brief, trial counsel may “reasonably . . . believe[] it ill-
advised to call undue attention” to the testimony. State v. Harper,
2006 UT App 178, ¶ 25, 136 P.3d 1261; see also State v. Reid, 2018
UT App 146, ¶¶ 45–47, 427 P.3d 1261 (noting that trial counsel
was not deficient in not objecting to hearsay statements when
the testimony was “unexpected, brief, and corrected by the
prosecutor”).
¶44 Here, Uncle’s testimony about the hard money lender’s
out-of-court statement was both unanticipated and brief. The
20161032-CA 19 2019 UT App 113State v. Squires
prosecutor asked Uncle an unobjectionable question—“how
were you feeling about the loan by September?”—and
specifically told Uncle to “stick to what [he] talked to [Squires]
about.” In response, Uncle explained that he was getting “pretty
concerned” about the loan and then, unexpectedly, related what
the hard money lender told him on the phone. The prosecutor
quickly changed the subject, redirected the conversation to what
Squires said, and “never repeated or emphasized” the testimony.
See State v. Fahina, 2017 UT App 111, ¶ 30, 400 P.3d 1177(concluding that hearsay was harmless because it was brief and
“never repeated or emphasized”). Given the low risk of
prejudice of the statement in the context of Uncle’s entire
testimony, it was objectively reasonable for Squires’s trial
counsel to forgo an objection and avoid calling “undue
attention” to the statement in isolation. See Reid, 2018 UT App
146, ¶ 47; Harper, 2006 UT App 178, ¶ 25.
¶45 Had the question itself been objectionable—along the
lines of, “What did the hard money lenders tell you about
Squires?”—the question of deficient performance would be
closer. See Landry v. State, 2016 UT App 164, ¶ 27, 380 P.3d 25 (“If
clearly inadmissible evidence has no conceivable benefit to a
defendant, the failure to object to it on nonfrivolous grounds
cannot ordinarily be considered a reasonable trial strategy.”
(cleaned up)). But the testimony here was elicited by an
innocuous question. There was no way to know when the
prosecutor asked the question that Uncle would relay what the
hard money lender had told him. By the time Uncle made the
challenged statement, it was arguably too late for trial counsel to
remedy it. 9 Thus, Squires’s trial counsel was not constitutionally
9. One sentence in Squires’s reply brief hints that trial counsel
was not only constitutionally ineffective in not objecting but was
also constitutionally ineffective in not requesting a limiting
(continued…)
20161032-CA 20 2019 UT App 113State v. Squires
deficient, because it was a reasonable strategic decision not to
highlight Uncle’s unexpected and brief testimony. See Reid, 2018
UT App 146, ¶ 47; Gray, 2015 UT App 106, ¶ 44; Harper, 2006 UT
App 178, ¶ 25. 10
II. Utah’s Pattern of Unlawful Activity Act
¶46 Utah’s Pattern of Unlawful Activity Act (the UPUAA or
Act), Utah Code Ann. §§ 76-10-1601 to -1609 (LexisNexis 2017),
criminalizes acts involving a “pattern of unlawful activity,”
which is defined as “conduct which constitutes the commission
of at least three episodes of unlawful activity, which episodes are
not isolated, but have the same or similar purposes, results,
participants, victims, or methods of commission, or otherwise
are interrelated by distinguishing characteristics,” id.
§ 76-10-1602(2). The Act targets three types of conduct. First, it
prohibits “a principal of a pattern of unlawful activity from
(…continued)
instruction. In every other place in Squires’s opening brief and
reply brief, the argument is limited to whether trial counsel was
deficient in not objecting to the alleged hearsay. “It is well settled
that issues raised by an appellant in the reply brief that were not
presented in the opening brief are considered waived and will
not be considered by the appellate court.” Allen v. Friel, 2008 UT
56, ¶ 8, 194 P.3d 903 (cleaned up). We accordingly limit our
discussion to the lack of an objection by Squires’s trial counsel.
10. Squires contends that if “this court is not convinced that
individual errors warrant a new trial, this court may aggregate
the errors under the cumulative-error analysis and order a new
trial.” Having discerned no constitutionally deficient
performance by Squires’s trial counsel, there are no errors to
accumulate, and the cumulative error doctrine does not apply.
See State v. Beverly, 2018 UT 60, ¶ 80, 435 P.3d 160.
20161032-CA 21 2019 UT App 113State v. Squires
using or investing the income derived from the unlawful
activities” in an enterprise. State v. Stewart, 2018 UT 24, ¶ 6, 438
P.3d 515 (citing Utah Code section 76-10-1603(1)). Second, it
“penalizes the acquisition or maintenance of an interest in or
control of any enterprise that undertakes a pattern of unlawful
activity.” Id. (citing Utah Code section 76-10-1603(2)). Finally, the
Act “forbids a person from participating in, or conducting, the
affairs of an enterprise engaged in a pattern of unlawful acts.” Id.(citing Utah Code section 76-10-1603(3)). Each subsection of
section 76-10-1603 thus requires an “enterprise” and a “pattern
of unlawful activity.” See Utah Code Ann. § 76-10-1603.
¶47 Squires contends that his conviction under the UPUAA
should be vacated because the State’s evidence was insufficient.
He asserts (1) that the State “failed to present any evidence that
[Fitz Roy] was an ‘enterprise’” and (2) that the “State’s
allegations of multiple acts of communications fraud . . . are
insufficient” to establish a pattern of unlawful activity. We first
address whether the State provided sufficient evidence of an
“enterprise” and then turn to whether Squires’s communications
with Uncle amounted to a “pattern of unlawful activity.”
A. Enterprise
¶48 “Enterprise” is defined by the UPUAA as “any
individual, sole proprietorship, partnership, corporation,
business trust, association, or other legal entity, and any union
or group of individuals associated in fact although not a legal
entity, and includes illicit as well as licit entities.” Utah Code
Ann. § 76-10-1602(1) (LexisNexis 2017). The existence of an
“enterprise” is a separate element of a UPUAA violation and
must be proved by the State. State v. McGrath, 749 P.2d 631, 636–
37 (Utah 1988); see also State v. Bell, 770 P.2d 100, 103 n.2 (Utah
1988) (“[P]roof of the existence of an enterprise and its
relationship to the racketeering activity is essential for a
conviction under [the UPUAA].”).
20161032-CA 22 2019 UT App 113State v. Squires
¶49 The State provided ample evidence that Fitz Roy is an
“enterprise.” See State v. Workman, 2005 UT 66, ¶ 29, 122 P.3d 639(“We will reverse a jury verdict for insufficient evidence only if
we determine that reasonable minds could not have reached the
verdict.” (cleaned up)). In rejecting Squires’s motion for a new
trial, the trial court listed some of this evidence. The court
observed that (1) the State submitted evidence that Squires was
an employee of Fitz Roy; (2) Squires was paid by Anderson;
(3) Fitz Roy was an investment company that engaged in
construction projects; (4) Fitz Roy was a licensed, legal entity;
and (5) Squires wanted to become a partner in Fitz Roy when he
told Anderson about Uncle’s property. Squires’s trial counsel
even conceded in closing argument that “Fitz Roy was operating
a business, and that could have been an enterprise that was used
illegally.” These facts, and the inferences to be drawn from them,
reasonably support a finding by the jury of an “enterprise.” See
McGrath, 749 P.2d at 637. Thus, the trial court did not err in
denying Squires’s post-trial motions on this basis.
B. Pattern of Unlawful Activity
¶50 The UPUAA is modeled after the federal Racketeer
Influenced and Corrupt Organizations Act (RICO), and
our supreme court has said that the UPUAA’s definition of
“pattern of unlawful activity” and RICO’s definition of “pattern
of racketeering activity” “should be interpreted to mean
the same thing.” Hill v. Estate of Allred, 2009 UT 28, ¶ 38, 216 P.3d
929. Relying on United States Supreme Court precedent
interpreting the RICO statute, the court held that a pattern of
unlawful activity requires “continuity plus relationship.” Id.And “continuity,” the court explained, is “‘both a closed- and
open-ended concept.’” Id. ¶ 39 (quoting H.J. Inc. v. Northwestern
Bell Tel. Co., 492 U.S. 229, 241 (1989)). A closed period of
unlawful activity must extend “over a substantial period of
time”; a “few weeks or months” will not do. H.J. Inc., 492 U.S. at
242; see also State v. Kelson, 2012 UT App 217, ¶ 46, 284 P.3d 695,
20161032-CA 23 2019 UT App 113State v. Squires
rev’d on other grounds, 2014 UT 50, 345 P.3d 1136. Open-ended
continuity, on the other hand, may span a shorter period of
time but must include conduct that “by its nature projects into
the future with a threat of repetition.” Hill, 2009 UT 28, ¶ 39
(cleaned up); see also Kelson, 2012 UT App 217, ¶ 48 n.13
(explaining that the seventy-four drug transactions occurring
over a four-month period in State v. McGrath, 749 P.2d 631 (Utah
1988), was the kind of activity that threatened future unlawful
conduct).
¶51 Thus, “the proper test for determining whether there was
a pattern of unlawful activity is whether there was a series of
related predicates extending over a substantial period of time or
a demonstrated threat of continuing unlawful activity and not
whether there were multiple schemes.” Hill, 2009 UT 28, ¶ 41
(cleaned up). In Kelson, this court applied this test and vacated a
conviction for a pattern of unlawful activity based on securities
fraud when the defendant’s alleged crimes “took place over a
matter of days” and did “not threaten future criminal conduct.”
2012 UT App 217, ¶ 48 & n.11 (cleaned up).
¶52 Federal courts interpreting RICO have reached similar
conclusions. Indeed, under RICO it “is well established that a
single scheme to accomplish one discrete goal, directed at a finite
group of individuals, with no potential to extend to other
persons or entities, rarely will suffice to establish a threat of
continuing racketeering activity.” Pagel v. Washington Mutual
Bank, Inc., 153 F. App’x 498, 502 (10th Cir. 2005); see also Western
Assocs. v. Market Square Assocs., 235 F.3d 629, 634 (D.C. Cir. 2001)
(“If a plaintiff alleges only a single scheme, a single injury, and
few victims it is virtually impossible for plaintiffs to state a RICO
claim.” (cleaned up)); Midwest Grinding Co. v. Spitz, 976 F.2d
1016, 1025 (7th Cir. 1992) (concluding there was not a pattern of
racketeering activity when there “was only one victim,” “one
scheme,” and “one type of injury”).
20161032-CA 24 2019 UT App 113State v. Squires
¶53 Here, the State cannot establish closed-ended continuity,
because Squires’s predicate acts of communications fraud
extended over a short period of seven to eight months. See H.J.
Inc., 492 U.S. at 242; see also Midwest Grinding, 976 F.2d at 1024(listing cases in which closed periods of eight months and longer
were “considered insubstantial”). Squires first contacted Uncle
about the transaction in early 2008, and by September of that
year, the transaction had failed.
¶54 Neither can the State establish open-ended continuity,
because Squires’s communications with Uncle did not “by its
nature project[] into the future with a threat of repetition.” See
Hill, 2009 UT 28, ¶ 39 (cleaned up). Squires’s communications
were directed at a single victim (Uncle), sought to accomplish a
single goal (using Uncle’s property to obtain a loan), and
inflicted only one type of injury (loss of Uncle’s property). There
was never any scheme to obtain other property from Uncle or to
use Uncle to fund other projects, and Squires’s communications
with Uncle do not suggest that Uncle would be used for
fraudulent funding projects in the future.
¶55 Though the Hill court stated that the inquiry is not
whether there are multiple schemes, it emphasized that a pattern
of unlawful activity must demonstrate “continuity plus
relationship” and sought conformity with federal law. Id. ¶¶ 38–
39, 41. Under Hill, a single scheme may suffice to establish a
pattern of unlawful activity, but when linked with a short period
of time, few victims, and only one type of injury, a pattern of
unlawful activity is not demonstrated. See Kelson, 2012 UT App
217, ¶ 48; see also Pagel, 153 F. App’x at 502. Because Squires’s
communications with Uncle did not amount to a “pattern of
unlawful activity” as a matter of law, we conclude that there was
insufficient evidence to support the verdict on this count and it
was therefore error for the trial court to deny Squires’s motion to
arrest judgment.
20161032-CA 25 2019 UT App 113State v. Squires
CONCLUSION
¶56 We conclude that Squires’s trial counsel was not
constitutionally ineffective for not objecting to the jury
instructions on communications fraud. Nothing in the plain
language of the statute or Utah or federal caselaw so clearly
requires a specific-intent instruction in the circumstances present
here that Squires’s counsel could be deemed constitutionally
deficient for not arguing for such an instruction. We also
conclude that trial counsel was not deficient in failing to request
a “presently existing fact” instruction, because neither the plain
language of the communications fraud statute nor controlling
Utah caselaw has adopted the civil standard for fraud.
¶57 We next conclude that Squires’s trial counsel was not
constitutionally ineffective for not objecting to Uncle’s testimony
about the hard money lender’s out-of-court statements. Uncle’s
testimony was unanticipated and brief, and Squires has not
demonstrated that it was unreasonable for trial counsel not to
highlight that testimony. Accordingly, we affirm Squires’s
convictions for communications fraud.
¶58 Finally, we reverse Squires’s conviction for a pattern of
unlawful activity because the State did not demonstrate that
Squires’s communications extended over a substantial period of
time or threatened future criminal conduct. We therefore
remand the case to the trial court with instructions to enter a
judgment of acquittal on the pattern of unlawful activity charge.
20161032-CA 26 2019 UT App 113