State v. Randall , 447 P.3d 1232 ( 2019 )

2019 UT App 120THE UTAH COURT OF APPEALS
STATE OF UTAH,
Appellee,
v.
DEE ALLEN RANDALL,
Appellant.
Opinion
No. 20170836-CA
Filed July 11, 2019
Third District Court, Salt Lake Department
The Honorable Mark S. Kouris
No. 141906717
Nathalie S. Skibine and Wojciech S. Nitecki,
Attorneys for Appellant
Sean D. Reyes and Nathan D. Anderson, Attorneys
for Appellee
JUDGE DAVID N. MORTENSEN authored this Opinion, in which
JUDGES MICHELE M. CHRISTIANSEN FORSTER and KATE APPLEBY
concurred.
MORTENSEN, Judge:
¶1 For many years Dee Allen Randall cheated investors out
of millions of dollars in a classic Ponzi scheme. 1 Financial
1. A Ponzi scheme is a “fraudulent investment scheme in which
money contributed by later investors generates artificially high
dividends or returns for the original investors, whose example
attracts even larger investments.” Ponzi Scheme, Black’s Law
Dictionary (11th ed. 2019). “Money from the new investors is
used directly to repay or pay interest to earlier investors,
(continued…)
State v. Randall
carnage for Randall’s victims followed. The ill-gotten money
is gone. On balance, the victims and their families will suffer
from the burden and effects of Randall’s fraud forever.
After Randall was charged with a number of crimes, he pled
guilty to four counts of securities fraud and one count of
engaging in a pattern of unlawful activity. He was sentenced to
prison. Months later, the sentencing court held a hearing
and determined that both complete and court-ordered
restitution should be set at $10.2 million, although the record
reflected that investors may have been fleeced out of over $36.8
million. 2 Randall appeals the restitution determination. We
affirm.
BACKGROUND
The Crime
¶2 Over about a ten-year period, Randall ran a Ponzi scheme
that defrauded more than 500 investors out of over $36.8 million.
He sold investors private placement securities in one of his
(…continued)
[usually] without any operation or revenue-producing activity
other than the continual raising of new funds.” Id.
2. “‘Complete restitution’ means restitution necessary to
compensate a victim for all losses caused by the defendant,”
while “‘[c]ourt-ordered restitution’ means the restitution the
court having criminal jurisdiction orders the defendant to pay as
a part of the criminal sentence.” Utah Code Ann. § 77-38a-
302(2)(a)–(b) (LexisNexis 2017). “Court-ordered restitution is
therefore a subset of complete restitution that, among other
things, takes into account the defendant’s circumstances.” State
v. Hamilton, 2018 UT App 202, ¶ 28, 437 P.3d 530 (cleaned up).
20170836-CA 2 2019 UT App 120State v. Randall
several companies (Horizon Entities). 3 These securities (Horizon
Notes), on which Randall promised a return of nine to seventeen
percent annually, were promissory notes issued by Horizon
Entities. 4 But the companies composing Horizon Entities were
failing; financial audits revealed that they had been operating at
a loss for years and were not expected to survive another. To
keep Horizon Entities afloat, Randall commingled funds among
his companies and used new investor money to pay old
investors. In fact, Randall admitted to running a “legal Ponzi
scheme” during his bankruptcy proceedings. The director of the
Utah Division of Securities described Randall’s scheme as
“probably one of the two or three most egregious cases of
securities fraud that [he had] seen in the state.” The State
charged Randall with eighteen counts of securities fraud and one
count of a pattern of unlawful activity.
The Plea Agreement
¶3 Just weeks before trial, Randall pled guilty to four counts
of securities fraud and one count of engaging in a pattern of
unlawful activity. The State dismissed the remaining counts. The
victims of the securities fraud counts to which Randall pled
3. A private placement security is an “offering exempt from
registration with the SEC . . . . Generally speaking, private
placements are not subject to some of the laws and regulations
that are designed to protect investors, such as the comprehensive
disclosure requirements that apply to registered offerings.” U.S.
Sec. & Exch. Comm’n, Investor Bulletin: Private Placements Under
Regulation D (Sept. 24, 2014), https://www.sec.gov/oiea/investor-
alerts-bulletins/ib_privateplacements.html [https://perma.cc/VC9
W-MU48].
4. Horizon Entities consisted of companies involved in real estate
development and issuing automobile loans to people with poor
credit.
20170836-CA 3 2019 UT App 120State v. Randall
guilty—two individuals and two couples—were named in the
plea agreement. The pattern of unlawful activity count to which
Randall pled guilty did not identify specific victims but stated
that “commencing on or about June 2009 and continuing
through at least April 2011, [Randall] engaged in conduct which
constituted the commission of at least three episodes of unlawful
activity” involving securities fraud. Randall acknowledged that
he “may be ordered to make restitution to any victim or victims
of [his] crimes, including any restitution that may be owed on
charges that are dismissed as part of a plea agreement.” The plea
agreement further specified,
[Randall] agrees to an order of “complete”
restitution pertaining to all victims, whether named or
unnamed, in an amount to be determined by the
Court. The defendant acknowledges that the State
will seek restitution in the approximate amount of
$36.8 million for investors listed in the attached
spreadsheet[5] . . . . The State acknowledges that the
defendant may dispute restitution for investors
listed therein, and the parties agree that the Court
shall determine whether the Pattern of Unlawful
Activity statute, [Utah Code sections 76-10-1601 to
-1609], permits restitution pertaining to all such
investors. . . . [Randall’s] “court-ordered”
restitution shall be determined in accordance with
[Utah Code section] 77-38a-302(2)(c).[6]
(Emphasis added.)
5. The attached spreadsheet identified more than 500 investors
and their respective losses, totaling over $36.8 million.
6. This section of the code points to the factors a sentencing court
is to consider in determining complete and court-ordered
restitution.
20170836-CA 4 2019 UT App 120State v. Randall
¶4 At the plea hearing, Randall admitted that he “recklessly
made . . . material omissions” in representing the investments he
offered to the defrauded investors and that he “engaged in a
pattern of activity which involved . . . paying . . . old investments
with new invested money in at least three instances.” Randall’s
counsel, however, noting that there was no agreement regarding
restitution, asked for a post-sentencing hearing.
Sentencing
¶5 At the sentencing hearing, Randall asked the court to
suspend any prison sentence and place him on probation so that
he could “work to repay what . . . he took unlawfully.” He
submitted a repayment plan that contemplated the distribution
of $1.4 million to defrauded investors over a period of fifteen
years. Randall further stated, “Look, I’m guilty. . . . I did this.
Investors lost money, because of my actions, my omissions.” He
admitted that he did not disclose to investors how poorly his
businesses were doing, because “people would not have
invested” had they known the truth. He further stated, “I am so
deeply sorry for every single investor, not only those who are
sitting here, but others that are not.” (Emphasis added.) He added,
“I am committed to work every day of my life. . . . I am
determined to do whatever I can to see that they all get as much
money as they can before the day I die.” While admitting that he
would be unlikely to “pay the entire restitution,” Randall noted
that he could “at least pay the restitution to begin with to the
people who were named in the information.” Nevertheless,
Randall acknowledged that his responsibility to pay restitution
“doesn’t stop with just the investors who are listed in the
information.”
¶6 The State asked that Randall be sentenced to prison,
stating,
You don’t defraud people out of $36.8 million and
get probation. You don’t destroy hundreds and
20170836-CA 5 2019 UT App 120State v. Randall
hundreds of lives and get probation. . . .
[H]undreds of people have to suffer emotional and
physical pain, possibly early deaths, family
conflict, loss of house, business, et cetera, but he
gets to stay in his house and stay with his family?
If that’s how things work, something is wrong.
The court agreed with the State and sentenced Randall to three
to fifteen years on the securities counts and one to fifteen years
in prison on the pattern of unlawful activity count.
Restitution
¶7 At the restitution hearing, the State asked for complete
restitution in the amount of $36.8 million to repay all those
Randall had defrauded. Randall disputed this amount. He first
argued that the plea agreement limited his pattern of unlawful
activity to the period between June 2009 and April 2011. Citing
Utah Code section 77-38a-302(5)(a), Randall then argued that the
State had not proved all the investors in that time period were
“directly harmed” by Randall’s criminal conduct “in the course
of a scheme, conspiracy or pattern,” thus greatly limiting the
amount of complete restitution the court should impose. The
sentencing court agreed with Randall on the first argument and
limited the restitution he owed to the victims he had defrauded
between June 2009 and April 2011. 7 But the court disagreed with
Randall on the second argument, finding that the “victims were
directly harmed” by Randall’s criminal conduct. Accordingly,
the court set complete restitution at $10.2 million.
¶8 Regarding court-ordered restitution, Randall argued that
the amount should be set at $31,000—the amount held in
Randall’s trust account with the court. Randall argued that in
7. The court determined that Randall’s conduct harmed 156
investors during this period.
20170836-CA 6 2019 UT App 120State v. Randall
light of his circumstances—namely, he had no financial
resources, he was going to prison for at least nine years, he was
sixty-seven years old and would be seventy-five when
released—there was “no reason to impose additional court-
ordered restitution in this case.” The State, while agreeing that
Randall lacked the financial resources to pay complete
restitution, argued that court-ordered restitution should be set at
$10.2 million, given the “overwhelming amount of loss” and the
“enormous fraud” visited upon the victims.
¶9 The sentencing court responded by stating that it had
considered the restitution factors listed in Utah Code section
77-38a-302(5)(a)–(b) and determined that “these victims listed
here were directly harmed . . . by [Randall’s] actions, and there’s
an absolute nexus there.” The court noted that Randall had taken
the life savings of many of his victims and left them with
nothing. In applying section 77-38a-302(5)(c), the court
acknowledged that, given the lack of financial resources, court-
ordered restitution imposed a burden on Randall. Although it
found his inability to pay “problematic,” the court weighed this
burden against “the fact that [Randall] took [money] from other
people.” After “seriously looking at all of those factors,” the
court set court-ordered restitution at $10.2 million, the same as
complete restitution. Randall appeals.
ISSUES AND STANDARDS OF REVIEW
¶10 Randall first asserts that the sentencing court erred when
it set the amount of complete restitution at $10.2 million based
on the combined net losses of the 156 people who invested with
Randall from June 2009 until April 2011. Second, Randall claims
that the sentencing court erred, after it considered but rejected
Randall’s arguments, in calculating court-ordered restitution as
the same amount as complete restitution.
¶11 “[I]n the case of restitution, a reviewing court will not
disturb a [sentencing] court’s determination unless the court
20170836-CA 7 2019 UT App 120State v. Randall
exceeds the authority prescribed by law or abuses its discretion.”
State v. Laycock, 2009 UT 53, ¶ 10, 214 P.3d 104. “A court will be
deemed to have abused its discretion only if no reasonable
person would take the view adopted by the [sentencing] court.”
State v. England, 2017 UT App 170, ¶ 9, 405 P.3d 848 (cleaned up).
ANALYSIS
I. Complete Restitution
A. Scope of Complete Restitution
¶12 Randall argues on appeal that the sentencing court erred
when it considered the losses suffered by 156 investors and set
complete restitution at $10.2 million. Randall contends that at
most the charges to which he pled guilty encompassed twelve
victims and resulted in about $1.2 million in losses. Thus, this
issue requires us to determine whether the sentencing court
correctly included 156 investors as Randall’s victims. We
conclude that it did.
¶13 “When a person is convicted of criminal activity that has
resulted in pecuniary damages, . . . the court shall order that the
defendant make restitution to the victims, or for conduct for
which the defendant has agreed to make restitution as part of a
plea agreement.” Utah Code Ann. § 76-3-201(4)(a) (LexisNexis
2017). 8 The Crime Victims Restitution Act (Restitution Act), see
generally id. §§ 77-38a-101 to -601, defines a victim as “any person
. . . who the court determines has suffered pecuniary damages as a
result of the defendant’s criminal activities,” id. § 77-38a-
102(14)(a) (emphasis added). Furthermore, “[a] victim of an
offense that involves as an element a scheme, a conspiracy, or a
8. Because the statutory provisions in effect at the relevant time
do not differ in any material way from the provisions now in
effect, we cite the current version of the Utah Code.
20170836-CA 8 2019 UT App 120State v. Randall
pattern of criminal activity, includes any person directly harmed by
the defendant’s criminal conduct in the course of the scheme,
conspiracy, or pattern.” Id. § 77-38a-302(5)(a) (emphasis added).
“According to the plain language of the statute, restitution can
include payment for crimes not listed in the information so long
as a defendant admits responsibility or agrees to pay
restitution.” State v. Bickley, 2002 UT App 342, ¶ 9, 60 P.3d 582.
But “a defendant cannot be ordered to pay restitution for
criminal activities for which the defendant did not admit
responsibility, was not convicted, or did not agree to pay
restitution.” Id.
¶14 Here, Randall claims that he did not agree to pay
restitution to all 156 investors. But the plain language of his plea
agreement leads us to arrive at a contrary conclusion. The plea
agreement stated that Randall “agrees to an order of ‘complete’
restitution pertaining to all victims, whether named or unnamed,
in an amount to be determined by the [sentencing court].”
Furthermore, the plea agreement stated that Randall and the
State “agree that the [sentencing court] shall determine whether
the Pattern of Unlawful Activity statute, [Utah Code sections 76-
10-1601 to -1609], permits restitution pertaining to all such
investors.” And the court made such a determination in
Randall’s case. Before the sentencing court, the State argued that
the words “all victims” in Randall’s plea agreement required
him to pay restitution in the amount of $36.8 million to the more
than 500 investors he defrauded. Randall disputed this claim
and argued that the pool of investors should be more limited.
The court agreed with Randall and limited the victim pool to
those defrauded between June 2009 and April 2011, namely 156
investors.
¶15 Randall also argues that the pool of defrauded investors
encompassed by the plea agreement should be further limited to
the twelve victims he admitted harming, resulting in complete
restitution of $1.1 million. But Randall ignores some key parts of
the record establishing that he admitted to defrauding more than
20170836-CA 9 2019 UT App 120State v. Randall
the twelve named victims. At the sentencing hearing he stated,
“I am so deeply sorry for every single investor, not only those who
are sitting here, but others that are not.” (Emphasis added.) Randall
admitted his responsibility to pay restitution “doesn’t stop with
just the investors who are listed in the information.” (Emphasis
added.) And while acknowledging he would be unlikely to
repay all those he defrauded, Randall offered that he could “at
least pay the restitution to begin with to the people who were named
in the information.” (Emphasis added.) Finally, Randall stated,
“I am determined to do whatever I can to see that they [i.e., the
investors] all get as much money as they can before the day I
die.” To this end, he presented a $1.4 million repayment plan. If
Randall were admitting that he had defrauded twelve investors
of only $1.1 million, we are at loss as to why he would present a
repayment plan in excess of that amount that would only
“begin” to repay investors. The obvious reason is that Randall
himself acknowledged that his fraud extended beyond the
twelve named individuals.
¶16 Even if Randall did not explicitly admit that he defrauded
more than twelve victims, the sentencing court still retained
discretion to order restitution for the 156 victims who were
defrauded by Randall’s pattern of unlawful activity covered by
the plea agreement. In State v. Hight, 2008 UT App 118, 182 P.3d
922, a defendant pled guilty to the “broad offense” of burglary
and stealing marijuana. Id. ¶ 4. Although he never admitted to
stealing a watch, a set of keys, and a silver dollar collection,
which were missing from the burglarized premises, the trial
court ordered that the defendant pay restitution for those items.
Id. The defendant claimed that the trial court erred in ordering
restitution for the missing items because “his responsibility for
any particular missing items must be firmly established before
the court [could] order restitution for them.” Id. (cleaned up). We
affirmed the trial court: “Once [the defendant pled] guilty to
burglary, the trial court acted within its broad discretion, after
reviewing the evidence presented at the restitution hearing, in
20170836-CA 10 2019 UT App 120State v. Randall
ordering restitution for any pecuniary damages clearly resulting
from the burglary.” Id. ¶ 5.
¶17 Here, Randall pled guilty to “engag[ing] in conduct which
constituted the commission of at least three episodes of unlawful
activity as defined in [the Pattern of Unlawful Activity Act].”
And Randall agreed to allow the sentencing court to determine
the amount of restitution owed to all investors, “whether named
or unnamed,” harmed by his pattern of unlawful activity. As in
Hight, Randall pled guilty to the broad offense of engaging in a
pattern of unlawful activity between June 2009 and April 2011
through which he defrauded named and unnamed investors.
Once Randall pled guilty to a pattern of unlawful activity during
the period in question, the sentencing court “acted within its
broad discretion . . . in ordering restitution for any pecuniary
damages” suffered by the 156 victims Randall defrauded during
that time. See id.
¶18 We conclude that the sentencing court correctly
determined that the plea agreement Randall signed included his
admission that he defrauded 156 investors of $10.2 million
between June 2009 and April 2011.
B. Causation
¶19 Randall also argues that the State failed to establish that
Randall’s crimes caused the losses suffered by the investors. We
find this argument unpersuasive.
¶20 “Proximate cause is required to find that a criminal
activity has resulted in pecuniary damages.” State v. Ogden, 2018
UT 8, ¶ 48, 416 P.3d 1132 (cleaned up). “Proximate cause has two
elements. First, but-for causation must be present; indeed,
proximate cause is that cause which, in a natural and continuous
sequence, unbroken by any new cause, produced the injury, and
without which the injury would not have occurred. Second, the
harm must be foreseeable.” State v. Oliver, 2018 UT App 101,
¶ 21, 427 P.3d 495 (cleaned up).
20170836-CA 11 2019 UT App 120State v. Randall
¶21 The record indicates that Randall’s actions proximately
caused pecuniary damage to the investors. Randall sold
investors private placement securities in his companies. He
induced victims to hand over their money by promising annual
returns of nine to seventeen percent. All the while, Randall knew
his companies were failing and had been for years. Randall
engaged in the reckless practice of keeping his companies afloat
by commingling funds among them and using new investor
money to pay old investors—a classic Ponzi scheme. Indeed,
Randall’s lies caused people who trusted him to transfer their
life savings into his care. As Randall’s counsel admitted, had
these trusting souls known the truth, they “would not have
invested.” Thus, by failing to disclose essential information to
investors, Randall’s conduct was a “substantial causative factor”
leading to the losses they incurred. See McCorvey v. Utah State
Dep’t of Transp., 868 P.2d 41, 45 (Utah 1993). Furthermore, given
Randall’s knowledge of the precarious financial health of his
companies, the potential for harm to investors was entirely
foreseeable, if not inevitable.
¶22 Thus, we conclude that the sentencing court properly
determined that Randall’s conduct proximately caused the losses
of the 156 investors.
II. Court-Ordered Restitution
¶23 Randall argues that the sentencing court erred in
calculating court-ordered restitution identical in amount to
complete restitution. Court-ordered restitution is the “restitution
the court having criminal jurisdiction orders the defendant to
pay as a part of the criminal sentence.” Utah Code Ann. § 77-38a-
302(2)(b) (LexisNexis 2017). The amount of court-ordered
restitution is determined by the court after it has calculated
complete restitution under the Restitution Act. The factors
for court-ordered restitution include (1) the factors for complete
restitution, including the loss to the victim, (2) “the financial
resources of the defendant,” (3) “the burden that payment of
20170836-CA 12 2019 UT App 120State v. Randall
restitution will impose, with regard to the other obligations
of the defendant,” (4) “the ability of the defendant to
pay restitution on an installment basis,” (5) “the rehabilitative
effect on the defendant,” and (6) “other circumstances that the
court determines may make restitution inappropriate.” Id. § 77-
38a-302(5)(b)–(c); see also State v. Thomas, 2016 UT App 79, ¶ 4,
372 P.3d 87 (per curiam). “Court-ordered restitution may be
identical in amount to complete restitution, but it need not be
so.” State v. Laycock, 2009 UT 53, ¶ 30, 214 P.3d 104.
“Additionally, in the case of restitution, a reviewing court will
not disturb a [sentencing] court’s determination unless the court
exceeds the authority prescribed by law or abuses its discretion.”
Id. ¶ 10. Finally, “a restitution order will be overturned for abuse
of discretion only if no reasonable person would take the view
adopted by the [sentencing] court.” Thomas, 2016 UT App 79, ¶ 4
(cleaned up).
¶24 The analysis on this issue requires us to determine
whether the sentencing court adequately considered the
factors for complete and court-ordered restitution. See Utah
Code Ann. § 77-38a-302(5)(a)–(c). The record indicates that it did.
Making explicit reference to Utah Code section 77-38a-302(5)(a)–
(b), the court determined that Randall directly harmed the
victims when he took their life savings and left them
with nothing. The court described one defrauded couple in
poignant terms: “[T]hey are both sick now and they both now
somehow have to go back out and get work, and they are in their
60s and they aren’t healthy, and they had no idea where to
turn.” Referencing Utah Code section 77-38a-302(5)(c), the
sentencing court then considered Randall’s financial resources,
acknowledging that restitution imposed a heavy burden on
Randall. It noted that Randall was old, going to prison, and may
never get out. Although the court found Randall’s circumstances
“problematic,” it weighed the burden that restitution imposed
on him against the harm inflicted on his victims. After “seriously
looking at all of those factors,” the court set court-ordered
restitution at $10.2 million.
20170836-CA 13 2019 UT App 120State v. Randall
¶25 Randall “essentially argues that because the court-
ordered restitution amount was not lower than the complete
restitution amount, the [sentencing] court must have failed to
consider the required factors and, therefore, it abused its
discretion.” See Thomas, 2016 UT App 79, ¶ 5. But the record
shows that the sentencing court considered all required factors
and found that they weighed in favor of substantial court-
ordered restitution. The Restitution Act requires only that the
sentencing court “consider” the financial resources of a
defendant in imposing restitution. See Utah Code Ann. § 77-38a-
302(5)(c). This statute in no way requires that Randall’s crime-
induced, self-inflicted financial straits be given dispositive effect
in determining court-ordered restitution. The fact that Randall
will most likely never pay the $10.2 million court-ordered
restitution “does not, standing alone, demonstrate that the
[sentencing] court failed to consider the statutorily required
factors.” See Thomas, 2016 UT App 79, ¶ 6. As our supreme court
has pointed out, restitution has a two-fold purpose. “One
purpose is to compensate the victim for pecuniary damages. The
other purpose, as a part of a criminal sanction, is to rehabilitate
and deter the defendant, and others, from future illegal
behavior.” Laycock, 2009 UT 53, ¶ 18. Rehabilitation refers to the
“process of seeking to improve a criminal’s character and
outlook so that he or she can function in society without
committing other crimes.” Rehabilitation, Black’s Law Dictionary
(11th ed. 2019). Thus, “restitution is an effective rehabilitative
penalty because it forces the defendant to confront, in concrete
terms, the harm his actions have caused. . . . The direct relation
between the harm and the punishment gives restitution a more
precise deterrent effect than a traditional fine.” Laycock, 2009 UT
53, ¶ 18 (cleaned up). From this perspective, the imposition of
$10.2 million in restitution will arguably have the most impact
on Randall and others. This restitution order will make Randall
and other potential fraudsters more sensitive to greed’s cost and
the real harm caused. Finally, if there is any remote possibility
that Randall can pay anything, his victims should remain first in
line to claim any funds to which Randall may have access, even
20170836-CA 14 2019 UT App 120State v. Randall
to the end of his days. This approach acknowledges how
devastating financial crimes like these are to the lives of so
many.
¶26 We conclude that the sentencing court properly
considered the statutory factors and did not abuse its discretion
in imposing $10.2 million in court-ordered restitution.
CONCLUSION
¶27 The sentencing court correctly determined that Randall
admitted in his plea agreement to defrauding 156 investors of
$10.2 million between June 2009 and April 2011. Randall’s fraud
caused the losses suffered by these 156 investors, and the
sentencing court did not abuse its discretion in setting court-
ordered restitution at $10.2 million.
¶28 Affirmed.
20170836-CA 15 2019 UT App 120