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State v. Bradshaw
Citations: 2004 UT App 298; 99 P.3d 359; 508 Utah Adv. Rep. 10; 2004 Utah App. LEXIS 103; 2004 WL 2029608Docket: 20020137-CA
Court: Court of Appeals of Utah; September 10, 2004; Utah; State Appellate Court
Brooks Bradshaw faced eleven counts of communications fraud and one count of racketeering, both classified as second degree felonies under Utah law. After waiving a preliminary hearing, a stipulation of facts revealed that Bradshaw defrauded eleven victims, collecting a total of $5,400 by falsely representing himself as a mortgage company owner and promising assistance with refinancing or foreclosure avoidance. Victims were misled into paying fees for services that were never rendered, which Bradshaw then used for personal expenses. Bradshaw filed a motion to quash the racketeering charge, arguing that the prosecution failed to establish that he was engaged in an 'enterprise' as required by state law, and sought to reduce the communications fraud charges, contending that the prosecution improperly aggregated the total amount taken and charged him with multiple felonies based on separate communications. He argued that he should have faced either eleven misdemeanors or a single felony charge. The trial court rejected Bradshaw's motion, asserting that the state could prove the enterprise element of the racketeering charge and could legally charge him with multiple counts of communications fraud. The Court of Appeals reversed the trial court's decision. Bradshaw entered a plea agreement, pleading guilty to four counts of attempted communications fraud, classified as third-degree felonies under Utah law, while reserving his right to appeal the denial of his motion. The trial court accepted his plea, resulting in a judgment of conviction on these counts, with other charges dropped. On appeal, Bradshaw raises two main issues: (1) he contends that the State's charging scheme contradicts the intent and language of Utah's Communications Fraud statute; and (2) he argues that the trial court wrongly denied his motion to quash the bindover on a racketeering charge, asserting that the stipulated facts failed to demonstrate his involvement in an "enterprise." Both issues hinge on statutory interpretation, which is a question of law subject to de novo review, meaning the appellate court will not defer to the trial court's legal conclusions. The analysis of statutory interpretation emphasizes that the primary objective is to ascertain the Legislature's true intent. The plain language of the statute is considered the best indicator of its meaning, and all parts of the statute should be rendered relevant. The interpretation process includes recognizing that the presence of one term implies the exclusion of others and that omissions must be noted. In cases where the statute's language is ambiguous or unclear, courts may refer to legislative history and policy considerations for guidance. Additionally, Utah law mandates a liberal construction of statutory provisions to further their objectives and promote justice. Bradshaw contends that the State improperly aggregates the amounts taken from multiple victims while treating each communication as a separate offense, resulting in an aggregated total of $5,400 attributed to each of his eleven victims. Under Utah's Communications Fraud statute, a person who schemes to defraud another is guilty of varying degrees of offenses based on the value obtained, ranging from a class B misdemeanor for amounts under $300 to a second-degree felony for amounts exceeding $5,000. The statute stipulates that the degree of the offense is determined by the total value sought through the scheme, but each communication executed in furtherance of the scheme constitutes a separate offense. The trial court interpreted the term "another" in the statute's first subsection to potentially include multiple victims, concluding that Bradshaw's actions constituted a single scheme affecting all eleven victims. However, this interpretation was deemed erroneous, as the statute's language and legislative intent suggest that the singular term should not automatically be read to include the plural when such a reading contradicts the statute's context. The court emphasized that while the rules of statutory construction allow for singular and plural interpretations, they should yield to the clear intent of the legislature and the statute's context. The statute's language specifies that the provisions for 'aggregation' and 'separate offense' are applicable only within a single scheme or artifice. Subsection (2) allows for the aggregation of the total value of money obtained through the scheme described in Subsection (1), while Subsection (5) treats each communication made to execute or conceal the scheme as a separate offense. The interpretation of 'scheme' is flexible and can vary based on perspective. Ambiguities in criminal statutes should be resolved in favor of lenity, which means choosing the less severe interpretation when two reasonable readings exist. Utah courts adhere to this principle, which emphasizes resolving doubts against harsher penalties. In this case, charging an individual with multiple felonies for a relatively small amount of money raises concerns regarding fairness and proportionality, contradicting the Utah Criminal Code's purpose of ensuring penalties align with the seriousness of offenses. The code mandates that all provisions be interpreted to promote justice and achieve the law's objectives. A foundational principle of statutory interpretation holds that interpretations leading to unreasonable outcomes should be rejected in favor of those yielding reasonable results. In this case, the stipulation indicates the existence of multiple distinct schemes rather than a singular scheme affecting multiple victims. The victims experienced deception at various times, locations, and via different narratives, with some victims approached individually and others as couples, in cities including Salt Lake City, West Jordan, South Jordan, Tooele, and Draper. They were offered different services, such as title searches and property appraisals, with only some facing imminent foreclosure. The State attempts to categorize these varied incidents as a single scheme, but the court argues that the disparate nature of the circumstances does not support this characterization under section 76-10-1603. While the State acknowledges the legislature's authority to define crimes and enforce penalties, it argues for an interpretation of section 76-10-1801 that allows treating each fraudulent communication as a separate offense. This interpretation is consistent with the legislature's intent to address communications fraud rigorously. However, absent clear legislative direction, the court will not permit the State to combine losses from multiple schemes to apply uniformly across all victims. The court emphasizes that the interpretation of statutory provisions should align with the overall purpose of the legislation, warning against literal applications that lead to unintended harsh outcomes. Ultimately, the court concludes that the aggregated amount of $5,400 cannot be attributed to each victim of Bradshaw's fraudulent activities, supporting Bradshaw's motion to reduce the degree of the charged offenses related to communications fraud counts. Bradshaw contends that the State did not demonstrate probable cause for his involvement in an 'enterprise' under the Utah Pattern of Unlawful Activity Act (UPUAA). To proceed to trial, the State must present credible evidence showing that an offense occurred and that Bradshaw committed it, which includes proving both that he engaged in a pattern of unlawful activity and was involved in an enterprise. While Bradshaw concedes that the State met the probable cause requirement for the 'pattern of unlawful activity,' the focus is on whether the facts presented established his involvement in an 'enterprise.' The stipulation failed to provide any basis for identifying an enterprise related to the racketeering charge, lacking a clear connection between the alleged racketeering activity and an enterprise, as illustrated in State v. Bell. In Bell, the court overturned a conviction due to the inadequacy of the State’s description of the enterprise element. The current case mirrors this deficiency, as the State's information simply restates UPUAA language without explaining its theory of the enterprise. The State now suggests that an 'association in fact' between Bradshaw and his former coworkers constitutes the enterprise, defined as a continuing unit operating as an ongoing organization. Vague references to two of Bradshaw's acquaintances witnessing or participating in misrepresentations do not substantiate the existence of an 'ongoing organization' or a 'continuing unit' necessary for a RICO violation. The State must provide credible evidence of all crime elements to meet the probable cause standard. Temporary or sporadic criminal collaborations do not fulfill the 'enterprise' requirement of the state RICO act. The State incorrectly interprets the UPUAA by assuming that merely identifying an 'individual' suffices for the 'enterprise' element. While a defendant can be both an 'individual' and an 'enterprise,' the State fails to cite authority showing that an individual's status alone establishes a UPUAA violation. An enterprise can be a legal or illicit entity and must consist of more than just an individual to avoid collapsing the distinct elements of 'enterprise' and 'pattern of unlawful activity.' The stipulation lacks facts indicating Bradshaw used fraudulent proceeds to invest in an enterprise, as it states he paid personal bills instead. The trial court's finding that such use qualifies as racketeering is incorrect. The UPUAA mandates that proceeds from unlawful activities must be used or invested in acquiring or operating an enterprise. A RICO violation occurs only upon using or investing such proceeds in the prescribed manner, not merely from engaging in predicate acts. Thus, evidence of using fraudulent income in the proscribed manner is essential for establishing a RICO violation. To establish a RICO violation, the government must demonstrate the existence of an enterprise, the defendant's income derived from a pattern of racketeering activity, and the use of that income to acquire or operate the enterprise. The focus of a RICO violation is on the investment of racketeering income rather than merely committing predicate acts. In the context of the case, the stipulation was inadequate to show probable cause for a bindover on the racketeering charge, as it related more to general fraud rather than RICO-specific conduct. Courts must be vigilant against mischaracterizing ordinary fraud cases as RICO cases, as the RICO statute is a powerful legal tool not intended for every criminal act. The Utah Communications Fraud statute prohibits attributing a total fraudulent amount to each individual victim for schemes, and the state failed to prove that Bradshaw engaged in an "enterprise" as required by specific statutory provisions. Consequently, the trial court's decision is reversed, and instructions are given to reduce the charges against Bradshaw and to quash the racketeering charge. A dissenting opinion argues that the majority's conclusion lacks deference to the trial court and the state’s evidence, which could support a probable cause finding for the racketeering charge. The dissent emphasizes the need to correctly interpret what constitutes an "enterprise" and the investment requirement based on federal case law, noting that an enterprise could be any entity acquired through illegal activities, not strictly a profit-seeking entity. Courts do not require prosecutors to provide detailed factual pleadings for racketeering indictments. Case law indicates that a RICO indictment does not need to include extraordinary detail, as established in United States v. Habicht, and that the elements of a RICO charge need not be pled with particularity, as noted in Azurite Corp. v. Amster. Specifically, while three elements must be proven for the existence of an enterprise, these are not necessary to plead a RICO cause of action. Additionally, there is no requirement that the person and the enterprise be separate under the RICO statute, as supported by several cases, including Riverwoods Chappaqua Corp. v. Marine Midland Bank and Banks v. Wolk. In interpreting Utah Code section 76-10-1603(1), there is no obligation for the defendant and the enterprise to be distinct, nor does the statute require particularity in pleading. The State only needs to present evidence suggesting the existence of an enterprise for bindover purposes. Furthermore, section 1962(a) does not demand precise proof of how income from racketeering is used or invested, allowing for broad interpretations of terms like 'use or invest' and 'income.' Savings resulting from racketeering activity count as income, as confirmed by Azurite Corp. Therefore, to adequately plead a violation under section 76-10-1603(1), the State must show evidence from which a reasonable inference can be drawn that the defendant used proceeds from racketeering to benefit an enterprise. In this case, stipulated facts reveal that Bradshaw engaged in unlawful activity resulting in income and used those funds for personal purposes. This supports the inference that he saved funds from legitimate activities and potentially invested them. The stipulation also suggests that Bradshaw himself constituted the enterprise, allowing him to gather sensitive financial information, thus meeting the requirements of section 76-10-1603(1). The majority opinion asserts that courts have consistently dismissed attempts to categorize ordinary fraud as racketeering, emphasizing the need for careful prosecution under Utah's Pattern of Unlawful Activity Act (UPUAA). However, the author disagrees with this view, noting that Bradshaw's victims likely would not consider his actions as mere "garden-variety" fraud. Evidence indicates that Bradshaw's crimes involved significant planning and the exploitation of sensitive financial information. The author argues that racketeering and communications fraud can coexist and cites case law where racketeering has been applied in broader contexts than initially anticipated by Congress. Concerns over the misuse of racketeering charges lack substantial support in higher court rulings, which have interpreted RICO broadly to address various criminal activities beyond organized crime. The author emphasizes that the focus should be on whether the state has provided enough evidence for bindover, highlighting that Bradshaw admits to engaging in a pattern of unlawful activity that defrauded numerous victims of over $5,000. The evidence against Bradshaw supports reasonable inferences that he accessed sensitive financial information about victims and exploited their financial needs. It suggests that he used the proceeds from his actions to sustain his lifestyle and continue defrauding others, establishing probable cause for racketeering charges. The court correctly denied his motion to quash the bindover order for these charges. Debate arises regarding the interpretation of the communications fraud statute, particularly the term "scheme." The majority opinion's focus on this term and the interpretation of "another" in the singular is contested. The dissent argues that the majority misinterprets the statute, which clearly prohibits devising a scheme to defraud "another" and engaging in communication related to it. The dissent emphasizes the importance of adhering to the statute's plain language and warns against interpretations that could render parts of the statute ineffective. The majority opinion interprets the term "another" in section 76-10-1801 as singular, relying on its understanding of "scheme." However, this interpretation lacks substantial support and disregards the principle that statutory language can be interpreted in both singular and plural forms unless inconsistent with legislative intent. Section 76-10-1801 does not impose such limitations, suggesting that "another" includes one or more individuals. The language of section 76-10-1603 is clear and unambiguous, rendering the majority's leniency discussion irrelevant, as the rule of lenity only applies in the presence of ambiguity. The court emphasizes that policy issues should be addressed by the legislature, not the judiciary, and courts should not question the legislative selection of penalties as long as they are not excessively severe. The focus is on whether charging Bradshaw with multiple counts of communications fraud aligns with the statute's clear language, which defines the crime based on devised schemes to defraud and stipulates that each communication related to the scheme constitutes a separate offense. The phrase "scheme or artifice to defraud" encompasses a broad definition, referring to a comprehensive plan designed to deceive one or multiple individuals through a common technique. In United States v. Massey, the court clarified that this term is not limited to individual acts of fraud but includes any overarching fraudulent design. The court emphasized that activities supporting fraudulent endeavors, even if not directly fraudulent, can violate the federal mail fraud statute. The legislature intended the term to apply to any common plan used to defraud others. In this case, Bradshaw acknowledged the facts of his actions, which indicated that he operated under a singular fraudulent scheme. He accessed sensitive financial information of multiple victims who were seeking refinancing assistance. Bradshaw approached each victim with a consistent narrative, claiming ownership of a mortgage company and requiring upfront fees for promised services related to refinancing. Despite receiving amounts not exceeding $600 from each of the eleven victims, he failed to deliver any services. The court determined that Bradshaw's actions constituted a single "scheme or artifice to defraud," and thus his total illicit gains exceeded $5,000. Consequently, under the applicable statute, each communication made in furtherance of this scheme could be charged as a second-degree felony, as the statute penalizes the act of communication itself rather than the success of the fraudulent scheme. Under section 76-10-1801(5), each communication made by Bradshaw to execute or conceal a fraudulent scheme constitutes a separate act of communication fraud. Bradshaw admitted to making or attempting at least eleven such communications in furtherance of his fraudulent scheme, resulting in eleven distinct violations of the statute. The law stipulates that any scheme to defraud, involving communication aimed at executing or concealing that scheme, is punishable, with penalties based on the total amount gained through the fraud. The State's decision to charge Bradshaw with eleven second-degree felony counts of communication fraud was deemed appropriate, and the trial court's refusal to reduce the charges was upheld. The dissenting opinion critiques the majority's interpretation and the handling of the bindover standard, emphasizing that sufficient probable cause existed for the charges based on the presented evidence, which included a stipulation of facts rather than traditional evidentiary hearings. The overall conclusion supports the trial court's decisions regarding both the number and the severity of the charges against Bradshaw. The State's decision to bind Bradshaw over for trial relied solely on a written stipulation rather than presenting evidence or witnesses, which limits its ability to draw evidentiary inferences. The stipulation must be evaluated strictly based on its contents, as the State cannot revert to traditional evidence presentation. The Legislature has made clear distinctions in the law; for instance, Utah Code Ann. 76-10-1801(5) specifies that multiple communications, even if part of a single scheme, constitute separate offenses. The State agrees with the trial court's interpretation that "another" in subsection (1) implies aggregation of losses from multiple victims within a single scheme, but does not argue that "scheme or artifice" should similarly allow for aggregation across multiple schemes. A hypothetical example illustrates that a single scheme can affect multiple victims, as seen in an investment seminar scenario where multiple individuals are defrauded simultaneously. The stipulation process was initiated by the parties, who intended for the court to rule on the motion to quash based on the stipulated facts, thereby placing the burden of establishing probable cause on the State through that stipulation. The relevant legal provisions discussed remain unchanged despite recent amendments to section 76-3-203. It is unlawful for individuals to use or invest any proceeds derived from unlawful activities in the acquisition or operation of any enterprise. This includes direct or indirect participation in such activities. The Utah Pattern of Unlawful Activity Act (UPUAA) mirrors the Federal Racketeer Influenced and Corrupt Organizations Act (RICO), which similarly prohibits the investment of income derived from racketeering in enterprises affecting interstate or foreign commerce. Under UPUAA, "enterprise" encompasses any legal entity or group, including illicit operations. The definition aligns closely with RICO's, which also includes various forms of businesses and associations. Previous cases under Utah's former Racketeering Influences and Criminal Enterprise Act (RICE) remain relevant, as the current provisions are largely unchanged. The State's analogy to the case of State v. Bell emphasizes the necessity for sufficient factual support in establishing whether an individual was engaged in an enterprise, particularly concerning the adequacy of notice for defense preparation. Vague allegations regarding the existence of an enterprise are inadequate to notify a defendant of charges and fail to meet the probable cause standard. In RICO actions, a "person" includes any individual or entity that can hold a legal or beneficial interest in property, as defined under UPUAA and federal law. Under RICO, both an "enterprise" and a "pattern of racketeering activity" must be proven as separate elements for a conviction; proof of one does not establish the other. The Utah Supreme Court has highlighted the necessity of demonstrating at least one element beyond the pattern of racketeering to avoid double jeopardy issues. The State cannot simply assume that personal expenses of the defendant contributed to an enterprise; such assumptions are not valid if the stipulation lacks sufficient evidence. Defense counsel argued that for UPUAA elements to be satisfied, the proceeds must be shown to have been reinvested in the criminal scheme, rather than used for personal expenses. The court acknowledged the defense's position regarding the necessity of evidence linking proceeds to the enterprise. The disagreement centers on whether an individual using proceeds for personal benefit, rather than to further a criminal scheme, meets the criteria for racketeering under federal RICO statutes. The RICO statute provides a civil cause of action for those injured by violations, requiring plaintiffs to establish the same elements as in criminal cases. The Utah Supreme Court, in State v. Clark, clarified that to bind a defendant for trial, the prosecution must demonstrate "probable cause" at preliminary hearings, which necessitates sufficient evidence to show that the crime occurred and the defendant was involved. The required standard for probable cause is relatively low, as the evidence is expected to strengthen with further investigation, and magistrates must view evidence favorably towards the prosecution without weighing conflicting evidence. The court also stated there should be no distinction between the probable cause standards for arrest warrants and preliminary hearings. The application of this standard was evident in subsequent cases, such as State v. Schroyer and State v. Hawatmeh, where the court upheld the necessity to bind over defendants despite potential alternative interpretations of the evidence, emphasizing that factual issues must be resolved at trial. The Utah Supreme Court in Schroyer established that evidence must be assessed in the light most favorable to the prosecution, with inferences drawn to support the prosecution's claims unless the evidence is completely lacking. The court emphasized that the State only needs to demonstrate that its theory of the crime is reasonable at the bindover stage. In this case, while the majority opinion inadequately applied the bindover standard by favoring the defendant's perspective, it was noted that the evidence was comparable in sufficiency to prior cases, indicating enough grounds for binding the defendant, Bradshaw, over on racketeering charges. Further, while the majority referenced civil RICO cases, the author pointed out a critical distinction between criminal and civil racketeering prosecutions under 18 U.S.C.A. § 1962(a). In criminal cases, the government must prove the existence of an enterprise and the defendant's income derived from racketeering activities. Conversely, for civil suits under the same statute, a plaintiff must demonstrate injury resulting from the use of racketeering income, not merely from the racketeering acts. This difference underscores that civil cases do not provide a direct analogy to criminal prosecutions regarding RICO violations. The majority opinion's decision to not draw inferences in favor of the State due to the stipulation of facts by the parties is unprecedented and unjustified, as Bradshaw voluntarily accepted the stipulation. There is no reason to penalize the State for this. Furthermore, the term "entity" in Supreme Court rulings should not limit the definition of an enterprise, as established in Riverwoods Chappaqua Corp. v. Marine Midland Bank, which clarifies that under section 1962(a), no distinction between the person and the enterprise is required. Additionally, at least one circuit has determined that RICO does not necessitate an enterprise to have an ascertainable structure, as noted in United States v. Connolly. The majority's reliance on Condict v. Condict is misplaced, as it involved a civil dispute unrelated to racketeering, with the court ruling based on a failure to demonstrate a pattern of racketeering activities. In contrast, Bradshaw acknowledges his engagement in such activities, making Condict irrelevant. Regarding the determination of probable cause in the State's case against Bradshaw, the majority opinion incorrectly compares it to State v. Bell, which dealt with a jury-convicted defendant whose trial was impacted by the lack of a bill of particulars. The Supreme Court in Bell focused on how the State's failure to provide necessary information prejudiced the defendant's ability to prepare his defense and did not address probable cause or suggest improper binding over. Thus, the majority's conclusions about probable cause lack support and misinterpret the Bell case. The court in *Bell* prioritized the fairness of the defendant's trial and addressed the necessary proof for conviction under the racketeering statute, but did not provide substantial guidance for the current case. Bradshaw could have leveraged *Bell* to request a bill of particulars from the State. The evidence regarding Bradshaw's unlawful conduct is separate from any claims that he was the enterprise itself. While the evidence from the bindover hearing is adequate to withstand a motion to quash, it may not be sufficient for a conviction of racketeering. However, following the supreme court's directive to assume the State's case will strengthen, the trial court correctly denied Bradshaw's motion to quash. The case primarily involves statutory interpretation, with no ambiguity in the communications fraud statute. The differing opinions focus on the application of the statute rather than its meaning. The definition of "to defraud" suggests wrongdoing in property rights through deceitful methods. The majority contends that the victims were deceived in varied ways, but the dissent argues that Bradshaw employed a consistent method with minor variations. Concerns about the potential for a 165-year sentence are addressed; the correct maximum under Utah law is 30 years for consecutive sentences. The dissent posits that the severity of potential sentencing reflects the serious impact of Bradshaw's actions on his victims, who could face significant financial losses.