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Lawrence v. People.

2021 CO 28. No. 19SC556.  Criminal Justice—Securities Regulation—Fraud and Theft—Expert Witness Testimony.

May 10, 2021

In this prosecution for securities fraud and theft, the Supreme Court addressed (1) whether an agreement entered into by the defendant and the victim constitutes an investment contract and therefore a security for purposes of the Colorado Securities Act; (2) whether the trial court erred in admitting the Colorado Securities Commissioner’s expert testimony opining generally on securities law and specifically that the agreement at issue was an investment contract and therefore a security; and (3) the proper remedy when the trial court incorrectly instructs the jury regarding the value of the property taken and that value was disputed at trial.

The Court held that an investment contract is a contract, transaction, or scheme whereby people invest their money in a common enterprise and are led to expect profits derived substantially from the entrepreneurial or managerial efforts of others. Under this definition, the contract at issue here was an investment contract and therefore a security.

The Court further held that the Commissioner’s testimony was admissible under CRE 702 and 704 and the standards set forth in People v. Rector, 248 P.3d 1196, 1203 (Colo. 2011). And even if the admission of this testimony was erroneous, any error was harmless.

Finally, the Court found that when a trial court erroneously instructs the jury on the value of the property taken and the parties dispute the value at trial, the proper remedy is to remand the case. On remand, the prosecution may either elect to retry the theft charge in its entirety or to agree to the entry of judgment based on the lowest degree of theft supported by the jury’s verdict.

Accordingly, the Court affirmed the judgment of the division below.

Official Colorado Supreme Court proceedings can be found at the Colorado Supreme Court website.

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