NO THE STATE OF TEXAS IN THE DISTRICT COURT WARREN KENNETH PAXTON, JR. COLLIN COUNTY, TEXAS

Transcription

1 NO THE STATE OF TEXAS IN THE DISTRICT COURT V. 416 th JUDICIAL DISTRICT WARREN KENNETH PAXTON, JR. COLLIN COUNTY, TEXAS MOTION TO QUASH INDICTMENT NO FOR FAILURE TO GIVE ADEQUATE NOTICE OF SPECIFIC CHARGES AND FOR FAILURE TO STATE AN OFFENSE TO THE HONORABLE JUDGE GEORGE GALLAGHER: Warren Kenneth Paxton, Jr. ( Paxton ) requests this Court quash the Indictment for failure to give adequate notice of specific charges against him and failure to state an offense as follows: I. INTRODUCTION The Indictment in State of Texas v. Warren Kenneth Paxton, Jr., in the 416 th Judicial District Court of Collin County, Texas, No ( Indictment ) (Exhibit A ), fails to specify which of the alternative manner and means of render[ing] services as an investment adviser representative Paxton allegedly committed, the identity of the investment adviser, and that he was actually required to register by the Act. The Indictment specifically fails to state whether Paxton is alleged to have to solicited clients or provided investment For Failure to State an Offense 1 1

2 advice on behalf of an investment advisor for compensation. By failing to identify the statutory manner and means or investment adviser, the Indictment fails to provide Paxton adequate notice, which deprives him of due process of law. Furthermore, the Indictment fails to state a criminal offense because it omits essential elements of the alleged crime and deprives this Court of jurisdiction. II. INDICTMENT MUST BE QUASHED FOR LACK OF NOTICE A. Indictment Omits Manner and Means. On or about July 7, 2015, Paxton was charged by indictment for a third degree felony offense of acting as an investment adviser representative without being registered with the Texas State Securities Board, a violation of the Texas Securities Act ( Act ). See TEX. REV. CIV. STAT. ANN. Art (I). The Indictment alleges that Paxton on or about July 18, 2012 did then and there intentionally and knowingly render services as an investment adviser representative to James and Freddie Henry, and was not duly registered as an investment adviser representative. The Indictment does not describe the services that Paxton allegedly rendered to the Henrys. Under the Act, an investment adviser representative may render services in two different ways, neither of which is alleged in the Indictment. See TEX. REV. CIV. STAT. ANN. Art (P). The absence of the manner and means Paxton allegedly committed to violate the For Failure to State an Offense 2 2

3 law fails deprives Paxton of adequate notice of the crime that he is accused of violating, and prevents him from adequately preparing a defense. B. PAXTON IS ENTITLED TO NOTICE OF HIS ALLEGED UNLAWFUL ACTS. Persons accused of a crime are guaranteed the right to be informed of the nature and cause of the accusations against him under both the United States and Texas Constitutions. See U.S. Const. amend. VI; Tex. Const. art. I, 10; State v. Moff, 154 S.W.3d 599, 601 (Tex. Crim. App. 2004). An indictment must be specific enough to inform the defendant of the accusations so that he or she may adequately prepare a defense. Smith v. State, 297 S.W.3d 260, 267 (Tex. Crim. App. 2009); State v. Barbernell, 257 S.W.3d 248, 250 (Tex. Crim. App. 2008) (citing Lawrence v. State, 240 S.W.3d 912, 916 (Tex. Crim. App. 2007)). The Texas Court of Criminal Appeals addressed the sufficiency of notice in charging instruments in State v. Barbernell, 257 S.W.3d 248, 251 (Tex. Crim. App. 2008). Barbernell held that "a charging instrument that tracks the statutory text of an offense is sufficient to provide a defendant with adequate notice." Id. at However, "when the statutory language fails to be completely descriptive" of the offense, an indictment "that tracks the statutory language may be insufficient to provide a defendant with adequate notice." Id. For example, when a statute defines the manner or means of commission in several alternative ways, an indictment will fail for lack of specificity if it neglects to identify which of the statutory means it For Failure to State an Offense 3 3

4 addresses. Id. "In such cases, 'more particularity is required to provide notice' and the Court should require the indictment to identify which of the statutory means it alleges. Id.; and see Furusaon v. State, 622 S.W.2d 846, 851 (Tex. Crim. App. 1980) ( [I]t is clear that even though an act or omission by a defendant is statutorily defined, if that definition provides for more than one manner or means to commit that act or omission, then upon timely request, the State must allege the particular manner or means it seeks to establish. ). Barbernell establishes a two-step analysis for determining adequacy of notice. Id. at 255. First, the court must identify the elements of the offense. Ibid. 1 Then, where the statute defines an element of the offense that describes an act or omission, a court must determine whether these definitions provide alternative manners or means to commit the act or omission. Ibid. If the statute does, then the accused is entitled to notice of which manner or means the prosecution relies upon. The Act is precisely such a statute. The elements of the offense charged against Paxton include render services as an investment adviser representative. TEX. REV. CIV. STAT. ANN. Art (I). Under the Texas Securities Act, an [i]nvestment adviser representative," includes each person or company who, for compensation, is employed, appointed, or authorized by an investment adviser to 1 Element of the Offense includes the forbidden conduct; required culpability; any required result; and the negation of any exception to the offense. TEX. PEN. CODE 1.07(a)(22). For Failure to State an Offense 4 4

5 solicit clients for the investment adviser or who, on behalf of an investment adviser, provides investment advice, directly or through subagents, as defined by Board rule, to the investment adviser's clients. TEX. REV. CIV. STAT. ANN. Art (P)(emphasis added). This definition creates two different means of committing the offense: (i) soliciting clients or (ii) providing investment advice to the investment adviser s clients, each of which is a specific and separate unlawful act. See Barbernell at 251. In the first instance, the defined prohibited act is soliciting potential clients for the investment adviser whereas in the second, the prohibited act is the advising of existing clients of the investment adviser. Moreover, because of this difference in client status, the two different acts cannot overlap or be committed at the same time. The State must elect a particular act Paxton allegedly committed either soliciting or advising for which to prosecute him. 2 As such, Paxton is entitled to proper notice in the Indictment of the crime for which he is accused of committing so that he may prepare a defense. 2 Soliciting and advising are two different acts, not two methods of proving the same act as occurred in Barbernell, a DWI case. As the Barbernell Court noted, [t]he State s choice between the method of proving intoxication [ loss of faculties or per se ] does not in any sense determine what acts, conduct or behavior of the accused that the State will rely on. Rather, the choice concerns the type of evidence the State will rely upon to show particular conduct by the accused driving or operating a vehicle performed while a particular circumstance intoxication existed. Barbernell at 256 (internal citations omitted). Similarly, rules promulgated by the Texas State Securities Board provide that rendering services can be made by personal contact, mail, telegram, telephone, wireless, electronic communication, or any other form of oral or written communication. 7 TEX. ADMIN. CODE 116.1(a)(5)(C) (Vernon 2012). For Failure to State an Offense 5 5

6 C. Paxton is entitled to Notice of the Investment Adviser Represented The Indictment also fails to provide Paxton with adequate notice because it fails to allege the Investment adviser he supposedly represented at the time of the alleged offense. Paxton believes that the investment adviser whom he is alleged to have represented is Mowery Capital Management, but it is not so stated in the indictment and should have been. The actual existence of a principal investment adviser is not only necessary in order to prove the commission of the offense, but the identification of that investment adviser is necessary for Paxton to present a defense, confront and cross-examine his accusers. This is, in part, because not all investment advisers or investment adviser representatives are required to register under the Act. See TEX. REV. CIV. STAT. ANN. ART and (Vernon 2011). The representative s duty to register under the Act arises from the status of the investment adviser under the Act. Id. The identity of the principal investment adviser and duty to register under the act are material facts that must be proven beyond a reasonable doubt by the attorneys pro tem. Without knowing the investment adviser s identity, Paxton cannot investigate or challenge the existence of the duty to register as an investment adviser representative under the Act. Paxton is entitled to proper notice of the identity of the investment adviser he is accused of representing in the indictment, which it fails to provide. For Failure to State an Offense 6 6

7 III. INDICTMENT FAILS TO ALLEGE ESSENTIAL ELEMENTS OF THE CRIME Any element of an offense that must be proved should be stated in the Indictment, leaving nothing to inference or intendment. TEX. CODE CRIM. PROC. ART , Green v. State, 951 S.W.2d 3, 4 (Tex. Crim. App. 1997). If an indictment fails to allege an offense, it is so defective that it cannot vest jurisdiction. TEX. CONST. art. V, 12(b); Studer v. State, 799 S.W.2d 263, (Tex. Crim. App. 1990). The Indictment against Paxton fails in both regards, by omitting the manner and means and by omitting an element as required by this [Texas Securities] Act. it leaves much to inference or intendment and fails to allege an offense, thus depriving this Court of jurisdiction. A. Manner and Means is an Essential Element Omitted from the Indictment. Rendering services as an investment adviser representative is an element of the offense in the Indictment against Paxton. See TEX. REV. CIV. STAT. ANN. Art (I). However, the offense may be statutorily committed by one of two alternate manners and means. See II, above; TEX. REV. CIV. STAT. ANN. Art (P). Neither of these is alleged in the Indictment. See Exhibit A. Nevertheless, one of these alternative acts by an accused must be proved and so is required to be stated in the Indictment. See TEX. CODE CRIM. PROC. ART Failure to state manner and means leaves the Defendant and the Court to infer from For Failure to State an Offense 7 7

8 the Indictment the intended activity it seeks to call a violation, thus fails to state a criminal offense. TEX. CODE CRIM. PROC. ART ; Green, 951 S.W.2d at 4. As a result, it is so defective it cannot vest jurisdiction in this Court and must be dismissed. See TEX. CONST. art. V, 12(b); TEX. CODE CRIM. PROC. ART ; Green, 951 S.W.2d at 4; Studer, 799 S.W.2d at ; Posey, 545 S.W.2d at 163. B. Indictment Omits Allegation that Paxton Required to Register by the Texas Securities Act. The requirement that Paxton be registered under the Act is an essential element of the offense charged and must be pleaded in the indictment and proven at trial. Not all investment adviser representatives are required to register under the Act. See TEX. REV. CIV. STAT. ANN. ART and (Vernon 2011). Absent a duty to register there cannot have been a crime for rendering services as an investment adviser representative while not registered. Section 29(I) of the Act explicitly provides: Any person who shall [....] render services as an investment adviser or an investment adviser representative without being registered as required by this Act shall be deemed guilty of a felony of the third degree. TEX. REV. CIV. STAT. ANN. ART (I)(Vernon 2011)(emphasis added). The Indictment makes no reference to the registration provisions of the Act or to any specific requirement to register. As a result the indictment fails to allege For Failure to State an Offense 8 8

9 an offense by Paxton or vest this Court with jurisdiction to proceed and should be dismissed. IV. CONCLUSION Paxton moves that the Court grant this Motion to Quash Indictment No for Failure to Give Adequate Notice of Specific Charges and for Failure to State an Offense and that the Indictment in this case be quashed and dismissed. Respectfully submitted, HILDER & ASSOCIATES, P.C. /s/ Philip H. Hilder Dan Cogdell Philip H. Hilder CO-LEAD COUNSEL CO-LEAD COUNSEL Cogdell Law Firm, PLLC State Bar No Main Street, 4 th Floor Q. Tate Williams Houston, Texas State Bar No Telephone: (713) Lovett Blvd. Facsimile: (713) Houston, Texas dan@cogdell-law.com Telephone: (713) Facsimile: (713) philip@hilderlaw.com tate@hilderlaw.com Terri Moore Bill Mateja 300 Burnett St., Ste. 160 Fish & Richardson, P.C. Fort Worth, TX Main Street, Suite 5000 Telephone: (817) Dallas, Texas moore@terrimoorelaw.com Telephone: (214) mateja@fr.com For Failure to State an Offense 9 9

10 Heather J. Barbieri Barbieri Law Firm, P.C Gables Court Plano, Texas Telephone: (972) Facsimile: (972) ATTORNEYS FOR DEFENDANT, WARREN KENNETH PAXTON, JR. CERTIFICATE OF SERVICE I hereby certify that on November 2, 2015, a true and correct copy of the above and foregoing Motion was served on all counsel of record via , electronic filing, certified mail, return receipt requested, or by hand delivery. /s/ Philip H. Hilder Philip H. Hilder CERTIFICATE OF CONFERENCE Since this is a contested Motion to Quash, the Court should treat this Motion as Contested. /s/ Philip H. Hilder Philip H. Hilder For Failure to State an Offense 10 10