Case Summary
Jerry Smith appeals his forty-year sentence and order of restitution following his convictions for five counts of Class C felony conducting business as a broker-dealer without registering with the Indiana Secretary of State. We reverse and remand.
Issues
The issues we address are:
- whether the trial court properly ordered Smith to pay $410,189.16 in restitution to the five victims; and
- whether Smith’s forty-year sentence violates statutory limits on sentences for a single episode of criminal conduct.
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[In Smith’s first] appeal, this court held the trial court erred in failing to dismiss counts 1 through 5 of the information, which [violated I.C. § 35-41-4-5’s statutory double jeopardy protections from prosecution by dual sovereigns; Smith had already pleaded guilty in federal court to three charges relating to the same $8.9 million Ponzi scheme, and been ordered to pay $5 million in restitution to the defrauded investors.] However, we held that Smith could face prosecution under counts 6 through 10 for engaging in business as a broker-dealer without having registered as a broker-dealer. [Citation omitted.]
On remand following the appeal, Smith elected to plead guilty to the remaining counts of the information, with sentencing left to the trial court. At the sentencing hearing, counsel for Smith noted that he had already been ordered to pay restitution to the Indiana victims of the Ponzi scheme in the federal proceeding and requested that Smith not be ordered to pay restitution twice. … The trial court imposed maximum sentences of eight years for each conviction, to be served consecutively for a total term of forty years, with twenty years suspended to probation. It also ordered Smith to pay a total of $410,189.16 in restitution to the victims. Smith now appeals.
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I. Restitution
We first address Smith’s claim that the trial court erred in ordering him to pay restitution to the Indiana victims of the Ponzi scheme. …
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… [Our] opinion [in the first appeal] clearly held that Smith could face prosecution on state charges of failing to register as a broker-dealer because they were entirely different in nature than the federal convictions related to defrauding investors. Our first opinion is the law of the case on that question. Also, the federal charges led to restitution orders with respect to Smith’s Indiana victims. It was Smith’s conduct as charged in federal court that led to the victim’s losses, not his failure to register as a broker-dealer. The State fails to adequately demonstrate that there was anything about Smith’s failure to register as a broker-dealer that caused financial loss to the victims. Smith also did not explicitly agree to pay restitution with respect to these charges. As such, we conclude there is an inadequate legal and factual basis for awarding restitution under Smith’s failure to register as a broker-dealer charges.
We reverse the award of restitution in this case. …
II. Single Episode of Criminal Conduct
Next, we address Smith’s argument that his five convictions for failing to register as a broker-dealer constituted a single episode of criminal conduct subject to statutory limitations on sentencing for such crimes. … Here, all of Smith’s convictions were for Class C felonies. The advisory sentence for a Class B felony was ten years. I.C. § 35-50-2-5(a). Smith received a sentence of forty years.
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… [W]e conclude that Smith committed one single episode of criminal conduct by failing to register as a broker-dealer with the Secretary of State and then knowingly proceeding to transact business without having done so. The precise number of times that Smith transacted business is not the gravamen of the offense; rather, it is his initial failure to register. That failure is a grievance against the Secretary of State and the State as a whole, which by itself did not result in direct harm to the victims. [Citation omitted.]
Therefore, regardless of Smith’s subsequent acts of transacting business without having first registered as a broker-dealer, such acts constitute a single episode of criminal conduct for purposes of Indiana Code Section 35-50-1-2(c). As such, the total sentence Smith may receive is ten years, the advisory sentence for a Class B felony. We reverse the imposition of the forty-year sentence and remand for the trial court to craft a sentence that complies with this opinion, including recalculation of suspended time Smith may receive, if any. …
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Reversed and remanded.
Kirsch, J., and Najam, J., concur.