01-1092-CR State v. Johnson

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By its plain terms, Wis. Stat. § 551.21(1) is violated through an offer to sell an unregistered security, even if no sale actually occurs. Therefore, the issuance of a promissory note or other writing is not a necessary element of a violation.

For the conviction that arose out of defendant’s 1992 offer to sell investor $12,500 of debentures for $5,000, there is a statutory presumption that the debentures are securities, see Wis. Stat. § 551.02(13)(a).

As to the conviction that arose out of the loans made in 1996, we find that those loans were part of a pattern of solicitations that had been ongoing for years; there were no risk-reducing factors that would make the application of Wis. Stat. § 551.21(1) unnecessary; the evidence is sufficient to prove defendant violated § 551.21(1) by his offers to sell a right to receive a significant return on the loans.

Because we have determined that the family resemblance test is the appropriate analysis for a debt instrument under Wisconsin statutes, proof of horizontal commonality is not required in order to have the solicitation to loan money involve a security within the meaning of ch. 551.

The circuit court did not err in finding material misrepresentations in defendant’s (1) repeated assurances that he would repay two or three times the principal amount of the loans; (2) statements that commercial financing to cover the repayment was soon to be available; and (3) omission of back tax and fraud conviction information.

Affirmed.

Recommended for publication in the official reports.

Dist IV, Green County, Mittelstadt, J., Roggensack, J.

Attorneys:

For Appellant: Ralph A. Kalal, Monona; Michele Anne Tjader, Madison

For Respondent: Edwin J. Hughes, Madison; Gary L. Luhman, Monroe