BY THE COURT
Whether jurisdiction exists is a question of law over which
appellate courts have unlimited review.
purpose of the Kansas Securities Act is to provide rigid
governmental regulation and control over the promoting and
selling of speculative securities in order to protect both
investors and the public.
Kansas Securities Act is patterned after the Uniform
Securities Act that, in turn, is modeled after the Federal
Securities Act. Accordingly, Kansas courts may look to
decisions of federal courts as well as decisions from other
states that have adopted the Uniform Securities Act for
guidance in interpreting the Kansas Securities Act in an
attempt to make its application uniform with other
K.S.A. 17-12a501 makes it unlawful for a person, in
connection with the offer, sale, or purchase of a security,
to make an untrue statement of material fact or to omit a
material fact. It is also unlawful to engage in an act,
practice, or course of business that operates as a fraud or
deceit upon another person.
Under K.S.A. 17-12a610, Kansas courts have territorial
jurisdiction over a person that sells or offers to sell a
security in this state. Likewise, Kansas courts have
jurisdiction where the purchase or offer to purchase a
security is made and accepted in this state. An offer to sell
or to purchase a security is made in Kansas-whether or not
either party is then present in this state-if the offer
originates from within Kansas.
out-of-state offer originates from Kansas if any portion of
the selling process has occurred here or if there is some
territorial nexus between the offer and this state.
from Sedgwick District Court; Benjamin L. Burgess, judge.
E. Knutzen, deputy director of policy and senior staff
attorney, and Joshua A. Ney, Ryan A. Kriegshauser, and
Christopher D. Mann, of the Office of the Kansas Securities
Commissioner, and Derek Schmidt, attorney general, for
Richard Ney and David L. Miller, of Ney, Adams & Miller,
of Wichita, for appellee David G. Lundberg.
P. Kerns, of Ariagno, Kerns, Mank & White, LLC, of
Wichita, for appellee Michael L. Elzufon.
Zachary T. Knepper, deputy general counsel, and A. Valerie
Mirko, general counsel, of North American Securities
Administrators Association, Inc., of Washington, D.C., and
Alan V. Johnson, of Sloan, Eisenbarth, Glassman, McEntire
& Jarboe, L.L.C., of Topeka, for amicus curiae North
American Securities Administrators Association, Inc.
Bruns, P.J., McAnany and Buser, JJ.
State appeals from the district court's decision
dismissing 56 counts in each of two 61-count criminal
complaints filed against David G. Lundberg and Michael W.
Elzufon. The complaints alleged that Lundberg and Elzufon had
violated the Kansas Uniform Securities Act, K.S.A. 17-12a101
et seq. Specifically, the complaints asserted that
Lundberg and Elzufon unlawfully sold-or offered to
sell-unregistered securities and committed securities fraud.
district court consolidated the two cases for preliminary
hearing. Prior to the hearing, Lundberg filed a motion to
dismiss for lack of territorial jurisdiction because the
sales, offers to sell, and purchases occurred outside of
Kansas. Elzufon subsequently joined the motion to dismiss
and, prior to the completion of the preliminary hearing, the
district court dismissed the bulk of the charges against both
defendants for lack of territorial jurisdiction.
Subsequently, the State voluntarily dismissed the remaining
charges in order to appeal the district court's decision.
appeal, we find that the district court has territorial
jurisdiction over these cases pursuant to K.S.A. 17-12a610
because a portion of the securities selling process occurred
in this state. Furthermore, we find that there is a
sufficient territorial nexus between the actions of Lundberg
and Elzufon-as well as that of their limited liability
companies-to support jurisdiction in Kansas. Thus, although
we take no position on the merits of the criminal charges
brought against Lundberg and Elzufon, we reverse the district
court's decision to ...