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State v. Morley

Court of Appeals of Kansas

August 16, 2019

State of Kansas, Appellant,
v.
Ronald D. Morley, Appellee.

         SYLLABUS BY THE COURT

         1. A sentencing court is required to impose the presumptive sentence provided by the Kansas Sentencing Guidelines Act, K.S.A. 2018 Supp. 21-6815(a), unless the court finds substantial and compelling reasons to impose a departure sentence.

         2. A substantial and compelling reason to depart downward from a presumptive sentence is a mitigating factor. Although K.S.A. 2018 Supp. 21-6815(c)(1)(A)-(E) provides a list of potential mitigating factors, the list is nonexclusive, and a sentencing court may rely on nonstatutory factors to depart if they are consistent with the principles underlying the Kansas Sentencing Guidelines Act.

         3. A defendant's acceptance of responsibility may be a valid nonstatutory mitigating factor in support of a departure sentence.

         4. If a sentencing court determines that a departure sentence is warranted, it must state on the record at the time of sentencing the substantial and compelling reasons for the departure and make findings of fact regarding those mitigating factors. K.S.A. 2018 Supp. 21-6815(a); K.S.A. 2018 Supp. 21-6817(a)(4).

         5. An appellate court's standard of review for departure decisions depends on the issue presented. When we consider whether the record supports an articulated mitigating factor for a departure sentence, we review for substantial competent evidence. Substantial competent evidence is evidence possessing both relevance and substance that a reasonable person could accept as being adequate to support a conclusion.

         6. When the record supports a valid, articulated mitigating factor, an appellate court applies an abuse of discretion standard to determine whether the mitigating factor constituted a substantial and compelling reason to depart in the particular case.

         7. Whether the factors relied upon by the sentencing court constitute substantial and compelling reasons for departure from the sentencing guidelines is a question of law with no deference given to the sentencing court. The term "substantial" refers to something that is real, not imagined; something with substance and not ephemeral. The term "compelling" implies that the court is forced, by the facts of a case, to leave the status quo or go beyond what is ordinary. The question is whether the departure factors, as a whole, are substantial and compelling reasons for imposing a departure sentence in light of the offense of conviction, the defendant's criminal history, and the purposes of the sentencing guidelines. The analysis of this question is twofold: first, whether a particular reason given by the sentencing court is a valid departure factor and, second, whether the reasons, as a whole, are substantial and compelling reasons for departure in a given case.

         8. Reasons which may in one case justify a departure, may not in all cases justify a departure. Rather, the inquiry must evaluate the crime and the departure factors as a whole to determine whether departure in a particular case is justified. It is a question of what weight to give each reason stated and what weight to give the reasons as a whole in light of the offense of conviction and the defendant's criminal history. The inquiry also considers the purposes and principles of the Kansas Sentencing Guidelines.

         9. If an appellate court concludes that the sentencing court's factual findings are not supported by evidence in the record or do not establish substantial and compelling reasons for a departure, the appellate court must remand the case to the sentencing court for resentencing. K.S.A. 2018 Supp. 21-6820(f).

         10. Under the facts of this case, we hold that while a defendant's acceptance of responsibility may be a valid nonstatutory mitigating factor in support of a downward durational departure sentence, in this case there was no substantial competent evidence to support the factor that the defendant accepted responsibility for his crimes. Moreover, assuming there was substantial competent evidence to support this mitigating factor, the district court erred in its legal conclusion that this factor was real, substantial, and compelling such that the district court was forced by the case facts to abandon the status quo, venture beyond presumptive prison sentences, and grant probation.

          Appeal from Shawnee District Court; Mark S. Braun, judge.

          Stacy Edwards, assistant attorney general, and Derek Schmidt, attorney general, for appellant.

          James C. Heathman, of Heathman Law Office PA, of Topeka, for appellee.

          Before Buser, P.J., Pierron and Bruns, JJ.

          BUSER, J.

         This is an appeal by the State of Kansas of the district court's granting of dispositional departure sentences to Ronald D. Morley. Upon our review, we hold the district court erred in two respects. First, the district court's finding that Morley accepted responsibility for his actions was not supported by substantial competent evidence. Second, assuming there was substantial competent evidence in support of this departure factor, that basis did not constitute a substantial and compelling reason to depart under the totality of circumstances in this case. Accordingly, the judgment of the district court is reversed, the sentences are vacated, and the case is remanded to the district court for resentencing.

         Factual and Procedural Background

         On November 3, 2016, Morley was indicted on 12 felony counts. In particular, he was charged with four counts of securities fraud in violation of K.S.A. 17-12a501; four counts of sale of an unregistered security in violation of K.S.A. 17-12a301; and four counts of acting as an unregistered issuer agent in violation of K.S.A. 17-12a402. According to the indictment, the crimes occurred from December 2011 through April 2013. The indictment further alleged that four Kansas investors lost a total of $845, 900 as a consequence of Morley's criminal conduct.

         Prior to trial, a plea agreement was reached between the State and Morley. The agreement provided that Morley would plead no contest to one count of securities fraud, a severity level 4 nonperson felony, and one count of acting as an unregistered issuer agent, a severity level 5 nonperson felony. The State agreed to dismiss the rest of the charges in the original indictment. The State also agreed to recommend that the sentences run concurrent. For his part, Morley agreed that "he owes restitution to all victims listed in the amended indictment but does not agree to the amount." Under the agreement, the parties were permitted to argue the amount of restitution and all other aspects of the sentence.

         Punishment for both convictions was presumptive prison, although the charge of acting as an unregistered issuer agent was a border box offense on the sentencing grid. Of note, Morley's convictions were also subject to a special rule which provides that any violation of the Kansas Uniformed Securities Act (KUSA) shall be presumed imprisonment if the violation resulted in a loss of $25, 000 or more. See K.S.A. 2018 Supp. 17-12a508(a)(5).

         On March 23, 2018, Morley pled no contest to an amended indictment in accordance with the plea agreement. Subsequently, the State submitted a sentencing memorandum summarizing the factual basis for the pleas as stated at the plea hearing:

"In brief, Mr. Morley sold preferred stock shares in Summit Trust Company to four Kansas investors: [B.A.], [T.A.-F.], [L.H.], and [D.R.]. Mr. Morley counseled the victims the preferred stock was a safe investment with a guaranteed 6% quarterly dividend, and he further advised the victims the preferred stock was a good fit for their stated investment goals and avowed low risk tolerances. The victims relied entirely on Mr. Morley's representations in making their preferred stock purchases, as Mr. Morley failed to provide any of the victims with a prospectus or offering memorandum. Contrary to Mr. Morley's representations, the preferred stock investment was high risk and low liquidity and was only open to accredited investors. Mr. Morley knew none of the Kansas investors qualified as accredited investors, and yet nonetheless sold the Kansas victims the preferred stock securities. In addition, Mr. Morley failed to notify the victims he had been permanently barred from the securities and investment advisory business in Maryland after a 2006 consent order issued by the Securities Commissioner of Maryland.
"Mr. Morley was not and never has been registered to sell securities in Kansas as an issuer agent. Mr. Morley earned between a 5.2% and 6% commission for the Kansas victims' purchase of preferred stock.
"[B.A.] invested a total of $352, 500 in the Summit Trust preferred stock; [T.A.-F.] invested $252, 400; [L.H.] is invested $150, 000; and [D.R.] also invested $150, 000. [T.A.-F.] redeemed $29, 000 in preferred stock shares over time (leaving a remaining principal of $223, 400), and [D.R.] redeemed $30, 000 in preferred shares (leaving a remaining principal of $120, 000).
". . . None of the Kansas investors have been able to recover any of their lost principal."

         The State calculated a total loss to the four Kansas investors of $845, 900. For his role in selling the stock to these investors, Morley received $50, 154 in commissions. Morley acknowledged receiving about $3 million in commissions over a 10-year period from sales of Summit Trust Company (Summit) stock throughout the United States.

         Before sentencing, Morley filed a motion for durational and dispositional departure sentences. In support of the motion, Morley asserted that a departure was appropriate "because of (1) his minor role in the offense; (2) similarly situated defendants have also received downward departures; [and] (3) his lack of criminal background, lack of danger to the public, his role in mitigating damage to his clients, providing restitution and his cooperation with the SEC and other investigators."

         Sentencing occurred on July 3, 2018. During the hearing, Morley testified in support of the motion and three investors, B.A., D.R., and his wife, addressed the court and read victim statements. Four exhibits were admitted in evidence, including documents relating to the Summit stock offering and a 2006 consent order issued by the Maryland Securities Commissioner permanently barring Morley from the securities and investment advisory business in Maryland.

         At the conclusion of the hearing, the district court sentenced Morley to 41 months' imprisonment upon his conviction for securities fraud and 32 months' imprisonment upon his conviction for acting as an unregistered issuer agent. The sentences were ordered to run concurrent. The district court granted Morley's motion for dispositional departure sentences based on the nonstatutory factor that Morley accepted responsibility for his crimes. The district judge reasoned:

"[T]he ground that I'm relying on is to the extent that I believe it's-much of it is true is the taking of responsibility. I do think that whether it was entering the plea to . . . two counts, he did agree to pay restitution as ordered and to me, that's part of the focus of responsibility. The other part is he did plea. He plead[ed] no contest, but he certainly acknowledged and he understood he was going to be found guilty.
. . . .
". . . It's the overall issue of accepting responsibility by entering a plea to the two offenses and agreeing to pay restitution is where I'm hanging my hat on."

         Morley was placed on probation for 36 months and ordered to pay $845, 900 in restitution.

         After sentencing, Morley objected to the State's proposed journal entry which listed the sole basis for the district court's dispositional departure as "[d]efendant took responsibility for his actions." See Supreme Court Rule 170(d) (2019 Kan. S.Ct. R. 222). At the hearing held to resolve the language in the journal entry, the district judge approved the State's wording, stating, "That single ground was the one the Court relied on and still feels it was a substantial and compelling reason to depart. Court does note that it was the single ground of the defendant taking responsibility that moved me to grant the dispositional departure in this matter." The journal entry of judgment signed and filed by the district court stated: "Reasons Cited as Basis for Departure: Defendant took responsibility for his actions."

         The State filed a notice of appeal contesting the district court's granting of the dispositional departure sentences.

         Kansas Law Regarding Departure Decisions and Standards of Review

         The State presents two contentions on appeal. First, it asserts: "The district court's decision that the record supported an articulated reason for departure, namely Morley's acceptance of responsibility, is not supported by substantial competent evidence." Second, the State posits: "Even if the record supported the existence of the acceptance-of-responsibility departure factor, the district court abused its discretion in granting Morley's motion for departure." In response, Morley submits the district court's departure decision was supported by substantial competent evidence and "[t]he district court's reasons are valid for departure."

         We begin with a summary of Kansas law applicable to departure decisions and our standards of appellate review. A sentencing court is required to impose the presumptive sentence provided by the Kansas Sentencing Guidelines Act (KSGA), K.S.A. 2018 Supp. 21-6815(a), unless the district court finds substantial and compelling reasons to impose a departure sentence. State v. Theurer, 50 Kan.App.2d 1203, Syl. ¶ 1, 337 P.3d 725 (2014). A substantial and compelling reason to depart downward from a presumptive sentence is a mitigating factor. 50 Kan.App.2d 1203, Syl. ¶ 2.

         Although K.S.A. 2018 Supp. 21-6815(c)(1)(A)-(E) provides a list of potential mitigating factors, the list is nonexclusive, and a sentencing court may rely on nonstatutory factors to depart if they are consistent with the principles underlying the KSGA. 50 Kan.App.2d 1203, Syl. ¶ 3. Of particular importance in this appeal, "[a] defendant's acceptance of responsibility may be a [nonstatutory] mitigating factor in support of a departure sentence." 50 Kan.App.2d at 1232. This is because "[r]ecognizing a defendant's acceptance of responsibility as a nonstatutory departure factor is consistent with the underlying principles of and legislative purposes behind enacting the [KSGA]." State v. Bird, 298 Kan. 393, Syl. ¶ 3, 312 P.3d 1265 (2013).

         If, as in this case, a sentencing court determines that a departure sentence is warranted, it must state on the record at the time of sentencing the substantial and compelling reasons for the departure and make findings of fact regarding those mitigating factors. See K.S.A. 2018 Supp. 21-6815(a); K.S.A. 2018 Supp. 21-6817(a)(4); State v. Reed, 302 Kan. 227, Syl. ¶ 7, 352 P.3d 530 (2015).

         On appeal-with reference to the first issue presented by the State-an appellate court's standard of review provides that we review for substantial competent evidence to ascertain if the record supports an articulated mitigating factor for a departure sentence. Substantial competent evidence is evidence possessing both relevance and substance that a reasonable person could ...


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