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State v. West

Court of Appeals of Ohio, Twelfth District, Butler

February 20, 2018

STATE OF OHIO, Plaintiff-Appellee,
WILLIAM TROY WEST, Defendant-Appellant.


          Michael T. Gmoser, Butler County Prosecuting Attorney, Willa Concannon, Government Services Center, for plaintiff-appellee

          Rion, Rion & Rion, L.P.A., Inc., Jon Paul Rion, Jason D. Norwood, for defendant-appellant


          HENDRICKSON, P.J.

         {¶ 1} Defendant-appellant, William Troy West appeals from his convictions and sentence in the Butler County Court of Common Pleas for the sale of an unregistered security and the fraudulent act or practice in the sale of securities. For the reasons set forth below, we affirm West's convictions and sentence.

         {¶ 2} On May 7, 2015, West pled guilty to a bill of information that charged him with one count of the sale of an unregistered security in violation of R.C. 1707.44(C)(1) and one count of fraudulent acts or practices in the sale of securities in violation of R.C. 1707.44(G), both felonies of the second degree. The charges arose out of business dealings relating to a Texas company, North Shore Energy, LLC, that West and co-defendant, Catherine Schaper, were partners in. Between December 1, 2010 and September 10, 2011, West and Schaper sold unregistered promissory notes totaling more than $2.2 million to 18 investors to raise money for North Shore Energy to drill oil wells in Texas. [1] Sixteen of the sales took place in Butler County, Ohio.[2] Many of the investors were introduced to West, Schaper, and North Shore Energy through co-defendant Robert McManus. McManus hosted a radio show entitled "Safe Money America" where he pitched investments to listeners.

         {¶ 3} When selling the promissory notes to investors, West and Schaper failed to disclose the material fact that, at the time of the sales, North Shore Energy was engaged in litigation in Texas regarding its leasing rights to the land that it was purporting to prepare to drill the oil wells on. After two wells North Shore Energy drilled on were found to be "dry" and North Shore Energy lost its lawsuit in Texas, the company was unable to pay back money to the investors.

         {¶ 4} An investigation into West's, Schaper's, and North Shore Energy's activities was conducted, and each defendant faced 36 felony charges relating to the 18 sales of the promissory notes.[3] West, Schaper, and North Shore, represented by the same defense attorney, entered into a plea agreement with the state. Each defendant agreed to plead guilty to one count of the sale of an unregistered security and one count of fraudulent acts or practices in the sale of securities in exchange for the state's agreement not to pursue the remaining charges. The defendants executed written plea agreements. The plea agreement executed by West provided as follows:

Defendant will waive restitution limitation and agree to $2, 251, 712.26 in restitution to be divided as determined by the State among 18 victims to be specified, less any amounts that have been paid back to any of the 18 victims as will be provided by the State. All restitution is to be raised through fully legal means and in compliance with all federal, state and local laws. The defendants agree that any effort to raise restitution through illegal means will result in motion to the court to immediately set the matter for disposition.
The State and defendants agree that disposition will be delayed as may be recommended by the State or otherwise ordered by the court for the purpose of allowing defendants to continue legitimate efforts to raise restitution. Defendants agree to cooperate with the State by providing regular communications regarding efforts to raise restitution. Sentencing will be delayed at least until the trial court concludes proceedings on remand in the case of North Shore Energy LLC vs. John James Harkin et al, Goliad County Texas, case no. 10-08-9635CV and thereafter at the discretion of the State and the court.
The parties agree that the plea agreement shall be under seal of the court until final disposition of the case and that no press releases shall be issued pending unsealing [of] the case. Notwithstanding the sealing of the record, the State shall be allowed to communicate confidentially with the victims in the case for purposes of apprising them of case status and progress.
Upon payment of full restitution as provided herein, the State agrees to allow the defendants to withdraw all pleas in exchange for misdemeanor pleas to be further defined at that time.

(Emphasis added.)

         {¶ 5} Prior to accepting the defendants' guilty pleas, the trial court conducted a Crim.R. 11(C) colloquy and advised the defendants of the rights they were waiving. West and Schaper were advised that each of the second-degree felonies for which they intended to plead guilty carried a presumption of a prison term, that the prison term for each second-degree felony offense was between two and eight years, and that the maximum possible prison term was 16 years as the court could run the sentences consecutively. The defendants indicated they understood the rights they were waiving and the possible penalties they faced and stated that no promises, other than those set forth in their respective written plea agreements, had been made to induce their guilty pleas. West and Schaper further informed the court that they had discussed the plea agreements with their attorney and were "satisfied with the efforts of [their] attorney."

         {¶ 6} The court accepted North Shore Energy's, Schaper's, and West's pleas to the charges, noted that sentencing would be held in abeyance pursuant to the terms of the plea agreements, and sealed the proceedings to avoid any detriment to West's and Schaper's prospects for earning money to pay the agreed upon restitution. West and Schaper were released on their own recognizance and permitted to return to Texas.

         {¶ 7} In December 2016, the state provided notice that court proceedings in the Texas case had concluded, and it sought to unseal the proceedings against West, Schaper, and North Shore Energy and move forward with sentencing. The trial court scheduled a sentencing hearing for March 28, 2017. Defense counsel, on behalf of West, Schaper, and North Shore Energy, moved to continue sentencing to a later date as there had not been a final entry journalized in the Texas case and Schaper had been diagnosed with a serious medical condition that required immediate treatment. The court rescheduled sentencing for June 5, 2017. Defense counsel again moved to continue sentencing to a later date as Schaper was undergoing treatment for her medical condition and was under doctor's orders not to travel. Defense counsel argued it was in the interest of judicial economy to continue sentencing for all defendants "to avoid the inconvenience to the State and victims of having to travel to and prepare for two separate sentencing hearings." The trial court granted the continuance with respect to Schaper, but denied defense counsel's motion to continue sentencing for West and North Shore Energy.

         {¶ 8} On June 1, 2017, just four days prior to the sentencing hearing, defense counsel again moved to continue sentencing. Counsel argued that the defendants were seeking to "raise restitution through the ongoing activities of Challenger Water Solutions Company, which provides wastewater treatment services to the oil and gas drilling industry [and it was] * * * anticipated that this enterprise [would] generate substantial revenues to pay restitution in full or a major part thereof no later than July 1, 2017." Attached to defense counsel's motion for a continuance was a copy of a $54, 500 check, dated June 1, 2017, that the defendants had submitted as partial restitution. Defense counsel indicated that the funds "represented] income received from the operations of Challenger, which [is] now generating revenue, and expected to allow Defendants to continue to pay a minimum of $7, 500 per month in restitution for the foreseeable future, with a probability of greater amounts, depending on the speed of that business's growth."

         {¶ 9} The trial court denied the June 1, 2017 motion for a continuance. On June 5, 2017, West and North Shore Energy appeared before the court for sentencing with their shared defense counsel. McManus, represented by separate counsel, also appeared before the court for sentencing at this time.

         {¶ 10} West's defense counsel asked the court to impose community control sanctions on West, rather than a prison term, as West had "no prior criminal involvement at his age [of] 50" and the presentence investigation report ("PSI") indicated West was unlikely to reoffend. Defense counsel stated West was determined to repay the investors, had recently submitted $54, 500 in restitution, and was working diligently to make his new business, Challenger Water Solutions, a success so that he could pay the remaining restitution. Defense counsel noted he had "review[ed] the timeline of this case and there's not a single reason to believe that at any point when this was unfolding that Mr. West had an intent not to repay his investors, " and he pointed out that numerous letters had been sent to the court attesting to West's good character.

         {¶ 11} Defense counsel then invited West's mother, father, stepmother, girlfriend, and business partner in Challenger Water Solutions to speak on West's behalf. West's mother stated she was not sure whether West "had full knowledge of what went on here, " or whether he was actually "involved in speaking to any of [the] victims, " but she believed West had not intended to hurt anyone and was "willing to work very hard with his partner to repay" the investors. West's father stated his son was "probably guilty of a lack of due diligence and really the due diligence was given to his business partner at the time [Schaper] and he was unaware of the laws in the State of Ohio." West's father opined that West would "never knowingly defraud anyone" and his "only motivation at this point is to see that all of these investors are repaid in full." West's stepmother agreed with West's father's opinion, stating that it was "never [West's] intent to hurt any of the investors [or] to not be able to give them their money in full plus more."

         {¶ 12} West's girlfriend stated that "[t]here's nothing more that [West] wants than to see that all of [the investors] get paid back * * * so that everybody can move on with their lives." She claimed West had created a new business "for the sole purpose of getting everyone paid back, " that Schaper had nothing to do with the new business, and that the $54, 500 that had been paid in restitution "came from Mr. West's efforts alone." West's new business partner, Clint Layman, stated he and West had been working for the last two years to make Challenger Water Solutions profitable so that West could repay the investors. Layman indicated West had been upfront with him when Challenger Water Solutions was formed, telling him that he would likely have to forgo the profits from ...

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