Jefferson County District Court No. 14CR2062 Honorable Philip
J. McNulty, Judge
J. Weiser, Attorney General, Brittany L. Limes, Assistant
Attorney General, Denver, Colorado, for Plaintiff-Appellee
A. Ring, Colorado State Public Defender, Rachel K. Mercer,
Deputy State Public Defender, Denver, Colorado, for
1 Defendant, Karl Christopher Baker, appeals the judgment of
conviction entered on jury verdicts finding him guilty of
three counts of securities fraud (fraud in the sale of a
security); three counts of theft ($20, 000 or more); and one
count of filing a false tax return. Because we conclude that
the prosecution's expert witness on securities
impermissibly testified to conclusions solely within the
jury's province, we reverse Baker's securities fraud
and theft convictions and remand for a new trial on those
counts. We affirm the conviction for filing a false tax
2 Baker and his business partner formed Aviara Capital
Partners, LLC (Aviara), in late 2009, planning to buy a
controlling interest in a bank, purchase the bank's
distressed assets (mostly loans secured by real estate), and
then sell those assets at a profit when the real estate
3 To fund this plan, Aviara needed investors. Baker sought
out potential investors, including four people named as
victims in this case: Donna and Lyal Taylor, Dr. Alan Ng, and
Stanley Douglas. According to the indictment, each chose to
invest in Aviara after Baker allegedly told them the
1. Their investments would go toward buying a distressed
2. "Class A" investors - larger, corporate
investors - were already lined up.
3. The amount of their investment that they could lose was
capped. (The Taylors alleged that Baker said they could lose
$30, 000 at most. Douglas said that he was told he could lose
no more than 25% of his investment. Ng understood that, in a
worst case scenario, he wouldn't make a profit.)
4. Baker wouldn't take a salary until Aviara was up and
running or profitable.
5. Aviara would hold their money in escrow.
6. They would get their principal back quickly (within a year
according to Ng and Douglas; within three to four months
according to the Taylors).
Taylor also alleged that Baker told her his mother was going
to invest in Aviara.
4 After the People indicated that Lillian Alves, the Deputy
Commissioner for the Colorado Division of Securities, would
testify at trial, defense counsel filed a motion in limine to
exclude her testimony, arguing (among other things) that her
proposed testimony would usurp the jury's role as fact
finder, would include determinations the jurors could make
themselves, wouldn't be helpful, would misstate the law,
and would serve "only to bolster and re-state the
charges, which of course are not evidence." The district
court denied that motion.
5 At trial, each investor testified that Baker had told them
that larger investors were about to jump in, there would be a
limit on their potential losses, Baker wasn't taking a
salary, and Aviara would hold their investments in escrow.
The Taylors and Douglas also testified that Baker told them
that all, or at least some, of their investment would go
directly toward purchasing the bank. And both the Taylors and
Ng testified that Baker told them they would get their
principal back quickly.
6 After the court qualified Alves as an expert in securities
law, she testified about the Colorado Securities Act and its
registration requirements, that securities law requires
"full and fair disclosure," that Baker had an
obligation to truthfully disclose material facts, and that
the shares of Aviara that Baker sold were securities. She
also testified at length about what statements or omissions
Baker had made to the investors, and whether those statements
and omissions were material. And she concluded that the
things Baker said would happen never occurred. Defense
counsel repeatedly objected to this testimony.
7 Baker didn't testify, but defense counsel vigorously
attacked the investors' credibility, arguing that the
statements attributed to Baker didn't make any sense,
particularly in light of the comprehensive documents Baker
had provided to the investors, which didn't include such
8 A jury found Baker guilty of the charges noted above, but
acquitted him ...