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North Carolina v. Clemmons8/17/1993
Defendant argues that the trial court erred by failing to dismiss the count of the alleged violations of the North Carolina Securities Act (Chapter 78A of the General Statutes) and by failing to instruct the jury on the specific misrepresentation as alleged in the indictments on obtaining property by false pretenses (G.S. 14-100). As to the alleged Chapter 78A violations, we agree and reverse the judgments. As to the G.S. 14-100 charges, we find no error.
I.
Each verdict sheet for the alleged Chapter 78A violations appeared as follows:
We, the jury, unanimously return as our verdict that the defendant is:
1. Guilty of violating the North Carolina Securities Act by transacting business in securities on [applicable date], without being licensed or registered to do so by the North Carolina Secretary of State as a dealer or salesman, or
2. Not Guilty
In the North Carolina Securities Act (hereinafter "the Act"), G.S. 78A-36 (entitled "Registration requirement"), upon which these charges were based, provides:
(a) It is unlawful for any person to transact business in this State as a dealer or salesman unless he is registered under this Chapter. No dealer shall be eligible for registration under this Chapter, or for renewal of registration hereunder, unless such dealer is at the time registered as a dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934; any dealer specializing in church securities may be registered to offer or sell only those securities which are issued by churches located within this State.
G.S. 78A-36. One "who willfully violates" G.S. 78A-36(a) "shall upon conviction be punished as a Class I felon." G.S. 78A-57(a). "That penal statutes must be construed strictly is a fundamental rule. The forbidden act must come clearly within the prohibition of the statute, for the scope of a penal statute will not ordinarily be enlarged by construction to take in offenses not clearly described; and any doubt on this point will be resolved in favor of the defendant." {PA}
Page 572} State v. Heath, 199 N.C. 135, 138, 153 S.E. 855, 857 (1930) (interpreting former Chapter 78, Securities Law, which was repealed by Session Laws 1973, c. 1380, which enacted Chapter 78A of the General Statutes in its place, see G.S. 78A-1) (emphasis added) (citations omitted). Since G.S. 78A-36(a) is a criminal statute, we must utilize a strict construction. Heath, 199 N.C. at 138, 153 S.E. at 857.
The crux of our inquiry is whether defendant actually did "transact business" so as to come within the purview of G.S. 78A-36(a) by misrepresenting to the victims that he had invested their money in stock options when, in fact, defendant never purchased the stock options and when the State's evidence showed only that defendant gave the victims the false impression that he was a "broker" or "licensed broker." The State concedes that " he evidence showed that the Defendant was not a registered dealer or salesman" under the North Carolina Securities Act. See G.S. 78A-36 through G.S. 78A-40 (Article 5 -- entitled "Registration of Dealers and Salesmen"; requiring registration with the Secretary of State).
The first sentence of G.S. 78A-36(a) provides that "It is unlawful for any person to transact business in this State as a dealer or salesman unless he is registered unde
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