SECURITY FRAUD
CAUSE NO. «CAUSENO»
THE STATE OF TEXAS § IN THE «COURTNO» DISTRICT COURT
VS. § OF HARRIS COUNTY, TEXAS
«DEFENDANT» § «MONTH» TERM, A. D., «YEAR»
Members of the Jury:
Our statutes provide that it shall be unlawful for any person, either directly or indirectly, to engage in any fraud or fraudulent practice in connection with the sale, offering for sale, delivery, invitation of offers to sell, or dealing in any other manner in any security or securities, whether or not the transaction or security is exempt from registration under the Texas Securities Act.
The terms "fraud" or "fraudulent practice" includes an intentional failure to disclose a material fact. An omitted fact is "material" if there is a substantial likelihood that it would have assumed actual significance in the deliberations of a reasonable investor, in that it would have been viewed by the reasonable investor as significantly altering the total mix of available information used in deciding whether to invest.
The term "security" or "securities" shall include any limited partner interest in a limited partnership, share, stock, treasury stock, stock certificate under a voting trust agreement, collateral trust certificate, equipment trust certificate, preorganization certificate or receipt, subscription or reorganization certificate, note, bond, debenture, mortgage certificate or other evidence of indebtedness, any form of commercial paper, certificate in or under a profit sharing or participation agreement, certificate or any instrument representing any interest in or under an oil, gas or mining lease, fee or title, or any certificate or instrument representing or secured by an interest in any or all of the capital, property, assets, profits or earnings of any company, investment contract, or any other instrument commonly known as a security, whether similar to those herein referred to or not. The term applies regardless of whether the "security" or "securities" are evidenced by a written instrument. Provided, however, that this definition shall not apply to any insurance policy, endowment policy, annuity contract, optional annuity contract, or any contract or agreement in relation to and in consequence of any such policy or contract, issued by an insurance company subject to the supervision or control of the Texas Department of Insurance when the form of such policy or contract has been duly filed with the Department as required by law.
The terms "sale" or "offer for sale" or "sell" shall include every disposition, or attempt to dispose, of a security for value. The term "sale" means and includes contracts and agreements whereby securities are sold, traded or exchanged for money, property or other things of value, or any transfer or agreement to transfer, in trust or otherwise. Any security given or delivered with or as a bonus on account of any purchase of securities or other thing of value, shall be conclusively presumed to constitute a part of the subject of such purchase and to have been sold for value. The term "sell" means any act by which a sale is made, and the term "sale" or "offer for sale" shall include a subscription, an option for sale, a solicitation of sale, an attempt to sell, or an offer to sell, directly or by an agent or salesman, by a circular, letter, or advertisement or otherwise, including the deposit in a United States Post Office or mail box or in any manner in the United States mails within this State of a letter, circular or other advertising matter.
A person acts intentionally, or with intent, with respect to the nature of his conduct or to a result of his conduct when it is his conscious objective or desire to engage in the conduct or cause the result.
This State has jurisdiction over an offense that a person commits by his own conduct if either the conduct or a result that is an element of the conduct occurs inside this State.
All persons are parties to an offense who are guilty of acting together in the commission of the offense. A person is criminally responsible as a party to an offense if the offense is committed by his own conduct, by the conduct of another for which he is criminally responsible, or by both.
A person is criminally responsible for an offense committed by the conduct of another if, acting with the kind of culpability required for the offense, he causes or aids an innocent or non-responsible person to engage in conduct prohibited by the definition of the offense, or acting with intent to promote or assist the commission of the offense, he solicits, encourages, directs, aids, or attempts to aid the other person to commit the offense. Mere presence alone will not constitute one a party to an offense.
Now therefore, if you find from the evidence beyond a reasonable doubt that heretofore on or about various dates between February 15, 1994 and July 25, 1994, in Harris County, Texas, the defendant, «DEFENDANT1», acting alone or with (PARTIES) as a party to the offense, as that term is hereinbefore defined, did then and there unlawfully, or intentionally, pursuant to one scheme and continuing course of conduct, directly or indirectly, offer for sale, and/or sell securities, namely, a subordinated debenture issued by The Murchison Group, Inc., to (COMPLAINANTS), who are hereafter referred to as the complainants, and did obtain money in an aggregate amount of one hundred thousand dollars or more from the sale of said securities to the above complainants, and the defendant did then and there directly or indirectly engage in fraud by intentionally failing to disclose to the complainants the following material fact or facts which was/were known to the defendant and the defendant intentionally failed to disclose said fact or facts to the complainants for the purpose of inducing the complainants to purchase the said securities;
(1) That Hurst-Murchison Corporation, an affiliated entity of Murchison Group, Inc., and its predecessor in interest, had previously sold approximately $450,000.00 of similar subordinated debentures in 1992, and the defendant had directly and/or indirectly represented to the 1992 debenture purchasers that the 1992 debentures were collateralized or secured by United States Treasury Notes, when in fact only approximately $300,000.00 in Treasury Notes were purchased or acquired to collateralize or secure the investments of the 1992 debenture purchasers, and said Treasury Notes were sold in approximately July of 1993, and that the revenues from the sale of 1992 subordinated debentures, and from the subsequent sale in approximately July of 1993 of the approximate $300,000.00 in United States Treasury Notes were placed in the general operating business bank account of Murchison Investment Bankers, Inc., also known as Murchison Investment Bankers, Ltd., and expended for the general operating expenses of the affiliated companies, Murchison Group, Inc., and the Murchison Investments Bankers, Inc., and/or for the personal use of Burrell Murchison, Chairman/Chief Executive Officer of the Hurst-Murchison Corporation and/or Murchison Group, Inc., and (PARTIES), President of the Hurst-Murchison Corporation and/or The Murchison Group, Inc.
(2) That Murchison Investments Bankers, Inc., an affiliated company of The Murchison Group, Inc., an entity substantially responsible for producing the revenue and income of Murchison Group, Inc., had sustained net operating losses of approximately $77,000.00 in January of 1994; and/or approximately $112,000.00 in February of 1994; and/or approximately $211,000.00 in March of 1994; and/or approximately $155,000.00 in April of 1994; and/or approximately $75,000.00 in May of 1994; and/or approximately $25,000.00 in June of 1994; and/or approximately $75,000.00 in July of 1994.
(3) That Murchison Investments Bankers, Inc., sold substantially its entire owned inventory of securities between approximately April 15, 1994 and June 24, 1994, thereby reducing Murchison Investment Bankers, Inc.’s, net capitalization balances to limits less than permissible under the rules and regulations of the National Association of Securities Dealers.
(4) That the 1993 financial statements used by Murchison Investment Bankers, Inc., to promote the sale of the Instant Securities were outdated and showed the company to be in a positive, viable condition when in fact, the company needed revenues generated from the sale of the Instant Debentures to meet its ordinary operating expenses.
(5) That revenues from the sale of the Instant Debentures Securities were needed for operating expenses and costs of The Murchison Group, Inc., and its affiliated companies, and to pay interest to purchasers of the 1992 aforementioned subordinated debentures and for the personal use of the aforementioned Burrell Murchison and (PARTIES).
then you will find the defendant guilty as charged in the indictment.
Unless you so find from the evidence beyond a reasonable doubt, or if you have a reasonable doubt thereof, you will acquit the defendant and say by your verdict "Not Guilty."
You are instructed that if you find beyond a reasonable doubt that there is evidence in this case in regard to the defendant’s having participated in recent transactions other than, but similar to, the transaction for which he is now on trial, you cannot consider such other transactions for any purpose unless you find and believe beyond a reasonable doubt that the defendant did participate in such other transactions, if any, and even then you may only consider the same in determining the intent of the defendant and knowledge of the defendant, if any, in connection with the transaction, if any, alleged against him in the indictment in this case, and for no other purpose.
Our law provides that a defendant may testify in his own behalf if he elects to do so. This, however, is a right accorded a defendant, and in the event he elects not to testify, that fact cannot be taken as a circumstance against him.
In this case, the defendant has elected not to testify and you are instructed that you cannot and must not refer to or allude to that fact throughout your deliberations or take it into consideration for any purpose whatsoever as a circumstance against him.
A Grand Jury indictment is the means whereby a defendant is brought to trial in a felony prosecution. It is not evidence of guilt nor can it be considered by you in passing upon the question of guilt of the defendant. The burden of proof in all criminal cases rests upon the State throughout the trial and never shifts to the defendant.
All persons are presumed to be innocent and no person may be convicted of an offense unless each element of the offense is proved beyond a reasonable doubt. The fact that he has been arrested, confined, or indicted for, or otherwise charged with the offense gives rise to no inference of guilt at his trial. The law does not require a defendant to prove his innocence or produce any evidence at all. The presumption of innocence alone is sufficient to acquit the defendant, unless the jurors are satisfied beyond a reasonable doubt of the defendant's guilt after careful and impartial consideration of all the evidence in the case.
The prosecution has the burden of proving the defendant guilty and it must do so by proving each and every element of the offense charged beyond a reasonable doubt and if it fails to do so, you must acquit the defendant.
It is not required that the prosecution prove guilt beyond all possible doubt; it is required that the prosecution's proof excludes all "reasonable doubt" concerning the defendant's guilt.
A "reasonable doubt" is a doubt based on reason and common sense after a careful and impartial consideration of all the evidence in the case. It is the kind of doubt that would make a reasonable person hesitate to act in the most important of his own affairs.
Proof beyond a reasonable doubt, therefore, must be proof of such a convincing character that you would be willing to rely and act upon it without hesitation in the most important of your own affairs.
In the event you have a reasonable doubt as to the defendant's guilt after considering all the evidence before you, and these instructions, you will acquit him and say by your verdict "Not Guilty."
You are the exclusive judges of the facts proved, of the credibility of the witnesses and the weight to be given their testimony, but the law you shall receive in these written instructions, and you must be governed thereby.
After you retire to the jury room, you should select one of your members as your Foreman. It is his or her duty to preside at your deliberations, vote with you, and when you have unanimously agreed upon a verdict, to certify to your verdict by using the appropriate form attached hereto and signing the same as Foreman.
During your deliberations in this case, you must not consider, discuss, nor relate any matters not in evidence before you. You should not consider nor mention any personal knowledge or information you may have about any fact or person connected with this case which is not shown by the evidence.
No one has any authority to communicate with you except the officer who has you in charge. After you have retired, you may communicate with this Court in writing through this officer. Any communication relative to the cause must be written, prepared and signed by the Foreman and shall be submitted to the court through this officer. Do not attempt to talk to the officer who has you in charge, or the attorneys, or the Court, or anyone else concerning any questions you may have.
Your sole duty at this time is to determine the guilt or innocence of the defendant under the indictment in this cause and restrict your deliberations solely to the issue of guilt or innocence of the defendant.
Following the arguments of counsel, you will retire to consider your verdict.
«JUDGE», Judge Presiding
«COURTNO1» District Court
Harris County, TEXAS
CAUSE NO. «CAUSENO»
THE STATE OF TEXAS § IN THE «COURTNO» DISTRICT COURT
VS. § OF HARRIS COUNTY, TEXAS
«DEFENDANT» § «MONTH» TERM, A. D., «YEAR»
V E R D I C T
"We, the Jury, find the defendant, «DEFENDANT1», not guilty."
_____________________________________
Foreman of the Jury
_____________________________________
(Please Print) Foreman
"We, the Jury, find the defendant, «DEFENDANT1», guilty of «OFFENSE», as charged in the indictment."
_____________________________________
Foreman of the Jury
_____________________________________
(Please Print) Foreman
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