Ventures 7000 v. Acc

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

VENTURES 7000, LLC, et al., Plaintiffs/Appellants,

v.

ARIZONA CORPORATION COMMISSION, Defendant/Appellee

No. 1 CA-CV 21-0179
FILED 2-3-2022

Appeal from the Superior Court in Maricopa County
No. LC2020-000093-001
The Honorable Daniel J. Kiley, Judge

AFFIRMED

COUNSEL

Weiss Brown, Scottsdale
By Alan Baskin, Caroline Saunders
Counsel for Plaintiffs/Appellants

Arizona Corporation Commission, Securities Division, Phoenix
By James D. Burgess
Counsel for Defendant/Appellee
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MEMORANDUM DECISION

Presiding Judge Paul J. McMurdie delivered the Court’s decision, in which
Vice Chief Judge David B. Gass and Judge Angela K. Paton joined.

M c M U R D I E, Judge:

¶1 Vernon Twyman and Ventures 7000, LLC, (“Ventures”)
appeal from the superior court’s judgment affirming the Arizona
Corporation Commission’s order finding Twyman and Ventures liable for
unregistered securities sales by unregistered dealers or salespersons and
fraud in the purchase or sale of securities. We find no reversible error and
affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 In February 2016, the Arizona Corporation Commission
Securities Division1 issued a temporary order to cease and desist against
Twyman and Ventures after learning that several investors had been misled
into funding Twyman’s purported business operations. Investors explained
they were solicited for funds to finance projects to recover a stash of
priceless lead forgotten for centuries beneath a catholic church in Central
America and gold hidden in the Philippines by Japanese soldiers during
World War II. In February 2020, after a lengthy hearing before the
Commission’s Hearing Division,2 the Commission found Twyman and
Ventures liable for material misrepresentations and omissions made by
Ventures in connection with an offer or sale of securities. Twyman and
Ventures were also found responsible for inducing and participating in
unlawful sales made by Ventures’ joint partner, the Fortitude Foundation

1 See A.R.S. §§ 44-1811, -1813; Ariz. Admin. Code (A.A.C.)
§§ R14-3-109(G), R14-4-304 (securities division conducts investigations and
prosecutes enforcement actions on behalf of the Commission).

2 See A.R.S. § 44-1973(A); A.A.C. §§ R14-3-102(G), -109(A) (hearing
officer authorized by the Commission may preside over enforcement
hearings).

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(“Fortitude”). The Commission ordered Twyman and Ventures to pay
more than $744,000 in restitution.

¶3 Twyman and Ventures sought review of the Commission’s
order from the superior court, arguing the evidence did not support the
Commission’s findings, and they were denied due process because the
hearing violated their right to a jury trial and the Commission allowed a
victim investor to testify without being subject to cross-examination.
Viewing the facts in the light most favorable to affirming the Commission’s
decision, the superior court affirmed the order. It concluded that the
Commission’s findings were supported by substantial evidence, Twyman
and Ventures were not entitled to a jury trial, and the investor’s statement
did not violate Twyman’s or Ventures’ due process rights.

¶4 Twyman appealed to this court. We, too, view the facts in the
light most favorable to upholding the Commission’s decision. Hirsch v.
Arizona Corp. Comm’n, 237 Ariz. 456, 459, ¶ 1, n.2 (App. 2015). We have
jurisdiction under A.R.S. §§ 12-2101(A)(1) and 12-120.21(A)(1).

Facts before the Commission

¶5 As he tells it, Twyman has spent much of his life zealously
hunting Japanese treasure hidden in the Philippines. From several
unnamed contacts, Twyman claims to have received information verifying
the presence of gold and other valuables hidden or discarded at specific
locations in the Philippines during World War II.

¶6 Twyman testified that he first learned of the rumored
Japanese gold while working at a financial planning seminar in 1985. He
noticed that some attendees he was advising had marked on their balance
sheet something called a “Philippine gold investment.” Twyman recounted
that he doubted the investment and recorded the investment’s value at $0,
agitating the man who had solicited the investments. The man later came
to the seminar and accused Twyman of telling the investors they had been
scammed. Twyman claimed the man hired him to perform due diligence
on the investment. After four months, Twyman said he believed the
Japanese war treasure was real and a recovery project viable. Twyman
explained he then began to recover the gold in the Philippines. He testified
that he was “involved at a very high level” and reported to some unnamed
individual in Washington, D.C.

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¶7 In the 1980s, Twyman took a break from the treasure hunt
after he came to believe it was endangering his life.3 During this break, he
became the president of BeneFund. This corporation was ultimately the
subject of an enforcement action brought by the Securities and Exchange
Commission in the United States District Court for the Northern District of
Oklahoma. The SEC alleged that Twyman engaged in a fraudulent scheme
to promote and distribute BeneFund securities. Sec. & Exch. Comm’n,
Litigation Release No. 15364, (May 13, 1997).4 The SEC alleged, in
connection with the offer and sale of unregistered BeneFund securities,
Twyman misrepresented that BeneFund stock would be listed on the
Nasdaq stock exchange within 60 to 90 days and investment funds would
be used for a marketing campaign expected to boost BeneFund’s annual
revenue to nearly $50 million. Id. As a result of the SEC action, Twyman
consented to a judgment issued by the District Court which enjoined him
from future violations of the antifraud and registration provisions of federal
securities laws, barred him from serving as an officer or director of a
publicly traded company, and ordered disgorgement of $277,000.5

¶8 Twyman testified that he eventually returned to the
Philippines to continue to search for gold. He explained that his focus
shifted to another venture when progress on the gold-recovery project
slowed during the rainy season. He claimed to have received a tip that a
South American priest could give him access to underground caverns
containing a stash of priceless lead, which could be sold for a quick profit
because its unique composition made it useful in electronic-component
manufacturing.

¶9 In early 2012, Twyman was introduced to Robert Moss,
Jeffrey McHatton, and Robert Sproat by a mutual friend, a pastor who

3 Twyman testified that a former president of the Philippines sent men
to kill him because he was assisting the president’s successor in recovering
treasure. Twyman reported having been the victim of an intentional dioxin
poisoning during this period, although it is unclear whether Twyman was
claiming that there were two attempts on his life or that the president’s men
poisoned him with dioxin.

4 We take judicial notice of the SEC’s litigation release to establish the
allegations’ existence but not their veracity.

5 The SEC waived disgorgement based on Twyman’s demonstrated
inability to pay.

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believed they shared the same vision and objectives. Moss, McHatton, and
Sproat represented Fortitude, a 501(c)(3) nonprofit corporation seeking
investment opportunities. They characterized Fortitude as a non-profit run
by “three men of God who were called with a Divine purpose to help heal
the needy, and in doing so bring salvation to their hearts for the Kingdom
of God.” The men met at leadership conferences and, once acquainted, soon
conceived the idea for an organization that would make charitable
donations using investment proceeds. Fortitude distributed promotional
materials stating its charter required 90% of its net earned income to further
philanthropic efforts. Still, at the time of the hearing, it did not produce a
charter or any records of charitable contributions. Fortitude had, however,
distributed funds to Moss, McHatton, and Sproat, which were used to pay
for living and other personal expenses, including payments towards Moss’s
home loan and his daughter’s tuition, and Sproat and McHatton’s home
rental payments.

¶10 After speaking with Moss, McHatton, and Sproat, Twyman
provided them with a financing proposal summary he prepared explaining
the history of the gold-recovery project, its status, and the need for capital
funding. The proposal asserted that (1) several business entities controlled
by Twyman had spent considerable time and money over the previous ten
years investigating potential treasure sites in the Philippines, (2) efforts at
two confirmed sites were “poised for completion,” (3) gold had been
“visually confirmed” at one of the sites, (4) the operation to recover 20
metric tons of gold bullion at that site would take less than six weeks, and
(5) the investors’ projected returns on the projects would be “substantial,
potentially exceeding 100 to 1.”

¶11 Twyman also told Moss, McHatton, and Sproat about his plan
to buy and sell the lead in Central America. Twyman reported he knew the
location of a large supply of specially-composed lead that could be
purchased for less than $10 per pound and sold for more than $1100 per
pound to companies like IBM and Qualcomm, which had a high demand
for the lead because of a shortage.

¶12 Moss, McHatton, and Sproat expressed an interest in forming
a joint venture partnership and funding Twyman’s projects with the
proceeds from a recent transaction, expected to total $100 million. Moss
later testified that Fortitude used $110,000 of an investor’s money to
purchase what they believed was a Brazilian government-issued bond
worth $100 million in a sale brokered by a woman purportedly working for
both the United Nations and an investment company domiciled in the
Bahamas. When the Brazilian-bond deal fell through, they decided to fund

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Twyman’s projects by seeking investments from their “sphere of
influence.”

¶13 In April 2012, Twyman sent Fortitude an email detailing his
past legal difficulties after Fortitude learned about what he characterized as
“largely incomplete and erroneous” information about him available on the
internet. His email explained he realized “some of [Fortitude’s] prospective
investors” may also choose to undertake their due diligence, so he believed
it prudent to “mitigate any possible misunderstanding by providing a
totally candid and transparent rendering of the facts.” The email provided
explanations and context for several past issues, including the SEC
judgment arising out of Twyman’s involvement with BeneFund, a
judgment against Twyman in the mid-1980s for a breach of fiduciary duty
involving the embezzlement of $150,000, and a civil action against Wycliffe
to recover some of the $850,000 Wycliffe received as proceeds of a Ponzi
scheme after he invested over $2.3 million from clients, friends, and
relatives.

¶14 In May 2012, Fortitude entered a joint venture funding
agreement with Twyman’s business entities.6 Fortitude agreed to fund the
projects with $14 million borrowed from investors in exchange for a portion
of the future revenue of the gold- and lead-recovery projects. In June 2012,
shortly after asking Twyman to provide a financing proposal detailing how
Ventures would use a $250,000 investment, Fortitude received $250,000
from Timothy Brunt.

¶15 Brunt testified that he read the financing proposal before
deciding to invest, including projections that an investment of $250,000
would lead to a return of $11 million. He was encouraged by the proposal’s
anticipated timeline for a return on his investment. The proposal offered
“both near and long-term returns to those financiers willing to undertake
the challenge.” It created a sense of urgency by providing a “special bonus
pool” that would pay “an additional cash bonus” to the purchasers of the
next five revenue-sharing units. And the proposal stated that 20 metric tons
of gold bullion had been located in the Philippine Sea under just 300 feet of
water. It revealed the “coordinates [were] exclusively in the hands of

6 Twyman conducted his business through Wycliffe Trust, for which
he was the sole managing trustee and a beneficial owner, and through
Ventures, an Oklahoma limited liability company managed by Twyman
and wholly owned by Wycliffe Trust.

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Ventures,” and the added funding would allow Ventures to recover the
gold within six weeks.

¶16 Brunt was directed to wire the funds to a bank account
controlled by McHatton. McHatton then transferred $225,000 to a bank
account controlled by Twyman and $7500 to a bank account controlled by
Moss.

¶17 In October 2012, Dr. Matt Mannino, the speaker who led the
leadership seminars where McHatton, Moss, and Sproat first met, invested
$75,000 with Fortitude to be used in Ventures’ lead-recovery project.
Mannino received an email from Moss inviting him to participate in a
webinar about an opportunity to invest in the project. The email
represented that Fortitude had invested $250,000 of its capital into
Ventures’ earlier fundraising round and was now “lead[ing] the charge” by
investing $125,000 in this latest lead-recovery opportunity. Webinar
attendees were presented with information Twyman provided outlining
the project.7 Attendees were informed that an ample supply of 200- to 500-
year-old lead had been discovered “in a specific and proprietary location.”8
They were told they could expect a 500% return on their investment within
90 to 120 days and that they needed to act quickly to participate in the
opportunity. Expressions of interest were due by the close of business that
week, and funds had to be wired by the end of October.

¶18 On October 31, Mannino wired the money to a bank account
controlled by McHatton. Brunt made another investment of $125,000
around the same time. Shortly after the two investments, McHatton
transferred $170,000 of the $200,000 to a bank account controlled by
Twyman.

¶19 In November 2012, Lowell Olmstead invested $100,000 in the
lead project. In late October, Olmstead also received an email from Moss
about the lead-recovery investment opportunity. Moss provided Olmstead
with documents explaining the project, the capital needed, the low risks

7 Moss testified that Twyman prepared the slides presented during
the webinar.

8 A slide from the webinar states that “ERA” had located the lead.
Twyman testified that ERA was the Environmental Reclamation Authority
Limited, an entity he was incorporating to manage the lead-recovery
project.

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involved, and the anticipated returns. Like he had told Mannino, he told
Olmstead that Fortitude had invested $250,000 with Twyman’s
organizations and that Fortitude was investing $125,000 in the current
opportunity. Olmstead testified that he would not have invested if
Fortitude had not invested its own money.

¶20 Between November 20 and December 19, 2012, James Clark,
John Bruner, and Thomas Spencer invested in the lead-recovery project.
Clark and Spencer invested $50,000, and Bruner invested $100,000. Moss
approached Clark, Bruner, and Spencer about the opportunity and told
them specific project details Twyman had provided, including that the lead
was valuable because of its composition and usefulness in computer
manufacturing. They were also forwarded a document from Twyman,
which represented that “one of the world’s foremost experts on the
subject . . . placed the market value of the lead at $1,100 to $4,400 per
pound.” They were also told there was no risk in the investment, and the
returns were expected within three to six months, projected at 500%.

¶21 The Hearing Division heard testimony that Twyman led a
team on a failed expedition to Guatemala to recover the lead after receiving
the investments. Twyman testified that his team included a consultant who
attended the trip at Fortitude’s request, a metallurgist who could verify the
quality of the lead, a former SEAL Team 6 officer, and Twyman’s contact
who had told him about the opportunity. One team member testified that
the trip was disorganized and unfocused.

¶22 Twyman had first planned the trip for Panama but testified
that, at the last minute, his contact revealed that the lead was instead in
Guatemala. Twyman explained that his contact had misled him about the
whole deal. He testified that he could not meet with the priest to access the
underground caverns where the lead was stored after he arrived in
Guatemala. He said his contact got on a plane and flew out of the country
when confronted.

¶23 After the failed expedition, Fortitude solicited the investors in
the lead-recovery project to roll their investments into the gold-recovery
project. Moss emailed the investors with an attachment written by Fortitude
titled “additional opportunity.” After apologizing for the delayed return of
principal and profits, Fortitude offered the investors the opportunity to
convert their investment in the lead-recovery project to the gold-recovery
project at no extra cost. The proposal explained:

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[D]ue to the delay and in concert with several requests from
our lenders for involvement in some of our other project(s),
we would like to grant you a great opportunity to join us, and
participate right along-side of us, as a financial partner in this
additional project, without having to commit any additional
financial resources to this secondary project. We are more
interested in what we can do “for” you, than what we can
obtain “from” you.

As stated, we truly appreciate your patience, cooperation and
joint vision. This is not a pitch for more money, as some might
expect. We ALL know that the [lead] project is taking longer
than expected, and as you may have experienced, sometimes
these kinds of delays occur in projects of this nature,
especially, in these un-certain and somewhat turbulent
economic times.

¶24 Twyman testified he was unsure how many investors in the
lead project rolled their money over to the gold-recovery project, but he did
not need to keep track because the money was pooled and used for both.
He said they were no longer actively pursuing the lead recovery but
remained vigilant for antique lead during their sea recoveries in the gold
project.

¶25 In 2015, Ventures produced a “news brief” updating investors
on the state of the project and soliciting additional investments. More than
three years after Ventures’ $250,000 financing proposal, the update asserted
that “the difficult work of locating and confirming the treasures has already
been accomplished” and two separate treasure sites were “now ready to
move into the recovery stage.” It also declared, “We are exceedingly
pleased to announce the shifting of focus in our Philippine operations from
[the] Discovery (and Exploration) Phase to the Recovery Phase.”

¶26 The news brief contained a solicitation:

As we finally move into the final recovery stage, there will be a
small window of opportunity for existing partners to increase their
investment position by purchasing additional revenue sharing units
at a reduced rate and thereby increase their distribution payout.
(For further information please call (539) 777-[XXXX])
Additionally, in the future there will be a number of exciting
investment opportunities offered exclusively to Ventures

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7000 via reputable banking and financial institutions. Some of
these opportunities are already being arranged.

¶27 The update proclaimed, “Finally, we are poised on the
threshold of achieving all that we have so diligently pursued! In fact, our
prospects for phenomenal success have never been greater nor more
tangible than they are today!” But at the time of the hearing, the gold- and
lead-recovery projects had not yet produced any income or profit.

DISCUSSION

¶28 On appeal from a superior court’s review of an administrative
decision, we determine whether the administrative action was illegal,
arbitrary, capricious, or involved an abuse of discretion. Hirsch v. Ariz. Corp.
Comm’n, 237 Ariz. 456, 461–62, ¶ 18 (App. 2015). We will affirm a decision
supported by substantial evidence. Wales v. Ariz. Corp. Comm’n, 249 Ariz.
263, 268, ¶ 19 (App. 2020).

A. Substantial Evidence Supports the Commission’s Findings that
Twyman and Ventures Induced and Participated in Unlawful
Sales to Investors.

¶29 Under the Arizona Securities Act, it is unlawful to sell or offer
unregistered securities for sale. A.R.S. § 44-1841(A). And a dealer or
salesman of securities must be registered to sell or purchase or offer to sell
or buy any securities. A.R.S. § 44-1842(A). The Act also provides:

It is a fraudulent practice and unlawful for a person, in
connection with a transaction or transactions within or from
this state involving an offer to sell or buy securities, or a sale
or purchase of securities, . . . directly or indirectly to do any of
the following:

(1) Employ any device, scheme or artifice to defraud.

(2) Make any untrue statement of material fact, or omit to state
any material fact necessary in order to make the statements
made, in the light of the circumstances under which they were
made, not misleading.

(3) Engage in any transaction, practice or course of business
which operates or would operate as a fraud or deceit.

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A.R.S. § 44-1991(A). Our supreme court has explained that “the legislature
intended the [Arizona Securities Act] ‘as a remedial measure’ for the
‘protection of the public’ and therefore specified that the act be ‘liberally
construed.’” Grand v. Nacchio, 225 Ariz. 171, 174, ¶ 16 (2010) (citing 1951
Ariz. Sess. Laws, ch. 18, § 20 (1st Reg. Sess.)). In addition, “[t]he language
of the Act confirms a broad intent to sanction wrongdoing in connection
with the purchase or sale of securities.” Id.

¶30 The Commission may bring enforcement actions for violating
these sections against “any person, including any dealer, salesman or agent,
who made, participated in or induced the unlawful sale or purchase.”
A.R.S. § 44-2003(A); see also A.R.S. § 44-2032. Our supreme court has
recognized the sweeping authority granted by A.R.S. § 44-2003(A), which
provides a single narrow exception for those who have acted only in the
ordinary course of their professional capacity in connection with the sale or
purchase. Grand, 225 Ariz. at 174, ¶¶ 17–18.

¶31 After proceedings spanning several months, the hearing
officer issued a recommended opinion and order. The Commission adopted
the opinion and order with only minor changes.9 The Commission found
that Fortitude and its principals were unregistered securities dealers, had
sold unregistered securities, and had violated A.R.S. § 44-1991(A) by, inter
alia, failing to disclose to investors Twyman’s SEC judgment and giving
investors unrealistic projections of when and in what amount they would
receive investment returns. The Commission also found Twyman and
Ventures had participated in and induced Fortitude’s unlawful sales to six
investors. Concerning Twyman, the Commission found:

Although Mr. Twyman did not meet any of the investors in
the [gold and lead projects] except for Mr. Brunt, Mr. Twyman
and [Ventures] prepared and provided the informational
materials to [Fortitude] that [Fortitude] then used to solicit
investors in those Projects. The information included by
Mr. Twyman and [Ventures] in the materials contained
historic and scientific details that [Fortitude] likely could not
have adequately conveyed to investors to induce the sale of
the securities. Further, [Ventures’] activities were not

9 See A.A.C. § R14-3-110 (“A proceeding is submitted for decision by
the Commission after taking of evidence, the filing of briefs or the
presentation of oral argument as may have been prescribed by the
presiding officer.”).

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“tangential” or “collateral” to [Fortitude’s] unlawful
securities sales—they were the central purpose of the sales.
We agree with the Division that the Projects’ completion and
investment return projections were misleading, and that
failure to include information regarding the prior securities
orders and the lack of success after Mr. Brunt’s $250,000
investment, were material omissions.

¶32 On appeal, Twyman and Ventures argue that they did not
participate in or induce the sales. We disagree. Substantial evidence
supports the Commission’s finding that Twyman and Ventures
participated in and induced the fraudulent sales.

¶33 We agree with the superior court and the Commission that
Twyman and Ventures induced unlawful sales. “Induce” is not statutorily
defined, but we have interpreted the term narrowly to avoid “sweep[ing]
within the statute any outsider to a securities transaction—no matter how
remote from the transaction—who provided information that foreseeably
contributed to, and thereby influenced, a buyer or seller’s decision to
engage in the transaction.” Standard Chartered PLC v. Price Waterhouse, 190
Ariz. 6, 21 (App. 1996) (as amended). But Twyman and Ventures are not
outsiders. Twyman and Ventures were the source of much of the
misleading information Fortitude relayed to victims to persuade them to
invest. The Commission expressly found that Ventures’ timelines and
return projections later given to investors were misleading.

¶34 We also conclude that there is substantial evidence that
Twyman and Ventures participated in the unlawful sales. Participation
requires more than taking tangential action related to an ongoing sale.
Standard Chartered PLC, 190 Ariz. at 21. But, as noted by the Commission,
Twyman and Ventures’ activities were not tangential to Fortitude’s
unlawful securities sales. They were instead the central purpose and basis
for the sales. By authoring investment proposals with language directed at
investors and receiving the money from those investments to operate a
business, Twyman and Ventures participated in the unlawful sales used to
fund their projects.

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B. Substantial Evidence Supports the Commission’s Finding that
Ventures Directly Violated A.R.S. § 44-1991(A)(2) and that, as a
Controlling Person of Ventures, Twyman Is Jointly Liable for the
Violation.

¶35 The Commission found that, along with inducing and
participating in the unlawful securities sales made by Fortitude, Ventures
directly violated A.R.S. § 44-1991(A)(2) by making misrepresentations and
omitting material facts in the $250,000 financing proposal.

¶36 Twyman and Ventures argue that Ventures did not make a
material misrepresentation or omission in connection with the offer or sale
of the securities because the alleged misrepresentations were made after the
investments were already obtained. They assert that Moss delivered
Ventures’ $250,000 financing proposal several months after Brunt invested
without cogent citations to the record. But Brunt testified that he read
Ventures’ $250,000 funding proposal before investing. When evidence
conflicts, the trier of fact determines which evidence to accept as accurate.
Fairway Builders, Inc. v. Malouf Towers Rental Co., 124 Ariz. 242, 250 (App.
1979).

¶37 The Division presented sufficient evidence for the
Commission to conclude that Twyman knew that the proposal would be
provided to prospective investors. Twyman testified that Brunt was present
at the meetings that led to the joint venture between Wycliffe and Fortitude
and that he considered Brunt part of the organization. Substantial evidence
supports the Commission’s finding that Ventures violated A.R.S.
§ 44-1991(A)(2) by making material misrepresentations in the $250,000
financing proposal that was read by a victim investor shortly before he
invested.

¶38 Twyman and Ventures also challenge the Commission’s
finding that the 2015 news brief contained material misrepresentations and
omissions that violate A.R.S. § 44-1991(A)(2). They argue that the news brief
was confidential and did not lead to more investments. But the news brief
stated that there was a small window for existing partners to increase their
investments and provided a phone number for inquiries. And though no
investments were made in response to the solicitation, A.R.S.
§ 44-1991(A)(2) prohibits misrepresentations made in connection with an
offer or sale even where no sale is made.

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¶39 Twyman also argues that he acted in good faith, did not
directly or indirectly induce Ventures’ conduct, and is therefore not liable
as a control person for Ventures’ violations. Under A.R.S. § 44-1999(B),

[e]very person who, directly or indirectly, controls any person
liable for a violation of § 44-1991 or 44-1992 is liable jointly
and severally with and to the same extent as the controlled
person to any person to whom the controlled person is liable
unless the controlling person acted in good faith and did not
directly or indirectly induce the act underlying the action.

The burden to prove a good faith defense under A.R.S. § 44-1999(B) falls
upon the controlling person. E. Vanguard Forex, Ltd. v. Ariz. Corp. Comm’n,
206 Ariz. 399, 413, ¶ 46 (App. 2003). The Commission found that Twyman
failed to satisfy this burden because “he presented no evidence that he took
any steps to ‘maintain and enforce a reasonable and proper system or
supervision and internal control.’”

¶40 On appeal, Twyman challenges this finding by asserting that
Ventures’ Director of Investor Relations sent the 2015 news brief without
Twyman’s authorization. Much like when he made the same argument
below, he provides no evidence to support this claim, and consequently, he
fails to meet his burden.

C. The Commission Did Not Violate Twyman’s and Ventures’ Due
Process Rights by Allowing a Victim Investor to Make Statements
Not Subject to Cross-examination at an Open Meeting.

¶41 Twyman and Ventures also argue that the Commission
denied them due process by permitting Brunt to make unsworn statements
at an open meeting without cross-examination.

¶42 Twyman and Ventures called victim-investor Brunt as their
witness during the evidentiary portion of the administrative hearing. At the
hearing, Brunt testified that he did not want restitution and preferred to
keep his investment in the gold-recovery project. Later, Brunt applied for
leave to intervene to correct his testimony, asserting that after the hearing
he believed Moss and McHatton had misled him and made
misrepresentations about the nature of particular investments. The hearing
officer granted the request “for the limited purpose of allowing [Brunt] to
be included in any award of restitution.” Twyman and Ventures did not
respond or object to Brunt’s application.

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¶43 The Commission held an open meeting to consider whether
to adopt the recommended opinion and order prepared by the hearing
officer. At the open meeting, the Commission heard statements from the
Hearing Division, the Securities Division, Moss, McHatton, and counsel for
Twyman and Ventures. Brunt also requested to speak, and Twyman and
Ventures opposed his request.

¶44 The Securities Division suggested allowing Brunt the
opportunity to speak as a public member so long as the Commission
understood that the evidentiary hearing had closed, Brunt’s statement was
not under oath, was not testimony, and would not constitute evidence. The
Commission agreed and allowed Brunt to speak during public comment.
In addition, McHatton’s spouse and an uninvolved citizen also spoke
during the time for public comment. In his statement, Brunt summarized
some of the testimony presented at the evidentiary hearing, explained how
his losses had placed him in a position of financial insecurity, and accused
Moss and McHatton of being dishonest and lacking integrity, asserting that
he had proof of misrepresentations made by Moss.

¶45 Due process requires notice and an “opportunity to be heard
‘at a meaningful time and in a meaningful manner.’” Wales, 249 Ariz. at 267,
¶ 9 (quoting Comeau v. Ariz. State Bd. Of Dental Exam’rs, 196 Ariz. 102,
107–08, ¶ 20 (App. 1999). And “[t]he right to cross-examination is
fundamental and attaches when . . . any testamentary or documentary
evidence [is received].” Volk v. Brame, 235 Ariz. 462, 469, ¶ 24 (App. 2014)
(alteration in original) (quoting Obersteiner v. Indus. Comm’n, 161 Ariz. 547,
549 (App. 1989).

¶46 If the facts asserted by Brunt constituted evidence that could
be relied on by the Commission, Twyman and Ventures would be entitled
to an opportunity to challenge the testimony during cross-examination. But
in this case, the Commission could not and did not rely on those facts in
deciding to adopt the recommended opinion and order. See A.A.C.
R14-3-109(F) (“All testimony to be considered by the Commission in formal
hearings shall be under oath, except matters of which judicial notice is taken
or entered by stipulation.”). The Commission allowed Brunt to speak only
after agreeing with the Security Division that the statement was not
evidence. It is clear from the record that the Commission’s adoption of the
recommended opinion and order, drafted before the open meeting, was not
affected by Brunt’s unsworn statement.

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 VENTURES 7000, et al. v. ACC
Decision of the Court

CONCLUSION

¶47 We affirm.

AMY M. WOOD • Clerk of the Court
FILED: AA

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