Sync Title 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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

SYNC TITLE AGENCY, LLC, Appellant,

v.

ARIZONA CORPORATION COMMISSION, Appellee.

No. 1 CA-CV 23-0606
FILED 05-06-2025

Appeal from the Superior Court in Maricopa County
No. LC2022-000275-001
The Honorable Joseph P. Mikitish, Judge
Arizona Corporation Commission No. S21131A-20-0345

AFFIRMED IN PART, VACATED IN PART

COUNSEL

Escolar Law Office, Reno, Nevada
By M. Philip Escolar
Counsel for Appellant

Arizona Corporation Commission, Phoenix
By Paul Kitchin
Counsel for Appellee

Scharf-Norton Center for Constitutional Litigation at the Goldwater
Institute, Phoenix
By Timothy Sandefur
Counsel for Amicus Curiae Goldwater Institute
Burch & Cracchiolo, P.A., Phoenix
By Daryl Manhart
Co-Counsel for Amicus Curiae North American Securities Administrators
Association, Inc

North American Securities Administrators Association, Inc., Washington,
DC
By Dylan White
Co-Counsel for Amicus Curiae North American Securities Administrators
Association, Inc.

Arizona Attorney General’s Office, Phoenix
By Joshua D. Bendor, Alexander W. Samuels, Luci D. Davis, Joshua G.
Nomkin
Counsel for Amicus Curiae State of Arizona

MEMORANDUM DECISION

Judge Jennifer M. Perkins delivered the decision of the Court, in which
Presiding Judge Michael S. Catlett and Vice Chief Randall M. Howe joined.

P E R K I N S, Judge:

¶1 The Arizona Corporation Commission (the “Commission”)
found that Sync Title Agency, LLC (“Sync”) sold an unregistered non-
exempt security under Arizona Revised Statutes Sections 44-1841 and 44-
1844(A)(1), and committed securities fraud under Section 44-1991(A)(2).
The Commission ordered Sync to pay both restitution and administrative
penalties. Sync appeals the superior court’s decision affirming the
Commission’s order.

¶2 Sync conceded that it sufficiently “participated” in a sale of
securities under Section 44-2003(A) to subject it to liability under the
Arizona Security Act (the “Security Act”). And the Arizona Constitution
does not require a jury trial for alleged violations of the Security Act when
brought by the Commission through internal proceedings. EFG America,
LLC v. Ariz. Corp. Comm’n, ___ Ariz. ___, 2025 WL 1039587, at *3, ¶ 13 (App.
2025).

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¶3 We therefore address the merits of the Commission’s fraud
claims.

¶4 We start by addressing the scope of Arizona’s non-public
offering securities registration exemption under Section 44-1844(A)(1). We
conclude this sale qualified as a non-public offering under Section 44-
1844(A)(1).

¶5 We conclude by addressing each of the Commission’s three
claims of securities fraud under Section 44-1991(A)(2). The Commission
found statements characterizing the transaction as a “slam dunk” and “fail
safe” investment were fraudulent. This was error because those statements
were non-material puffery. But we affirm the Commission’s finding that
failing to inform offerees that their investment funds would be used on
personal, non-Sync related expenses was fraud. The Commission also erred
by finding a statement projecting an operating timeline was fraudulent
because there was a reasonable basis for believing in that projection.

¶6 For the following reasons, we affirm the superior court’s
decision in part, vacate it in part, and remand to the Commission for
proceedings consistent with this decision.

FACTS AND PROCEDURAL BACKGROUND

¶7 Rosicella Joplin and Christopher Olson are licensed real estate
agents and brokers. They also jointly own a mortgage business. Megan and
Marcus Williams (collectively, the “Williams”) are respectively a
homemaker and an auto technician. They earn additional income flipping
houses. In August 2018, Joplin represented the Williams in a real estate
transaction. The Williams soon became friends with Joplin and Olson,
socializing together at dinners and events.

¶8 Joplin and Olson observed that their mortgage business was
often delayed by the titling process and decided to start Sync, a company
to handle real estate titling transactions. In December 2018, Joplin and
Olson approached the Williams about investing in Sync. They asked for a
$100,000 investment in exchange for a 19.9% share of Sync.

¶9 Joplin and Olson told the Williams that Sync would have a
steady stream of income because Joplin and Olson would refer clients from
their real estate and mortgage business to Sync. Because Sync would have
a built-in customer base, Joplin and Olson characterized the requested
investment as “fail-safe” or a “slam dunk” and represented that it would
generate $6,000–7,000 per month as the Williams’ profit share. Joplin and

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Olson also represented that the Williams’ investment funds would be used
to secure office space, pay software subscription fees, and hire a title agent.
At the December 2018 meeting with the Williams, Olson said Sync would
be operational within a month of their investment.

¶10 The Williams agreed to invest in Sync, and Joplin and Olson
drafted a purchase agreement. The Williams’ attorney reviewed the
agreement and informed them that the agreement contained many serious
drafting issues. The Williams asked to change their investment schedule so
that they would pay $50,000 up front, and the remaining $50,000 in two
installments. Joplin and Olson agreed to this amendment, and the Williams
did not negotiate any other changes.

¶11 The Williams reviewed the revised agreement with Sync’s
attorney. Sync was not a party to the agreement. Instead, Joplin and Olson
sold percentages of their membership interests to the Williams. But
pursuant to the agreement, the Williams transferred the funds directly into
Sync’s bank account.

¶12 Sync never became operational. It needed to obtain both an
escrow agent license and a title agent license from the Arizona Department
of Financial Institutions (the “Department”). Sync did not submit an escrow
agent license application to the Department until February 2019, and never
submitted a title agent license application. In April 2019, the Department
responded with a deficiency letter listing five incomplete parts of the
application, including a missing “Company’s Audited Financial Statement,
[to] ensure the net worth is $100k or more.” Sync did not respond to the
deficiencies and allowed its application to lapse in April 2019.

¶13 Meanwhile, Joplin and Olson used nearly all the funds from
Sync’s bank account on both business expenses and personal expenditures.
After delays in the opening of Sync, the Williams sought multiple updates
between February and June 2019 on Sync’s operating status, but Joplin and
Olson gave evasive or false answers. In June 2019, the Williams demanded
the return of their money.

¶14 In November 2020, the Commission notified Sync, Joplin, and
Olson of their opportunity for a hearing, see A.R.S § 44-1972, alleging they
violated Section 44-1841 by selling an unregistered security to the Williams
and committed securities fraud in violation of Section 44-1991. Sync, Joplin,
and Olson did not dispute that they sold an unregistered security but
argued the sale was an exempt non-public offering under A.R.S. § 44-
1844(A)(1).

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¶15 The Commission concluded that Sync, Joplin, and Olson did
not meet their burden in proving the applicability of the registration
exemption. See A.R.S. § 44-2033. Although the offering had been directly
negotiated with and limited to the Williams, the Commission found the
non-public offering exemption did not apply because (1) the Williams were
not sophisticated investors and (2) the Williams lacked access to the kind of
information about Sync that registration would have revealed.

¶16 The Commission also found securities fraud occurred when
Joplin and Olson (1) told the Williams their investment would be “fail-safe”
and a “slam dunk,” (2) projected that Sync would be operational within a
month of their investment, and (3) did not mention that some of their funds
would be spent on Joplin and Olson’s personal expenses. The Commission
ordered Sync, Joplin, and Olson to pay, jointly and severally, $50,000 in
restitution and to pay, individually, $5,000 in administrative penalties.

¶17 Sync, Joplin, and Olson appealed the order to the superior
court, which affirmed the order in a signed minute entry. All three parties
timely filed a notice of appeal, but Joplin and Olson failed to pay their filing
fee, resulting in their dismissal from this appeal. We have jurisdiction. See
A.R.S. §§ 12-120.21(A)(1) and 44-1981.

DISCUSSION

¶18 On appeal, Sync argues the Commission erred in imposing
administrative penalties and ordering restitution for violations of Sections
44-1991 and -1841 because (1) the Arizona Constitution guarantees a right
to a jury trial for alleged violations of Section 44-1991, (2) its offering was
exempt from securities registration as a non-public offering, and (3)
substantial evidence does not support the Commission’s findings that Sync
committed securities fraud.

I. Sync’s Participation in the Sale

¶19 The Security Act imposes liability for violations of Sections
44-1991 and 44-1841 on “any person . . . who made, participated in or
induced the unlawful sale or purchase.” See A.R.S. § 44-2003(A) (defining
the scope of liability for actions under Sections 44-2001 and 44-2002); A.R.S.
§ 44-2001 (transactions in violation of Section 44-1841 are voidable); A.R.S.
§ 44-2002 (transactions in violation of Section 44-1991 are voidable). Here,
the Commission found that the Sync corporate entity “participated in the
transaction at issue.” But Sync was not a party to the purchase contract with
the Williams—in fact, the only mention of Sync in the contract was a
provision that funds were to be wired to Sync at close of sale. Thus, the

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threshold question in this case is whether Sync’s role in the sale was enough
to constitute “participation” under Section 44-2003(A).

¶20 The Commission asserted at oral argument that Sync
participated in the sale to the Williams solely by accepting the funds from
the transaction. We disagree—accepting funds from a securities sale,
without more, is not participation for Section 44-2003(A) purposes. Rather,
participation under Section 44-2003(A) “requires active involvement with a
stake in the outcome, not merely an ancillary role in the stock sale.” Strategic
Diversity, Inc. v. Alchemix Corp., 664 Fed. Appx. 660, 664 (9th Cir. 2016).
Merely acting as a conduit for money exchanged in a sale is not active
involvement. Participation requires something more. See, e.g., Strom v. Black, 22 Ariz. App. 102, 103–04 (App. 1974) (appellant participated in fraudulent
sale by driving buyer to meetings, persuading buyer, drafting the sale
agreement, receiving funds, and taking commission from the sale); Ventures
7000, LLC v. Ariz. Corp. Comm’n, 1 CA-CV 21-0179, 2022 WL 320565, at *7, ¶
34 (Ariz. App. Feb. 3, 2022) (mem. decision) (appellant participated by
authoring investment proposals with language directed at investors and
receiving money from those investments to operate a business).

¶21 But Sync conceded at oral argument that it did more than
merely accept funds. Sync’s counsel asserted that “Sync was part and
parcel” of the sale to the Williams, that “Olson and Joplin, at times, at least
. . . were acting on behalf of Sync,” and that Sync was thus “hopelessly
intertwined” in the sale such that it was “drawn into” the sale by “acting in
connection with the sale of securities.” By its own admission, Sync
participated in the sale of securities to the Williams. Sync is therefore subject
to liability pursuant to Section 44-2003(A).

II. Right to a Jury Trial

¶22 In June 2024, the United States Supreme Court held in Sec. &
Exch. Comm’n v. Jarkesy that enforcement proceedings in the Securities and
Exchange Commission seeking civil penalties on federal securities fraud
claims violated defendants’ Seventh Amendment right to a jury trial. 603
U.S. 109, 120–21 (2024). We asked the parties for supplemental briefing and
invited briefs from amici to address what application, if any, Jarkesy has to
the present case.

¶23 While this matter was pending, another panel of this Court
issued an opinion concluding that “Arizona law does not grant a jury-trial
right for Commission enforcement actions” initiated before the

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Commission. EFG America, LLC, 2025 WL 1039587, at *3, ¶ 13. We agree and
thus reject Sync’s argument that Jarkesy requires a jury trial in this case.

III. Standard of Review

¶24 Because the Arizona Constitution does not entitle Sync to a
jury trial, we address the merits of the Commission’s security registration
violation and securities fraud findings.

¶25 The parties dispute our standard of review under Section 12-
910(F). Before 2018, Section 12-910(E) (as then numbered) instructed that we
affirmed an agency action unless the action “is contrary to law, is not
supported by substantial evidence, is arbitrary and capricious or is an abuse
of discretion.” A.R.S § 12-910(E) (2017). In other words, the Arizona
Administrative Procedure Act formerly mandated that we defer to agency
decisions across the board. See, e.g., Waltz Healing Ctr., Inc v. Ariz. Dep’t of
Health Servs., 245 Ariz. 610, 613, ¶ 9 (App. 2018).

¶26 After amendments in 2018 and 2021, Section 12-910(F) now
instructs that we will “affirm the agency action” unless we conclude that:

the agency’s action is contrary to law, is not supported by
substantial evidence, is arbitrary and capricious or is an abuse
of discretion. . . . [T]he court shall decide all questions of law
. . . [and] all questions of fact without deference to any
previous determination that may have been made on the
question by the agency.

A.R.S § 12-910(F).

¶27 Sync argues Section 12-910(F) applies abuse of discretion
review but requires that we first decide all questions of law de novo and
review the evidence without deference to any factual or legal
determinations made by the Commission. The Commission counters that
we should view the facts in the light most favorable to affirming its decision
and that we have “specifically found the 2021 amendment to [Section] 12-
910(F) applies only to new findings of fact made on appeal by the Superior
Court and does not apply to reviewing facts found by the agency.”

¶28 We have done no such thing. The plain language of Section
12-910(F) contradicts the Commission’s argument: “the court shall decide
all questions of fact without deference to any previous determination that
may have been made on the question by the agency.” A.R.S. § 12-910(F)
(emphasis added). And in Craven Constr., LLC v. Ariz. Registrar of

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Contractors, which the Commission cites to support its position, we did not
limit our review to the factual findings of the superior court. 1 CA-CV 22-
0011, 2022 WL 17592079, at *2, ¶ 12 n.1 (Ariz. App. Dec. 13, 2022) (mem.
decision). We merely noted that “the superior court made no new findings
of fact,” id., to underscore that we were directly reviewing the agency
decision, as our precedent instructs us to do, id. at ¶ 12.

¶29 Our review of an agency action on appeal from the superior
court is as follows. We independently review the agency action “and are
not bound by the superior court’s judgment because we examine the same
record.” Phillip B. v. Ariz. Dep’t of Child Safety, 253 Ariz. 295, 298, ¶ 8 (App.
2022). And we do not defer to the agency when resolving challenges to
“conclusions of law, factual findings, or mixed questions of law and fact.”
Simms v. Simms, ___ Ariz. ___, 2025 WL 838114, at *11, ¶ 62 (App. 2025).
Rather, we conduct an independent review of the record. Id.; A.R.S. § 12-
910(F). And we decide questions of law, including statutory interpretation,
de novo. A.R.S. § 12-910(F); Aroca v Tang Inv. Co. LLC, ___ Ariz. ___, 2025 WL
953724, at *2, ¶ 12 (2025).

IV. Exemption From Security Registration

¶30 Sync argues the sale of membership interest to the Williams
was exempt from registration as a non-public offering under Section 44-
1844(A)(1). The parties dispute the scope of the exemption and the
applicability of federal case law to that analysis.

¶31 Section 44-1844(A)(1) is identical to its federal counterpart, 15
U.S.C. § 77d(a)(2). Wales v. Ariz. Corp. Comm’n, 249 Ariz. 263, 270, ¶ 30 (App.
2020). When construing provisions of the Arizona Security Act with
substantially similar provisions in the federal Securities and Exchange Act,
we “follow[] settled federal securities law unless there is a good reason to
depart from that authority.” Sell v. Gama, 231 Ariz. 323, 327, ¶ 18 (2013); see
also 1996 Ariz. Sess. Laws, ch. 197, § 11(C) (2nd Reg. Sess.) (statement of
legislative intent) (“[I]n construing provisions of [the Security Act], the
courts may use as a guide the interpretations given by the securities and
exchange commission and the federal or other courts.”). We thus consider
relevant federal case law to the extent it aids our interpretation, but such
cases do not dictate our analysis.

A. The Scope of the Non-Public Offering Exemption

¶32 Unregistered securities may not be sold in Arizona unless the
sale fits within a registration exemption. A.R.S § 44-1841. One such

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exemption is when the sale is “by an issuer not involving any public
offering.” A.R.S § 44-1844(A)(1).

¶33 This non-public offering exemption “applies when those who
receive stock have no practical need for the protection provided by the
Securit[y] Act and registration of stocks.” Wales, 249 Ariz. at 270, ¶ 31 (citing
SEC v. Ralston Purina Co., 346 U.S. 119, 125 (1953)) (cleaned up). “An
offering to those who are shown to be able to fend for themselves is a
transaction not involving any public offering.” Ralston Purina Co., 346 U.S.
at 125 (cleaned up).

¶34 Wales v. Arizona Corporation Commission is the only previous
Arizona case to address the scope of the non-public offering exemption.
There, we noted that a critical factor in determining the need for the
registration protections is the offerees’ “access to . . . the type of information
proper registration would have revealed.” Wales, 249 Ariz. at 270, ¶ 32. But
other factors may be relevant, and “[federal] courts have developed flexible
tests for the [non-public] offering exemption.” S.E.C. v. Murphy, 626 F.2d
633, 644 (9th Cir. 1980).

¶35 The parties rely heavily on S.E.C. v. Murphy to argue whether
the offering to the Williams was non-public. Murphy adopted the following
factors: (1) the number of offerees, (2) the sophistication of the offerees, (3)
the size and manner of the offering, and (4) the relationship of the offerees
to the issuer. 626 F.2d at 644–45. The parties argue extensively about the
Williams’ relative sophistication, but the necessarily subjective nature of the
sophistication factor gives us pause. We find the Fifth Circuit’s formulation
in Doran v. Petroleum Mgmt. Corp., 545 F.2d 893, 900 (5th Cir. 1977) more
useful.

¶36 In Doran, the Fifth Circuit examined: (1) the number of
offerees and their relationship to each other and the issuer, (2) the number
of units offered, (3) the size of the offering, and (4) the manner of the
offering. Id. The Doran court noted that “the level of sophistication will not
carry the point,” and that instead “the relationship between the promoters
and the purchasers and the access to the kind of information which
registration would disclose become highly relevant factors.” Id. at 902
(quoting Hill York Corp. v. Am. Int’l Franchises, Inc., 448 F.2d 680, 690 (5th
Cir. 1971)) (cleaned up). Like the Fifth Circuit, we also decline to rely on
sophistication as a determining factor.

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B. Sync’s Sale to the Williams

¶37 Applying the Doran test, we conclude that Sync’s sale of
membership interest to the Williams was a non-public offering, and thus
exempt from registration under the Security Act.

¶38 Sync’s offering was small and limited to its purchase
agreement with the Williams. The offering was informal and conducted
largely via text message. Sync and the Williams directly negotiated the
purchase agreement after the Williams expressed interest in investing in
Joplin and Olson’s mortgage businesses.

¶39 And critically, the record shows that the Williams were close
enough with Joplin and Olson that they would have had “access to . . . the
type of information proper registration would have revealed.” See Wales,
249 Ariz. at 270, ¶ 32. The Williams had an ongoing business and personal
relationship with Joplin and Olson and communicated with them regularly.
The parties engaged in multiple conversations and meetings before signing
the purchase agreement, during which they could have asked for an
account of Sync’s assets or for a proposed statement of expenditures. The
Williams also represented in the purchase agreement that they had been
“given the opportunity to ask questions of and to receive answers from the
Company concerning its business.”

¶40 The record also demonstrates that Sync could have produced
registration-type information if the Williams had asked for it. The
Commission argues Sync lacked critical financial information that would
have been disclosed in the registration process, but its own witness belies
its argument. The Commission’s forensic accountant testified that he
reviewed 1,800 pages of Sync’s bank documents and credit card statements.
The Commission also submitted as exhibits simplified analyses showing all
deposits and withdrawals from Sync’s bank account and Sync’s credit card
activity. Even though Sync did not disclose these documents to the
Williams, the record establishes that the information was available.
Importantly, the record does not indicate that the information was
unavailable to the Williams before the transaction.

¶41 Notwithstanding the small scale and direct nature of the
offering, the Commission argues that the Williams needed the Security
Act’s protection because they lacked sophistication. Sync disputes the
Commission’s characterization of the Williams’ business acumen.

¶42 While we do not find the offeree’s sophistication to be a
helpful measure in evaluating whether the transaction was non-public, we

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recognize that the Commission hinged its determination in significant part
on this Murphy factor. Thus, we note that, even applying that factor, we
would conclude the Williams were sufficiently “sophisticated” to “fend for
themselves” in this transaction. See Banca Cremi, S.A. v. Alex. Brown & Sons,
Inc., 132 F.3d 1017, 1029 (4th Cir. 1997) (factors influencing investor
sophistication include business background, wealth, age, education,
professional status, and investment experience); Ralston Purina Co., 346 U.S.
at 125. Although the Commission and Sync dispute the relevance and
success of the Williams’ house-flipping business, at a minimum the
business provided the Williams with some experience in evaluating real
estate investment opportunities.

¶43 Viewed in its totality, the record demonstrates the sale of Sync
membership interest to the Williams was a limited offering not available to
the public. Before the sale, the Williams had the sort of relationship with
Joplin and Olson that would have given the Williams access to the
information that registration would have provided. The Williams invested
in Sync after directly meeting, negotiating with, and questioning Joplin and
Olson. Thus, the Commission erred in finding that the non-public offering
exemption under Section 44-1844(A)(1) did not apply.

V. Securities Fraud

¶44 The Commission found Joplin and Olson made three
fraudulent statements or omissions to the Williams: (1) representing that an
investment in Sync would be “fail-safe” and a “slam dunk”; (2) failing to
explain that Joplin and Olson would use investment funds for some
personal expenses; and (3) representing that Sync would be operational
within a month of investment. Fraud in the sale of a security is a direct or
indirect “untrue statement of material fact” or materially misleading
omission. A.R.S. § 44-1991(A)(2). An omission is “materially misleading” if,
objectively, there is a “substantial likelihood that, under all the
circumstances, the misstated or omitted fact would have assumed actual
significance in the deliberations of a reasonable buyer.” Trimble v. Am. Sav.
Life Ins. Co., 152 Ariz. 548, 553 (App. 1986) (cleaned up).

A. “Fail-Safe” and “Slam Dunk”

¶45 The Commission argues Sync’s “fail-safe” and “slam dunk”
statements were fraudulent because such statements would be material to
a reasonable investor, and Sync has in fact been a failure to date. But these
were “puffery,” or “generalized, vague, nonquantifiable statements of
corporate optimism.” Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307, 1318 (11th

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Cir. 2019). Puffery statements are not material because “[e]xcessively
vague, generalized, and optimistic comments . . . aren’t those that a
‘reasonable investor,’ exercising due care, would view as moving the
investment-decision needle.” Id. at 1320; see In re Stratasys Ltd. S’holder Sec.
Litig., 864 F.3d 879, 882 (8th Cir. 2017) (“A statement is not material and is
mere puffery, if it is so vague and such obvious hyperbole that no
reasonable investor would rely upon it.” (cleaned up)).

¶46 Here, the “fail-safe” and “slam dunk” statements are
precisely the sort of generalized hyperbole that Arizona courts have long
held cannot support a fraud claim. See, e.g., Hall v. Romero, 141 Ariz. 120,
123–24 (App. 1984) (rejecting fraud claim based on statement that “you’ll
never find a better, more secure investment”); Ellis v. First Nat’l Bank, 19
Ariz. 464, 471 (1918) (“[T]he law does not regard mere ‘puffing’ as to the
value of stock as an investment the same as a false representation . . . but
rather as a mere expression of opinion or ‘trade talk.’”). The Commission
erred by finding these statements fraudulent.

B. Joplin and Olson’s Personal Use of Investment Funds

¶47 Joplin and Olson told the Williams that their $50,000
investment would be used to secure office space, hire a title officer, and
cover expenses like commercial software. The Commission argues Joplin
and Olson defrauded the Williams by failing to disclose that Joplin and
Olson would withdraw and deposit the investment funds into their
personal accounts and use the funds to pay off Joplin’s and Olson’s
personal credit cards.

¶48 Sync argues the omission would not be material to a
reasonable buyer, see A.R.S. § 44-1991(A)(2); Trimble, 152 Ariz. at 553,
because the purchase agreement stated that Sync was not a party to the
agreement and that the Williams were purchasing their shares directly from
Joplin and Olson. A reasonable buyer pays close attention to an agreement’s
language. But the agreement does not unambiguously state that the
Williams’ investment would become Joplin’s and Olson’s personal
property. And the agreement required the Williams to wire their
investment funds into Sync’s business bank account. Reasonable investors
viewing this agreement language and hearing Joplin and Olson’s
representation could believe the funds were Sync’s property to be used only
on Sync-related expenses. The record supports the Commission’s finding
that Joplin and Olson’s use of the investment funds on personal expenses
was fraudulent.

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C. Sync’s Operational Timeline

¶49 The Williams testified that Joplin and Olson told them at a
December 2018 meeting that Sync would be operational within a month
after their investment. The Commission argues this statement was
fraudulent because Joplin and Olson falsely projected when Sync would
become operational. A projection or statement of belief is actionable
securities fraud when the declarant lacks “a reasonable basis for that belief.”
In re Apple Comput. Sec. Litig., 886 F.2d 1109, 1113 (9th Cir. 1989).

¶50 The Commission argues Joplin and Olson lacked a reasonable
basis for the projection because they had already written to another investor
in October 2018 that “[o]ur title company that we are opening here in
November is called SYNC Title Agency.” But the addressee was a person
Joplin and Olson interviewed to be an escrow officer. And in the rest of the
letter, they discuss Sync’s plans to “eventually hire on an escrow assistant .
. . [and] some business development roles as well.” The most reasonable
interpretation of the letter is that Joplin and Olson provided a hiring
timeline to a potential employee. A hiring timeline is not a projection of
operations.

¶51 The Commission also argues Joplin and Olson’s statement to
the Williams lacked a reasonable basis because Sync never applied for a title
agent license and did not file an escrow agent license application with the
Department until February 2019, almost a month after the Williams
invested. But the Commission did not introduce evidence that the timing of
Sync’s submissions departed from the typical application timeline. At a
minimum, Joplin and Olson could have reasonably believed Sync would be
approved for its licenses after submitting an escrow agent application,
paying an application fee, and purchasing a surety bond. The Commission
thus failed to prove Sync lacked a reasonable basis for its projection and
erred by finding the projection statement was securities fraud.

VI. Attorney Fees

¶52 Sync requests its attorney fees under Section 12-348(A), which
authorizes an award of attorney fees to a prevailing non-governmental
party in an adjudication on the merits in a “court proceeding to review a
state agency decision pursuant to . . . statute[s] authorizing judicial review
of agency . . . decisions.” A.R.S. § 12-348(A)(2). In our discretion, we decline
to award fees.

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CONCLUSION

¶53 We affirm in part and vacate in part the Commission’s order,
and remand to the Commission for proceedings consistent with this
decision.

MATTHEW J. MARTIN • Clerk of the Court
FILED: JR

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