DATE FILED: November 9, 2020 3:00 PM
DISTRICT COURT, COUNTY OF ARAPAHOE, CASE NUMBER: 2017CR1625
COLORADO
Arapahoe County Justice Center
7325 South Potomac Street
Centennial, CO 80112 ▲ COURT USE ONLY ▲
_________________
Plaintiff: PEOPLE OF THE STATE OF COLORADO
v. Case No. 2017CR1625
Defendant: SCOTT PACK Division: 407
Order re Restitution
This matter is before the Court concerning restitution. The Court presided over a hearing
on October 7 and 8, 2020. The Court takes judicial notice of its file.
Following trial and sentencing the Defendant stands convicted of Violation of the
Colorado Crime Control Act, §18-17-104(3), C.R.S., Conspiracy to Commit a Violation of the
Colorado Crime Control Act, §18-17-104(4), C.R.S., Conspiracy to Distribute Marihuana
Concentrate, §18-18-406(2)(b)(I), C.R.S., Cultivation of Marihuana, §18-18-306(3)(a)(I), C.R.S.,
and two counts of Securities Fraud, §11-51-501(1)(b) and (c), C.R.S. For one of the Securities
Fraud counts the jury additionally found that the Defendant made untrue statements of material
facts or material omissions.
The Defendant has taken an appeal.
After trial and before sentencing the prosecution filed their Motion for Joint and Several
Restitution. The seek over $2.8 million dollars in restitution for four different individuals:
Pierre Raygot ($246,480.60), Christof Raygot ($299,935), James Hay-Arthur ($1,050,000), and
Kyle Kolb ($1,250,000). The Defendant objected to the restitution request and filed a Brief
Opposing Restitution. The People filed a written response.
The following witnesses testified at the restitution hearing: Christoph Raygot, Pierre
Raygot (“Raygot”), James Hay-Arthur (“Hay-Arthur”), Kyle Kolb (“Kolb”), Michael
Stonehouse (“Stonehouse”), and Steve Bratten (“Bratten”).
Christoph Raygot
Mr. Christoph Raygot offered his testimony through an interactive audio/visual system.
He also used the services of a French-language interpreter. He did not testify during the trial.
He testified that he invested over $200,000 through his brother. He had no documents as
he trusted his brother. He had no details of the investment. He received no return from his
investment.
Pierre Raygot
Raygot offered his testimony through the court’s interactive audio/visual system. He also
testified at trial. A French-language interpreter was available during his trial testimony. He
never used the interpreter. The Court found it unnecessary to provide a French-language
interpreter during the restitution hearing testimony.
Raygot’s testimony during the restitution hearing did not vary from the testimony he
offered during the trial.
Raygot met the Defendant in 2010 and developed a close relationship with him. In 2015,
the Defendant discussed the possibility of Raygot investing in a business called Harmony and
Green. Raygot understood that the business had a relationship with the Colorado marihuana
industry. However, the Defendant told him that his foreign citizenship would not permit him to
invest directly in the cultivation and sale of marihuana, medicinal or recreational, and therefore
his investment would be in real estate that would be leased or rented to marihuana growers. This
point was confirmed on a number of occasions, including a visit to Colorado in 2015 when
Raygot toured a warehouse in Colorado Springs. Marihuana was being grown in this warehouse.
He testified that a separate entity, HGCO, was involved.
In June or July of 2015 he invested $100,000. Exhibits 89, 90, 92, and 257 reflect aspects
of the agreement and payments between Raygot and the Defendant.
Despite questions and concerns Raygot contacted his brother and convinced him to invest
in Harmony and Green. An additional $400,000 were invested with $200,000 coming from
Raygot and $200,000 from Christoph Raygot. Payments were made through a Spanish company.
Exhibits 194, 217, 224, 232, N, and O support the testimony of Raygot concerning his
on-going communications with Defendant (and a Co-Defendant). Additional documents (some
of which were introduced at trial but not during the hearing and so not considered by this Court
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for restitution purposes) were exchanged between the parties. The admitted documents also
support Raygot’s testimony concerning his understanding that he was investing in real estate and
not in marihuana production. At no time was Raygot informed that Harmony and Green was
involved in the out-of-state sale of marihuana.
Raygot testified that his brother relied on him and he relied upon the Defendant. He has
never received a return on his investment. He is involved in a civil lawsuit with the Defendant.
James Hay-Arthur
Hay-Arthur offered his testimony through the court’s interactive audio/visual system. He
also testified at trial under a grant of immunity. His hearing testimony was very similar to his
trial testimony.
He understood his monetary investment would be in a facility which was to provide space
for the growing of legal marihuana pursuant to Colorado law. He was led by the Defendant to
believe that licenses were the key to the value of his investment. Due to the represented nature
of the marihuana industry the licenses were to appreciate in value. These licenses, according to
information he received from the Defendant, were held by Harmony and Green. He later learned
that another company may have had ownership interest in the licenses.
As at trial, during the hearing he reviewed exhibit 192 which consists of 64 pages of
email communications between the Defendant, himself, a Co-Conspirator, Phillip Weisner, and
Kolb (Hay-Arthur’s business partner). He repeated that communications also occurred through
use of the telephone and electronic texts.
Upon his initial introduction to the Defendant’s business he dealt with the Defendant
although a Co-Conspirator was also involved. He preferred the Defendant because he thought he
was “the cleaner” of the two. Eventually, he became frustrated with the Defendant and the
information provided. He limited his communications with the Defendant preferring to deal
primarily with Weisner and the Co-Conspirator. The Defendant did tell him that HGCO was the
company that possessed the medical and recreational marihuana licenses.
At one time Hay-Arthur (and Kolb) toured property located in Elbert county. This
property has been referred to both during trial and during the restitution hearing as the Elbert
farm or the Elbert ranch or the Elbert property. This tour occurred after he had already invested
“a considerable amount of money.” During this tour he recalls meeting Stonehouse who he
thought was the gardener. He came away feeling uncomfortable about certain aspects of the
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operation in Elbert county. This discomfort did not prevent him from investing more money
which he believed would specifically be devoted to the Elbert county property.
Hay-Arthur was questioned by the Defendant concerning a meeting at a restaurant prior
to the tour of the Elbert county property. He could not recall such a meeting and he did not
recall Stonehouse ever telling him that Stonehouse “would take the fall.” He was certain that his
only conversation with Stonehouse was at the Elbert county property when he asked Stonehouse
about tomato plants that were growing in “hoop houses” in which marihuana was also being
grown. Based upon all testimony presented during the hearing the Court finds that the meeting
did occur. Otherwise, the Court credits the testimony of Hay-Arthur especially concerning his
belief that the investment was legal.
Stonehouse testified during the restitution hearing. He recalls meeting Hay-Arthur and
Kolb at a restaurant. The Defendant and a Co-Conspirator were also present. He understood that
Hay-Arthur and Kolb would invest in the Elbert county property. He believed that both Hay-
Arthur and Kolb understood that the marihuana growing on the Elbert county property was “not
entirely legal.” Much of his testimony was prefaced with phrases such as “I believe they
understood…” or “It appeared …” or “It was clear to me that …” Similarly, during the visit by
Hay-Arthur and Kolb to the Elbert county property there was a discussion of one of the two
investors about buying property in Elbert county upon which marihuana would be grown and
Stonehouse would manage the property. Stonehouse interpreted this to mean that the investors
wanted to set up an illegal grow operation. Stonehouse clearly interpreted Hay-Arthur’s and
Kolb’s actions through the lens of his own deep involvement in the criminal enterprise; i.e. he
assumed that Hay-Arthur and Kolb had the same or a similar level of knowledge concerning
marihuana cultivation, sale, and distribution as had he.
Bratten, an Agent of the Colorado Department of Revenue, testified that, during a proffer
by Stonehouse, Stonehouse said that both Hay-Arthur and Kolb were aware that the Elbert
county property growing operation was illegal.
Hay-Arthur was never informed that marihuana was going out-of-state or that there was
any illegality to the operation. He remembered being informed that all aspects of the operation
were legal and was adamant that if he had any idea that illegal activity was occurring, he would
have called law enforcement.
Incrementally, he invested $1,050,000 or $1,150,000. He relied upon Kolb to handle
most of the money transfers. He acknowledged receiving some return and described the return
as “insignificant”; either hundreds of dollars or in the low thousands.
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During the restitution hearing the Defendant confronted Hay-Arthur with his response to
the Defendant’s efforts to serve him with a subpoena to testify. He acknowledges he was aware
that a process server was attempting to contact him, but he declined to meet with her because he
knew he was presenting testimony anyway. He thought the effort was an attempt to intimidate
him. The Defendant submitted an Affidavit of Attempted Service detailing a process server’s
attempts to serve Hay-Arthur with a subpoena to testify.
Kyle Kolb
Kolb offered his testimony through the court’s interactive audio/visual system. He also
testified at trial under a grant of immunity. His hearing testimony was very similar to his trial
testimony.
He acknowledged owning a business with Hay-Arthur. The business has nothing to do
with the cultivation or marketing of marihuana. In January or February of 2016, he met the
Defendant and a Co-Conspirator. The meeting occurred at his offices. He was asked to invest in
the build-out of facilities which would then be leased to legal marihuana grow operations. He
received the impression that both the Defendant and the Co-Conspirator had made a sizeable
monetary contribution to Harmony and Green and that Harmony and Green was a marihuana or
hemp company.
To aid him in determining whether to invest he acknowledged touring a warehouse.
Later he also toured the Elbert county property for a similar purpose. He confirmed that the Co-
Conspirator took the lead with the tour of the Elbert county property and that the Defendant had
little to do with it.
On February 10, 2016, he, Hay-Arthur, and the Defendant signed exhibit 166
memorializing the investment in Harmony and Green. The investment totaled $4,800,000.
Harmony and Green was defined as “engaged in the Real Estate Acquisition, branding,
cultivation of Intellectual Property, and marketing related to cannabis industry products…”
Further Harmony and Green was described as “building out 70,000 SF of Medical and
Recreational Marijuana Cultivation, Retail Stores, and Extraction facilities…” HGCO was
designated as the entity licensing “all properties, local licenses, plant genetics, and other
Intellectual Properties from” Harmony and Green. Other entities are described as related to
Harmony and Green and involved in the medical and recreational cultivation of marihuana.
There is no indication in exhibit 166 that Harmony and Green was acting in violation of any law
although Kolb testified that he was aware that Colorado and Federal law diverged on this point.
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The investment by Kolb and Hay-Arthur was accomplished through the wire transfer of
funds to an account provided by either the Defendant or a Co-Conspirator.
Kolb remembers a meeting at a restaurant involving Stonehouse. The Defendant
absented himself from this meeting and Kolb understood that the Defendant and Stonehouse
were having “a tumultuous time.” At this meeting there were discussions concerning the Elbert
county property and the possibility Kolb and Hay-Arthur could acquire the property for a
discounted price. Kolb remembers no voiced concerns regarding the legality of any aspect of the
Elbert county property. By this time, Kolb was concerned about the security of the investment
and the purchase of the Elbert county property at a discounted price was attractive. Again,
money was wired from Kolb and Hay-Arthur to an account provided by the Defendant and the
Co-Conspirator.
Law and Argument
Restitution in criminal cases is mandatory to compensate crime victims and to assist in
the rehabilitation of the Defendant. Restitution also acts as a deterrence to future criminal acts.
Restitution is accomplished through Part 6 of Article 1.3 of Title 18.
“Restitution” means any pecuniary loss suffered by a victim and includes but is not
limited to all out-of-pocket expenses, interest, loss of use of money, proximately caused by the
Defendant’s conduct. The amount of restitution must be able to be reasonably calculated and
recompensed in money. Section 18-1.3-602(3)(a), C.R.S.
The Defendant relies upon §18-1.3-602(4)(b), C.R.S. After broadly defining “victim” the
subsection precludes “a person who is accountable for the crime or a crime arising from the same
conduct, criminal episode, or plan as defined under the law of this state or of the United States”
as a victim. He points out that the legalization of marihuana in Colorado did not legalize the
substance under federal law. People v. McKnight, 2019 CO 36, ¶37, 446 P.3d 397, 406 and
People v. Crouse, 2017 CO 5, ¶11, 388 P.3d 39, 41-42.
Under the plain language of subsection (4)(b) the Defendant asserts that “financiers of a
marijuana business” violate federal law. This broad assertion fails to recognize that the law
contains the concept of the “innocent investor.” See e.g. People v. Yoakum, 191 Colo. 269, 552
P.2d 291 (1976).
The Defendant also asserts that all four victims were precluded from funding retail
marijuana operations. During the time of the offenses the law prohibited out-of-state investors
from lawfully funding a retail marihuana business. Section 44-11-307, C.R.S. 2016, amended
2019.
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It is the obligation of the People to request restitution. Section 18-1.3-603(2), C.R.S.
The People must establish the amount of restitution owed by a preponderance of the evidence.
People v. Smith, 181 P.3d 324 (Colo. App. 2007). When a defendant challenges restitution a
court must conduct a hearing. People v. Martinez, 166 P.3d 223 (Colo. App. 2010).
The Court cannot order a defendant to pay restitution for losses that did not result from
the conduct that was the basis of the Defendant’s criminal conviction. Cumhuriyet v. People,
200 Colo. 466, 469, 615 P.2d 724, 726 (1980). The Court cannot award restitution for conduct
underlying an acquitted charge, Cowen v. People, 2018 CO 96, ¶14, 431 P.3d 215, 220, or for
losses caused by uncharged conduct, People v. Roddy, 2020 COA 72, ¶34.
The Defendant asserts that the securities fraud convictions he has suffered will not
withstand appellate challenge based upon a lack of jury unanimity concerning the “multiple
alleged securities transaction (sic) and alleged victims…” Alternatively, the Defendant asserts
that even if the securities fraud convictions are affirmed on appeal the Court would commit error
to “impose a restitution order regarding investors and transactions that were not specifically
found to be criminal by a unanimous jury verdict.” The chance of the appellate court’s
determination of error regarding a conviction will not prohibit the Court’s award of restitution.
People v. Vasseur, 409 P.3d 524 (Colo. App. 2016).
The Defendant also attacks the ability of the Court to determine restitution. Relying upon
Apprendi v. New Jersey, 530 U.S. 466 (2000), he asserts the jury was required to unanimously
determine if restitution is owing and the amount of restitution. Despite the number of published
appellate opinions holding that the rule of Apprendi doesn’t apply to restitution orders, see
People v. Knapp, 2020 COA 107, ¶86, the Defendant argues that the two-judge dissent from a
denial of certiorari in Hester v. United States, ___ U.S. ___, 139 S.Ct. 509, 202 L.Ed.2d 627
(2019), should control and should permit this Court to act contrary to the plain language in the
Colorado appellate opinions. Trial courts have no discretion to disregard binding appellate
rulings. People v. Roybal, 672 P.2d 1003, 1005 (Colo. 1983). The rule of Apprendi does not bar
this Court’s consideration of restitution.
Finally, the Defendant also challenges the factual support of the amount requested. On
that challenge the Court has engaged in this process of hearing and ruling.
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ORDER
Christof Raygot
Christof Raygot’s testimony at the restitution hearing established that, at the urging of his
brother, he invested $200,0001 in Harmony and Green. He relied exclusively on information
provided by his brother. He never toured any facility or property financially related to Harmony
and Green and he never met the Defendant or any Co-Defendant or employee of Harmony and
Green.
Christof Raygot is entitled to restitution in the amount of $199,935. The Court enters the
lesser amount as Christof Raygot’s testimony supports the conclusion that he was simply
rounding up regarding his loss and the other evidence submitted support the lesser amount. The
argument that §18-1.3-602(4)(b), C.R.S., bars his receipt of restitution is belied by his reliance
upon others in making his investment which is mentioned in more detail related to the award of
restitution for Pierre Raygot.
Pierre Raygot
Pierre Raygot’s testimony at the restitution hearing established that he invested $300,0002
in Harmony and Green. He relied on information provided by the Defendant, with whom he had
established a close relationship. He also toured a warehouse in which marihuana was being
grown. He was concerned about the legality of the business and pressed the Defendant on this
point. He received absolute assurances that his (and his brother’s) investment would be in the
warehouse and not the growing operation within the warehouse. As a citizen of a foreign
country he was not familiar with the laws related to the growing and distribution of marihuana.
Again, he relied upon assurances given by the Defendant.
Pierre Raygot is entitled to restitution in the amount of $299,935. Again, the Court enters
the lesser amount as Pierre Raygot also appeared to be rounding the amount of his loss. Section
18-1.3-602(4)(b), C.R.S., does not bar his receipt of restitution due to the assurances given by the
Defendant to him that he (and his brother) were investing in the warehouse and not in the
marihuana production taking place in the warehouse.
James Hay-Arthur
James Hay-Arthur’s testimony at the restitution hearing established that he invested some
amount in Harmony and Green. His initial investment related to space in which marihuana
1
Exhibit 500 presented by the People as a summary indicates that Christof Raygot invested $199,935.
2
Exhibit 500 indicates the Pierre Raygot invested $299,935.
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would be grown with collateral provided by marihuana licenses. He also invested in the Elbert
county property. He was clear that his investment was directly tied in with the growing and
marketing of marihuana.
He was credible in this testimony that he sought and received assurances from the
Defendant (and others) that Harmony and Green was not engaged in any illegal activities. He
candidly testified that he was uncomfortable with aspects of the Elbert county property. The
Court finds this discomfort related to his general impressions of Stonehouse and the Co-
Defendant. Hay-Arthur’s credibility is further supported by the testimony of his business
partner, Kolb. The Court does not find Stonehouse’s impressions and conclusions sufficient to
so erode the credibility of Hay-Arthur to permit the Court to conclude that he should be denied
restitution based upon §18-1.3-602(4)(b), C.R.S. The issue related to the service of the subpoena
in any way erodes his credibility.
Hay-Arthur’s pursuit and receipt of immunity does not change the Court’s analysis. He
was in a business relationship with the Defendant. The Defendant was criminally charged (along
with many others). The relative lack of legal expertise. All these factors lead the Court to
conclude that Hay-Arthur had every right to be concerned regarding criminal liability.
He testified that the initial investment was either $1,015,000 or $1,150,000. He also
indicated he invested additional amounts. He was not certain as to the total amount and as to any
amount of return he may have received. He was credible in his assertion that his partner, Kolb,
was more conversant with the actual monetary investment. The People’s Motion for Joint and
Several Restitution listed $1,050,000 and the People’s Exhibit 500 listed $1,250,000.
Hay-Arthur is entitled to restitution in the amount of $1,050.00. This amount reflects the
uncertainty in the total amount established through the evidence presented by the People.
Kyle Kolb
Kolb’s restitution hearing testimony was similar to Hay-Arthur’s testimony, but Kolb was
better able to recall specifics of the financial aspects of the investments. He relied upon
information given by the Defendant and Co-Defendant, and upon tours of a warehouse and the
Elbert county property. He and Hay-Arthur invested “somewhere between $200,000 and
$400,000” as an initial investment. Subsequent investments brought his personal loss to
$1,150,000 minus a $200,000 return.
He understood that Colorado law and Federal law diverged concerning the production
and distribution of marihuana. He accepted assurances by the Defendant and Co-Defendant that
all aspects of the investments complied with Colorado law. He recalls the restaurant meeting and
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he recalls nothing about that meeting causing him any concerns regarding the legality of his
investment. The Court finds Kolb credible.
The Court makes note that it received Exhibits 833 and 1584. The printed pages of
exhibit 83 reveal that the Defendant and Harmony and Green received $1,409,278.11 from this
account. The printed page of exhibit 158 reveals that Michael Stonehouse received $60,000
from this account. Based upon the testimony of Hay-Arthur and Kolb the Court finds these
exhibits of little use. The amounts revealed in these two exhibits permit the Court to conclude
that at least $1,409,278.11 was paid and potentially lost by Hay-Arthur and Kolb acting as
partners. But this amount is not conclusive of the overall loss as Kolb testified that some
payments occurred through wire payments which may not be reflected in these exhibits.
Kolb’s pursuit and receipt of immunity does not change the Court’s analysis. He was in a
business relationship with the Defendant. The Defendant was criminally charged (along with
many others). The relative lack of legal expertise. All these factors lead the Court to conclude
that Kolb had every right to be concerned regarding criminal liability.
Kolb is entitled to restitution in the amount of $950,000. The quality of evidence
presented by the People leads the Court to conclude that Kolb paid $1,150,000 and received a
return of $200,000. As with Hay-Arthur, the Court finds that §18-1.3-602(4)(b), C.R.S., does
not bar this recovery. Kolb acted on reliance of the assurances of the Defendant (and Co-
Defendant and Stonehouse) that Harmony and Green and the Elbert county property complied
with State law.
In summary: Judgment enters in favor of Pierre Raygot and against the Defendant in the
amount of $299,935. Judgment enters in favor of Christof Raygot and against the Defendant in
the amount of $199,935. Judgment enters in favor of James Hay-Arthur and against the
Defendant in the amount of $1,050,000. Judgment enters in favor of Kyle Kolb and against the
Defendant in the amount of $950,000. Interest shall accrue as required by law.
The Court shall issue an Amended Sentencing Order (Mittimus) reflecting this Order of
Restitution.
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This exhibit consists of seven pages and a CD with the label “Wells Fargo.” No information or testimony was
presented that the CD should also be examined by the Court to determine restitution. The Court declines any
invitation to engage in its own investigation as to whether the seven pages and the amounts set forth therein should
be expanded by information in the records on the CD.
4
This exhibit consists of one page and a CD with the label “JP Morgan.” No information or testimony was
presented that the CD should also be examined by the Court to determine restitution. The Court again delines any
invitation to engage in its own investigation as to whether the one page and the amount set forth therein should be
expended by information in the records on the CD.
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In the event any co-defendant has a restitution order entered against him or her the Court
will note the joint and several obligation of this restitution obligation.
November 9, 2020.
BY THE COURT:
MICHAEL SPEAR
District Court Judge
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