COLORADO COURT OF APPEALS                                         2017COA84


Court of Appeals No. 16CA0126
City and County of Denver District Court No. 15CV32760
Honorable Karen L. Brody, Judge


Gerald Rome, Securities Commissioner for the State of Colorado,

Plaintiff-Appellant,

v.

Antonio Reyes, Craig Kahler, and Betty Schnorenberg,

Defendants-Appellees.


                       JUDGMENT REVERSED AND CASE
                        REMANDED WITH DIRECTIONS

                                  Division I
                         Opinion by JUDGE NAVARRO
                       Taubman and Graham, JJ., concur

             Prior Opinion Announced May 11, 2017, WITHDRAWN

OPINION PREVIOUSLY ANNOUNCED AS “NOT PUBLISHED PURSUANT TO
C.A.R. 35(E)” ON May 11, 2017, IS NOW DESIGNATED FOR PUBLICATION

                          Announced June 15, 2017


Cynthia H. Coffman, Attorney General, Sueanna P. Johnson, Assistant
Attorney General, Charles J. Kooyman, Assistant Attorney General, Denver,
Colorado, for Plaintiff-Appellant

Foster Graham Milstein & Calisher, LLP, Chip G. Schoneberger, Denver,
Colorado, for Defendants-Appellees
¶1    In this civil enforcement action, plaintiff, Gerald Rome,

 Securities Commissioner for the State of Colorado (the

 Commissioner), appeals the district court’s judgment dismissing the

 claims against defendants Antonio Reyes, Craig Kahler, and Betty

 Schnorenberg. We reverse and remand with directions.

               I.     Factual and Procedural History

¶2    Because the court granted defendants’ motions to dismiss, we

 accept as true the following facts alleged in the Commissioner’s

 complaint. This case arises out of a Ponzi scheme that defrauded at

 least 255 investors out of $15.25 million dollars. To implement the

 scheme, defendant Kelly Schnorenberg formed defendant KJS

 Marketing, Inc., in Colorado to obtain funds for investment in

 insurance and financial-products sales companies. (Neither Kelly

 Schnorenberg nor KJS is a party to this appeal.) Kelly

 Schnorenberg hired Reyes, a California resident, and Kahler, a

 Wyoming resident, to solicit investor funds on behalf of KJS and its

 successor company, James Marketing.

¶3    Reyes and Kahler represented to potential investors that KJS

 would direct investment funds to particular companies for the

 purpose of recruiting and training agents to sell insurance and


                                   1
 financial products, and that the investors would receive ten to

 twelve percent returns from the ensuing commissions. Reyes and

 Kahler further represented that the investments were risk free and

 that prominent individuals in the insurance industry were involved.

 Reyes and Kahler directed out-of-state investors to Kelly

 Schnorenberg or KJS in Colorado to complete the transactions. The

 investors, in exchange for their investments, received promissory

 notes executed by Kelly Schnorenberg and/or KJS in Colorado and

 governed by Colorado law.

¶4      The investment scheme was a fraud, according to the

 Commissioner. Instead of directing most funds to the insurance

 and financial-products sales companies as promised, Kelly

 Schnorenberg allegedly converted the investments to personal use,

 or otherwise distributed the funds to his mother, his girlfriend, or

 prior investors in the attempt to mollify them while bringing in new

 investors to continue the scheme.1 Meanwhile, Reyes and Kahler


 1   The Commissioner explains the scheme as follows:

             Within approximately one year of starting
             investments of each of the insurance
             companies, [Kelly] Schnorenberg, Kahler
             and/or Reyes would tell investors that the

                                    2
 received transaction-based commissions (from Kelly Schnorenberg,

 KJS, or other Colorado entities) on the sale of the investments.

¶5    Seeking to enjoin the scheme, the Commissioner brought

 claims against Kelly Schnorenberg, Reyes, and Kahler for securities

 fraud, offer and sale of unregistered securities, and unlicensed sales

 representative activity. The Commissioner also sought a

 constructive trust or equitable lien against three “relief defendants”

 who allegedly received some of the improperly obtained investment

 funds. Betty Schnorenberg, Kelly’s mother, is one such relief

 defendant. She resides in Wyoming.

¶6    Reyes, Kahler, and Betty Schnorenberg moved to dismiss all

 claims against them under C.R.C.P. 12(b)(2) for lack of personal

 jurisdiction. Reyes and Kahler also sought dismissal of the



           company had failed. Schnorenberg, Kahler
           and/or Reyes would then tell investors about
           the opportunity to invest in a new insurance
           sales company, using the same or similar
           business models. Investors who had invested
           in the prior insurance sales company and who
           had not been paid were encouraged to roll
           their investments into the new company on the
           same terms. Other investors were rolled into
           the new insurance sales companies without
           their knowledge or consent.


                                   3
 securities fraud claim on the ground that it failed to meet the

 particularity requirements of C.R.C.P. 9(b).2 The district court

 granted all of these motions without conducting an evidentiary

 hearing. In written orders, the court concluded that it lacked

 personal jurisdiction over each of the nonresident defendants, and

 that the Commissioner’s securities fraud claim failed to “link any

 particular factual allegations to actual false representations” made

 by Reyes or Kahler. The court certified these rulings as final under

 C.R.C.P. 54(b).

                    II.     Personal Jurisdiction

¶7    The Commissioner contends that the district court erred in

 dismissing the claims against Reyes, Kahler, and Betty

 Schnorenberg for lack of personal jurisdiction. We agree.

                     A.    Rule 12(b)(2) Procedure

¶8    In its discretion, a district court may address a Rule 12(b)(2)

 motion before trial based solely on the documentary evidence or by

 holding an evidentiary hearing. Archangel Diamond Corp. v. Lukoil,


 2Additionally, Reyes and Kahler sought dismissal under C.R.C.P.
 12(b)(5) for failure to state a claim on which relief could be granted.
 The district court declined to address these requests given its
 disposition of the other motions.

                                    4
  123 P.3d 1187, 1192 (Colo. 2005). Where, as here, the court

  decides the motion on the documentary evidence alone, the plaintiff

  need only demonstrate a prima facie showing of personal

  jurisdiction to defeat the motion. Id.

¶9     Documentary evidence consists of the complaint’s allegations

  as well as affidavits and any other written material submitted by

  the parties. Id. The court must accept the complaint’s allegations

  as true to the extent they are not contradicted by the defendant’s

  competent evidence. If the parties’ competent evidence presents

  conflicting facts, the court must resolve such discrepancies in the

  plaintiff’s favor. Id.

¶ 10   A prima facie showing exists when the plaintiff raises a

  reasonable inference that the court has jurisdiction over the

  defendant. Id.; see also Keefe v. Kirschenbaum & Kirschenbaum,

  P.C., 40 P.3d 1267, 1272 (Colo. 2002). “This is a light burden

  intended only to ‘screen out “cases in which personal jurisdiction is

  obviously lacking, and those in which the jurisdictional challenge is

  patently bogus.”’” Found. for Knowledge in Dev. v. Interactive Design

  Consultants, LLC, 234 P.3d 673, 677 (Colo. 2010) (citations

  omitted).


                                    5
¶ 11   We review de novo whether the plaintiff established a prima

  facie case of personal jurisdiction. Id.

                            B.   Legal Standard

¶ 12   To exercise jurisdiction over a nonresident defendant, a

  Colorado court must comply with Colorado’s long-arm statute and

  constitutional due process. § 13-1-124, C.R.S. 2016; Magill v. Ford

  Motor Co., 2016 CO 57, ¶ 14. Because the long-arm statute extends

  jurisdiction to the maximum extent allowed by the Due Process

  Clause, the due process inquiry is controlling. New Frontier Media,

  Inc. v. Freeman, 85 P.3d 611, 613 (Colo. App. 2003).

¶ 13   To permit jurisdiction over a nonresident defendant, due

  process requires that the defendant have certain minimum contacts

  with the forum. Int’l Shoe Co. v. Washington, 326 U.S. 310, 316

  (1945). The quantity and nature of the minimum contacts required

  depends on whether the plaintiff alleges specific or general

  jurisdiction. Archangel, 123 P.3d at 1194. Here, the Commissioner

  relies on specific jurisdiction.

¶ 14   Specific jurisdiction is properly exercised over a defendant

  where the injuries triggering litigation arise out of and are related to

  significant activities directed by the defendant toward the forum


                                     6
  state. Id.; see Day v. Snowmass Stables, Inc., 810 F. Supp. 289,

  292 (D. Colo. 1993). “As such, the minimum contacts inquiry in

  regard to specific jurisdiction is essentially a two[-]part test

  assessing, (1) whether the defendant purposefully availed himself of

  the privilege of conducting business in the forum state, and

  (2), whether the litigation ‘arises out of’ the defendant’s forum-

  related contacts.” Archangel, 123 P.3d at 1194. The contacts must

  be established by the defendant himself. Day, 810 F. Supp. at 292.

  “The unilateral activity of those who claim some relationship with a

  nonresident defendant cannot satisfy the requirement of contact

  with the forum state.” Id. (quoting Hanson v. Denckla, 357 U.S.

  235, 253 (1958)).

¶ 15   Once it is established that a defendant has the requisite

  minimum contacts, those contacts must be considered in light of

  other factors to determine whether the assertion of personal

  jurisdiction would comport with notions of fair play and substantial

  justice (i.e., whether jurisdiction over the defendant would be

  reasonable). Youngquist Bros. Oil & Gas, Inc. v. Miner, 2017 CO 11,

  ¶ 13. These factors may include the burden on the defendant, the

  forum state’s interest in resolving the controversy, and the


                                      7
  plaintiff’s interest in attaining effective and convenient relief.

  Archangel, 123 P.3d at 1195. “[A]n especially strong showing of

  reasonableness may serve to fortify a borderline showing of

  minimum contacts.” Id. (citations omitted); see Keefe, 40 P.3d at

  1271-72. Conversely, when a defendant who purposefully directed

  his activities at a forum seeks to defeat jurisdiction, he must

  present a compelling case that the presence of some other

  considerations would render jurisdiction unreasonable. Keefe, 40

  P.3d at 1272.

                          C.     Reyes and Kahler

                            1.    The Affidavits

¶ 16   The Commissioner alleged in his complaint that Reyes and

  Kahler directly solicited investors in Colorado, among other states.

  Reyes and Kahler submitted affidavits in support of their motions to

  dismiss in which they denied soliciting investors in Colorado.3

  Though the Commissioner submitted affidavits from his investigator

  in response, we will accept as true Reyes’s and Kahler’s assertions

  on this point. See Archangel, 123 P.3d at 1192 (“[T]he allegations in

  3As we will discuss, however, Kahler admitted that he had
  contacted one Colorado investor via e-mail. Kahler asserted that he
  made this contact at Kelly Schnorenberg’s request.

                                      8
  the complaint must be accepted as true to the extent they are not

  contradicted by the defendant’s competent evidence[.]”).4

¶ 17   For its part, the district court seemed to disregard entirely the

  investigator’s affidavits addressing Reyes and Kahler. The court

  found that the investigator’s statements were not based on personal

  knowledge of the facts alleged and, therefore, they did not qualify as

  “competent evidence.” The Commissioner contends that the court

  erred in that ruling. We need not resolve this dispute, however,

  because the Commissioner made a prima facie showing of personal

  jurisdiction over Reyes and Kahler even without considering the

  investigator’s affidavits concerning them. We now turn to that

  jurisdictional analysis.

                    2.   Jurisdiction Under A Statute

¶ 18   The Commissioner first argues that the Colorado Securities

  Act (CSA), §§ 11-51-101 to -908, C.R.S. 2016, contemplates

  personal jurisdiction over Reyes and Kahler. To the extent the

  4We also accept as true the other specific facts asserted in the
  affidavits of Reyes and Kahler. We do not accept at face value any
  party’s conclusory allegation that defendants did or did not conduct
  business in Colorado. See Gognat v. Ellsworth, 224 P.3d 1039,
  1052 (Colo. App. 2009), aff’d, 259 P.3d 497 (Colo. 2011); see also
  Warne v. Hall, 2016 CO 50, ¶¶ 9, 27 (recognizing that a court need
  not accept as true legal conclusions or conclusory allegations).

                                    9
  Commissioner contends that, if he sufficiently alleged that Reyes

  and Kahler violated the CSA, his allegations against them also

  satisfied Colorado’s long-arm statute, we agree.

¶ 19   According to the long-arm statute, the transaction of business

  within the state may submit a person to the jurisdiction of the

  courts of this state. § 13-1-124(1)(a). According to the CSA, “[a]ny

  violation of this article shall be deemed to constitute the transaction

  of business within this state for the purpose of section 13-1-124,

  C.R.S.” § 11-51-706(4), C.R.S. 2016.

¶ 20   The Commissioner alleged that Reyes and Kahler violated the

  CSA, whether or not they were physically present in Colorado,

  because the transactions at issue pertained to securities that

  originated in Colorado. § 11-51-102(1), C.R.S. 2016 (providing that

  the relevant CSA provisions “apply to persons who sell or offer to

  sell when an offer to sell is made in this state or when an offer to

  purchase is made and accepted in this state”); § 11-51-102(3)

  (confirming that “an offer to sell or to purchase is made in this

  state, whether or not either party is then present in this state, when

  the offer originates from this state”). In support, the Commissioner

  asserted that the securities at issue — the promissory notes — were


                                    10
  executed in Colorado by a Colorado issuer (Kelly Schnorenberg

  and/or KJS) for whom Reyes and Kahler were acting as agents.

¶ 21   We assume without deciding that the above allegations create

  a reasonable inference that Reyes and Kahler violated the CSA. Cf.

  In re Trade Partners, Inc., 627 F. Supp. 2d 772 (W.D. Mich. 2008)

  (stating that allegations that issuer was from Michigan and out-of-

  state defendants acted as its agents satisfied “originating in”

  requirement of Michigan Securities Act); Rosenthal v. Dean Witter

  Reynolds, Inc., 908 P.2d 1095, 1105 (Colo. 1995) (applying an

  earlier, though substantially similar, version of the CSA to a suit

  brought by a Pennsylvania resident against an out-of-state broker

  because the issuer was in Colorado and the offer originated here).

  Even so, we must still consider whether exercising jurisdiction over

  Reyes and Kahler satisfies due process.

¶ 22   “The Fourteenth Amendment’s due process clause governs the

  outer boundaries of a state’s authority to proceed against

  nonresident defendants.” Magill, ¶ 15. In fact, “the personal

  jurisdiction inquiry under Colorado law collapses into the

  traditional due process inquiry.” Grynberg Petroleum Co. v.

  Evergreen Energy Partners, LLC, 485 F. Supp. 2d 1217, 1222-23 (D.


                                    11
  Colo. 2007). So, the question remains: Did the Commissioner make

  a prima facie showing of the nonresident defendants’ minimum

  contacts with Colorado such that exercising jurisdiction over them

  comports with due process?

                3.   Minimum Contacts with Colorado

¶ 23   The documentary evidence shows the following facts

  pertaining to both Reyes and Kahler:

          They solicited investments on behalf of KJS, a Colorado

            company. That is, Reyes and Kahler repeatedly

            encouraged investors to send money to Colorado in

            furtherance of the alleged Ponzi scheme.

          They directed investors to contact Kelly Schnorenberg or

            KJS in Colorado, where the transactions were finalized.

          They received transaction-based commissions from

            Colorado accounts pertaining to the investments.

¶ 24   In addition, with respect to Reyes and Kahler individually, the

  documentary evidence shows:

          Reyes serves as Executive Field Chairman for

            WealthSmart America (WSA), a Colorado-based company

            affiliated with the alleged Ponzi scheme. In 2014, he


                                   12
             attended a presentation in Colorado directing investors

             towards the company.

           Reyes is licensed to sell insurance in Colorado.

           Kahler e-mailed a Colorado-based investor at Kelly

             Schnorenberg’s behest. The purpose of the e-mail (which

             included an exchange note and financial information on

             one of the scheme’s underlying companies) was to enable

             the investor to roll over his investment from one failed

             company into another — in this case, WSA.

¶ 25   Considered in isolation, these contacts with Colorado might

  not be sufficient to establish specific jurisdiction. For instance, a

  person is not necessarily subject to Colorado’s jurisdiction simply

  because he entered into a solicitation agreement with a Colorado

  company. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478

  (1985); Gognat v. Ellsworth, 224 P.3d 1039, 1052 (Colo. App. 2009),

  aff’d, 259 P.3d 497. Nor is jurisdiction sufficiently established by a

  defendant’s simply receiving payment from the forum for work

  conducted outside of the forum. Touchtone Grp., LLC v. Rink, 913

  F. Supp. 2d 1063, 1075 (D. Colo. 2012). Similarly, Reyes’s serving

  as an officer for a Colorado company, or Kahler’s sending a single e-

                                    13
  mail into Colorado, might not be sufficient to satisfy the minimum

  contacts inquiry if considered alone. See In re Terrorist Attacks on

  Sept. 11, 2001, 740 F. Supp. 2d 494, 506 (S.D.N.Y. 2010) (officer),

  aff’d, 714 F.3d 118 (2d Cir. 2013); Keefe, 40 P.3d at 1271 (single

  contact).

¶ 26   But we cannot divide and conquer. We cannot isolate each

  individual contact when assessing whether the Commissioner has

  raised a reasonable inference of jurisdiction over these defendants.

  Instead, we consider the contacts in their totality. See Calder v.

  Jones, 465 U.S. 783, 789 (1984).

¶ 27   For example, in Foundation for Knowledge, our supreme court

  acknowledged that the nonresident defendant’s contractual

  relationship with a Colorado company, standing alone, was

  insufficient to establish personal jurisdiction. 234 P.3d at 680.

  Still, the court decided that the defendant’s additional contacts with

  Colorado established jurisdiction, including the facts that the

  agreement required others (not the defendant) to perform significant

  work in Colorado, the defendant extensively communicated with the

  Colorado company’s representatives while they were in Colorado,

  and the defendant was required to send parts of the project to


                                     14
  Colorado for approval. See id. Rejecting “the notion that an

  absence of physical contacts can defeat personal jurisdiction,” the

  supreme court concluded that the nonresident defendant’s contacts

  with Colorado were not “‘random, fortuitous, or attenuated’ in

  nature” but instead sufficiently established that he purposely

  availed himself of the privilege of conducting business in Colorado.

  Id. at 680-81 (citations omitted).

¶ 28   Likewise, in Greenway Nutrients, Inc. v. Blackburn, 33 F. Supp.

  3d 1224, 1238 (D. Colo. 2014), the court found personal

  jurisdiction over a foreign defendant where an agreement created a

  relationship between the defendant and the Colorado plaintiff, and

  the defendant purchased “product” outside of Colorado for the

  plaintiff in furtherance of their relationship. The court explained

  that the defendant’s purchase of product for the plaintiff’s benefit

  was “an activity directed at a resident of Colorado.” Id.

¶ 29   Likewise, the documentary evidence here shows that Reyes

  and Kahler each entered into an ongoing relationship with a

  Colorado-based company on whose behalf they solicited out-of-state

  investors through alleged misrepresentations. Reyes and Kahler

  each furthered the relationship by actively directing the unwitting


                                       15
  investors to Colorado, whereupon Reyes and Kahler received

  commissions from Colorado accounts based on the ensuing

  transactions. Furthermore, Reyes acted as an officer for a Colorado

  company associated with the scheme (WSA), and Kahler admitted

  contacting at least one Colorado investor with information to

  further the alleged scheme.

¶ 30   The above contacts were among those that triggered the

  Commissioner’s litigation under the CSA; the contacts supported

  the alleged Ponzi scheme that purportedly harmed the Colorado

  securities market. Thus, when viewing defendants’ contacts as a

  whole, we discern a prima facie showing that Reyes and Kahler

  purposefully availed themselves of the privilege of conducting

  business in Colorado with Colorado residents (Kelly Schnorenberg

  and the Colorado companies associated with the alleged scheme).

  See Found. for Knowledge, 234 P.3d at 680-81.

¶ 31   Indeed, the prima facie showing is particularly strong with

  respect to Reyes, given his involvement with WSA, a Colorado




                                   16
  company.5 To reiterate, the scheme at issue rested on the

  acquisition of investors’ funds solicited through misrepresentations.

  The thrust of the misrepresentations was that the investments

  would be directed to particular companies to generate profit,

  including WSA. These companies, however, never received

  sufficient funds to generate the promised return. Hence, Reyes

  allegedly solicited investments for the scheme while acting as an

  officer for one of the Colorado companies involved in the scheme.

¶ 32   These allegations against Reyes raise a reasonable inference

  that he may have been a primary participant in the scheme

  involving WSA. “[W]here individual officers and directors are

  primary participants in the wrongdoing giving rise to the court’s

  jurisdiction over the corporation, they are subject to jurisdiction in

  the forum state.” Scott v. Gurusamy, No. 16-CV-02961-RM-MEH,

  2017 WL 590291, at *4 (D. Colo. Feb. 14, 2017); see also

  Application to Enforce Admin. Subpoenas Duces Tecum of Sec. Exch.

  Comm’n v. Knowles, 87 F.3d 413, 418 (10th Cir. 1996)

  (“[E]mployees of a corporation that is subject to the personal

  5The Commissioner alleged that Reyes acted as an officer for
  several of the companies involved in the scheme. In his affidavit,
  Reyes concedes that he is an officer of WSA.

                                    17
  jurisdiction of the courts of the forum may themselves be subject to

  jurisdiction if those employees were primary participants in the

  activities forming the basis of jurisdiction over the corporation.”).

¶ 33   In sum, taking the allegations together, the activities of both

  Reyes and Kahler rendered it reasonably foreseeable that they could

  be haled into a Colorado court to answer the allegations of fraud,

  sale of unregistered securities, and unlicensed sales representative

  activity affecting the Colorado investment market. After all, the

  Commissioner’s burden to show a prima facie case of jurisdiction is

  “light” because the prima facie showing is merely intended to screen

  out cases in which personal jurisdiction is obviously lacking.

  Found. for Knowledge, 234 P.3d at 677. And, even if the showing of

  minimum contacts here were considered “borderline,” the strong

  showing of reasonableness discussed below “serve[s] to fortify” the

  contacts. Archangel, 123 P.3d at 1195 (citation omitted).

                           4.   Reasonableness

¶ 34   Colorado’s exercise of personal jurisdiction over Reyes and

  Kahler comports with notions of fair play and substantial justice.

  “This determination is essentially one of reasonableness.” Found.

  for Knowledge, 234 P.3d at 682.


                                     18
¶ 35   First, Colorado has a compelling interest in resolving the

  harms caused by the alleged Colorado-based Ponzi scheme,

  including those caused by Reyes’s and Kahler’s solicitations of

  investments to further the scheme. See § 11-51-101(2) (“The

  purposes of [the CSA] are to protect investors and maintain public

  confidence in securities markets[.]”). Second, the Commissioner

  can file suit only in Denver District Court. § 11-51-602, C.R.S.

  2016. Therefore, jurisdiction over Reyes and Kahler in Colorado is

  necessary if the Commissioner is to address and to obtain a remedy

  for the harms that Reyes and Kahler allegedly caused Colorado

  markets through their active and repeated participation in the

  scheme. Third, defendants do not argue that exercising jurisdiction

  over them in Colorado would create an unreasonable burden, and

  we discern no basis for such a conclusion.

¶ 36   As a result, the exercise of jurisdiction over Reyes and Kahler

  in Colorado does not offend due process principles.6


  6 Of course, a finding that a plaintiff has made a prima facie
  showing of personal jurisdiction does not preclude the district court
  from subsequently requiring the plaintiff to establish personal
  jurisdiction by a preponderance of the evidence, either at an
  evidentiary hearing before trial or by the close of trial. Archangel
  Diamond Corp. v. Lukoil, 123 P.3d 1187, 1192 n.3 (Colo. 2005).

                                   19
                        D.   Betty Schnorenberg

                 1.   Minimum Contacts with Colorado

¶ 37   According to the complaint, Betty Schnorenberg is a resident

  of Wyoming; she received funds from her son (Kelly), transferred

  from Colorado accounts; and she knew or should have known that

  the money came from investors in her son’s “Colorado-based

  investment scheme.” As a “relief defendant,” she is not accused of

  violating any substantive law but is part of this case only as an

  alleged holder of assets that must be recovered in order to afford

  complete relief. See Fed. Trade Comm’n v. Johnson, No. 2:10-cv-

  02203-MMD-GWF, 2013 WL 2460359, at *6 (D. Nev. June 6, 2013)

  (citing Commodity Futures Trading Comm’n v. Kimberlynn Creek

  Ranch, Inc., 276 F.3d 187, 192 (4th Cir. 2002)).

¶ 38   Betty Schnorenberg, in her affidavit, admitted receiving

  $604,924.21 from her son. She claimed that she had used this

  money to pay down $634,077.86 in credit-card debt incurred by her

  son on her cards from January 2014 through May 2015. She

  asserted that she had allowed him to use her credit cards to incur

  charges for what she understood to be “his business activities.” The

  affidavit of the Commissioner’s investigator identified an additional


                                    20
  $578,006 that Betty Schnorenberg had allegedly received from her

  son between January 2009 and December 2013. The investigator

  asserted that this money came from accounts controlled by her son

  “that were funded 99.99% by investors” in the underlying scheme.

¶ 39   Betty Schnorenberg’s contacts with Colorado were arguably

  fewer than those of Reyes and Kahler. However, “[i]n some

  circumstances, even a single act may subject a defendant to

  jurisdiction, where that act creates a substantial connection

  between the defendant and the forum state.” In re Marriage of

  Malwitz, 99 P.3d 56, 61 (Colo. 2004).

¶ 40   Where a defendant’s contacts are few, a three-part test

  applies. First, the defendant must purposefully avail herself of the

  privilege of acting in the forum state or of causing important

  consequences in that state. Id. Second, the cause of action must

  arise from the consequences in the forum state of the defendant’s

  activities. Id. Finally, the defendant’s activities or the

  consequences of those activities must have a substantial enough

  connection with the forum state to make the exercise of jurisdiction

  over the defendant reasonable. Id.




                                     21
¶ 41   For instance, our supreme court held that a defendant had

  established minimum contacts with Colorado because his abuse

  and harassment had caused his wife to move here, where she and

  her daughter received public assistance from the state (an

  “important consequence”). Id. at 62-64. Because the defendant

  should have expected his wife to flee to Colorado to join her family

  and he caused important consequences here, he created a

  substantial connection between himself and Colorado. Id. at 63-64.

¶ 42   Also illustrative is First Horizon Merchant Services, Inc. v.

  Wellspring Capital Management, LLC, 166 P.3d 166 (Colo. App.

  2007). There, a division of this court considered a defendant who

  had participated in three or four phone calls with people in

  Colorado, including a conference call where he apparently said

  nothing significant. Id. at 176. The plaintiff asserted that the

  defendant had engaged in fraudulent concealment because he had

  a duty to speak up during the conference call to correct another

  person’s material omissions. Id. The division concluded that the

  defendant’s activity, “although limited, was sufficient to create a

  reasonable inference that he purposefully availed himself of the




                                    22
  privilege of acting in Colorado or of causing important consequences

  in Colorado.” Id. (emphasis added).

¶ 43   Here, Betty Schnorenberg allegedly engaged in multiple

  financial transactions with her Colorado son that were substantial

  in amount and that extended over a relatively significant period.

  According to the documentary evidence, she may have provided

  considerable money to finance — and she may have received

  considerable money from — the Colorado-based Ponzi scheme at

  issue. See § 13-1-124(1)(a) (transacting business in Colorado may

  submit a person to Colorado’s jurisdiction). The complaint alleges

  that this scheme, including Betty Schnorenberg’s taking money

  from it, caused important consequences in Colorado (e.g., the

  victims’ losses). Cf. Malwitz, 99 P.3d at 63; First Horizon Merchant

  Servs., 166 P.3d at 176.7

¶ 44   Therefore, the Commissioner’s action against Betty

  Schnorenberg arises from her activities’ consequences in Colorado.

  See Malwitz, 99 P.3d at 62. Finally, as with Reyes and Kahler, the

  strong showing that Colorado’s exercise of jurisdiction over Betty

  7At this point in the proceedings, we must accept as true the
  Commissioner’s allegation that she might still possess some of the
  allegedly ill-gotten funds.

                                   23
  Schnorenberg would be reasonable (discussed below) fortifies her

  fairly limited contacts with Colorado. See Archangel, 123 P.3d at

  1195.

                          2.   Reasonableness

¶ 45   As discussed, Colorado has a compelling interest in resolving

  the harms caused by the alleged Ponzi scheme, including those

  caused by Betty Schnorenberg’s possible financing of and receipt of

  proceeds from the scheme. Because the Commissioner can file suit

  only in Denver District Court, Colorado’s jurisdiction over her is

  necessary if the Commissioner is to address and to obtain a full

  remedy for the Ponzi scheme’s harms.

¶ 46   Furthermore, Betty Schnorenberg does not contend that

  exercising jurisdiction over her in Colorado would unreasonably

  burden her. And we do not perceive such a burden. The

  Commissioner does not assert a cause of action against her that

  she would have to defend on the merits. See Kimberlynn Creek

  Ranch, 276 F.3d at 192. Instead, the equitable relief sought against

  her depends entirely on the Commissioner’s first proving his claims

  against the merits defendants. See id. (recognizing that a relief, or




                                    24
  nominal, defendant is joined purely as a means to facilitate

  collection).

¶ 47   The above considerations, “taken together, amply demonstrate

  the reasonableness of exercising jurisdiction over [Betty

  Schnorenberg], despite the somewhat limited nature of [her] direct

  contacts with Colorado.” Malwitz, 99 P.3d at 63. We therefore

  reverse the dismissal of Betty Schnorenberg from this case.

             III.     Heightened Pleading under Rule 9(b)

¶ 48   The district court dismissed the claims against Reyes and

  Kahler “under section 501 of the Colorado Securities Act” on the

  ground that the Commissioner had “not met [his] pleading burden

  under Rule 9(b).” The Commissioner says this ruling was

  erroneous, and we agree.

                 A.   Standard of Review and Relevant Law

¶ 49   The parties agree that Rule 9(b)’s heightened pleading

  standard applies to the Commissioner’s claim for securities fraud

  asserted under section 11-51-501(1)(a)-(c), C.R.S. 2016. We review

  de novo the dismissal of a fraud action for failing to satisfy this

  standard. Scott Sys., Inc. v. Scott, 996 P.2d 775, 780 (Colo. App.

  2000); see also Grossman v. Novell, Inc., 120 F.3d 1112, 1118 n.5


                                     25
  (10th Cir. 1997); State Farm Mut. Auto. Ins. Co. v. Parrish, 899 P.2d

  285, 288 (Colo. App. 1994) (case law interpreting an analogous

  federal rule may be persuasive in analyzing the Colorado rule).

¶ 50   Rule 9(b) requires that, in all averments of fraud, the

  circumstances constituting fraud shall be stated with particularity.

            While a plaintiff need not plead all of the
            evidence that may be presented to prove the
            claim of fraud, the complaint must at least
            state the main facts or incidents which
            constitute the fraud so that the defendant is
            provided with sufficient information to frame a
            responsive pleading and defend against the
            claim.

  Parrish, 899 P.2d at 289 (citation omitted).

                            B.    Application

¶ 51   In support of the claim for securities fraud, the Commissioner

  alleged that Reyes and Kahler — along with Kelly Schnorenberg —

  solicited investors on behalf of KJS to invest between $10,000 and

  $50,000 each for investments in a series of companies: Salus

  Marketing Enterprises, LLC; Premier Advantage Insurance Agency,

  LLC; Hegemon Holdings, LLC; Quantum Success Strategies, LLC;

  and WSA. During their respective solicitations, all of these

  defendants represented that



                                    26
           the investment funds would be used exclusively to invest

              in insurance sales companies;

           returns of ten to twelve percent would be paid to

              investors from commissions on the sales of insurance

              and financial products;

           investors would be provided with quarterly and annual

              financial statements of KJS; and

           the investments were risk free.

  According to the Commissioner, however, the majority of the

  investment funds were instead converted to Kelly Schnorenberg’s

  personal use or directed to his family and friends, leaving investors

  with no principal, much less profit.

¶ 52   The Commissioner further alleged that all of the defendants

  failed to disclose certain risks associated with the investments. For

  instance,

           Kelly Schnorenberg was subject to two prior permanent

              injunctions under the CSA relevant to the investment

              scheme;

           new investment money was being used to make interest

              payments to existing investors;

                                    27
           prior insurance companies involved in the scheme had

            failed without paying any returns to investors; and

           Kelly Schnorenberg and KJS owed prior investors

            millions of dollars relating to investments in similar

            insurance sales companies.

¶ 53   Reyes and Kahler argue that these allegations fail to meet the

  pleading standards under Rule 9(b) because they are broadly

  directed at “the Defendants” and do not allege specific conduct by

  each individual. On the contrary, the alleged misrepresentations

  and omissions are not based merely on collective action committed

  by an undifferentiated group. Rather, we construe the

  Commissioner’s complaint as alleging that each merits defendant

  (including Reyes and Kahler) made the aforementioned

  misstatements or omissions while soliciting his potential investors

  under the scheme. Bolstering this reading of the complaint is the

  Commissioner’s identification of a particular solicitation that each

  defendant made individually, which was “typical of the conduct

  engaged in by the Defendants with other investors.”

¶ 54   For example, Reyes recruited A.T., a California resident, in

  2012 and directed him to Kelly Schnorenberg. As for Kahler, he

                                    28
  approached M.S., an Illinois resident, and told him that the

  insurance company was going to be a “big hit” and “claimed that

  investment was growing quickly.” Kahler did not, however, provide

  M.S. with relevant written materials, disclose the risks, or disclose

  the other material information about regulatory and legal actions

  involving Kelly Schnorenberg.

¶ 55   Because the allegations are directed toward each individual

  defendant (rather than only toward defendants as a group), the

  cases cited by defendants and the district court are not particularly

  useful, in our view.8 More on point is State ex rel. Suthers v.

  Mandatory Poster Agency, Inc., 260 P.3d 9 (Colo. App. 2009).



  8 Koch v. Koch Indus., Inc., 203 F.3d 1202 (10th Cir. 2000) (finding a
  claim insufficient because the complaint failed to identify any
  specific defendant who made the fraudulent misrepresentations or
  omissions where a number of individual defendants were involved);
  Zerman v. Ball, 735 F.2d 15 (2d Cir. 1984) (dismissing the claims as
  to individual defendants where the complaint did not assert that
  either made any statement to the plaintiff or had contact with her);
  Amerson v. Chase Home Fin. LLC, No. 11-CV-01041-WJM-MEH,
  2012 WL 1686168 (D. Colo. May 7, 2012) (dismissing claim where
  plaintiff failed to identify who mailed the fraudulent letter at issue);
  Fisher v. APP Pharm., LLC, 783 F. Supp. 2d 424 (S.D.N.Y. 2011)
  (plaintiff failed to differentiate among the named defendants in each
  allegation and thus failed to inform each defendant of the
  circumstances surrounding the fraudulent contact with which he
  individually stood charged).

                                    29
¶ 56   In that case, the State asserted a Colorado Consumer

  Protection Act (CCPA) claim for deceptive trade practices against

  multiple defendants. The complaint identified each defendant

  individually and then alleged that the “defendants” violated the

  CCPA because the defendants’ solicitations deceived “consumers” in

  particular ways regarding the geographic origin of the defendants’

  goods. See id. at 13. In other words, the complaint did not

  separately allege that each defendant had committed a particular

  deceptive act or had deceived a particular consumer. Yet, a division

  of this court held that the allegations were sufficiently particular to

  satisfy Rule 9(b). Id. Mandatory Poster Agency is particularly

  relevant because, like the Commissioner’s claims here, it addressed

  the State’s law enforcement action against multiple defendants

  involving multiple victims — unlike the cases cited by defendants

  and the district court involving disputes between private parties.

¶ 57   Reyes and Kahler also claim that the Commissioner’s

  allegations failed to identify any specific, fraudulent behavior they

  committed against any investor individually. Again, we disagree.

  The Commissioner set forth specific statements made to investors,

  as well as failures to disclose, that are relevant to a claim for relief


                                     30
  under section 11-51-501 of the CSA. According to the complaint,

  the statements were unlawful because they reflected a device,

  scheme, or artifice to defraud, while the alleged omissions

  constituted material facts necessary to make the statements not

  misleading. As noted, the Commissioner identified particular

  investors solicited by Reyes and by Kahler personally. And, as

  Mandatory Poster Agency illustrates, the complaint need not

  identify every victim of a defendant’s fraudulent activities in order to

  survive a motion to dismiss for failure to comply with Rule 9(b). See

  also Parrish, 899 P.2d at 289 (“[A] plaintiff need not plead all of the

  evidence that may be presented to prove the claim of fraud[.]”).9

¶ 58   Consequently, the Commissioner’s complaint provides

  sufficient particularity to afford Reyes and Kahler fair notice of the

  claim for securities fraud and the main facts or incidents upon

  which it is based. We reverse the dismissal of the fraud claim

  against Reyes and Kahler.




  9A motion to dismiss for failure to comply with C.R.C.P. 9(b) is
  generally treated as a motion to dismiss for failure to state a claim
  on which relief can be granted. Cf. Seattle-First Nat’l Bank v.
  Carlstedt, 800 F.2d 1008, 1011 (10th Cir. 1986).

                                     31
                         IV.      Conclusion

¶ 59   The judgment is reversed. The matter is remanded to the

  district court for further proceedings consistent with this opinion.

       JUDGE TAUBMAN and JUDGE GRAHAM concur.




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