People v. Avignone CA4/1 ( 2021 )

Filed 10/20/21 P. v. Avignone CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
THE PEOPLE, D075948
Plaintiff and Respondent,
(Super. Ct. No. SCD250640)
v.
ORDER MODIFYING OPINION
WILLIAM ALAN AVIGNONE et al., AND DENYING MOTION TO
FILE A LATE PETITION FOR
Defendants and Appellants. REHEARING AS MOOT
NO CHANGE IN JUDGMENT
THE COURT:
It is ordered that the opinion filed herein on September 30, 2021, be
modified as follows:
1. On page 2, in the second line of the first full paragraph the space
after the word “Georgia” is removed.
2. On page 62, the first sentence after the heading “The Existence of
Two Tests to Determine If an Instrument Is a Security Did Not Violate
Susan’s Equal Protection Rights” is removed and replaced with:
Susan, with William joining, argues that because the
existence of a security is determined using two tests—the
risk capital and Howey tests—her equal protection rights
were violated.
There is no change in judgment.
The motion to file a late petition for rehearing is denied as moot.
McCONNELL, P. J.
Copies to: All parties
2
Filed 9/30/21 P. v. Avignone CA4/1 (unmodified opinion)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
THE PEOPLE, D075948
Plaintiff and Respondent,
v. (Super. Ct. No. SCD250640)
WILLIAM ALAN AVIGNONE et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of San Diego County,
Melinda J. Lasater, Judge. Affirmed.
John L. Staley, under appointment by the Court of Appeal, for
Defendant and Appellant William Alan Avignone.
Christine M. Aros, under appointment by the Court of Appeal, for
Defendant and Appellant Susan Joy Avignone.
Xavier Becerra, Attorney General, Lance E. Winters, Chief Assistant
Attorney General, Julie L. Garland, Assistant Attorney General, A. Natasha
Cortina and Annie Featherman Fraser, Deputy Attorneys General, for
Plaintiff and Respondent.
William and Susan Avignone solicited funds for a real estate
investment scheme in Georgia , promising their inexperienced, and naïve
investors regular interest payments at high rates of interest and the return of
all principal plus large profits. The Avignones told their victims the
investment was guaranteed, safe and that their principal was not at risk.
Several investors were also promised first lien positions on the properties.
Through their company, SABA Investments, William and Susan did purchase
several homes in Georgia. However, most of the money they were entrusted
with was used for personal expenses. In the end, the pair spent most of the
money, filed for bankruptcy, and closed their business without repaying
hundreds of thousands of dollars lent to them by the victims.
An initial guilty plea by both defendants was withdrawn after this
court determined their sentences were unlawful. Eventually the pair was
brought to trial and Susan and William were each convicted of six counts of
grand theft and nine counts of securities fraud. The jury also found true
white collar crime enhancements. William was sentenced to 13 years in state
prison and Susan was sentenced to seven years in state prison. Both now
appeal their judgments of conviction on various grounds.
William challenges his conviction on multiple bases and Susan joins
each of these arguments. First, William asserts the six grand theft
convictions should be consolidated into one conviction as a matter of law in
accordance with People v. Bailey (1961) 55 Cal.2d 514 (Bailey). Alternatively,
William argues the court’s failure to give a jury instruction based on Bailey
was error. William next argues the trial court erred by failing to give a
unanimity instruction requiring the jury to agree that the basis for each theft
conviction was either false pretenses or embezzlement. William also asserts
that the court prejudicially erred by giving a conspiracy instruction, which
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allowed the jury to improperly convict based on conspiracy to commit a
negligent act, a legal impossibility. Similarly, William argues that the
instructions on the excessive takings enhancement under Penal Code
section 186.11 constituted error because they allowed the computation of
losses to include securities fraud and theft by false pretenses. William also
challenges the trial court’s jurisdiction over the crimes related to victims who
resided in Arizona. Finally, William argues there was insufficient evidence to
support the jury’s findings that the promissory notes used to complete the
fraud were securities.
Susan also challenges the sufficiency of the evidence to support her
securities fraud convictions, arguing there was no evidence she personally
made, aided or abetted, or conspired to make any false statement or omission
of material fact. She also challenges the sufficiency of the evidence to support
the jury’s finding that the false statement and omissions were material.
Finally, Susan asserts her equal protection rights were violated because
California law allows two alternative tests to determine whether a
transaction is a security.
As we shall explain, we reject the Avignones’ arguments and affirm the
judgments of conviction.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Prosecution’s Case
William and Susan were financial advisors specializing in variable life
insurance products when they opened their own firm, SABA Financial, in
2006. William stated he did not like the way his prior employer, World
Financial Group, did business, so he decided to strike out on his own. In
2009, William was introduced to Mark Evans. William attended a seminar
put on by Evans, who impressed William with his expertise in a method of
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real estate investment using private investments, backed by promissory
notes, to purchase properties to rent to tenants eligible for assistance from
the federal housing voucher program known as Section 8. William partnered
with another financial advisor he met at the seminar to purchase Evans’s
business model for $18,000.
Using Evans’s method, William planned to obtain cash from his clients
and in exchange write them promissory notes. William and Susan then
planned to purchase “undervalued” properties in Atlanta, Georgia (using
Evans’s contacts) to refurbish and rent to Section 8 tenants. The scheme
included promises to the investors of first lien positions on properties, giving
clients peace of mind that their investments were secure. William testified
that he believed he could give himself and his investors a great return using
Evans’s plan. William and Susan quickly began soliciting funds for their new
scheme, looking to their unsophisticated life insurance clients.
1. Eric Van De Ven
William and Susan’s first investors in the real estate scheme were
existing clients Eric and Kristen Van De Ven, who resided in Topock,
Arizona. In 2006, the Van De Vens were introduced to the Avignones by
Susan’s brother, who was the pastor at the church the Van De Vens attended.
Eric Van De Ven is a drywall contractor who dropped out of school in tenth
grade. After their initial meetings, the Van De Vens were persuaded by
William and Susan to complete a cash-out refinance of their home. The Van
De Vens’ monthly mortgage payments were just $355 per month, and Eric
expressed concern to Susan that he could not afford a higher payment.
Kristen also did not think refinancing their home was a good idea.
Susan told the Van De Vens that Eric could use the proceeds of the
refinance to start his own business, which would increase his income and
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support the higher monthly mortgage payments. Eric was eventually
persuaded and with Susan completing the paperwork, the couple took
$125,000 in equity from their home. Their mortgage payment increased to
$1,200 per month. The Van De Vens used the money to pay off debt,
purchase tools for Eric’s business, and on the Avignones’ advice, deposit
$75,000 into an “ING Account.” On William’s recommendation, the Van De
Vens then each invested $12,500 from the ING Account into two Midland
National life insurance policies. The Van De Vens made another $12,500
investment into each policy the following year.
In 2009, William contacted Eric by phone and told him about the new
real estate investment opportunity. William told Eric the new opportunity
would provide higher returns than the Midland National policy. The money
would be invested in property in Georgia, and the Van De Vens could expect a
10% rate of return, and quarterly interest payments of $675 for five years.
The properties would then be sold at a profit, and the Van De Vens would
receive back 50% of that profit. William also told Eric they would have a first
lien position on the property, which Eric interpreted to mean he had an
ownership interest in the property that would provide security and control,
and the ability to liquidate his position before five years. William also told
Eric he could get his money back whenever he needed it.
An email Willian sent to Eric after their phone call to solicit the
investment, explained the money would be used to purchase “a highly
discounted, refurbished and guaranteed rented house and you get 1/2 equity
position on any profits beyond your initial investment. You are NOT having
to deal with being the ‘landlord’ on any of these properties. The system is
already in place to take care of all that. You will just get a periodic check
without any worries of the day-to-day task of managing the properties.”
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The Van De Vens agreed to the investment, and on the Avignones’
advice and with William and Susan’s assistance, withdrew $27,000 from their
Midland National life insurance policies. The Van De Vens received two
checks from Midland, which they deposited into their checking account. The
Van De Vens then wrote SABA Financial a check for $27,000 and mailed it to
the Avignones’ offices in San Diego. After receiving the check, in April 2009,
William emailed Eric a promissory note, which the Van De Vens printed,
signed, and faxed back to William. The note stated the Van De Vens would
receive the promised quarterly payments of $675, 50% of the profits on the
sale of property above $50,000, and a first lien position on the property. The
Van De Vens never received any paperwork showing a lien.
The Van De Vens received three to five payments, then in early 2011
the payments stopped. Eric, whose work had slowed and needed the monthly
payments to cover his higher mortgage and other living expenses, repeatedly
called and emailed the Avignones. William told Eric to relax and that if the
Van De Vens wanted their principal returned he should submit a formal
letter to SABA. The Van De Vens sent a notarized letter requesting the
money, but the request went unanswered. On June 1, 2011, Eric sent an
email to the Avignones threatening legal action if their money was not
returned. William responded by email, telling Eric to take responsibility for
his actions, and not “throw ‘blame’ or hurl accusations and threats
somewhere they don’t belong.” The email stated the Van De Vens would
receive their money back, but it never came.
2. Otilia Branch
The Avignones’ next victim was Otilia Branch, an administrator for the
health company Kaiser. Branch, who had been with Kaiser for 40 years, was
nearing retirement when her friend Beverly White recommended Branch
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meet with the Avignones.1 Branch had a meeting with William and Susan
sometime in 2006, and on their recommendation invested in a Midland
National life insurance policy. As with the Van De Vens, the Avignones
advised Branch to refinance her house and use a portion of the equity to
purchase life insurance.
In June 2009, Branch met with the Avignones and White. William and
Susan evaluated Branch’s financial position and prepared an investment
strategy recommending she use the proceeds of her retirement accounts from
Kaiser to invest in the real estate scheme. The Avignones suggested Branch
invest in five properties in Georgia at a cost of $50,000 each. William and
Susan explained to Branch that the investment was secure and that she
would receive quarterly interest payments based on an annual interest rate
of 12%. They also told Branch she would have a first lien position on the
properties, which were to be purchased, refurbished, and used for Section 8
housing. They emphasized the principal investment was secure because of
the lien and guaranteed Branch that she would not lose her principal
investment. Branch relied on the Avignones to take care of her retirement
funds and she believed the investment was safe and would provide her with
regular income to subsidize her social security payments.
The Avignones also told Branch the properties would be sold in three to
five years, and the investors would receive half of the profit above the initial
$50,000, which they estimated would be $150,000. During the meeting, the
1 Branch was White’s supervisor at Kaiser for a time in 1995. White left
Kaiser, but remained friends with Branch. White met William and Susan in
2005 when she began working as an independent contractor for World
Financial Group. White was starting her career in insurance sales and
considered the Avignones mentors. When William and Susan left World
Financial Group to start SABA, White brought her insurance business to
SABA.
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Avignones gave Branch a “Special Report” they had prepared, which stated
the investment was safe and secure, and that it would provide a high yield
return. The “Report” did not explain specifically what the investment was, or
any risks it carried, rather it highlighted the secure nature of the investment,
its liquidity, and the above market rates of return that were available,
promising clients a “Turnkey 9% Secured Investment.”
William suggested that Branch withdraw funds from her Midland
National life insurance policy to fund the first property purchase. William
and Susan completed the paperwork required for the withdrawal. On June
15, 2009, Branch wrote a check to SABA Investments for $70,000. Branch
testified at trial that $70,000 was the maximum amount that could be
withdrawn from her life insurance policy, and William advised her it made
sense to invest the most possible in the real estate scheme. The Avignones
gave Branch a $70,000 promissory note, dated June 15, 2009. The note
stated interest would accrue at a rate of 12% per year and that Branch would
receive quarterly payments of $2,100 for five years.2
Branch retired in December 2009, and the following month, William
and Susan provided Branch with a document outlining their plans for her
retirement finances. The document indicated SABA would pay the premiums
on Branch’s Midland National life insurance policy, and recommended
Branch invest an additional $280,000 in the real estate scheme. The
document also stated that Branch’s principal investment “will never be at
2 Another promissory note for $50,000, signed by Branch on June 11,
2010, with an interest rate of 16.8% was allegedly a replacement for the
$70,000 note so that $20,000 could be returned to the Midland National life
insurance policy. Neither Branch nor White could recall any specifics about
the replacement note, but Branch believed that the $20,000 that the
Avignones represented would be returned to the insurance policy was never
deposited and that the policy lapsed.
8
risk,” and would be returned to her or renegotiated in three to five years or
sooner. As with the earlier investment, William and Susan promised
quarterly interest payments at a rate of 12% per year.
Branch took the advice, liquidated her retirement account and at the
Avignones’ direction gave a check for $249,000 to a holding company called
Entrust. In return, Branch received another promissory note, this one for
$245,000 with an interest rate of 12% per year. Branch believed she would
have a first lien position on the properties that were to be purchased with her
investment, but that was not stated on the promissory note. On June 20,
2010, Branch wired additional funds from her 401(k) retirement account to
Entrust, and received a new promissory note for $285,000, replacing the
$245,000 note.
Branch and White believed that with the $285,000 investment and the
prior $70,000, the Avignones would purchase seven houses for $50,000 each
and that Branch would be the first lienholder on each property.3 Branch also
thought paperwork would be prepared, in addition to the promissory notes,
that would reflect the liens. She never received any documentation, however,
showing she had a lien on any property. When Branch asked, with White’s
assistance, for the documentation she was promised, William said that things
were delayed, or that they were on vacation, or that they encountered illness.
In May 2010, Branch asked William for copies of her paperwork to make sure
he had repaid the Midland policy and showing the policy was reinstated and
in effect, but Branch never received it.
3 White’s agreement with the Avignones was a $5,000 referral fee for
each property they purchased using funds from a client White referred to
them.
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Branch did receive quarterly interest payments, $2,100 for the first
note and $8,400 for the second, until early 2011. After her payments stopped,
in early March 2011, Branch sent William a heated email requesting
information about her investments. She asserted that her Midland National
life insurance policy had lapsed because of his and Susan’s failure to pay the
premiums and sought confirmation of her liens and equity positions in the
Georgia properties they had allegedly purchased with her investment.
William sent an email in response, stating that he was exercising the option
to terminate the note and that he would repay the principal. No money was
returned to Branch. She called and emailed repeatedly, and eventually
realized that the SABA offices had been closed. Branch hired an attorney
and filed a lawsuit against the defendants in 2012. The Avignones settled
the lawsuit with Branch in 2014 for a sum certain (not disclosed in this case)
and the transfer of several properties to Branch.
3. Monroe Wightman
The Avignones’s third victim, Monroe Wightman, was also connected to
White.4 Wightman, a retired ship engineer, was White’s next door neighbor.
She introduced him to William and Susan in 2009, and Wightman purchased
a life insurance policy from SABA Financial. Shortly after, Wightman
received an inheritance and was looking for an investment vehicle for the
money. White told Wightman about the Avignones’ real estate scheme and
set up another meeting between them. William and Susan told Wightman
about their investment in Georgia property that would be used for Section 8
housing. They told Wightman the houses cost $50,000, they would earn
4 Wightman knew White as Beverly Russel. The record does not make
clear why White used two different surnames.
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money from guaranteed rental income, and the income would go towards the
quarterly interest payments promised at a rate of 12% per year.
As with the other investors, the Avignones told Wightman the
properties would be sold at a profit after three to five years and Wightman
would be a first lien holder and entitled to 50% of the profits above the
$50,000 purchase price. The Avignones provided Wightman with the same
“Special Report” given to Branch that represented the investment was safe
and secured, yet still offered a “high yield.” Wightman trusted White and the
Avignones. William guaranteed the investment would be profitable.
Wightman agreed to invest $150,000. Wightman received two
promissory notes, the first dated June 16, 2009 for $100,000 and a second
dated June 23, 2009 for $50,000. The notes indicated that Wightman was a
first lien holder. Over the next two years, Wightman received 13 or 14 of the
promised interest payments, each by check signed by Susan for SABA
Investments. Wightman never received any additional documentation
showing his position as a first lienholder on any property.
The payments ceased around March 2011. When Wightman inquired,
William gave Wightman various excuses. He first told Wightman the checks
were delayed and would be forthcoming. William later told Wightman that a
property manager had stolen the profits, been caught, and the money was
tied up in court proceedings. William then told Wightman, in an email dated
April 28, 2012, that he and Susan were being investigated. Wightman was
contacted and interviewed by an investigator for the district attorney’s office
shortly after.
4. Carlos Lopez
Carlos Lopez was a colleague of Branch. Lopez worked with Branch at
Kaiser for over 20 years, primarily as a Spanish interpreter. Their
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retirements were close in time, and Branch referred Lopez to the Avignones
to help with his retirement investments. Lopez trusted Branch’s advice and
met with Susan and William at their La Mesa office in 2009. Lopez gave the
Avignones information about his finances and investment needs. After the
meeting, he agreed to take their advice and invest in the same real estate
scheme that William and Susan recommended for Branch. William and
Susan explained to Lopez that they planned to purchase properties in
Georgia, rent the homes, and then eventually sell them at a profit. As he had
with the other investors, William advised Lopez he would receive regular
interest payments at a rate of 12% per year.
After his retirement in November 2009, Lopez gave the Avignones a
check for $217,000, the entire proceeds of his retirement account. The
Avignones delivered the check to Entrust. Susan assisted Lopez in
negotiating settlements with a few creditors and used approximately $13,000
to pay off Lopez’s existing debt. On January 27, 2010, Lopez received a
promissory note for $200,000. The note stated Lopez would receive quarterly
interest payments of $6,000 for five years. The note did not state that Lopez
would have a first lien on any property and Lopez did not recall being told
that he would be given a lien.
After signing the note, Lopez received monthly payments of $2,000 for
about eighteen months. When the payments stopped, Lopez called the
Avignones’ office. When he did not get a response, he visited the office and
found it had been closed. Lopez recalled that when he finally reached the
Avignones they gave him various excuses about the stopped payments. They
initially said the payments were delayed because of an illness in the family,
then Susan told Lopez the money “was taken away,” and finally that they
had lost a large amount of money on the investments in Georgia. In the end,
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Lopez received nothing from the Avignones beyond the monthly payments
that ceased in 2011. Like Branch, Lopez lost his entire retirement.
5. Frank Blowers
Frank Blowers met William and Susan at his church in a program
called “Entrepeneuring For Christ.” The Avignones presented to the group
about life insurance as a retirement investment. After the presentation,
Blowers met with William and Susan at their office in La Mesa to discuss life
insurance. When he got there, the Avignones told Blowers they had a better
opportunity for him. They told Blowers they had a successful real estate
company that flipped houses into rentals. They also said they could offer
better returns than what Blowers had currently, paying him 10% on his
investment.
According to Blowers, both William and Susan participated in this
presentation. They emphasized the investment was safe and secure because
the properties could always be sold. William told Blowers he personally
guaranteed that Blowers would not lose money on the investment. Blowers
felt he could trust the Avignones because they had been invited to present at
his church. They showed Blowers photographs of homes they intended to
purchase in Georgia and a nice home there they stated they owned. The
Avignones also told Blowers the scheme was already profitable.
Blowers was attracted to the investment because it offered regular
payments. Blowers was retired and recently divorced, and was looking for
additional income to support his monthly housing costs. On May 6, 2010,
Blowers invested his life savings, $54,000, from his retirement account with
the Avignones. He provided a check to Entrust and received a promissory
note from the Avignones in exchange. The note stated that Blowers would
receive quarterly interest payments of $1,350 based on an annual interest
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rate of 10% for five years. Thereafter, Blowers received monthly payments of
$450. The payments ended after eight months.
Blowers remained close with William and Susan after his investment,
seeing them weekly at church and often having lunch with them after.
Blowers went to a birthday party for William during this time period, and
was the only non-family member in attendance. In April 2011, before the
payments to Blowers ceased, Blowers invested an additional $20,000 with the
Avignones. The Avignones told Blowers they needed additional funds to
complete the renovations of one of the investment properties. Blowers sold a
tractor and other equipment, and gave the cash proceeds to William and
Susan. In exchange, Blowers received a second promissory note, dated
April 15, 2011, stating he would receive $750 in interest after four months.
Shortly after this second investment, Blowers received a payment that
was short, then the payments stopped entirely. Blowers immediately
contacted William and Susan, who told him that their accounts had been
illegally seized and they were working on straightening things out. Blowers
never received any further payment.
6. Forensic Accounting
A key witness at trial, in addition to the testifying victims, was the
district attorney’s forensic accountant, Kevin Boyne. Boyne analyzed the
defendants’ bank records from April 2009 to April 2012, the point all of the
investors’ contributions—totaling $806,000—had been depleted. Boyne
established that the Avignones purchased 11 homes in Georgia at a total cost
of $190,000. He then traced the portions of the funds from each investment
to SABA by the victims that could be substantiated with records.
Boyne showed that of the $27,000 invested by the Van De Vens,
$16,780.38 was wired to a financial intermediary in Georgia for the purchase
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of 740 S. Grand Avenue, $14 was charged for the wire fee, and $6,000 was
used to pay contractors for work on that property.
For Branch, Boyne showed that after her first $70,000 transfer to the
Avignones, they withdrew $8,000 in cash or as a cashier’s check, and spent
$7,998.50 on personal expenses that included interest on personal loans,
personal credit card debt payments, payment to their Welk Resort time
share, and payments to a personal line of credit. $24,942.69 was directed
towards the purchase of real estate and $3,618.17 went towards business
related expenses. $675 of Branch’s initial $70,000 investment went towards
an interest payment to the Van De Vens, and $14,000 was paid to White.
Boyne also traced Branch’s second and third transfers to the
Avignones, of $245,000 on February 11, 2010 and $40,000 on June 16, 2010.
Boyne showed a portion of those funds were used to make interest payments
to Branch herself, Van De Ven, Wightman, Lopez, Blowers, and another
investor. $6,711 was withdrawn in cash and $87,447.95 went towards
personal expenses, including life insurance premiums on policies that listed
Susan as the beneficiary, credit card payments, payment on a personal line of
credit, an IRS payment, the Welk Resort time share, boat repairs, and Costco
and other consumer stores. Of the $285,000, Boyne calculated $105,878.23
was used to purchase real estate and real estate related expenses, and an
additional $66,000 was used for business expenses, including the Avignones’
office lease, utilities, and attendance at sales seminars.
With respect to Wightman’s $150,000 investment, Boyne opined that
the Avignones spent $43,755.56 on personal expenses, including mortgage
payments for a second home in Alaska, restaurants, retail shopping, credit
card debt, their home mortgage, donations to their church, personal
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insurance, and boat repairs. They used a little over half, $75,995.51 on real
estate and related business expenses.
Boyne determined that Blowers’s and Lopez’s investments were
comingled into one bank account, so he evaluated the funds together, tracing
the money from February 3, 2010, when Lopez’s check for $200,000 was
deposited, continuing through May 11, 2010, when Blowers’s $54,000 was
deposited, and ending on December 29, 2010, when the account was almost
entirely depleted. Boyne found the Avignones used $137,990.82 for personal
expenditures, including car payments and gasoline purchases; dental
payments; credit card payments; $30,085.87 for their home mortgage, gas,
utilities, and property taxes; and San Diego restaurants. The account was
also used to pay $1,500 in interest to Wightman, and $4,423.57 in interest to
Branch.
A real estate attorney evaluated the chain of title for the 11 properties
purchased by the Avignones and found no property had a lien in favor of any
of the victims. Boyne also determined the Avignones had spent between
$54,000 and $55,000 on repairs for the properties and made interest
payments to the victims totaling $133,875. By Boyne’s calculations, the
Avignones embezzled between $425,000 and $560,000 from their victims.
7. Bankruptcy Proceedings
In 2012, William and Susan filed for Chapter 13 bankruptcy. In their
filings, they failed to list any of the investors as creditors and none of them
were notified of the proceedings. They listed SABA Financial as a dissolved
entity with a value of $0. They also listed the Georgia properties as assets.
Before any plan was put in place in the bankruptcy, the Avignones
voluntarily dismissed their bankruptcy petition.
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In 2014, appellants filed for Chapter 7 bankruptcy. They listed
unsecured debt of $1,271,580.80. At a hearing in the proceeding, William
testified they sold two Georgia properties in 2013. One property was sold for
$121,500, and resulted in net proceeds of $48,175. The other property had
net proceeds of $53,769.55. William testified the money was all gone, and it
was used for appellants’ legal fees, for living expenses, and to take care of
other properties that were in arrears to avoid foreclosure.
B. Defense Case
Susan called an Atlanta-based consultant the Avignones hired to assist
in their efforts to find suitable properties to rehabilitate for Section 8
housing, and who also assisted with preparing the properties for rental. She
stated that both contractors and vagrants had stolen from the properties
after they were purchased, upsetting the Avignones’ plans to rent the homes.
The witness also testified that the requirements for Section 8 housing became
more stringent in the relevant time period, making it more difficult for the
Avignones to execute their plans. Susan also called a contractor they met at
Mark Evans’s seminar, who worked on creating various websites to solicit
investors and who they paid $150.
Susan called a forensic accountant, Richard Holstrom, to challenge
Boyne’s testimony. Holstrom testified that some of the expenses Boyne
categorized as personal were actually business expenses that were properly
funded with the victim’s investments. Specifically, he opined the life
insurance policy the Avignones had paid $46,602 in premiums on and that
listed Susan as the beneficiary was a business expense. Holstrom also
testified that the $20,000 from Branch’s initial $70,000 contribution was
returned to her and not properly included as part of the losses she sustained.
Finally, Holstrom criticized Boyne’s failure to account for property taxes the
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Avignones paid on the homes they purchased, which Holstrom calculated to
be $34,024.25.5 Holstrom’s opinion was that the victims loaned $786,000 to
SABA, and $722,490 was spent on legitimate business activities from 2009 to
2016.
William took the stand in his own defense and testified over three days.
William learned about Mark Evans’s real estate program through another
seminar and attended Evans’s seminar in Atlanta. William was impressed
with the strategy, and thought Evans’s program was sound and that it would
be profitable for him and his clients. William testified that he believed Evans
would provide all the expertise needed to carry out the strategy.
William testified that the product Evans sold him did not turn out the
way it was advertised, and that Evans’s expertise and support was absent.
William stated that after he collected investments from the victims, he was
unable to find reliable contractors to refurbish the properties. Further, some
of the properties he purchased were not located in areas that were approved
for Section 8 housing. These problems were apparent in 2010, before Branch
invested an additional $285,000, but William and Susan did not disclose
them. William told the jury he had run into problems in business in the past,
but because he had always come through successfully, he did not think it was
necessary to tell Branch about the issues they were having in Georgia.
William said he purchased 11 properties, some were titled in his name,
some in Susan’s name, and some in SABA Investment’s name. Seven
properties, all located in Atlanta, were purchased for cash (using the victims’
5 In rebuttal, the prosecution called Branch’s counsel in the civil suit,
James Swiderski. He testified that when he eventually sold the properties
William transferred to Branch after settlement, he was required to pay back
property taxes for the years 2011 through 2014 totaling approximately
$40,000.
18
funds) with the assistance of the Section 8 consultant who testified, and who
William wrongly believed worked for Evans. Three of the other four
properties, located outside Atlanta in Dallas, Georgia, were purchased later
using a modest down payment and lender financing. The fourth was
purchased with cash. William planned to renovate the houses, then obtain
additional financing at a higher home valuation, and use the proceeds of
those mortgages to fund payments to the victims.
William acknowledged that none of the victims were ever given first
lien positions on any of the properties, even though some of the promissory
notes stated liens would be provided. William explained he tried to get the
investors listed as first lien holders on the properties, but he could not get
Evans’s team to help him accomplish the task and he did not know how to do
it himself.
William testified he never intended to use the victims’ investments to
pay his personal expenses but when the real estate scheme started to fail, he
did. He did not disclose this to the victims because he was embarrassed and
thought he could turn things around. William stated by the time he solicited
Lopez’s and Blowers’s investments, he knew the business was failing. He
testified he told Blowers (but not Lopez) the scheme was not working as
planned, but he believed he could turn it around if he could get additional
capital.
William also explained the insurance policy he purchased and a
subsequent loan on the policy. He testified he obtained the policy to protect
the investors, and he took the loan to invest in a motel in Atlanta that the
website consultant he hired recommended. William thought this investment
would turn things around, but he lost the entire $45,000 he put towards the
motel. In the same time period, after he received the email from Branch
19
threatening litigation, William realized he was in trouble and sought legal
advice. In 2012, he filed for Chapter 13 bankruptcy in order to “block”
Branch’s lawsuit. William stated he did not list the victims as creditors
because he intended to pay them back fully, and did not want their debts to
the victims erased or compromised.
William testified he never intentionally deceived any of the victims and
he still intended to pay them what was owed. He also believed he was
allowed to use the victims’ funds for his personal expenses so long as he was
able to meet his obligations under the promissory notes.
C. Conviction and Sentencing
William and Susan were each charged with nine counts of grand theft
(Pen. Code, § 487, subd. (a), count 1 [Van de Vens], count 3 [Branch], count 5
[Branch], count 7 [Branch], count 9 [Wightman], count 11 [Wightman],
count 13 [Lopez], count 15 [Blowers], count 17 [Blowers]) and nine counts of
making false statements in connection with the sale of a security (Corp. Code,
§§ 25401 & 25540,6 count 2 [Van de Vens], count 4 [Branch], count 6
[Branch], count 8 [Branch], count 10 [Wightman], count 12 [Wightman],
count 14 [Lopez], count 16 [Blowers], count 18 [Blowers].)
The information alleged that as to counts 1 through 5 and 9 through 12,
the victims’ date of actual or constructive knowledge tolled the statute of
limitations pursuant to Penal Code section 803, subdivision (c). The
information further alleged, as to all counts, that William and Susan
committed two or more related felonies, a material element of which is fraud
and embezzlement, which resulted in a loss of more than $500,000, within
the meaning of Penal Code sections 186.11, subdivisions (a)(1) and (a)(2), and
6 Subsequent undesignated statutory references are to the Corporations
Code.
20
between $100,000 and $500,000 within the meaning of Penal Code section
186.11, subdivision (a)(3).
After the lengthy trial, the jury found William and Susan guilty of all
counts except 1 (grand theft related to Van De Vens), 3 (grand theft related to
Branch), and 9 (grand theft related to Wightman), upon which they could not
reach verdicts. The jury also found the aggravated white collar crime
enhancements true. The following month, the court sentenced William to 13
years in state prison and Susan to 7 years in state prison. Susan and
William both timely appealed the judgments of conviction.
DISCUSSION
I
Bailey Doctrine
William first argues, with Susan joining, that his grand theft
convictions must be consolidated as a matter of law under the Bailey doctrine
because the crimes were part of one continuing impulse, intent, plan, or
scheme. Alternatively, he contends the court should have given the jury an
instruction based on Bailey. The Attorney General responds that because the
convictions related to different victims, the Bailey doctrine is inapplicable.
Further, even if the multiple victim exception to the doctrine does not apply,
each theft was sufficiently different for the crimes to be individually charged.
As we explain, we agree the Bailey doctrine is not applicable in this case.
Therefore, we do not reach William’s alternative instructional error
argument.
A
In Bailey, the California Supreme Court determined a series of over-
payments to the defendant by a welfare office, which were the result of one
misrepresentation, were properly aggregated to form one count of grand
21
theft, rather than multiple separate charges of petty theft. (Bailey, supra, 55
Cal.2d at pp. 518‒519.) The defendant falsely told the welfare authorities
that the man who lived with her was not her husband and did not contribute
to the household financially, resulting in monthly overpayments by the
welfare department. (Id. at p. 518.)
The Supreme Court approved the trial court’s instruction, which stated
“that if several acts of taking are done pursuant to an initial design to obtain
from the owner property having a value exceeding $200, and if the value of
the property so taken does exceed $200, there is one crime of grand theft, but
that if there is no such initial design, the taking of any property having a
value not exceeding $200 is petty theft.” (Bailey, supra, 55 Cal.2d at p. 518.)
The court explained, “a defendant may be properly convicted upon separate
counts charging grand theft from the same person if the evidence shows that
the offenses are separate and distinct and were not committed pursuant to
one intention, one general impulse, and one plan.” (Id. at p. 519.) Bailey also
makes clear that “[w]hether a series of wrongful acts constitutes a single
offense or multiple offenses depends upon the facts of each case.” (Ibid.; see
also People v. Reid (2016) 246 Cal.App.4th 822, 834 [“[A]pplication of the
Bailey rule requires consideration of the facts unique to each case.”] (Reid).)
Subsequent courts of appeal applied Bailey in the manner William
advances here, allowing defendants to obtain the dismissal of convictions
where there are multiple thefts committed pursuant to the same scheme,
impulse or plan. (See, e.g., People v. Kronemeyer (1987) 189 Cal.App.3d 314,
363–364 (Kronemeyer) [reversing three counts of theft from one victim that
were part of the same scheme]; People v. Brooks (1985) 166 Cal.App.3d 24,
30–32 (Brooks) [reversing all but one theft conviction arising from the theft of
proceeds from the sale of 14 pieces of equipment at one auction]; People v.
22
Tabb (2009) 170 Cal.App.4th 1142, 1148 [recognizing a series of thefts from
an employee over a period of time was properly charged as one grand theft];
People v. Packard (1982) 131 Cal.App.3d 622 [reversing two of three grand
theft convictions based on the submission of a series of false invoices]; People
v. Gardner (1979) 90 Cal.App.3d 42 [reversing three of four counts of grand
theft of animal carcasses]; People v. Richardson (1978) 83 Cal.App.3d 853[reversing three of four counts of attempted grand theft based on attempting
to obtain payments on four fraudulent warrants]; and People v. Sullivan
(1978) 80 Cal.App.3d 16 [reversing eight of nine counts of grand theft based
on receipt of a series of cashier’s checks under a single fraudulent scheme].)
In People v. Whitmer (2014) 59 Cal.4th 733 (Whitmer), the Supreme
Court revisited the Bailey doctrine. The court refined the doctrine,
disapproving Kronemeyer, Brooks, and other similar decisions that had used
the doctrine defensively in the way William requests here. Whitmer
concluded those cases had “interpreted Bailey more broadly than is
warranted.” (Whitmer, at p. 735.) The defendant in Whitmer was the
manager of a motorcycle dealership who arranged for the fraudulent sale of
20 vehicles to fictitious buyers through the use of falsified financing
agreements, resulting in a loss to the dealership. (Ibid.) The 20 transactions
occurred on 13 different dates, to distinct fictitious buyers for different
vehicles. (Ibid.) In concluding these transactions were properly viewed as
distinct crimes, the court noted that in this case, “and, generally, in the
earlier cases the Bailey court distinguished, the defendant committed
separate and distinct fraudulent acts.” (Id. at p. 740, italics added.) “This,”
the court stated, “makes all the difference.” (Ibid.)
Whitmer reviewed the earlier cases Bailey had distinguished but did
not overrule, explaining those cases (People v. Stanford (1940) 16 Cal.2d 24723
(Stanford), People v. Rabe (1927) 202 Cal. 409 (Rabe), and People v. Ashley
(1954) 42 Cal.2d 246 (Ashley)) “ ‘embody the reasonable view that a defendant
who repeatedly takes property exceeding the requisite amount for grand theft
from a victim through separate transactions [citation]—but pursuant to a
single scheme or overarching misrepresentation—commits more crimes than
a defendant who takes such property only once. Indeed, a contrary view
would give a “felony discount” to the thief who perfects a scheme to commit
multiple acts of grand theft.’ ” (Whitmer, supra, 59 Cal.4th at p. 739.)
In Stanford, supra, 16 Cal.2d 247, “ ‘a lawyer entrusted with control of
an elderly woman’s property obtained her permission to use her funds to buy
property for her. (Id. at pp. 248–249.) He took title to the property in his
own name and made three payments of the entrusted funds for its purchase,
each of which exceeded the threshold amount constituting grand theft. (Id. at
pp. 248–250.) Following his conviction of three counts of grand theft, the
Stanford court affirmed, stating: “There is no merit in appellant’s contention
that the entire transaction could not constitute more than one offense, and
that the conviction of three separate offenses was error. ... In the present
case the evidence showed that the thefts referred to in the first three counts
of the indictment were separate and distinct transactions, which occurred on
different dates, and involved the taking of different sums of money. Such
separate transactions constituted separate offenses. [Citations.]” ’ ”
(Whitmer, supra, 59 Cal.4th at pp. 738–739.)
“ ‘In Rabe, the defendant fraudulently obtained money and property by
falsely representing that he intended to use the funds and property to
establish a corporation. (Rabe, supra, 202 Cal. at p. 417.) From one
individual he secured investments on three separate dates: a payment for
$1,250, a payment for $4,000, and a contribution of real property worth
24
$11,000. (Ibid.) … [T]he Supreme Court rejected his contention that he had
committed only a single offense, reasoning that “[i]n each count of the
indictment the property ... was obtained at a different time and was different
in character and value ....” ’ ” (Whitmer, supra, 59 Cal.4th at p. 738.)
“ ‘In Ashley, the manager of a corporation obtained funds from two
individuals by falsely representing that the funds would be used for one of
the corporation’s business projects. (Ashley, supra, 42 Cal.2d at pp. 252–257.)
Because the manager received two payments from each individual, each of
which exceeded the threshold amount for grand theft, he was charged with
four counts of grand theft. (Ibid.) Before the Supreme Court, he contended
that he could be convicted on only one count of grand theft with respect to
each victim. (Id. at p. 273.) Relying on Rabe, the court rejected this
argument.’ ” (Whitmer, supra, 59 Cal.4th at p. 738; see also Id. at pp. 738—
739 [explaining “the remaining cases cited by Bailey … reached similar
conclusions on similar facts. (People v. Barber (1959) 166 Cal.App.2d 735,
736–738 [defendant properly convicted of two counts of grand theft after
obtaining two payments exceeding minimum necessary for grand theft from
single victim who intended to invest in defendant's bogus mining company];
People v. Caldwell (1942) 55 Cal.App.2d 238, 242–243, 252 [defendant who
falsely represented he was providing insurance to victim properly convicted of
five counts of grand theft based on five separate premium payments, each
exceeding minimum necessary for grand theft]; People v. Ellison (1938) 26
Cal.App.2d 496, 497–499 [defendants properly convicted of three counts of
grand theft for receiving three separate payments from creditor, each
exceeding minimum necessary for grand theft, based on presentation of
falsified contracts to creditor indicating that defendants were selling goods to
others].)”].)
25
Following these cases, Whitmer held that “a defendant may be
convicted of multiple counts of grand theft based on separate and distinct
acts of theft, even if committed pursuant to a single overarching scheme,”
overruling contrary appellate court decisions. (Whitmer, supra, 59 Cal.4th at
p. 741, emphasis added.) The court, however, declined to apply the rule to
the defendant in that case retroactively because of “the long, uninterrupted
series of Court of Appeal cases, beginning with People v. Sullivan, supra, 80
Cal.App.3d 16, decided in 1978, and including People v. Kronemeyer, supra,
189 Cal.App.3d 314, decided in 1987, that have consistently held that
multiple acts of grand theft pursuant to a single scheme cannot support more
than one count of grand theft.” (Id. at p. 742.)
B
Although William concedes Whitmer effectively narrowed the Bailey
doctrine, he argues Whitmer does not apply retroactively to this case and
Bailey controls because his and Susan’s thefts were “committed pursuant to
one continuing impulse, intent, plan or scheme, to result in a single theft
conviction.” Thus, he argues his convictions for grand theft, counts 5, 7, 11,
13 and 17, must be consolidated into a single conviction.
The Attorney General responds that because the convictions relate to
different victims, the Bailey doctrine is inapplicable. Further, he asserts the
two cases William and Susan primarily rely on to support their argument
that consolidation is appropriate even for multiple victims, Brooks, supra,
166 Cal.App.3d 24 and People v. Columbia Research Corp. (1980) 103
Cal.App.3d Supp. 33 (Columbia Research), have been heavily criticized and
are distinguishable. Finally, the Attorney General argues that even if the
multiple victim exception to the Bailey doctrine does not apply, each theft
was sufficiently different to support the separate grand theft convictions.
26
As William asserts in his reply brief, the number of victims is one
factor, not alone determinative, to be considered in deciding whether the theft
offenses should be consolidated. (In re Arthur V. (2008) 166 Cal.App.4th 61,
68, fn. 4.; see also Whitmer, supra, 59 Cal.4th at p. 738, quoting Rabe, supra,
202 Cal. at p. 413 [“when a defendant obtains property through false
representations to the victim, the defendant may be separately punished for
obtaining additional property from the victim, even though the initial
misrepresentations ‘were still operating upon the mind” of the victim’ ”].)
However, we agree with the Attorney General that this case falls outside the
since-restricted Bailey doctrine. Like those cases Bailey distinguished and
unlike Bailey itself, here there were unquestionably “separate and distinct
fraudulent acts” committed by the defendants. (Whitmer, at p. 740.) While
the overarching scheme used by the Avignones was similar from victim to
victim, the crimes are appropriately categorized as separate offenses because
there were separate victims, the fraudulent investments were solicited at
different points in time, later investments were solicited to pay prior victims,
and the precise fraudulent statements used to solicit the investments differed
from victim to victim.
In the parlance of Bailey, this was not a scheme that was the result of
“one impulse” or one plan executed at one time. (Cf. Bailey, supra, 55 Cal.2d
at p. 518 [defendant fraudulently denied marriage in one deception, resulting
in a series of welfare payments that were too high; this was “a single plan [in
which the] defendant ma[de a] false representations and receive[d] various
sums from the victim”]; see also Reid, supra, 246 Cal.App.4th at pp. 834–835
[theft of nine urns at one time were appropriately considered separate thefts:
“Although the nine urns were stolen from the mausoleum during a single
crime spree, each urn was contained in a separate niche covered by its own
27
pane of glass. … Additionally, the urns were purchased separately and were
the property of separate victims”]; People v. Garcia (1990) 224 Cal.App.3d
297, 307 [rejecting argument that four separate instances of falsifying bonds
were pursuant to one scheme].)
Brooks and Columbia Research, on which William primarily relies, do
not lead us to conclude otherwise. Brooks, which was decided under the
framework of Penal Code section 654, involved a single auction, at which the
defendant auctioneer absconded with the profits of the sale of farm
equipment that was entrusted to him by 14 different people. (Brooks, supra,
166 Cal.App.3d at p. 27.) Columbia Research was an appeal of a demurrer to
a complaint in which the People alleged thousands of thefts of $15.95 could be
combined to assert a charge of grand theft, rather than multiple petty theft
charges. The corporate defendant offered three-night hotel stays in exchange
for $15.95 and collected thousands of checks but offered nothing in return.
The appellate department opinion held that the complaint as pleaded was not
sufficient to show a common scheme, but granted leave to amend the
complaint to add additional allegations of a single plan. (Columbia Research,
supra, 103 Cal.App.3d Supp. at p. 41.) These cases are plainly
distinguishable, and do not support consolidation or reversal of the multiple
theft convictions in this case.
II
Unanimity Instruction
William, with Susan joining, next asserts the court erred by failing to
instruct the jury that they must agree whether the grand thefts were
committed by false pretense or embezzlement. The Attorney General
responds that the issue was forfeited but even if properly considered,
28
unanimity is not required because under existing precedent, the jury was
allowed to be split on the applicable theory of theft.
A
At a hearing before trial, Susan’s counsel argued a unanimity
instruction on the theory of theft was required. The court declined to rule on
the argument, but stated it did not think such an instruction was needed
because the jury could be divided on the form of theft. The court pointed to
CALCRIM No. 1861 to support this position.
At a later jury instruction conference, Susan’s counsel again raised the
issue, arguing that despite the language of CALCRIM No. 1861, which states
the jurors do not need to agree on the same theory of theft to convict, the jury
was required to agree on which act constituted the theft and thus a
unanimity instruction was required. William’s counsel agreed with Susan’s
objection but conceded there was case law that was contrary to that position.
Near the end of the trial, after the instructions were given and the
prosecutor had presented his initial closing argument, the trial court raised
the issue again, stating it did not think that the unanimity instruction was
required. Susan’s counsel responded that it was required because the jury
needed to agree with respect to each count which actions supported a
particular charge. Susan’s counsel explained, using Branch as an example,
that “there’s a possibility that a jury could convict, for example, using the
facts from the $70,000 note and convict on the $245,000 note using those
facts,” which is not permitted. William’s counsel agreed, urging the court to
act cautiously and provide the unanimity instruction.
The court instructed the jury on theft by false pretenses and theft by
embezzlement using CALCRIM No. 1804 and CALCRIM No. 1806,
29
respectively.7 The court also instructed the jury, using CALCRIM No. 1861,
that as to the nine counts of grand theft charged:
“The Defendants have been prosecuted for theft under two
theories: Theft by false pretenses and embezzlement. Each
theory of theft has different requirements, and I will instruct you
on both. You may not find a defendant guilty of theft unless all of
you agree that the People have proved that the defendant
committed theft under at least one theory. But all of you do not
have to agree on the same theory.”
B
“A claim of instructional error is reviewed de novo.” (People v. Mitchell
(2019) 7 Cal.5th 561, 579.) “In reviewing a claim of instructional error, the
court must consider whether there is a reasonable likelihood that the trial
court’s instructions caused the jury to misapply the law in violation of the
Constitution. [Citations.] The challenged instruction is viewed ‘in the
7 With respect to false pretense, the court instructed the jury: “The
defendants are charged in Counts 1, 3, 5, 7, 9, 11, 13, 15, and 17 with grand
theft by false pretense in violation of Penal Code Section 487. To prove that a
defendant is guilty of this crime the People must prove that: One, the
defendant knowingly and intentionally deceived a property owner by false or
fraudulent representation or pretense. Two, the defendant did so intending
to persuade the owner to let the defendant take possession and ownership of
the property. And, three, the owner let the defendant take possession and
ownership of the property because the owner relied on the representations or
pretense.”
With respect to embezzlement, the court instructed: “The defendants
are charged in Counts 1, 3, 5, 7, 9, 11, 13, 15, and 17 with grand theft by
embezzlement in violation of Penal Code Section 487. To prove that a
defendant is guilty of this crime the People must prove that: One, an owner
entrusted his or her property to the defendant. Two, the owner did so
because he or she trusted the defendant. Three, the defendant fraudulently
converted the property for his or her own benefit; and, four, … when the
defendant converted the property he or she intended to deprive the owner of
it or its use.”
30
context of the instructions as a whole and the trial record to determine
whether there is a reasonable likelihood the jury applied the instruction in an
impermissible manner.’ ” (Ibid.)
The jury unanimity requirement ensures that for a conviction to be
valid, the defendant is found guilty of the specific crime of which adequate
notice has been given in the charges and trial proceedings. (People v. Russo
(2001) 25 Cal.4th 1124, 1132 (Russo).) “Therefore, cases have long held that
when the evidence suggests more than one discrete crime, either the
prosecution must elect among the crimes or the court must require the jury to
agree on the same criminal act.” (Ibid.) “On the other hand, where the
evidence shows only a single discrete crime but leaves room for disagreement
as to exactly how that crime was committed or what the defendant’s precise
role was, the jury need not unanimously agree on the basis or, as the cases
often put it, the ‘theory’ whereby the defendant is guilty.” (Ibid.)
“This requirement of unanimity as to the criminal act ‘is intended to
eliminate the danger that the defendant will be convicted even though there
is no single offense which all the jurors agree the defendant committed.’ ”
(Russo, supra, 25 Cal.4th at p. 1132.) “[U]nanimity as to exactly how the
crime was committed is not required. Thus, the unanimity instruction is
appropriate ‘when conviction on a single count could be based on two or more
discrete criminal events,’ but not ‘where multiple theories or acts may form
the basis of a guilty verdict on one discrete criminal event.’ [Citation.] In
deciding whether to give the instruction, the trial court must ask whether
(1) there is a risk the jury may divide on two discrete crimes and not agree on
any particular crime, or (2) the evidence merely presents the possibility the
jury may divide, or be uncertain, as to the exact way the defendant is guilty
31
of a single discrete crime. In the first situation, but not the second, it should
give the unanimity instruction.” (Id. at p. 1135.)
With respect to a theft prosecution, a jury must unanimously agree the
defendant is guilty of theft, but it need not agree as to what theory underlies
the theft. Historically, theft was divided into three separate statutory
crimes: larceny, theft by false pretense, and embezzlement. (People v.
Gonzales (2017) 2 Cal.5th 858, 865 (Gonzales).) This “disaggregation of theft
into different statutes created pleading challenges.” (Id. at p. 864.) As a
result, in 1927, the legislature amended the theft statutes “to define a
general crime of ‘theft.’ Theft was defined expansively to include all the
elements of larceny, false pretenses, and embezzlement.” (Id. at p. 865.) The
amendments “reflected the fact that the definition of theft encompassed all
three ways in which property could be unlawfully stolen.” (Ibid.)
“ ‘The purpose of the consolidation was to remove the technicalities that
existed in the pleading and proof of these crimes at common law.
Indictments and informations charging the crime of “theft” can now simply
allege an “unlawful taking.” [Citation.] Juries need no longer be concerned
with the technical differences between the several types of theft, and can
return a general verdict of guilty if they find that an “unlawful taking” has
been proved.’ ” (Gonzales, supra, 2 Cal.5th at p. 865.) The amendments were
“ ‘designed not only to simplify procedure but also to relieve the courts from
difficult questions arising from the contention that the evidence shows the
commission of some other of these crimes than the one alleged in the
indictment or information, a contention upon which defendants may escape
just conviction solely because of the border line distinction existing between
these various crimes.’ ” (Ibid.)
32
“ ‘The elements of the several types of theft … have not been changed,
however, and a judgment of conviction of theft, based on a general verdict of
guilty, can be sustained only if the evidence discloses the elements of one of
the consolidated offenses.’ [Citations.] In other words, the crime is called
theft, but to prove its commission, the evidence must establish that the
property was stolen by larceny, false pretenses, or embezzlement.” (Gonzales,
supra, 2 Cal.5th at pp. 865–866.) Further, “[t]he trial court must instruct on
the theory of theft applicable based on the evidence presented. [Citation.]
However, the jury need not unanimously agree on which type of theft a
defendant has committed and ‘it is immaterial whether or not they agreed as
to the technical pigeonhole into which the theft fell.’ ” (Gonzales, at p. 866,
fn. 9.)
C
As an initial matter, on this record, we agree with William that trial
counsel raised the issue unsuccessfully, preserving the issue for our review.
Further, the failure to give such an instruction, if required, would infringe on
the defendants’ fundamental rights, allowing review even without an
objection below. However, we do not agree with William that the court erred
by giving CALCRIM No. 1861 or in failing to give a unanimity instruction.
As noted, William asserts that it was error for the court to provide
CALCRIM No. 1861 because the cases that form the basis for that
instruction, unlike here, involve “situation[s] in which the same act
supported either theory of theft given to the jury.” Here, however, as the
Attorney General points out, there was substantial evidence to support either
theory of theft. Either that William and Susan intended to defraud the
investors at the outset of the scheme, or that their intentions changed after
obtaining the funds and the funds were fraudulently diverted for personal
33
use. Thus, the court properly instructed the jury on both theories of theft.
(See People v. Vidana (2016) 1 Cal.5th 632, 649 [“[A] trial court properly
instructs a jury on the elements of larceny and embezzlement if both
instructions are supported by substantial evidence. As we have long
recognized, a trial court also properly instructs a jury that it need not
unanimously agree on whether a defendant committed larceny or
embezzlement.”].)
Critically, the prosecution charged the defendants with separate thefts
based on each separate investment made, not based on a theory of theft
related to each transaction. If a victim wrote separate checks, those
transactions were charged as separate crimes. Thus, count 1 was the grand
theft of $27,000 given to the Avignones by the Van De Vens on April 22, 2009;
count 3 was the grand theft of $70,000 given by Branch on June 15, 2009;
count 5 was grand theft of the additional $245,000 given by Branch on
February 11, 2010; count 7 was the additional $40,000 given by Branch on
June 16, 2010; count 9 was grand theft of $100,000 given by Wightman on
June 16, 2009; count 11 was the additional $50,000 given by Wightman on
June 23, 2009; count 13 was the grand theft of $200,000 given by Lopez on
January 27, 2010; count 15 was the grand theft of $54,000 given by Blowers
on May 6, 2010; and count 17 was the grand theft of the final $20,000
Blowers contributed on April 15, 2011.
In closing, the prosecutor accurately explained that there were two
theories available for the jurors to find the Avignones guilty of each grand
theft charge. He stated: “[E]ach theory—either theft by false pretense or
theft by embezzlement—has certain requirements. And say, for example, the
Van De Vens some of you might be convinced beyond a reasonable doubt that
the defendants are guilty … of grand theft under an embezzlement theory,
34
and some of you may be convinced beyond a reasonable doubt that they’re
guilty [under a] false pretense theory … as long as you are convinced beyond
a reasonable doubt that they’re guilty under one theory or the other, two of
you don’t have to agree on the same theory.”
Contrary to William’s assertion, the act at issue is not the method by
which the theft was accomplished (i.e. either false pretense or
embezzlement). Rather, the act that the jury was required to agree upon is
the unlawful taking of a specific sum of money from the victims. William’s
characterization of the “wrongful act” as either theft by false pretense or
embezzlement is too narrow and not in conformance with the law. The cases
he cites, also set forth in the notes for CALCRIM No. 1861, show the principle
in action and support our determination that the trial court properly
instructed the jury that unanimity in the theory of theft was not required.
In People v. Nor Woods (1951) 37 Cal.2d 584 (Nor Woods), the
defendant car dealer purported to sell the victim a car in exchange for
another car and a cash payment. (Id. at p. 585.) The dealer represented to
the buyer that the car had a lien in the amount of the cash payment, which
he would pay off upon receipt of the funds. The dealer failed to make the lien
payment, absconding with the cash, and the car was repossessed from the
bank. (Ibid.) The dealer was charged with, and convicted of, grand theft. On
appeal, the dealer argued reversal was required because the court failed to
instruct the “jury that they must agree upon the method by which the theft
was committed.” (Id. at p. 586.) The Supreme Court rejected this argument.
It explained that if the victim “intended that only possession of the
[exchanged car] should pass at the time of the sale, defendant was guilty of
larceny by trick or device, but if [the victim] intended that title should pass,
defendant was guilty of obtaining property by false pretenses.” (Ibid.)
35
The court held that “[i]rrespective of [the victim’s] intent, however,
defendant could be found guilty of theft by one means or another, and since
by the verdict the jury determined that he did fraudulently appropriate the
property, it is immaterial whether or not they agreed as to the technical
pigeonhole into which the theft fell.” (Nor Woods, supra, 37 Cal.2d at p. 586.)
Likewise here, so long as the jury agreed that the specific property (in this
case a certain sum of money) was fraudulently taken by the Avignones, it was
not required to agree by which theory of theft the taking occurred.
People v. McLemore (1994) 27 Cal.App.4th 601 (McLemore), cited by
William’s trial counsel as contrary to the defense position, likewise supports
affirmance. There, the defendant entered a clothing store and picked up a
dress. When a store employee asked him if he needed assistance, the
defendant said he wanted to exchange the dress for a different size. (Id. at
p. 604.) The employee questioned whether he had purchased the dress since
it still had its tag and security sensor on it. The defendant became
belligerent and the employee eventually let the defendant leave with the
dress. (Id. at pp. 604‒605.) At trial, the defendant argued a unanimity
instruction was required because the prosecution alleged two separate acts of
theft, theft by trick and device (based on the defendant’s statement the dress
was his) and simple larceny (based on intimidation of the store employee).
(Id. at p. 605.)
The Court of Appeal rejected the defendant’s argument. In so doing, it
framed the issue succinctly: “The crux of the present controversy deals with
the meaning of a unanimous criminal verdict. Must the jurors agree the
defendant committed the ultimate statutory offense of theft or must they also
agree on his course of conduct in accomplishing the crime?” (McLemore,
supra, 27 Cal.App.4th at p. 605.) The court then surveyed the existing case
36
law to conclude the jury was not required to agree on the course of conduct
used to accomplish the theft. (Ibid.)
William argues that in McLemore there was only one act that
supported two theories of theft advanced by the prosecution, which he asserts
distinguishes the facts here. This is an inaccurate characterization of
McLemore. The case involved two theories of theft, based on two theories of
conduct by the defendant reasonably inferred from the evidence. The same is
true here. Either William and Susan were deceitful from the outset,
supporting the theory of theft by false pretense, or their intentions became
fraudulent at the time they used the money for their personal benefit,
supporting the theory of embezzlement. Substantial evidence was admitted
for both theories and the jurors could convict on either theory without
agreement on which occurred.8
William’s claim that the United States Supreme Court’s opinion in
Richardson v. United States (1999) 526 U.S. 813 (Richardson) required the
jury to agree on the theory of theft is also misplaced. Richardson interpreted
a federal drug statute to require unanimity on certain drug crimes that were
elements of the larger crime of engaging in a criminal enterprise. As
8 William also argues that People v. Counts (1995) 31 Cal.App.4th 785provides support for his contention that a unanimity instruction was
required. Counts, however, addressed the issue of whether the victim’s
retention of a security interest in the stolen property prevented a conviction
of theft by false pretenses. The defendant argued the facts supported only a
charge of larceny by trick because of the remaining security interest, that
prevented title from passing entirely to the thief. (Id. at p. 788.) In
concluding the security interest did not negate the charge, the court noted
that because theft could be found under either theory, there was no prejudice
to the defendant in the jury’s verdict of guilt by the theory of false pretense.
(Id. at p. 792.) Counts does not support William’s argument that the jury was
required to unanimously agree on the theory of theft in this case.
37
explained in People v. Vargas (2001) 91 Cal.App.4th 506, “the United States
Supreme Court determined that the statutory phrase ‘series of violations’
[contained in the criminal enterprise code provision] ‘create[s] several
elements, namely the several “violations,” in respect to each of which the jury
must agree unanimously and separately.’ [Citation.] Because each ‘violation’
was an element of the crime, the jury had ‘to agree unanimously about which
specific violations make up the “continuing series of violations.” ’ ” (Vargas,
at p. 560, quoting Richardson, at pp. 815, 817–818.)
Richardson has no application here. The statutory scheme at issue in
that case is not comparable to the California theft statute. Nor is Williams’
reliance on the dissenting opinion in Schad v. Arizona (1991) 501 U.S. 624availing. As explained by the Supreme Court in People v. Grimes (2016) 1
Cal.5th 698, 727–728, “[w]hen a defendant’s alleged conduct constitutes a
single offense that may be committed in different ways, the federal
Constitution does not require unanimity on how the crime was committed.
(Schad v. Arizona, supra, 501 U.S. 624 [due process clause of U.S. Const. does
not require jury to agree unanimously whether charge of first degree murder
was committed by an intentional, premeditated killing or by felony murder].)”
As the Attorney General points out, acceptance of William’s theory
would require this court to ignore binding precedent on the unanimity
requirements of theft; a position we reject. In sum, the trial court’s failure to
require the jury to agree on which theory supported the grand theft charges
was not error.
III
Uncharged Conspiracy Instruction
William, with Susan again joining, next asserts the trial court erred by
giving an uncharged conspiracy instruction. Specifically, he contends that
38
because the object of a conspiracy cannot be negligence, and the securities
fraud instruction provided to the jury allows guilt to be based on criminal
negligence, his convictions must be overturned.
The Attorney General responds first that the issue was forfeited. Next,
he contends there was no error because to be convicted of the crime, the
prosecution was required to prove the sale of the security was willful.
Further, the conspiracy instruction also requires intent, negating William’s
assertion the conviction was based merely on negligence. Finally, the
Attorney General asserts that even if there was instructional error, it was
harmless.
A
At a jury instruction conference, the parties discussed CALCRIM
No. 416, the pattern instruction concerning evidence of an uncharged
conspiracy. When the court asked Susan’s counsel her position on the
instruction, she responded “I think this is a lot of stuff.” William’s counsel
stated, “I think this is very cumbersome.” The court agreed, then stated,
“Now we get to, is it required to be given? Is it a viable theory?” Susan’s
counsel did not object and William’s counsel responded that it was a
confusing instruction, and that he had “a general objection … to this
particular instruction when there is no conspiracy that is charged.” He
continued, “I think it gets very confusing for the jury, but if [the prosecutor]
wants it, and I think that the case law is pretty specific, the Court can give it.
… I’m not necessarily objecting to it other than my global objection.” The
court then stated it would provide the instruction.
The court thus instructed the jury with CALCRIM No. 416:
“I have explained that a defendant may be guilty of a crime if he
either commits the crime or aids and abets the crime. … If he or
she either commits the crime or aids and abets the crime, he or
39
she may also be guilty if he or she is member of an uncharged
conspiracy. … A member of a conspiracy is criminally
responsible for the acts or statement of any other member of the
conspiracy done to help accomplish the goal of the conspiracy.
“To prove that a defendant was a member of the conspiracy in
this case the People must prove that: One, the defendant
intended to agree and did agree with the other defendant to
commit grand theft or securities fraud. Two, at the time of the
agreement the defendant and the other defendant intended that
one or more of them would commit grand theft or securities
fraud. Three, one of the defendants committed at least one of the
following overt acts to accomplish grand theft or security fraud.
“[Overt acts.9]
“[¶] ... [¶]
9 The instruction listed nine overt acts: (1) “On or about April 9, 2009,
the defendants offered by phone a ‘turnkey’ private real estate investment to
… Van de Ven in which they guaranteed ‘1st lien position’ on real property
acquired with their funds. [(2)] On April 9, 2009, the defendants conveyed
details of their ‘turnkey’ private real estate investment to …Van de Ven via
email in which they guaranteed ‘1st lien position’ on real property acquired
with their funds. [(3)] On or about April 22, 2009, the defendants emailed a
promissory note to Van de Ven in which they listed the terms of their
‘turnkey’ investment. [(4)] On May 5, 2009, the defendants wired $16,780.38
to Atlanta to acquire real estate using the Van de Vens’ funds. [(5)] On June
17, 2009, the defendants purchased real property using the Van de Vens’
funds but failed to list the Van de Vens as 1st lien position holders. [(6)] On
May 5, 2009, Susan Avignone opened a bank account under SABA
investments with Navy Federal [(7)] On June 15, 2009, the defendants met
with Otilia Branch to offer a ‘turnkey’ private real estate investment in which
they guaranteed ‘1st lien position’ on real property acquired with her funds.
[(8)] On July 20, 2009, the defendants wired $7,556.68 to Atlanta to acquire
real estate using Ms. Branch’s funds. [(9)] On August 17, 2009, the
defendants purchased real property using Ms. Branch’s funds but failed to
list Ms. Branch as 1st lien position holder.”
40
“The People must prove that the members of the alleged
conspiracy had an agreement and intent to commit grand theft or
securities fraud.
“[¶] ... [¶]
“Someone who merely accompanies or associates with the
members of a conspiracy but who does not intend to commit the
crime is not a member of the conspiracy.”
The court next instructed the jury with CALCRIM No. 417, informing
them that to prove that defendant is guilty of the crimes charged under a
conspiracy theory of liability the People must establish (1) “the defendant
conspired to commit one of the following crimes. Grand theft or securities
fraud. [(2) A] member of the conspiracy committed grand theft or securities
fraud to further the conspiracy; and [(3)] grand theft and/or securities fraud
was a natural and probable consequence of a common plan or design of the
crime that the defendant conspired to commit.”
As to the securities fraud counts, the court instructed the jury that the
People must prove:
“[(1) T]he defendant willfully offered to sell or sold a security in
California. [(2) T]he offer to sell or sale was made by means of a
written or oral communication. [(3) T]he communication included
“A” an untrue statement of material fact or “B” omitted to state a
material fact necessary to make the statements made in light of
the circumstances under which the statements were not
misleading. [(4) T]he defendant knew or should have known the
statement was false or the omitted fact made the statement
misleading. [(5)] The defendant knew or should have known that
the statement or omitted fact was—was material or was
criminally negligent in failing to know or discover that a
representation or omission of material fact was untrue.
“The truth or falsity of a representation and the materiality of an
omission must be determined on the basis of what the seller
knew or should have known at the time of the sale. ... A fact is
material if there is a substantial likelihood that under all of the
41
circumstances a reasonable investor would consider it important
in reaching an investment decision. A failure to disclose a fact
alone is not sufficient. Even where the disclosed fact is material.
“Criminal negligence means conduct which is more than ordinary
negligence. Ordinary negligence is the failure to exercise
ordinary or reasonable care. Criminal negligence refers to
negligen[t] acts that are aggravated, reckless, or flagrant and are
such a departure from the conduct of an ordinarily prudent and
careful person under the same circumstances as to constitute
indifference to the consequences of those acts. The fact must be
that such the [sic] consequences of negligent acts could
reasonably [have] been foreseen, and it must appear that the
consequences of those acts were not the result of inattention,
mistake in judgment or misadventure but the natural and
probable result of an aggravated, reckless, or flagrantly negligent
act.”
B
“The doctrine of conspiracy plays a dual role in our criminal law. First,
conspiracy is a substantive offense in itself—‘an agreement between two or
more persons that they will commit an unlawful object (or achieve a lawful
object by unlawful means), and in furtherance of the agreement, have
committed one overt act toward the achievement of their objective.’
[Citations.] Second, proof of a conspiracy serves to impose criminal liability
on all conspirators for crimes committed in furtherance of the conspiracy.”
(People v. Salcedo (1994) 30 Cal.App.4th 209, 215; see People v. Valdez (2012)
55 Cal.4th 82, 150 [“Our decisions have ‘long and firmly established that an
uncharged conspiracy may properly be used to prove criminal liability for acts
of a coconspirator.’ ”].) Accordingly, the prosecution may argue that a
conspirator can be criminally liable for the acts of her coconspirator in
furtherance of the conspiracy. Where the prosecutor has “not charge[d]
conspiracy as an offense, but [has] introduced evidence of a conspiracy to
42
prove liability, the court ha[s] a sua sponte duty to give uncharged conspiracy
instructions.” (People v. Williams (2008) 161 Cal.App.4th 705, 709.)
A claim of instructional error must be viewed “ ‘in the context of the
instructions as a whole and the trial record to determine whether there is a
reasonable likelihood the jury applied the instruction in an impermissible
manner.’ ” (People v. Rivera (2019) 7 Cal.5th 306, 326.) To preserve a claim
of instructional error for appellate review, the defense must object on the
specific grounds raised on appeal in the trial court. (See People v. Lang
(1989) 49 Cal.3d 991, 1024 [“A party may not complain on appeal that an
instruction correct in law and responsive to the evidence was too general or
incomplete unless the party has requested appropriate clarifying or
amplifying language.”] (Lang).) Failure to do so forfeits the issue. (People v.
Hart (1999) 20 Cal.4th 546, 622 (Hart).)
C
As an initial matter, we agree with the Attorney General that William
did not preserve this issue for review. He now argues that the uncharged
conspiracy instruction was incorrect because it allowed the jury to find him
liable as an uncharged conspirator based only on negligence. However,
neither defense attorney asserted the uncharged conspiracy instruction was
problematic on this basis. They stated only that CALCRIM No. 416 was
“cumbersome,” “a lot of stuff,” “confusing,” and lodged a “general objection” to
the instruction. Neither lawyer argued that the instruction was improper
because it did not clarify for the jury that criminal liability resulting from a
conspiracy is not properly based on criminal negligence. Indeed, William’s
counsel told the court that the case law was clear the instruction was proper.
On this record, the issue was not preserved for our consideration. (See Hart,
43
supra, 20 Cal.4th at p. 622 [“Defendant’s failure to request such a clarifying
instruction at trial, however, waives his claim on appeal.”].)
Even had William raised the issue in the trial court, however, we would
not conclude the court erred by giving the uncharged conspiracy instruction.
We agree with a recent decision of the Third District Court of Appeal, People
v. Koenig (2020) 58 Cal.App.5th 771 (Koenig), which rejected the same
argument. As in this case, the defendant in Koenig was convicted of violating
section 25401 after the jury was instructed it could find liability based on a
conspiracy theory. (Id. at p. 802.) On appeal, the defendant asserted that
“the trial court erred in instructing the jury that it could convict him of
section 25401 on either a conspiracy or aiding and abetting theory” because
“section 25401 is a crime of negligence and is therefore incompatible with
those theories of liability.” (Id. at p. 794.)
After noting its general agreement with the principle that “one cannot
conspire to commit a crime of negligence” because a “person cannot agree and
specifically intend to accomplish an unintended result,” the court concluded
“section 25401 does not proscribe a negligent act, nor does it a proscribe a
resulting harm. As such it is not incompatible with conspiracy liability.”
(Koenig, supra, 58 Cal.App.5th at p. 795.) “Section 25401 provides: ‘It is
unlawful for any person to offer or sell a security in this state, or buy or offer
to buy a security in this state by means of any written or oral communication
which includes an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading.’ Section
25540, which provides the criminal penalties for section 25401, includes a
requirement that the conduct be willful. [Citation.] Accordingly, section
25401’s actus reus — offering or selling a security by means of a
44
communication that includes an untrue material fact or omits a material fact
— must be done willfully.” (Id. at pp. 795–796.)
Thus, Koenig held that section 25401, which the California Supreme
Court has characterized as a general intent crime, requiring scienter, “ ‘i.e.,
guilty knowledge of the facts which make the act a crime,’ ” is not a crime of
negligence in the way that William argues. (Koenig, supra, 58 Cal.App.5th at
p. 796.) Rather, the statute’s use of criminal negligence “refers to an
alternative way of proving the knowledge element” of the crime. (Ibid.) The
use of criminal negligence “does not describe how the actus reus must be
committed—and thus it does not convert section 25401 into a crime of
criminal negligence.” (Ibid.) We agree with this analysis and hold that
section 25401 does not proscribe negligence in the manner William advances.
The cases that William relies on to support his argument do not lead us
to a contrary conclusion. U.S. v. Sdoulam (8th Cir. 2005) 398 F.3d 981,
discussed in Koenig, also rejected an argument like the one William makes.
There, the defendant challenged the district court’s denial of his motion to
dismiss based on an argument that the federal statute for conspiracy to
distribute a controlled substance improperly allowed for a conspiracy
conviction based only on negligence. (Id. at pp. 987‒988.) The court rejected
this interpretation of the conspiracy charge: “The section does not punish the
inadvertent sale of a listed chemical to an illegal drug manufacturer, but
instead punishes only those sales where the seller understands, or should
reasonably understand, that the chemical will be used illegally.” (Id.at
p. 988, italics added; see also U.S. v. Mitlof (S.D.N.Y. 2001) 165 F.Supp.2d
558, 562–564 [rejecting motion to dismiss on a similar theory]). The situation
here is analogous. If the jurors concluded either defendant was liable for
securities fraud as a conspirator, rather than a direct perpetrator, the law
45
required the jurors to find the crime was committed with a mens rea of
knowledge, not mere negligence.
Because sections 25401 and 25540 are not crimes of negligence, the
challenged conspiracy instruction did not improperly lead the jury to find a
conspiracy to commit a negligent act. (Cf. People v. Swain (1996) 12 Cal.4th
593, [holding conspiracy to commit implied malice second degree murder is a
legal impossibility because “it would be illogical to conclude one can be found
guilty of conspiring to commit murder where the requisite element of malice
is implied. Such a construction would be at odds with the very nature of the
crime of conspiracy … precisely because commission of the crime could never
be established, or be deemed complete, unless and until a killing actually
occurred.”].) Rather, the jurors were instructed that liability could be based
on conspiracy if they found William and Susan agreed to sell promissory
notes either knowing they had omitted or misrepresented material
information or they agreed to sell the notes with flagrant disregard for their
46
victims’ need for that information. Either finding properly supported liability
based on an uncharged conspiracy to commit an intentionally wrongful act.10
IV
Sufficient Evidence Supported the Jury’s Determination
the Promissory Notes were Securities
William next contends, with Susan joining, that insufficient evidence
underpinned the jury’s determination that each promissory note was a
security under sections 25019 and 25401. Relying on People v. Black (2017) 8
Cal.App.5th 889 (Black), William argues that because the promissory notes
were not “an indiscriminate offering at large to the public” and allegedly
individually negotiated with each victim, the notes could not be properly
categorized as securities. The Attorney General distinguishes Black, and
10 Another case cited by William, Navarrete v. Meyer (2015) 237
Cal.App.4th 1276 (Navarrete) further illustrates the point and supports the
conclusion we reach. Navarrete reversed summary judgment, in part on the
grounds that a triable issue of fact remained on whether there could be joint
tort liability based on civil conspiracy, where the defendant vehicle
passenger, and alleged co-conspirator, encouraged the defendant driver to
drive in an unsafe manner. This court rejected the claim that conspiracy
liability could not attach because the object of the conspiracy was a reckless
act, holding “a jury could reasonably conclude that [the alleged co-
conspirators] expressly or tacitly agreed that [the driver] would engage in an
unlawful exhibition of speed, and knew that was the specific unlawful
purpose of their agreement. This conduct is sufficiently intentional to
support a cause of action for conspiracy.” (Navarrete, supra, 237 Cal.App.4th
at p. 1294.) Likewise, here, the jury could appropriately find that William
and Susan agreed to commit securities fraud based on their flagrant
disregard for the material facts.
47
responds that sufficient evidence supported the jury’s finding that the notes
were investment contracts, subject to securities regulation.
A
In assessing the sufficiency of the evidence supporting a criminal
conviction, this court must “ ‘examine the whole record in the light most
favorable to the judgment to determine whether it discloses substantial
evidence—evidence that is reasonable, credible, and of solid value—such that
a reasonable trier of fact could find the defendant guilty beyond a reasonable
doubt.’ ” (People v. Guerra (2006) 37 Cal.4th 1067, 1129; Jackson v. Virginia
(1979) 443 U.S. 307, 319.) “Further, ‘the appellate court presumes in support
of the judgment the existence of every fact the trier could reasonably deduce
from the evidence.’ ” (People v. Catlin (2001) 26 Cal.4th 81, 139.) “When the
circumstances reasonably justify the jury’s findings, a reviewing court’s
opinion that the circumstances might also be reasonably reconciled with
contrary findings does not warrant reversal of the judgment.” (People v.
Mendoza (2011) 52 Cal.4th 1056, 1069.)
“We neither reweigh the evidence nor reevaluate the credibility of
witnesses.” (People v. Jennings (2010) 50 Cal.4th 616, 638.) “Resolution of
conflicts and inconsistences in the testimony is the exclusive province of the
trier of fact.” (People v. Young (2005) 34 Cal.4th 1149, 1181.) “Moreover,
unless the testimony is physically impossible or inherently improbable,
testimony of a single witness is sufficient to support a conviction.” (Ibid.)
B
California’s Corporate Securities Law, which was patterned after the
federal Securities Act of 1933 (15 U.S.C. § 77b), “ ‘provides a comprehensive
system of securities regulation’ in California. (1 Marsh & Volk, Practice
Under the Cal. Securities Laws (2011) § 1.01, p. 1–3 (Marsh & Volk.).)”
48
(Black, supra, 8 Cal.App.5th at p. 899.) “[S]ections 25401 and 25540
‘criminalize the sale or purchase of securities by means of oral or written
communications which either contain false or misleading statements or omit
material facts….’ Whether the promissory notes may be deemed securities
presents a mixed question of law and fact: ‘ “The definition of a security is a
matter of law. It is the judge’s duty to instruct the jury concerning that
definition: the way in which a security is identified. Whether a particular
piece of paper meets that definition, however, is for the jury to decide.” ’ ”
(Ibid., fn. omitted.)
“[T]he corporate securities laws do not contain an ‘all-inclusive formula
by which to test the facts in every case. And the courts have refrained from
attempting to formulate such a test. Whether a particular instrument is to
be considered a security within the meaning of the statute is a question to be
determined in each case. In arriving at a determination the courts have been
mindful that the general purpose of the law is to protect the public against
the imposition of unsubstantial, unlawful and fraudulent stock and
investment schemes and the securities based thereon.’ ” (People v. Figueroa
(1986) 41 Cal.3d 714, 736.)
“[S]ection 25019 defines ‘security’ by listing transactions and
instruments deemed to be securities, including ‘any note; stock; ... bond; ...
evidence of indebtedness; certificate of interest or participation in any profit-
sharing agreement; ... investment contract; ... or, in general, any interest or
instrument commonly known as a “security” ....’ This list is ‘expansive,’ but is
not applied literally. [Citations.] Rather, ‘the “critical question” … is
whether a transaction falls within the regulatory purpose of the law
regardless of whether it involves an instrument which comes within the
49
literal language of the definition.’ ” (Black, supra, 8 Cal.App.5th at pp. 899‒
900.)
California courts rely on two tests to determine if a particular
instrument is a security: “the risk capital test and the federal or Howey test.
The risk capital test, articulated by the California Supreme Court in Silver
Hills Country Club v. Sobieski (1961) 55 Cal.2d 811, 815, describes ‘ “[1] an
attempt by an issuer to raise funds for a business venture or enterprise; [2]
an indiscriminate offering to the public at large where the persons solicited
are selected at random; [3] a passive position on the part of the investor; and
[4] the conduct of the enterprise by the issuer with other people’s money.” ’
This test reflects the court’s assessment that the term ‘security’ is defined
broadly in order ‘to protect the public against spurious schemes, however
ingeniously devised, to attract risk capital.’ ” (Black, supra, 8 Cal.App.5th at
p. 900.)
“The federal or Howey test,” applicable here, and “formulated by the
United States Supreme Court in [S.E.C. v. W.J. Howey Co. (1946) 328 U.S.
293,] 301 [(Howey)], asks ‘whether the scheme involves an investment of
money in a common enterprise with profits to come solely from the efforts of
others.’ A common enterprise ‘may be established by showing “that the
fortunes of the investors are linked with those of the promoters,” ’ such as by
a profit sharing arrangement. [Citation.] An expectation of profits produced
by the efforts of others exists ‘when “ ‘the efforts made by those other than
the investor are the undeniably significant ones, those essential managerial
efforts which affect the failure or success of the enterprise.’ ” ’ ” (Black,
supra, 8 Cal.App.5th at p. 900.) “It is generally accepted that both the risk
capital and federal tests may be applied, either separately or together; a
transaction is a security if it satisfies either test.” (Ibid.)
50
C
Here, the court used the definition of a security set forth in Howey. It
instructed the jury:
“A security is also called an investment contract.
“An investment contract is a transaction in which a person
entrusts money or other capital to another, with the expectation
of deriving a profit, income or some financial benefit from a
business enterprise, the failure or success of which is dependent
upon the managerial efforts of other persons.
“To find that an offering is a security, the people must prove the
following:
“(1) A person entrusted money or capital to another;
“(2) The person entrusting the money or capital did so with the
expectation of receiving profit, income, or financial benefit;
“(3) The failure or success of the business enterprise was
dependent upon the managerial efforts of persons other than the
ones who entrusted the money.”
The jury concluded the notes were securities and found William and Susan
guilty of violating sections 25401 and 25540 with respect to all five victims.
William argues insufficient evidence supported the jury’s finding that
the Howey test was satisfied because the promissory notes were no different
than the note at issue in Black, in which the court dismissed securities fraud
charges before trial after finding the note there was not a security. William
argues that like the promissory note in Black, his notes “were not securities
because: (1) the promissory notes resulted from personal negotiations and
meetings between William and Susan and the investors; (2) few people were
involved in the investments; (3) security in the properties was either included
in the promissory notes or orally promised to the investors; and (4) the
51
promissory notes were unconditional promises to pay by William and Susan’s
business.”
The investment at issue in Black, however, is much different than the
scheme perpetrated by the Avignones. Black also involved a real estate
investment, in property in Idaho the defendant planned to develop. The note
at issue, individually negotiated with the lender, stated the LLC in which
Black was the managing member would pay the lender either (1) his
principal and interest at a certain rate based on profit if the property was
sold; (2) a certain portion of the property; or, (3) if the property was not sold
or developed in a year, the lender could elect to receive the principal invested
and interest at a rate of 10%. (Black, supra, 8 Cal.App.5th at p. 893.) Black
also put up his separate property as collateral on the loan. (Ibid.)
After the deal failed and investigators discovered the money had been
spent by Black on his personal expenses, Black was charged with theft by
false pretenses and securities fraud. (Black, 8 Cal.App.5th at pp. 894‒895.)
After several amendments to the charging information, the trial court
eventually granted Black’s motion to dismiss under Penal Code section 995,
finding that the promissory note was not a security under either the risk
capital or Howey tests. (Id. at p. 897.)
The People challenged the trial court’s determination, and the Court of
Appeal affirmed. Critical to the appellate court’s decision was the fact that
the note was individually negotiated with the alleged victim and offered only
to him. (Black, supra, 8 Cal.App.5th at p. 906.) The investor testified that he
would not have invested had Black not negotiated the guaranteed return at
the investor’s election after one year and “that he traveled with Black to
Idaho to see the property,” which the investor called “ ‘an obsession for both
of us.’ ” (Ibid.) There was also no indication that the note was intended to be
52
offered to other investors, or sold more widely. (Ibid.) In concluding the note
was not a security within the meaning of the Corporate Securities Law, the
court was careful to state that it was not “finding that all one-on-one
contracts are excluded as a matter of law from the definition of security.
Rather the individualized nature of the transaction is one factor that must be
considered in determining whether that transaction comes within the
regulatory purpose and purview of the securities law.” (Id. at p. 909.)
The single loan at issue in Black was unlike the investments made by
the unsophisticated victims in this case. Each transaction, offered to five
different individuals, involved a note with the same terms (only the lien
language was removed from some of the notes) undermining William’s
assertion these were individually negotiated agreements like the note in
Black. Further, William and Susan prepared pitch documents that were
presented to multiple victims showing the instrument offered was the same
from victim to victim and White testified that William asked her to invite
anyone she knew that might have money to invest to hear his proposal.
While the notes drafted by the Avignones were not a widely distributed
instrument, the Avignones targeted existing life insurance clients and anyone
who White could lobby, distinguishing this case from the close business
relationship in Black. (See People v. Miller (1987) 192 Cal.App.3d 1505,
1510–1511 [“[T]hese investors were solicited from the general public and had
no control over the success of the venture in which their money was placed.”]
(Miller).)
Further, unlike Black, the collateral promised to the investors was not
the Avignones’ own property, but first lien positions on the homes they
intended to purchase in Georgia. The proposed liens were also never
executed, and did not reduce any of the risk the victims assumed when they
53
purchased the notes. Finally, the loans here were far in excess of the value of
what the Avignones claimed was the secured interests of the properties they
did purchase, such that no resale or foreclosure of the homes could have made
them whole or even close to whole. (See Miller, supra, 192 Cal.App.3d 1505,
1510 [holding notes to multiple investors in connection with a luxury home
purchase scheme were securities, and observing the loans “were so far in
excess of the value of the secured interests that no resale or foreclosure could
recoup more than a few cents on the dollar to the individual lenders”].)
In sum, we reject William’s assertion that the promissory notes were
not properly characterized as securities under the Howey test because they
were akin to the individualized note negotiated in Black. Rather, the
evidence in the trial court showed the promissory notes fell well “ ‘within the
regulatory purpose of the law ….’ ... [¶] ... ‘to protect the public against
spurious schemes, however ingeniously devised, to attract risk capital.’ ”
(Black, supra, 8 Cal.App.5th at p. 900.)
V
Sufficient Evidence Supported The Jury’s
Determination That Susan Was Guilty of Securities Fraud
Susan contends that the jury’s securities fraud verdicts were not
supported by sufficient evidence on two additional grounds. She argues there
was no evidence she directly made, or aided, abetted or conspired to make, a
material omission or untrue statement to any of the victims. Susan also
contends that statements and omissions relied on by the prosecutor to
support the charges were not materially misleading.
The Attorney General responds that the evidence showed Susan was an
equal partner to William in the real estate scheme and that even if she did
not directly make any materially false statements or omissions, she is
54
culpable as an aider and abettor or coconspirator. With respect to the
materiality of the false statements and omissions, the Attorney General
asserts that the evidence showed the Avignones falsely told the victims—in
person, over the phone, and through marketing materials—they were
investing in a safe and secure business, that they were guaranteed regular
interest payments at attractive rates for certain time periods, and that they
were guaranteed profits on their principal. Further, the evidence showed the
Avignones omitted to share material information about their lack of
experience in the real estate business, their inability to fulfill promises of
first lien positions on the homes they purchased, and their own troubled
financial situation.
A
As discussed, when a conviction is challenged on appeal for insufficient
evidence to support it, we apply the substantial evidence standard of review.
(People v. Vines (2011) 51 Cal.4th 830, 869; People v. Johnson (1980) 26
Cal.3d 557, 578.) In so doing, we review the whole record in the light most
favorable to the judgment to determine whether there is substantial evidence
to support the conviction. (Vines, at p. 869; Johnson, at p. 578.) Substantial
evidence is evidence that is reasonable, credible, and of solid value such that
a rational trier of fact could find the defendant guilty beyond a reasonable
doubt. (People v. Killebrew (2002) 103 Cal.App.4th 644, 660.) We do not
reweigh the evidence, resolve conflicts in the evidence, or reevaluate the
credibility of witnesses. (People v. Cochran (2002) 103 Cal.App.4th 8, 13.)
“[A] person aids and abets the commission of a crime when he or she,
acting with (1) knowledge of the unlawful purpose of the perpetrator; and
(2) the intent or purpose of committing, encouraging, or facilitating the
commission of the offense, (3) by act or advice aids, promotes, encourages or
55
instigates, the commission of the crime.” (People v. Beeman (1984) 35 Cal.3d
547, 561.) “The liability of an aider and abettor extends also to the natural
and reasonable consequences of the acts he knowingly and intentionally aids
and encourages.” (Id. at p. 560.)
“A conviction of conspiracy requires proof that the defendant and
another person had the specific intent to agree or conspire to commit an
offense, as well as the specific intent to commit the elements of that offense,
together with proof of the commission of an overt act ‘by one or more of the
parties to such agreement’ in furtherance of the conspiracy.” (People v.
Morante (1999) 20 Cal.4th 403, 416.) “The elements of conspiracy may be
proven with circumstantial evidence, ‘particularly when those circumstances
are the defendant’s carrying out the agreed-upon crime.’ [Citations.] To
prove an agreement, it is not necessary to establish the parties met and
expressly agreed; rather, ‘a criminal conspiracy may be shown by direct or
circumstantial evidence that the parties positively or tacitly came to a
mutual understanding to accomplish the act and unlawful design.’ ” (People
v. Vu (2006) 143 Cal.App.4th 1009, 1024–1025.)
Section 25401 provides that securities fraud can be committed by
making “an untrue statement of a material fact” or omitting “to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.” (People v.
Simon (1995) 9 Cal.4th 493, 510.) A fact is material if there is a substantial
likelihood that a reasonable investor would consider it important in reaching
an investment decision under all the circumstances. (People v. Butler (2012)
212 Cal.App.4th 404, 421.)
56
B
Susan asserts there was not sufficient evidence showing her direct
involvement with each of the five victims in this case. She also argues there
was a lack of evidence to support the jury’s verdict on either an aiding and
abetting or conspiracy theory. However, as the Attorney General outlines,
the evidence in the trial court showed that Susan was an integral part of the
investment scheme and, at minimum, aided and abetted her husband’s
violation of sections 25401 and 25540. Critically, witness testimony
established she was present in meetings with all of the victims about the
scheme except the Van De Vens and failed to correct the false and misleading
statements and omissions made by William, or made such statements and
omissions herself.
Specifically, Wightman testified that both Susan and William told him
he would be a first lien holder on the property. Branch testified that based
on a meeting with both Susan and William in their office in La Mesa, she
believed that Susan was the one “running the show.” She also testified both
William and Susan guaranteed the investment. Similarly, Blowers, who met
William and Susan together when they presented at his church, testified “it
was very obvious that [Susan] was every bit equal to [William], if not more
so.” Blowers rejected the defense position that Susan was merely a typist for
William. When Blowers met with the Avignones in their office, Susan
participated in the investment pitch and supported what William told him
about the scheme, its safety and the couple’s successful record of investing in
real estate. Susan never contradicted William.
Lopez’s testimony about Susan’s involvement echoed that of Branch
and Blowers. He described the real estate pitch as given by both William and
Susan in their office. Lopez testified they told him they periodically went to
57
Georgia to check on the properties, that he believed he was investing with
both defendants through SABA Financial, and that both explained the terms
of the investment to him. Further, Susan was the one who assisted Lopez
with his creditors and dealt with the required paperwork to facilitate the
investment (as she also did with other victims). Eric Van De Ven did not
testify about meeting with Susan to discuss the real estate investment, but
his testimony supported an inference that he understood Susan and William
were partners in the business. Like the other victims, Van De Ven referred
to them and their business dealings collectively. When the quarterly interest
payments ceased, Van De Ven initially called Susan, not William.
Additionally, Susan was a signatory to at least one of the promissory notes
for each victim and endorsed some of the investors’ checks. And her business
cards held her out to the victims as the business’s “Financial Strategist.”
This evidence supported the jury’s finding that Susan and William
were equal partners in the real estate scheme. Even if Susan did not make
the same material misrepresentations as William, she was present in
meetings in which those misrepresentations were made (e.g. that they were
experienced in this type of investment and that this was a safe and
guaranteed investment) and she herself omitted to provide the victims with
material information about the promissory notes (e.g., that they lacked any
experience in such transactions, that they had no independent knowledge
about securing first lien positions for the victims, their own financial trouble
and use of the victims’ investments to pay their personal expenses, and, after
the initial investments, that the scheme and had failed and they were using
new investments by the victims to make interest payments on earlier
investments).
58
At minimum, the evidence supported a finding by the jury that Susan
aided and abetted William’s violations of sections 25401 and 25540. Susan,
in essence, asks this court to reevaluate the evidence to conclude she was not
a participant in this scheme. That is not this court’s role. Rather, we must
determine whether there was sufficient evidence to support the jury’s
findings that Susan was liable directly, or as an aider and abettor or
coconspirator. This burden is easily met.
C
We also reject Susan’s argument there was insufficient evidence to
support the jury’s findings that the statements and omissions made by the
Avignones to their victims were materially misleading. The evidence showed
that William and Susan vastly misrepresented the nature of the investment
they were selling—representing it as safe and secure, and omitting any
information about the risks or their own inexperience with this untested real
estate scheme. They further told the victims their investments were secured
by the homes in Georgia, which guaranteed the victims’ principal could not be
lost. These statements were demonstrably false. They also omitted the
material information that William and Susan did not know how to secure the
first lien positions they were promising and were relying exclusively on the
expertise of Mark Evans, a person unknown to the victims.
In addition, the misleading nature of the Avignones’ promises became
more extreme as time passed. Despite knowing that the scheme was already
failing because of their inability to purchase properties that could be rented
to Section 8 tenants, they continued to solicit additional investments from the
victims. Their false promises and omissions, thus, became more significant
as the scheme went on. By the time Blowers made his second investment in
2011, the Avignones were painfully aware that they had lost all of the earlier
59
contributions made by the victims, yet Blowers’s testimony was that they
disclosed none of this relevant information to him.
As with her arguments about her involvement in the scheme, Susan
makes another series of arguments that amount to a request for this court to
draw different inferences from the evidence than those drawn by the jury.
She argues the statements were not false and misleading because (1) she and
William “did not present themselves as experienced financial advisors” or
real estate investors; (2) William and Susan sincerely believed the
investment would be profitable; (3) the victims did not understand what the
term “first lien” meant, so the promise of a first lien was not misleading; and
(4) because the promissory notes did not contain any term restricting their
use of the victims’ funds, William and Susan’s failure to disclose that they
spent the money on personal expenses was not material. Finally, Susan
asserts that because the most important aspect of the investment to her
victims was the monthly interest payments, and they received those
payments for a period of time, none of the other information was material.
These arguments do not support reversal of the securities fraud
convictions. The evidence showed the victims believed William and Susan
were experts in providing financial advice and would protect their retirement
savings because they held themselves out in this manner. For instance, they
repeatedly guaranteed the victims’ principal was safe and secured by the
property they intended to purchase. To support her assertion that William
and Susan were honest about their lack of experience in this type of venture,
Susan points to White’s testimony that White had only known them to sell
insurance, and had never seen them invest in real estate. But White was not
a victim of the scheme. Susan also points to Wightman’s testimony that he
knew William was not experienced in real estate. This testimony, however,
60
does not show that William and Susan’s representations that they had the
experience and knowledge to manage the real estate scheme were not
materially misleading.
Susan’s argument that her and William’s statements were not
materially misleading because they honestly believed the scheme would
become profitable was one inference that could be drawn from William’s
testimony, but this conclusion was rejected by the jury. We are not permitted
to reweigh the evidence or reassess William’s credibility in the manner Susan
suggests. Likewise, the fact that the promissory note did not explicitly
restrict the Avignones’ use of the funds says nothing of whether their failure
to disclose how the money would be used was materially misleading. Again,
the interpretation of the evidence advanced by Susan was reasonably rejected
by the jury. As the Attorney General responds, Susan’s “argument simply
does not in any way detract from the false statements or material omissions”
made by the Avignones to their victims.
The same goes for Susan’s argument that because Eric Van De Ven
testified that he did not understand the term “first lien” the Avignones’
promise of a first lien was not material. Eric testified he understood that the
principal was secured by a property interest. The jury’s determination this
was a false and materially misleading statement was supported by Van De
Ven’s testimony irrespective of his understanding of the isolated term “first
lien.” Likewise, the fact the investors might have prioritized the receipt of
monthly payments over the security of their principal investment does not
detract from the false and misleading information the Avignones provided
about the security and safety of that principal. At most Susan has presented
an alternative interpretation of the evidence. She has not shown that
insufficient evidence supported the jury’s conclusion that the Avignones’
61
statements and omissions were materiality misleading. Accordingly, we
reject Susan’s claim of error.
VI
The Existence of Two Tests to Determine If an Instrument
Is a Security Did Not Violate Susan’s Equal Protection Rights
Susan alone argues that because the existence of a security is
determined using two tests—the risk capital and Howey tests—her equal
protection rights were violated. This novel argument is without merit.
“ ‘ “The concept of the equal protection of the laws compels recognition
of the proposition that persons similarly situated with respect to the
legitimate purpose of the law receive like treatment.” ’ [Citation.] ‘The first
prerequisite to a meritorious claim under the equal protection clause is a
showing that the state has adopted a classification that affects two or more
similarly situated groups in an unequal manner.’ [Citation.] This initial
inquiry is not whether persons are similarly situated for all purposes, but
‘whether they are similarly situated for the purposes of the law challenged.’ ”
(Cooley v. Superior Court (2002) 29 Cal.4th 228, 253.) “Neither the
Fourteenth Amendment of the Constitution of the United States nor the
California Constitution [citations] precludes classification by the Legislature
or requires uniform operation of the law with respect to persons who are
different.” (People v. Guzman (2005) 35 Cal.4th 577, 591.)
Susan has failed to identify what classification the law has adopted
that treats her differently from a similarly situated defendant. Rather, all
defendants charged with securities fraud are subjected to the same legal
principles and face the same analysis to determine whether an instrument is
a security regulated by the California Securities Law. Contrary to Susan’s
assertion, there is no “risk that two similarly situated defendants will obtain
62
differing results based on an arbitrary decision made about which test
applies.” Instead, in every case the court employs a reasoned analysis to
determine if the instrument is properly classified as a security under either
test. (See People v. Syde (1951) 37 Cal.2d 765, 768 [“The Corporate Securities
Law does not contain an all-inclusive formula by which to test the facts in
every case. And the courts have refrained from attempting to formulate such
a test. Whether a particular instrument is to be considered a security within
the meaning of the statute is a question to be determined in each case.”]
(Syde).) This two-test analysis applies to all defendants equally.
Additionally, even if Susan was treated differently than a defendant
who fraudulently sold a security as determined under the risk-capital test,
Susan has not identified a suspect classification or the violation of a
fundamental right. Even if she were treated differently than other
defendants, that treatment would be lawful so long as there is a rational
relationship between that differing treatment and a legitimate governmental
purpose. As the Attorney General asserts, there is a legitimate purpose in
employing the broad definition of securities found in the federal Howey test,
“to protect the public against the imposition of unsubstantial, unlawful and
fraudulent stock and investment schemes and the securities based thereon.”
(Syde, supra, 37 Cal.2d at p. 768.) Finally, the record shows that Susan was
notified from the outset of trial that the prosecution was proceeding under
the Howey test.
Like the trial court, we reject this non-sequitur argument.
VII
White Collar Loss Enhancement Jury Instruction
Recasting his argument concerning conspiracy liability, William argues
that the jury’s true findings on the loss enhancement allegations must be
63
reversed because the jury instruction allowed the enhancement findings to be
based on criminal negligence. William also argues that the instruction was
erroneous because theft by false pretenses is not listed in the enhancement
statute. Susan joins in these arguments.
The Attorney General responds that the claims are forfeited because
William did not object to the instruction on these grounds in the trial court.
Further, even if the claims were not waived, they have no merit because theft
by false pretenses and securities fraud are proper bases for the enhancement.
We agree with the Attorney General on both points.
As discussed, in order to preserve a claim of instructional error for our
review, the defense must object on the specific grounds raised on appeal in
the trial court. (See Lang, supra, 49 Cal.3d at p. 1024.) Failure to do so
forfeits the issue. (Hart, supra, 20 Cal.4th at p. 622.) Here, William concedes
that there was no objection by the defense to the enhancement instruction.
Accordingly, any error was forfeited.
Even if we were to assume the argument had not been forfeited, we still
would not conclude it requires reversal of the enhancement verdicts. The
court instructed the jury with CALCRIM No. 3221, the standard instruction
on the aggravated white collar crime enhancement for Penal Code
section 186.11, subdivision (a)(1) and (a)(3):
“If you find a defendant guilty of 2 or more of the crimes charged
in Counts 1 through 18, you must then decide whether the People
have proved the additional allegation that a defendant engaged
in a pattern of related felony conduct that involved the taking or
resulted in the loss by another person or entity of more than
[$500,000/$100,000].
“To prove this allegation, the People must prove that:
64
“1. The defendant committed two or more related felonies,
specifically [g]rand [t]heft and/or [f]raud in connection with offer
or sale of a security;
“2. Fraud or embezzlement was a material element of at least two
related felonies committed by the defendant;
“3. The related felonies involved a pattern of related felony
conduct; AND
“4. The pattern of related felony conduct involved the taking or
resulted in the loss by another person or entity [of] more than
[$500,000/$100,000].
“A pattern of related felony conduct means engaging in at least
two felonies that have the same or similar purpose, result,
principals, victims, or methods of commission, or are otherwise
interrelated by distinguishing characteristics, and that are not
isolated events.
“Related felonies are felonies committed against two or more
separate victims, or against the same victim on two or more
separate occasions.
“Fraud is a material element of [f]raud in [c]onnection with [the]
[o]ffer or [s]ale of a [s]ecurity. Embezzlement may be a material
element of [g]rand [t]heft.
“The People have the burden of proving this allegation beyond a
reasonable doubt. If the People have not met this burden, you
must find that this allegation has not been proved.”
William contends this instruction incorrectly allowed the jury to find
the enhancement for theft by false pretenses and securities fraud. In other
words, he believes the only losses that can be included are for embezzlement.
William’s argument that grand theft losses cannot be included appears to be
based on the language in the statute that requires the losses to be from “two
or more related felonies,” a material element which is “fraud or
embezzlement.” He asserts that because the prosecutor proceeded on
65
theories of theft by false pretenses and embezzlement, but Penal Code
section 186.11 only mentions “embezzlement,” the jury could not include the
grand theft charges in the computation amount of the enhancement.
William’s reading of the statute is too narrow and not consistent with
its language. The statute does not purport to list each crime that is included;
rather, it states generally, that the enhancement must be based on two or
more felonies, “a material element of which is fraud or embezzlement.” (Pen.
Code, § 186.11.) Grand theft includes both embezzlement and theft by false
pretenses. (Gonzales, supra, 2 Cal.5th at p. 865.) Since theft by false
pretenses required the jury to find appellants “intentionally deceived a
property owner by [a] false or fraudulent representation or pretense,” it
clearly falls under the category of “fraud” and losses based on the grand theft
convictions were proper bases for the enhancements. (CALCRIM No. 1804,
see People v. Martinez (2017) 10 Cal.App.5th 686, 693 [enhancement based on
Corporations Code violations and grand theft and conspiracy]; People v.
Nilsson (2015) 242 Cal.App.4th 1, 16 [applying enhancement to grand theft];
People v. Mozes (2011) 192 Cal.App.4th 1124, 1129 [defendant pled guilty to
multiple counts of theft by false pretenses and admitted enhancement based
on that charge]; People v. Frederick (2006) 142 Cal.App.4th 400, 404
[enhancement based on grand theft and securities fraud counts].)
Finally, in an argument similar to his prior assertion that the
conspiracy instruction was erroneous because it allowed the jury to find the
defendants liable for securities fraud as conspirators based on mere
negligence, William contends the enhancement instruction was flawed
because the enhancement also cannot be based on negligent conduct. As
discussed, William’s interpretation of the criminal negligence language
contained in section 25401 is misguided. That provision does not allow for
66
liability based on negligence in the manner he asserts. Rather, the statute
regulates knowing conduct. Undoubtedly, securities fraud convictions are
proper bases for the enhancements. Further, the enhancement instruction
specifically required the jury to find that fraud or embezzlement was a
material element of the felonies. Thus, the jury could not logically find the
enhancement was based on mere negligent conduct. Accordingly, William’s
argument fails.
VIII
Jurisdiction Over the Crimes Against the Van De Vens
William’s final contention on appeal, also joined by Susan, is that
count 2, the securities fraud charge related to the Van De Vens, must be
reversed because the trial court lacked jurisdiction over the transaction,
which William argues occurred in Arizona. The Attorney General responds
the court properly exercised jurisdiction over the crime because at least some
part of the crime was committed in this state.
Before trial, Susan moved to dismiss counts 1 and 2 under Penal Code
section 995, asserting the court lacked jurisdiction over her and San Diego
was not a proper venue with respect to the Van De Vens because they lived in
Arizona at the relevant time. The prosecution opposed the motion, arguing
jurisdiction and venue were proper because the Avignones cashed the Van De
Vens’ check in San Diego, conducted their unlawful operation in San Diego,
and because the Avignones caused harm in San Diego as a result of the
fraudulent real restate scheme. After argument, the court denied the motion.
At trial, Eric Van De Ven testified he first met William and Susan in
his home in Arizona, and shortly after decided to refinance his home on the
Avignones’ advice. Several years later, William called Van De Ven to tell him
about the real estate scheme. William also sent an email about the proposal.
67
The Van De Vens took money from their Midland National life insurance
policy and sent a check to the Avignones at their La Mesa office in San Diego.
The Avignones then mailed a promissory note from their office to the Van De
Vens, who signed the note and returned it to San Diego. According to
William, all of the Avignones’ transactions with the Van De Vens were over
the phone and by mail or fax machine.
California jurisdiction statutes provide territorial jurisdiction when at
least some part of a crime is committed within California. (People v. Brown
(2001) 91 Cal.App.4th 256, 263.) Those liable to punishment in California
include “[a]ll persons who commit, in whole or in part, any crime within this
state.” (Pen. Code, § 27, subd. (a)(1).) Further, whenever a person, with
intent to commit a crime, does any act within this state in execution or part
execution of that intent, which culminates in the commission of a crime,
either within or without this state, the person is punishable for that crime in
this state in the same manner as if the crime had been committed entirely
within this state. (Pen. Code, § 778a, subd. (a).) Accordingly, Penal Code
section 778a provides territorial jurisdiction in California over an offense if a
defendant “with the requisite intent, does a preparatory act in California that
is more than a de minimis act toward the eventual completion of the offense.”
(People v. Betts (2005) 34 Cal.4th 1039, 1047 (Betts).)
In reviewing an issue of territorial jurisdiction, an appellate court must
uphold a trial court’s factual determinations if supported by substantial
evidence. The trial court’s legal determinations are reviewed de novo. (Betts,
supra, 34 Cal.4th at p. 1055.)
The evidence in this case showed that all of the Avignones’ actions
related to count 2 occurred in San Diego. William contacted Eric Van De Ven
from his office in La Mesa and all of their discussions about the investment in
68
the real estate scheme occurred while the Avignones were in this state.
Further, the promissory note itself states explicitly that it was entered into in
California. This conduct in California supported the court’s territorial
jurisdiction over count 2.11 (See People v. Anderson (1961) 55 Cal.2d 655,
661‒662 [holding jurisdiction properly exercised over defendants who
initiated plan to steal from victims in California, even though the final
consummation was in Nevada].)
DISPOSITION
The judgments are affirmed.
McCONNELL, P. J.
WE CONCUR:
DATO, J.
DO, J.
11 William points to the fact that he and Susan initially met with the Van
De Vens in Arizona. This meeting, however, occurred several years before
the crimes at issue in this case occurred. Thus, that fact is not at all
dispositive of the jurisdictional question William raises.
69