P. v. Heard CA4/1 ( 2013 )

Filed 5/20/13 P. v. Heard CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
THE PEOPLE, D060921, D061687
Plaintiff and Respondent,
v. (Super. Ct. No. SCD221605)
JEREMY HEARD,
Defendant and Appellant.
CONSOLIDATED APPEALS from a judgment of the Superior Court of
San Diego County, Louis R. Hanoian, Judge. Affirmed as modified with directions.
Rex Williams, under appointment by the Court of Appeal, for Defendant and
Appellant. [Appointed.]
Kamala D. Harris, Attorney General, Dane R. Gillette, Chief Assistant Attorney
General, Julie L. Garland, Assistant Attorney General, Melissa Mandel and Scott C.
Taylor, Deputy Attorneys General for Plaintiff and Respondent.
Jeremy Heard appeals from a judgment convicting him of numerous counts of
prohibited practice by a mortgage foreclosure consultant and forgery arising from his
operation of a company that purported to assist homeowners whose residences were in
foreclosure. He argues the prohibited practice counts (based on his acquisition of an
interest in the residences) must be reversed because (1) the statute of limitations had
expired for these counts, and (2) the prosecution did not establish that the residences were
still in foreclosure at the time he acquired an interest in them. He also argues the forgery
counts must be reversed because (1) the evidence does not support that the charged
misconduct constituted forgery, and (2) the trial court failed to instruct on aiding and
abetting principles. Further, he challenges the trial court's award of victim restitution on
the basis that one of the victims did not suffer economic loss. We reject his contentions
of reversible error.
The Attorney General concedes, and we agree, that the minute order and abstract
of judgment incorrectly refer to a parole revocation restitution fine that was unauthorized
and not imposed by the court. Accordingly, we modify the minute order to strike the
reference to this fine, and instruct the superior court to prepare an amended abstract of
judgment reflecting this change.
As so modified, the judgment is affirmed.1
FACTUAL AND PROCEDURAL BACKGROUND
In the early 2000's, defendant formed a company called Good Samaritan Society
(GSS or Good Samaritan) with a partner, James Cloud. Cloud, a real estate salesperson,
1 Defendant has also filed a petition for writ of habeas corpus, which we have
considered with the appeal. In an order filed separately from this opinion, we deny the
habeas petition.
2
had worked with defendant in the real estate industry since 1988. According to Cloud,
GSS was formed to help people whose residences were in foreclosure. The plan was to
get residences out of foreclosure; place ownership of the residences in a trust account for
three years; allow the homeowners time to rebuild and establish their credit; and then
permit the homeowners to obtain a loan and reacquire their ownership of their home. To
qualify for GSS's services, the residences had to be in foreclosure and have some equity
value. To build a customer base, Cloud and defendant purchased a foreclosure list and
mailed postcards advertising their services to homeowners on the list. The charges in the
current case were based on transactions between defendant and seven homeowners who
contracted with GSS in 2004 and 2005.
At trial, the prosecution's witnesses included Cloud, the homeowner/victims who
contracted with GSS, and several "straw buyers" who were hired by defendant to
participate in the transactions. The transactions were generally structured as follows.2
The homeowners entered into a trust agreement with GSS and signed a grant deed
transferring title to the residence to GSS. GSS then sold the property to a straw buyer
who obtained a loan to buy the residence. After the straw buyer's loan was finalized, the
straw buyer deeded the property back to GSS. To obtain the loan, the straw buyer
submitted a residential purchase agreement and loan application to the bank indicating
that he or she was buying the property from GSS. The straw buyer's loan was used to pay
2 There were some differences in the way some of the transactions were structured,
but for purposes of resolving the issues on appeal we need not specify the variations.
3
off the homeowner's loan, and the portion of the straw buyer's loan derived from the
equity in the home was disbursed through escrow to GSS as the seller.
The straw buyer's name remained on the loan even after the straw buyer
transferred ownership of the property back to GSS. The straw buyers received $10,000
from GSS for their participation. The homeowner continued residing in the home, made
monthly payments to GSS, and GSS in turn paid the monthly mortgage on the loan
obtained by the straw buyer. Under the terms of a beneficiary agreement created with the
trust agreement, GSS (or an affiliated company owned by defendant) was entitled to a
percentage of the equity in the home upon the termination of the trust agreement.
Defendant used three GSS employees, and the father of a GSS employee, to act as
straw buyers. According to the straw buyers, defendant made the decisions for GSS's
operations and told them how to fill out the documents, including the residential purchase
agreements and loan applications. The straw buyers were not experienced in real estate
and they simply complied with defendant's directions.
To ensure that the straw buyers would qualify for the purchase loans, defendant
had them engage in numerous fabrications on the loan applications, including falsely
stating that they were going to occupy the residences; creating "dummy" corporations and
stating they worked for these corporations; inflating their incomes; listing assets that they
did not have; and falsely stating they had no business relationship with the seller (GSS).
Defendant also gave money to the straw buyers to place in their bank accounts to show
that they had sufficient assets, which the straw buyers gave back to defendant after the
loan closed.
4
To sell GSS's services to interested homeowners, defendant met with them at their
homes or in his office. Defendant told the homeowners that he could save the home from
foreclosure by putting it into a trust. He explained that the trust, operated by Good
Samaritan, was designed to keep residences safe for homeowners who had poor credit
and could not access the equity in the home until the homeowners could improve their
credit, refinance the property, and buy it back from the trust. He told the homeowners
that they needed to sign a deed giving the house to him or GSS so that he or another
buyer could get a loan on the home to pay off the homeowner's loan. He assured the
homeowners that they would still own the home, and the home would be deeded back to
them once they reestablished their credit and could refinance the property. When
homeowners asked defendant why they had to sign a rental agreement if they were still
the owners, defendant said it was part of the trust arrangement.
The homeowners, who were not experienced in real estate, testified that they
trusted defendant and thought he was placing their home in a trust that would save the
home for them. Defendant told them that even though they signed the grant deed, they
retained ownership of the home though the placement of the property in the trust.
Further, defendant explained to the homeowners that Good Samaritan's services were
designed to use the equity in the homes to help the homeowner, and also to help other
homeowners who needed assistance, and for this reason the company was called Good
Samaritan.
In 2006 and 2007, problems began emerging in the loan payment arrangements.
For various reasons, the homeowners stopped sending payments to GSS and/or GSS
5
stopped sending payments to the bank. For most of the homeowners, the loan went into
default, and the bank ultimately foreclosed on the home or defendant evicted the
homeowner from the home. In June 2006, Cloud, who had become embroiled in a
financial dispute with defendant and had started to question whether defendant was
helping people, wrote a letter to the district attorney's office describing GSS's practices.
Also in 2006 and 2007, some of the homeowners contacted the authorities or retained
attorneys, and one of the straw buyers contacted the FBI.
After an investigation by the authorities, defendant was charged with six counts of
a prohibited practice by a foreclosure consultant based on his acquisition of an interest in
properties in foreclosure (Civ. Code, § 2945.4, subd. (e)) and seven counts of forgery
(Pen. Code, § 470, subd. (d)) based on the fabricated home purchase loan applications.3
The prohibited practice counts were based on the transactions with six of the
homeowners.4 The forgery counts were based on transactions with five of the
homeowners whose transactions involved defendant's use of straw buyers.5
Defendant represented himself at trial. After hearing the evidence, the jury
convicted him as charged. Counsel was appointed for purposes of sentencing, and
3 Subsequent unspecified statutory references are to the Penal Code.
4 The prosecutor did not file a prohibited practice count for the transaction involving
the seventh residence because it was not owner-occupied as required by the statutory
scheme. (Civ. Code, §§ 2945.4, subd. (e), 2945.1, subd. (f), 1695.1.)
5 For the two homeowner transactions for which no forgery charges were filed, GSS
sold the home to defendant rather than to a straw buyer hired by defendant.
6
defendant received an eight-year eight-month sentence (four years eight months to be
served in the county jail and the remaining four years to be served on supervised
community release).
DISCUSSION
I. Challenges to Prohibited Practice Counts
A. Statute of Limitations
1. Application of Four-Years-After-Discovery Statute of Limitations
Defendant argues that when the prosecution against him was commenced on
July 20, 2009 (his arraignment date), the statute of limitations had expired for the counts
based on a prohibited practice by a mortgage consultant (Civ. Code, § 2945.4). Under
sections 800 and 801, prosecution of an offense that is punishable by imprisonment for
less than eight years (as here) must be commenced within three years after commission of
the offense.6 Section 801.5 and section 803, subdivision (c), extend the statute of
limitations to four years and allow for a discovery tolling period if the offense involves
an element of fraud or breach of a fiduciary obligation.7 The trial court instructed the
jury to resolve the statute of limitations issue under the four-years-after-discovery statute.
6 The prohibited practices offense is punishable by a sentence of 16 months, two
years, or three years. (§ 1170, subd. (h); Civ. Code, § 2945.7.)
7 Section 801.5 states: "Notwithstanding Section 801 or any other provision of law,
prosecution for any offense described in subdivision (c) of Section 803 shall be
commenced within four years after discovery of the commission of the offense, or within
four years after the completion of the offense, whichever is later." As we shall discuss,
section 803, subdivision (c) describes an offense "a material element of which is fraud or
breach of a fiduciary obligation . . . ."
7
Because the charged prohibited practice offenses were committed in 2004 and
2005, the commencement of the prosecution in 2009 was untimely if the three-year
statute of limitations applied. Defendant asserts the three-year statute of limitations
applied because the prohibited practice of the acquisition of an interest in a residence in
foreclosure does not include an element of fraud or breach of fiduciary obligation within
the meaning of section 803, subdivision (c). We disagree.
Section 803 states in relevant part: "(a) Except as provided in this section, a
limitation of time prescribed in this chapter is not tolled or extended for any reason.
[¶] . . . (c) A limitation of time prescribed in this chapter does not commence to run until
the discovery of an offense described in this subdivision. This subdivision applies to an
offense punishable by imprisonment . . . , a material element of which is fraud or breach
of a fiduciary obligation . . . ." (Italics added.)
Appellate courts (including this court) have concluded that section 803,
subdivision (c) is applicable if an offense has the prevention of fraud or fiduciary breach
as its "core purpose," even if fraud or fiduciary breach is not strictly an element of the
offense. (People v. Guevara (2004) 121 Cal.App.4th 17, 25-26 [filing a false nomination
paper governed by section 803, subdivision (c)]; People v. Bell (1996) 45 Cal.App.4th
1030, 1061 [this court's decision holding that offense of filing false or forged documents
is governed by section 803, subdivision (c)].) Defendant argues this interpretation is
contrary to the statute's plain language because "material element" can only mean an
element of the offense that the prosecution must prove. We are not persuaded.
8
When interpreting a statute, our goal is to ascertain and effectuate legislative
intent. (People v. Price (2007) 155 Cal.App.4th 987, 991.) We construe the words of the
statute based on their ordinary and usual meaning and in the context of the statute as a
whole. (Ibid.)
" 'Material element' " can be defined in its narrow, technical sense to mean an
essential element that the prosecution must prove to establish the offense. (See State v.
Reynolds (Or.App. 2002) 51 P.3d 684, 685-686.) However, it can also be defined in its
broader, nontechnical sense to mean an important aspect of the offense. (See Merriam-
Webster's Collegiate Dictionary (10th ed. 2002) pp. 715, 372 ["material" means "having
real importance or great consequences"; "element" means "a constituent part"].) The
latter interpretation is not contrary to the plain language of the statute; rather, it is merely
based on everyday usage rather than the technical definition of the term.
We agree with the holdings in Guevara and Bell, and conclude the Legislature
intended the term "material element" to be interpreted based on its nontechnical usage.
Generally, the delayed discovery rule is designed to relieve " 'the harshness [of barring
prosecution] . . . where it is manifestly unjust to deprive plaintiffs of a cause of action
before they are aware that they have been injured.' " (April Enterprises, Inc. v. KTTV
(1983) 147 Cal.App.3d 805, 826.) Such injustice can arise when the defendant engages
in a fraudulent act or a breach of a fiduciary obligation that prevents the plaintiff from
being aware of the misconduct or dissuades the plaintiff from investigating the possibility
of misconduct. (See id. at p. 827.) This unfairness can occur regardless of whether the
fraud or fiduciary breach is an actual element of the offense, or whether prevention of
9
fraud or fiduciary breach is the underlying purpose of the statutory enactment. Given the
ameliorative purpose of section 803, subdivision (c)'s delayed discovery provision, it
makes sense that the Legislature intended the phrase "material element" to be interpreted
based on its broader, ordinary usage so as to apply the tolling provision to offenses that
target fraud and breach of fiduciary obligations even if these matters are not actual
elements of the offense.
As an alternative argument, defendant posits that the prohibited practice offense of
acquiring an interest in property in foreclosure (Civ. Code, § 2945.4, subd. (e)), does not
have a core purpose of protecting against fraud or breach of a fiduciary obligation. He
notes that the offenses in Guevara and Bell involved falsification of documents, whereas
no such falsification is needed to acquire an interest in the homeowner's property. Again,
we disagree because it is clear that the prevention of fraud and breach of a fiduciary
obligation underlies the statutory scheme governing mortgage foreclosure consultants,
including the provision prohibiting acquisition of an interest in the property.
In the introductory provisions of the statute regulating mortgage foreclosure
consultants, the Legislature explicitly sets forth its intent to prevent fraud and unfair
dealing, stating: "[H]omeowners whose residences are in foreclosure are subject to fraud,
deception, harassment, and unfair dealing by foreclosure consultants . . . . [¶] . . . [¶] . . .
The intent and purposes of this article are . . . [¶] . . . to safeguard the public against
deceit and financial hardship; . . . to prohibit representations that tend to mislead; and to
encourage fair dealing in the rendition of foreclosure services." (Civ. Code, § 2945,
subds. (a), (c)(1).) To this end, the Legislature imposed a lengthy list of obligations on a
10
foreclosure consultant who contracts with a homeowner whose home is in foreclosure,
including, for example, the duty to provide a written contract fully disclosing the exact
nature of the consultant's services; to notify the homeowner in "14-point boldface type"
that the consultant cannot ask the homeowner to sign any deed; to notify the homeowner
in "10-point boldface type" of the right to cancel the transaction within five business
days; not to receive any compensation until after the services are fully performed; not to
take any security to secure payment of compensation; not to acquire an interest in the
residence in foreclosure; and not to take any power of attorney from the homeowner.
(Civ. Code, §§ 2945.3, 2945.4.)
A fiduciary obligation arises when a person " 'knowingly undertake[s] to act on
behalf and for the benefit of another, or . . . enter[s] into a relationship which imposes
that undertaking as a matter of law.' " (City of Hope National Medical Center v.
Genentech, Inc. (2008) 43 Cal.4th 375, 386.) A foreclosure consultant who contracts
with a homeowner whose property is facing foreclosure has undertaken an obligation to
act for the benefit of the homeowner and is subject to strict statutory oversight. As such,
a foreclosure consultant falls into the category of persons who owe fiduciary obligations
to his or her clients. (See, e.g., George Ball Pacific, Inc. v. Coldwell Banker & Co.
(1981) 117 Cal.App.3d 248, 256 [real estate broker owes fiduciary duties to client];
Apollo Capital Fund LLC. v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226,
245 [stockbroker who advises on investment decisions owes fiduciary duty].) And, by
acquiring an interest in the homeowner's property, the foreclosure consultant has violated
11
one of the statutorily-defined fiduciary obligations. It is clear that this prohibited practice
offense has at its core the prevention of a breach of fiduciary obligation.
We conclude the four-years-after-discovery provision applies to the prohibited
practice counts.
2. Substantial Evidence of Delayed Discovery
Even applying the four-years-from-discovery statute of limitations, defendant
asserts the evidence does not support the jury's finding that the discovery of the
prohibited practice offenses occurred on or after July 20, 2005, so as to make the July 20,
2009 commencement of the prosecution timely. He contends the homeowners discovered
or should have discovered the offenses when they signed the deeds transferring the
properties to GSS, which occurred in 2004 and January 2005.
An offense is discovered when either the victim or law enforcement learns of facts
which, when investigated with reasonable diligence, would make the person aware a
crime had occurred. (People v. Wong (2010) 186 Cal.App.4th 1433, 1445.) The crucial
determination is whether the victim or the authorities had actual notice of circumstances
sufficient to make them suspicious of fraud or breach of a fiduciary obligation leading
them to make inquiries that might have revealed the misconduct. (Ibid.) However, when
there is a fiduciary relationship between a defendant and a victim, "facts which ordinarily
require investigation may not incite suspicion . . . ." (Hobbs v. Bateman Eichler, Hill
Richards, Inc. (1985) 164 Cal.App.3d 174, 201.) In this circumstance, "the duty to
investigate may arise later because the [victim] is entitled to rely upon the assumption
that his fiduciary is acting on his behalf." (Id. at p. 202.)
12
The prosecutor must prove that the prosecution is timely by a preponderance of
the evidence. (People v. Wong, supra, 186 Cal.App.4th at p. 1444.) On appeal, we
review the record in the light most favorable to the judgment and draw all reasonable
inferences that the jury could draw from the evidence. (Ibid.)
The record supports that when the homeowners signed the deeds transferring title
to their residences in 2004 and early 2005, they thought they were transferring their home
to a trust which would safeguard the property on their behalf, and hence they were not
aware of facts giving rise to a suspicion that there had been a prohibited transfer to a
foreclosure consultant. By contracting to help the homeowners save their homes from
foreclosure, defendant assumed the fiduciary obligations defined in the Civil Code for
foreclosure consultants. The homeowners consistently testified that although they signed
a deed transferring the property to GSS, defendant told them that under the trust
arrangement the home still belonged to them and it would be transferred back to them
when they could improve their credit and obtain refinancing. Given defendant's status as
a foreclosure consultant subject to statutorily-specified duties of disclosure and fair
dealing, the jury could reasonably consider that the homeowners were entitled to rely on
defendant's expertise and the truth of his representations when he described the
transaction as effectively retaining their ownership interests in the property
notwithstanding the execution of the deeds.
Because defendant led the homeowners to believe that under the terms of the
transfer he did not own their homes, but rather the trust owned the home for the benefit of
the homeowner, the jury could reasonably find that when the homeowners signed the
13
grant deeds in 2004 and early 2005 they were unaware of facts triggering a duty to
investigate the possibility of a prohibited transfer of interest to a foreclosure consultant.
Thus, the jury was not required to find that the offenses were discovered, or should have
been discovered, prior to July 2005 so as to make the July 2009 commencement of the
prosecution untimely.
B. Substantial Evidence of Residence in Foreclosure
With respect to the prohibited practice counts, defendant argues there was
insufficient evidence to support the statutory requirement that the homeowners'
residences were in foreclosure based on outstanding recorded notices of default at the
time he acquired the interests in their properties. He contends that although the
prosecution presented evidence that notices of default were recorded at some point before
he acquired the interests, it did not present evidence that they were still outstanding when
he acquired the interests.
Civil Code section 2945.4, subdivision (e) makes it unlawful for a foreclosure
consultant to "[a]cquire any interest in a residence in foreclosure from an owner with
whom the foreclosure consultant has contracted." A residence in foreclosure is defined
as "residential real property consisting of one- to four-family dwelling units, one of
which the owner occupies as his or her principal place of residence, and against which
there is an outstanding notice of default, recorded pursuant to [section 2920 et seq.]."
(Civ. Code, §§ 1695.1, italics added, 2945.1, subd. (f).)
In reviewing a challenge to the sufficiency of the evidence, we consider the entire
record and draw all reasonable inferences in favor of the judgment to determine whether
14
a reasonable trier of fact could find the elements of the offense beyond a reasonable
doubt. (People v. Young (2005) 34 Cal.4th 1149, 1175.) The same standard applies
when the prosecution relies primarily on circumstantial evidence. (Ibid.) "An appellate
court must accept logical inferences that the jury might have drawn from the
circumstantial evidence." (People v. Maury (2003) 30 Cal.4th 342, 396.) To carry its
burden of proof, the prosecution is not required to "call all witnesses or introduce all
exhibits or documents referred to in the testimony or suggested by the evidence."
(People v. Simms (1970) 10 Cal.App.3d 299, 313.) "Unless it is clearly shown that 'on no
hypothesis whatever is there sufficient substantial evidence to support the verdict' the
conviction will not be reversed." (People v. Dejourney (2011) 192 Cal.App.4th 1091,
1114.)
At trial, the prosecution submitted into evidence notices of default for each of the
homeowners involved in the prohibited practice counts. Each notice of default was
recorded prior to the time defendant acquired the interest in the property. Also, the
homeowners testified that they contacted defendant and agreed to the trust transaction
because they were behind in their mortgage payments and/or their homes were in
foreclosure and defendant told them he could save their homes from foreclosure.
To illustrate, the evidence included the following.
(1) For homeowner Kathy Barnes, the prosecution submitted a notice of default
recorded on January 7, 2004, and a trust agreement and deed for the GSS transaction
signed by Barnes on February 3, 2004. Barnes testified that she missed three mortgage
payments in late 2003; she met with defendant in December 2003 and January 2004 to
15
discuss what she could do in the event of foreclosure; and defendant provided money to
get her home out of foreclosure.
(2) For homeowner Leotha Britt, the evidence showed a July 21, 2003 recorded
notice of default, and a September 21 and 22, 2004 signed trust agreement and deed,
respectively. Britt testified that in 2004 she fell behind on her mortgage payments "to the
point of foreclosure"; defendant told her he would be able to save her home from the
foreclosure; Britt signed the deed because she was desperate and "trying to save [her]
home"; and she filed for bankruptcy to stop the foreclosure because the house was going
to be sold through foreclosure "within a couple of days[.]"
(3) For homeowner Ruta Tavale, the evidence showed a September 8, 2004
recorded notice of default, and an October 13 and 20, 2004 signed trust agreement and
deed, respectively. Tavale testified that in 2004 she was falling behind on her mortgage
payments; she received notices from the bank about foreclosure; defendant told her he
could stop the foreclosure; and she entered into the transaction to get out of foreclosure.
(4) For homeowner Ominae Aiono, the evidence showed a January 30, 2002
recorded notice of default, and a January 7 and 11, 2005 signed trust agreement and deed,
respectively. Aiono testified that he had trouble making his mortgage payments in the
early 2000's; by the time he met with defendant he was about $12,000 behind in his
$1,900 monthly payment; he told defendant about his "foreclosure situation"; and
defendant said GSS could get him out of foreclosure.
(5) For homeowner Larry Bridges, the evidence showed a November 30, 2004
recorded notice of default, and a January 31, 2005 signed trust agreement and deed.
16
Bridges testified that he was three months behind on his mortgage and the home started
going into foreclosure in the summer; he contacted defendant in the fall; and defendant
said he could give him a loan to help him catch up with his mortgage and he would pay
defendant instead of a bank.8
(6) For homeowner Andrew Bulinski, the evidence showed an August 2, 2004
recorded notice of default, and a January 6, 2005 signed trust agreement and deed.
Bulinski testified that he began falling behind in his mortgage payments and received
notices from his bank about defaulting on the loan; he contacted the bank and was told
they could not help him; he "started panicking" and contacted defendant in early 2005;
defendant told him he could save his home; and when Bulinski signed the documents
provided by defendant Bulinski was "desperate."
The documents showing that notices of default had been recorded, combined with
the homeowners' testimony reflecting that they were trying to save their homes from
foreclosure when they contacted defendant, provides substantial evidence to support the
jury's finding that the default notices were still outstanding when defendant acquired the
interests in the properties.
To support his challenge to the sufficiency of the evidence, defendant notes that
the prosecution could have presented evidence indicating that a records search had been
conducted and that no notices of rescission of the notices of default had been recorded at
8 Bridges testified that the foreclosure process started in the summer of 2005 and his
initial contact with defendant occurred in the fall of 2005, whereas the relevant
documents show the time periods he referenced were in 2004.
17
the time he acquired the interests in the homes. The absence of this evidence does not
defeat the support for the findings that there were outstanding notices of default. As
stated, the prosecution is not required to present all evidence that could support the
alleged charges. On appeal, our inquiry is whether there is substantial evidence
supporting the jury's finding that the element was established beyond a reasonable doubt.
This standard is met here.9
II. Challenges to Forgery Counts
A. Substantial Evidence of Misconduct Constituting Forgery
Defendant argues the record does not support that the charged acts constituted
forgery. He asserts the prosecution's theory was that he committed forgery by directing
the loan applicants to inflate income and assets on the loan applications; forgery requires
a false writing that purports to be that of another or something that it is not; the loan
applications were signed by the applicants and were what they purported to be; and the
mere inclusion of false information contained in a document does not constitute forgery.
The offense of forgery is committed when the defendant, with the intent to
defraud, falsely makes or passes, as true and genuine, a writing that, if genuine, creates
some legal right or obligation. (§ 470, subd. (d); People v. Gaul-Alexander (1995) 32
Cal.App.4th 735, 741-742.) However, when a document is what it purports to be, the
inclusion of false statements within the instrument may constitute false pretenses, but it
9 In the habeas petition considered with this appeal, we conclude defendant has not
set forth a prima facie case for relief based on his submission of notices of rescission of
the notices of default for three homeowners.
18
does not constitute forgery. (2 Witkin, Cal. Criminal Law: Crimes Against Property (4th
ed. 2012) § 194, pp. 244-245.) "[F]orgery directly implicates the writing itself, not the
oral or implied misstatement about the writing." (Id. at p. 245) To constitute forgery
based on the creation or use of a fraudulent document, the "instrument must fraudulently
purport to be what it is not." (People v. Bendit (1896) 111 Cal. 274, 277.) " 'The term
falsely, as applied to making or altering a writing in order to make it forgery, has
reference not to the contents or tenor of the writing, or to the fact stated in the writing,
because a writing containing a true statement may be forged or counterfeited as well as
any other, but it implies that the paper or writing is false, not genuine, fictitious, not a
true writing, without regard to the truth or falsehood of the statement it contains --a
writing which is the counterfeit of something which is or has been a genuine writing, or
one which purports to be a genuine writing or instrument when it is not.' " (Id. at p. 279,
italics added.) That is, "[t]hough a forgery, like false pretenses, requires a lie, it must be
a lie about the document itself:[] the lie must relate to the genuineness of the document."
(LaFave, Substantive Criminal Law (2d ed. 2013) § 19.7, subd. (j)(5), p. 138, italics
added, fn. omitted.)
The jury was instructed that to convict defendant of forgery the defendant must
have "falsely made a residential loan application" or "passed or used a false residential
loan application." The evidence showed that defendant caused the submittal of home
purchase loan applications (and accompanying documentation) to the banks purporting to
be applications from persons who were seeking loans to purchase the homes, whereas in
fact the persons identified in the loan applications were not purchasing the homes and
19
were not applying for loans for a home purchase transaction.10 Rather, the persons
identified on the home purchase loan applications were hired by defendant to pose as
buyers.11 Although the straw buyers may have filled out the loan applications, they did
so at defendant's direction and thus the creation and use of the documents could properly
be attributed to defendant.
In short, defendant caused documents to be submitted to the banks that purported
to be genuine home purchase loan applications that were not home purchase loan
applications at all because there was no real buyer and no home actually being sold to a
buyer. The home purchase loan documents did not merely contain false statements about
such matters as the buyer's income and assets; rather, the documents themselves were
fake representations of a nonexistent transaction. Thus, defendant created and used a
document that purported to be a genuine home purchase loan application that was not in
fact a genuine document because a home buyer and a home purchase transaction did not
exist. This factual scenario supported the forgery counts.
Defendant also argues the loan applications were not subject to the forgery statute
because they did not create a legal duty on the part of the bank to approve the loan
applications. The forgery offense applies to fabricated documents that will damage the
legal rights, usually money or property, of a person who acts upon the document as
10 In addition to the loan applications themselves, the banks also received the
residential purchase agreements between the straw buyer and GSS and, for some
transactions, copies of fake documents showing corporate stock ownership.
11 See footnote 5, ante.
20
genuine. (People v. Gaul-Alexander, supra, 32 Cal.App.4th at p. 742; People v. Vincent
(1993) 19 Cal.App.4th 696, 700; People v. McKenna (1938) 11 Cal.2d 327, 332
["Whether the forged instrument . . . , if genuine, would create a legal liability, is
immaterial; the test is whether upon its face it will have the effect of defrauding one who
acts upon it as genuine."].) Although the bank was not required to approve the loan
application, when it did so it was acting upon the document as a genuine home purchase
loan application. The bank's right not to extend loans for nonexistent transactions was
prejudiced by the fabricated document. There was no error in applying the forgery
statute to defendant's conduct of creating or using the fabricated home purchase loan
applications.
B. Failure To Instruct on Aiding and Abetting for Forgery
Defendant contends the prosecutor relied on aiding and abetting principles for the
forgery counts and hence the court erred in failing to sua sponte instruct the jury on
aiding and abetting.
A trial court must sua sponte instruct on general principles of law that are
commonly connected to the facts adduced at trial and that are necessary for the jury's
understanding of the case. (People v. Young, supra, 34 Cal.4th at p. 1200.) The court
must instruct on every theory of the case supported by substantial evidence. (Ibid.) The
perpetrator of a crime is the person whose culpability is premised on his or her own
commission of acts that constitute the crime. (See People v. McCoy (2001) 25 Cal.4th
1111, 1117.) An aider and abettor of a crime is a person whose culpability is premised
on his or her assistance or encouragement of the perpetrator's acts. (See ibid.) To
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establish culpability based on aiding and abetting, the defendant must have had
knowledge of the perpetrator's unlawful purpose, intended to commit or encourage the
offense, and by act or advice aided or encouraged the commission of the offense.
(People v. Williams (1997) 16 Cal.4th 635, 676.)
When the evidence can support culpability based on aiding and abetting, the jury
should be instructed on the intent necessary to establish guilt on this theory. (See People
v. Williams, supra, 16 Cal.4th at p. 676.) However, instructions on aiding and abetting
are not required where the defendant was not tried as an aider and abettor and there was
no substantial evidence to support the theory. (People v. Young, supra, 34 Cal.4th at
p. 1201.) Evidence is substantial if a reasonable jury could find it persuasive. (Id. at
p. 1200.)
Contrary to defendant's contention, the record shows that defendant was tried as
the actual perpetrator of the forgery, not as an aider and abettor. The prosecution's theory
was that defendant was the actual perpetrator because he masterminded the fraudulent
home purchase loan application scheme and instructed the straw buyers on how to fill out
the documents. Although the straw buyers may have been defendant's accomplices
because they helped defendant, there was no claim by the prosecutor that defendant could
be culpable as a facilitator of the straw buyers even if he was not the direct perpetrator.12
12 The jury was instructed that the straw buyers were accomplices and were
instructed on the corroboration requirement for accomplice testimony. (See CALCRIM
No. 335.) The prosecutor referred to the accomplice corroboration requirement in closing
arguments, but did not suggest that defendant's liability could be premised on aiding and
abetting the straw buyers.
22
Defendant contends he could not be prosecuted as the direct perpetrator because
he did not personally produce the loan applications but directed others to do so. The
contention is unavailing. The evidence showed that defendant in effect committed the
acts of fabricating the loan applications by directing his subordinates to prepare the
documents per his instructions. In this context, defendant used agents to commit acts for
him, which can make him culpable as the perpetrator. (People v. Waxman (1952) 114
Cal.App.2d 399, 407-408; see 17 Cal.Jur. 3d (2010) Criminal Law: Core Aspects, § 128,
pp. 224-225.) This is not a case where the defendant merely assisted or encouraged other
persons to commit the acts underlying the criminal offense; rather, defendant himself
generated and controlled the acts through the use of subordinates who obeyed his
directions.
Because defendant was not tried on an aiding and abetting theory and there was no
substantial evidence to support that he was merely a facilitator and not an actual
perpetrator, the trial court was not required to sua sponte instruct on aiding and abetting
principles.
Alternatively, even assuming arguendo the trial court should have instructed on
aiding and abetting, the error was harmless beyond a reasonable doubt. (People v.
Kurtenbach (2012) 204 Cal.App.4th 1264, 1274.) The jury was instructed that to find
defendant guilty of forgery, the prosecution had to prove that defendant made or used a
false residential loan application; that he knew the application was false; and that he
intended that the application be accepted as genuine and intended to defraud. (See
CALCRIM Nos. 1904, 1905.) Thus, the instructions required the jury to find defendant
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committed the acts and had the requisite state of mind for forgery, and the jury was not
led to believe that it could find him guilty based merely on an accomplice's acts or state
of mind.
Defendant argues that because the jury was not instructed on aiding and abetting,
it did not know that the straw buyers who actually filled out the loan applications had to
have acted with intent to defraud in order to find defendant guilty as an aider and abettor.
This contention is based on a misunderstanding of aider and abettor principles. Aiding
and abetting culpability may be based on the combined acts of the perpetrator and aider
and abettor, but the culpability of each turns on his or her own individual mens rea.
(People v. McCoy, supra, 25 Cal.4th at p. 1120.) The fact that the direct perpetrator may
have a lesser (or no) culpability does not exonerate an aider and abettor who acts with the
state of mind required for the charged offense. (Id. at p. 1121.)
There was no reversible error arising from the failure to instruct on aiding and
abetting.
III. Restitution
A. Restitution Awarded to Wilson
After holding a restitution hearing, the trial court ordered defendant to pay
restitution to the homeowners based on the amount of equity they had in their homes at
the time of defendant's misconduct. Defendant asserts there was no evidence to support a
finding of compensable loss by one of the victims (Michael Wilson) because Wilson's
father was the owner of the home, and Wilson was a victim associated with the forgery,
but not the prohibited practice, counts. The Attorney General contends this challenge is
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forfeited on appeal because although defendant challenged the amount of the award to
Wilson, he did not raise the issue of Wilson's lack of ownership of the home.
To avoid a forfeiture on appeal, the defendant must generally raise restitution
objections to the trial court. (People v. Gonzalez (2003) 31 Cal.4th 745, 755.) In any
event, even assuming arguendo the issue is not forfeited, the record supports the award to
Wilson.
The trial court is required to award restitution to "a victim [who] has suffered
economic loss as a result of the defendant's conduct . . . ." (§ 1202.4, subd. (f).) A victim
is a person who is the object of a crime. (People v. Crow (1993) 6 Cal.4th 952, 957.) On
appeal, we review the trial court's restitution order for abuse of discretion. (People v.
Gemelli (2008) 161 Cal.App.4th 1539, 1542.) No abuse of discretion will be found
where there is a rational and factual basis for the restitution order. (See ibid.)
The prosecution did not file a prohibited practice count for the transaction
associated with Wilson because the residence was not owner-occupied as required by the
prohibited practices statutory scheme. (See fn. 4, ante.) The forgery counts were based
on the fabricated loan applications, and defendant argues that the bank (not Wilson) was
the direct victim of the forgery and Wilson has not suffered an economic loss based on
the forgery.
Although Wilson did not directly suffer loss from the forgery, he nevertheless was
a direct victim of, and suffered economic loss from, defendant's overall trust agreement
scheme. Wilson testified that his father originally purchased the home and title to the
home was in his father's name, but Wilson made the monthly mortgage payments and
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lived there with his family. Wilson met with defendant and decided to use GSS's
services, and thereafter brought his father to a meeting with defendant to sign the
necessary documentation. Wilson explained that his father let him decide whether to sign
up for GSS services, stating: "[M]y dad left it in my purview to do. At the time I was
messing up my father's credit. I wanted to get my dad's name off of the credit. So this
was like [a] last shot. We'll do this, get his name out of it, and he won't have anything to
do with the house anymore."
Drawing all inferences in favor of the court's ruling, the evidence showed that
Wilson paid the mortgage, used the home as his permanent residence, and had an
understanding with his father that the house effectively belonged to him. This provided a
reasonable basis for a finding that he suffered economic loss from defendant's
misconduct. Further, because Wilson lived in and was financially responsible for the
residence and met with defendant to secure GSS's services, he was the object of
defendant's misconduct. Under these circumstances, he can reasonably be characterized
as a victim of defendant's misconduct even though he was not the title owner and his
transaction did not correlate with the prohibited practice counts. The record supports the
trial court's inclusion of Wilson in the victim restitution award.
B. Correction of Minute Order and Abstract of Judgment
The parties agree, as do we, that the minute order and abstract of judgment should
be corrected to remove a parole revocation restitution fine (§ 1202.45) that was not
imposed by the court and that is not authorized given that defendant is serving his
sentence in local custody and will not be paroled.
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DISPOSITION
The judgment is modified to remove the parole revocation restitution fine from the
minute order. As so modified, the judgment is affirmed. The superior court is directed to
correct the abstract of judgment to remove the parole revocation restitution fine and to
transmit a corrected abstract of judgment to the local custody officials and to the
California Department of Corrections and Rehabilitation as necessary.
HALLER, Acting P. J.
WE CONCUR:
MCDONALD, J.
O'ROURKE, J.
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