PEOPLE v. YANEZ

Reset A A Font size: Print

Court of Appeal, Second District, Division 4, California.

The PEOPLE, Plaintiff and Appellant, v. Carlos Carl YANEZ, Defendant and Respondent.

No. B078140.

Decided: November 28, 1994

Gil Garcetti, Dist. Atty., Patrick D. Moran and Natasha S. Cooper, Deputy Dist. Attys., for plaintiff and appellant. David L. Mann, under appointment by the Court of Appeal, Seal Beach, for defendant and respondent.

The People appeal from an order denying a Penal Code section 871.5 motion to reinstate a complaint charging respondent Carlos Yanez with two counts of selling securities without permission (Corp.Code, § 25110).1  Appellant contends that the trial court employed an incorrect standard of review, that is, substantial evidence, when it upheld the decision of the magistrate to dismiss the case.   We affirm.

BACKGROUND

In this case, the record indicates that “Panda,” a conglomerate of entertainment companies, retained respondent, an attorney, to advise it in connection with financial offerings to potential investors.   It is conceded that the financial offerings violated section 25110 of the Corporations Code in that they were not registered.   In fact, respondent advised Panda that in his opinion the offerings were exempt from registration.   He does not deny the actions he took in connection with the offering as set out in the evidence received by the magistrate.   Instead, he argues that his activities were insufficient to bring him within the scope of persons who may be held criminally responsible, based upon strict liability, for violation of section 25110.   The magistrate agreed and twice dismissed the charges against respondent.

The second time the matter was dismissed, the magistrate ruled as follows:  “As to [respondent], I would grant the motion to dismiss.   I don't believe that the actions of [respondent] constitute violations of these sections.  [¶] It would seem to me that what we have here is, I think, by all accounts, something that really was a lousy setup and it stunk real bad and, if anything, [respondent] is in a position that, as [defense counsel] argues, [respondent] is acting in the capacity of an attorney.  [¶]  It seems to me that in this case, the things that [respondent] did, if they were to be criminal, in my opinion, then, there is a missing statute someplace.   There is not a crime that is defined in the code—at least that [the prosecutor] is aware of, or else he would have been charged—that fits the scenario here.  [¶]  I do not accept that there is enough evidence to indicate that [respondent] was directly involved in the sale of these investments.  [¶]  It seems to me the crux of it really was that these investments should have been registered and [respondent's] opinion is or was that they didn't need to be;  and I guess if that in effect were a crime, then that's what he did.   For better or worse, [respondent's] participation appears to be within that sphere, which is making a decision.   Whether it is wrong or grossly wrong, I don't know;  but that is not what the crime is.   It is whether or not they were securities, whether or not they needed to be registered.   His opinion was they did not need to be, and I don't think the rest of the activity is enough to hold him to answer for a violation of sales.”

After the second dismissal, the prosecutor moved for reinstatement pursuant to Penal Code section 871.5.  (People v. Mayo (1986) 185 Cal.App.3d 389, 394–395, 229 Cal.Rptr. 762.) 2  The superior court judge denied the motion stating:  “I have to view the preliminary transcript in the light most favorable to the judge who ruled thereon just as the appellate [court] rules․  [¶]  Well, I'm not saying it's a good call or bad call.   It's like a [Penal Code section] 995 argument except it's in reverse.   The People usually enjoy a 995, the advantage of the following concept:  If there is a scintilla[ ] to support their position, no matter how much window dressing therein to the contrary, a 995 is generally and should lawfully be denied because the proper place for affirmative defenses is at a trial.  [¶]  It's just the reverse concept under 871.5 and it's simply this:  If I have to view the transcript in the light most favorable to the magistrate, if there is any basis for me to—to conclude that he had a good faith belief in the evidence to support his call, no matter how much evidence to the contrary there may be therein, it's the same rules in reverse.   It's just the defendant gets your hat on today.  [¶] ․ And it is extremely close, Gentlemen.   I could argue either side of this with a straight face and I do encourage the People to seek their remedy under [Pen.Code, § 1238, subd. (a)(9), appeal by People] because I'm as interested in the final outcome as any of you.”

Appellant argues that the magistrate made no factual findings and therefore the superior court judge utilized the wrong standard of review, i.e., substantial evidence, by deferring to the magistrate.   Instead, appellant argues that we can review the decision de novo and determine as a matter of law that sufficient evidence was presented to hold respondent to answer.

DISCUSSION

1. Liability for violation of section 25110:

 Corporations Code section 25110 makes it unlawful “for any person to offer or sell in this state any security in an issuer transaction ․, whether or not by or through underwriters, unless such sale has been qualified under section 25111, 25112 or 25113 ․ or unless such security or transaction is exempted․” 3  (Emphasis added.)

Criminal enforcement for violation of this section is set out in section 25540 which, in 1990, stated in pertinent part:  “(a) Except as provided in subdivision (b),[4 ] any person who willfully violates any provision of this law, [section 25110 in this case] ․ shall upon conviction be fined not more than two hundred and fifty thousand dollars ($250,000), or imprisoned in the state prison, or in a county jail for not more than one year, or may be punished by both such fine and imprisonment;  ․”

Criminal violations of section 25110 fall within the ambit of strict liability so that it is unnecessary that offerors or sellers know that their actions are in violation of section 25110.  (People v. Clem (1974) 39 Cal.App.3d 539, 114 Cal.Rptr. 359.)

Respondent argues that he cannot be prosecuted for violation of section 25110 because at all times he was merely acting in his role as an attorney and not directly involved in the sale or offer of the Panda investments.   At oral argument, appellant conceded that, to the extent respondent merely acted in his role as attorney, he could not be criminally liable.   Appellant argued that respondent exceeded this role in two key areas:  (1) by responding to a letter from the Director of Corporations advising that the corporation cease and desist its activities in connection with the offerings;  and (2) his role in amending documents relating to a sale to Diana Cole.   Appellant contends these activities are sufficient to hold respondent to answer to the charges.

 We agree that, absent aider and abettor liability, unless respondent's activities fell within the scope of offering or selling the securities, he cannot be held to answer for a strict liability violation of section 25110.   Our review follows a four step process:  (1) Did the trial court use the correct standard?  (2) If so, was there sufficient evidence to support the magistrate's findings?  (3) Were the other alleged activities sufficient to support prosecution of respondent?  (4) Whether respondent can be held liable based upon aiding and abetting.

2. Did the trial court use the proper standard of review?

 “The superior court's review of a magistrate's dismissal for lack of sufficient cause under [Pen.Code, § 871.5] depends upon the existence of factual findings.   If the magistrate made express factual findings and dismissed the charges for lack of probable cause, the superior court is bound by those findings if supported by substantial evidence.   If the magistrate dismissed the charges without making factual finding, the superior court reviews the dismissal as a question of law.  [Citation.]”  (People v. Childs (1991) 226 Cal.App.3d 1397, 1406–1407, 277 Cal.Rptr. 456.)   In other words, if the magistrate believed all of the evidence presented but decided that the evidence produced was insufficient to hold the defendant to answer, then we review the uncontradicted evidence and decide as a matter of law whether the magistrate properly dismissed the case.  (People v. Slaughter (1984) 35 Cal.3d 629, 638–643, 200 Cal.Rptr. 448, 677 P.2d 854.)

 We understand the statements of the magistrate as mixed findings of fact and conclusions of law.   In connection with respondent's activities, the magistrate found:  “I don't believe that the actions of [respondent] constitute violations of these sections.  [¶] ․ if anything, [respondent] is in a position that, ․ [respondent] is acting in the capacity of an attorney. ”   We believe this to be a finding of fact.   Next, the magistrate states “that there is [not] enough evidence to indicate that [respondent] was directly involved in the sale of these investments.”   We interpret this as a conclusion of law that, absent his role as an attorney, the evidence was insufficient to support a finding that respondent was directly involved in the sales or offerings.   Finally, the magistrate states, “I don't think the rest of the activity is enough to hold him to answer for a violation of sales.”   We also interpret this as a conclusion of law that the evidence was insufficient.

We find that the superior court used the proper standard of review relating to the magistrate's finding on respondent's activities as an attorney.   With regard to the other two conclusions, the superior court did not err to the extent that the evidence in the transcript supported a conclusion that all activities of respondent fell within his role as an attorney as compared to an offeror or seller.   To the extent that his “other” activities did not fall within his role as attorney, then the wrong standard was utilized.

3. Was there sufficient evidence to support the magistrate's findings?

To the extent that respondent's role as “acting in the capacity of an attorney” is supported by substantial evidence, the magistrate's findings exonerate him from liability under section 25110 for acting within that role.   In that regard, a review of the transcript of the subject preliminary hearing indicates that the magistrate heard uncontradicted testimony from Blake Wilson, the head of an investment sales company, and Department of Corporations (Department) investigator Kathryn Holguin.   We conclude from our review that respondent's acts were no more than appropriate to his role as part-time, outside legal counsel.

(a) The testimony of Blake Wilson:

Wilson testified that on February 14, 1990, he learned that “Panda” was a conglomerate of companies based in the entertainment business and was seeking to expand its operating capital.   Chief executive officer and president James Young, vice president Robert Short, and in-house counsel Leon Jordan of Panda invited Wilson to represent them as a securities broker/dealer to assist in the raising of capital.   Young and Short were two of the four principals who managed Panda.   Advertising of the investment opportunities had commenced sometime earlier.

Over the next week, the parties discussed a relationship between Wilson's firm and Panda's in-house brokers.   They also discussed the legality of various forms the investment offer might assume.   Young and Short indicated to Wilson that they wished to bring Panda into compliance with state and federal securities guidelines and asked him to refer them to an attorney to provide the proper offering document.   Wilson suggested that Young and Short talk to respondent, a securities attorney whom he had met as a referral in 1987 and who had expertise in the field.   Panda had not had any previous dealings with respondent.   Wilson cautioned Panda that respondent was his attorney and there was potentially a severe conflict of interest, but that respondent perhaps could assist them in drafting documents.

On March 6, 1990, Wilson learned from respondent that Panda had contacted him through in-house counsel Jordan.   Respondent indicated to Wilson that he was going to help Panda restructure the offering.   Respondent told Wilson he was working with Panda's in-house counsel whom he believed had a great deal of background and familiarity with the company, as well as their independent counsel, a Century City law firm, which would collaborate to compile the information necessary for the particular document.   Respondent would use the information to prepare the finished documentation.   The resulting opinion letter, signed by respondent, was sent to potential investors.   Panda's memorandum, which Wilson saw after review and approval by the Panda management team, was circulated with attachments that were not a part of the memorandum.   Wilson testified that such documents are prepared by the issuer.

When Wilson received the opinion letter, he was concerned about the legality of the offering and discussed the matter with Panda officials and respondent.   Wilson asked respondent to write him a separate opinion letter to provide further detail.   Towards the end of March, Wilson received the letter.   It provided detailed case references upon which respondent had based his opinion that this particular offering was not a security.   Respondent's opinion was “promulgated as a result of his discussion with the in-house counsel and the independent law firm.”   Wilson testified he was quite sure that respondent did not tell solicitors anything about the legalities of the offer.   That was done via the administration of Panda.

Panda disseminated all sales materials to prospective investors.   Wilson used the materials to instruct his sales people and Panda later provided additional material that purported to be information about investment in a new product, a Michael Jackson board game.   The investment opportunity was a debt in the form of a note secured by the goodwill of Panda.   At Panda's option, stock could be issued at a later date.

Wilson's company sold Panda notes from the last two weeks of May 1990 through about the first part of August 1990, raising about $350,000.   During the period between March 6 and when Wilson stopped selling the notes, the details of the offering changed many times.   Wilson would ask respondent to explain the then current offering.

After respondent assisted in the construction of the offering documents, respondent devoted several afternoons a week to assisting Panda's in-house counsel with other legal work.   Respondent reported to Wilson that Panda had invited respondent to take on more work based on his good performance on the drafting of the opinion letter and because Panda “needed help in cleaning themselves up” and with overflow work.   Panda was a “large rumor mill” and respondent's responsibilities included ensuring that Wilson had accurate information so that his salesmen could make accurate representations.   Respondent's source of “official” information was the Panda administration, including in-house counsel Jordan or Short who represented that Panda had rights to manufacturer, market and distribute the Michael Jackson board game.   Respondent had advised Wilson he had no role in putting together the game deal.   When Wilson decided to check a rumor that a fan club had guaranteed purchase of a certain number of the games, respondent investigated and concluded the club did not exist.   Wilson testified:  “Please remember [respondent] was one of the attorneys.   Usually with regards to company policy, I call Leon Jordan, since he was [respondent's] senior.   That's usually what happened.   But if I couldn't get ahold of Mr. Jordan, I would talk to [respondent], whose opinions have been worthwhile to me prior to my association with Panda.”   Respondent further indicated to Wilson that certain documents which had been sent to Wilson were unknown to him.

Wilson did not trust Young, who was the main player at Panda.   Young had already misused invested money for his own purposes.   Most of Wilson's discussions regarding this concern were with in-house counsel Leon Jordan although he had some discussion of the matter with respondent.   In this connection, Panda established a corporate escrow account at Bank of the Oaks.   Respondent concurred with in-house counsel Jordan that it was appropriate to establish the account to limit Young's control over the funds collected.   To Wilson's knowledge, respondent was not involved in establishing the account, however, respondent was listed on the account in bank documents as “Secretary.”   Young, accountant Stone, and respondent were authorized to make withdrawals from that account;  however, Young's signature had to appear in conjunction with either respondent's or Stone's.   While a Department of Corporation investigation recovered one check, made out to either “cash” or “Panda Resources,” which bore respondent's signature;  it was co-signed by accountant Stone and respondent's signature was not found on any type of withdrawal slip.

On June 29, 1990, Wilson learned that in-house counsel Leon Jordan had left Panda.   By July 1990, Young was the only principal remaining.   Wilson testified:  “Mr. Young didn't listen to anybody or take anybody's advice, he did what he wanted to do.”   Respondent informed Wilson that Panda's in-house sales people were violating policies respondent had recommended.   Wilson testified that respondent ultimately left the consultation job with Panda sometime in August or September 1990.

(b) Kathryn Holguin's testimony:

Kathryn Holguin was the Department's chief investigator in the Panda matter.   She testified that neither Wilson nor Panda had obtained a permit to sell the securities to the public.   Holguin interviewed alleged victim Diana Cole, who related she had received from Corey, of Paine Webber, a brochure, private placement memorandum, “Dear Investor” letter indicating that Panda had been given an exclusive right to the Michael Jackson board game, a related “hot off the press” announcement, and a newspaper article.   Cole gave a check for $35,000 to Corey.   In return, she received a promissory note and letter from Nathan Berlin, purporting to be “President of Panda Resources International, Ltd.,” evidencing her investment.   Cole later noticed that the note did not indicate that she had purchased an interest in the Michael Jackson board game.   She notified Corey, who told her he would get the problem solved and get back to her.   In a three-way telephone conversation among Cole, Corey, and respondent, Cole stated her understanding that she had also invested in the game and that the note did not reflect that fact.   Respondent told her he would send her the proper paperwork.   Thereafter, Cole received documents from Panda which provided:  “As additional consideration for the advancing of the funds as provided herein, Panda agrees to assign to lender a 1.75 percent interest to the net profits derived by Panda from that certain board game known as Michael Jackson's Infinity.”   Cole told Holguin that the conversation with respondent only involved the paperwork.   She indicated to Holguin that the documents sent by respondent reflected the interests she believed she had originally purchased.   At the time of her investment, she had not spoken to anyone at Panda;  she had only spoken to Corey.   In September, when Cole could not reach Panda, she contacted respondent at his office, at another address, and he informed her that Panda was defunct.

The Department sent a letter dated April 6, 1990, addressed to Berlin, at Panda, stating, in part:  “It has been called to our attention that you may be offering to sell securities to the public by telephone and/or mail solicitation.”   The letter also set out certain legal requirements, including the need to qualify the investments through the Department and obtain a permit to sell to the public.   A May 10, 1990 letter from respondent to the Department stated in part:  “During our first meeting, I suggested that they immediately terminate all fund raising activities until I was able to bring them into compliance.   I understand this was done effective March 1, 1990.  [¶] ․ At this point Panda Entertainment is not selling any securities or anything else for that matter․   Panda Entertainment does not intend to sell any security until such time as a permit is issued.   I was retained for the purpose of arranging all necessary permits for all sales of securities.   No sales of securities will be made until such time as I inform Panda that they are in compliance with applicable laws.”   The letter also included a reference to a rescission letter, a copy of which he sent to the Department in September 1990.   Holguin spoke to over 30 Panda investors and found no one who had received the letter.   Also in evidence was Department correspondence to respondent requesting additional information about Panda and respondent's letter in reply, including a two-page client list and the figure $1,247,500.

(c) Conclusions from the evidence:

 During the period of approximately six months that respondent was associated with Panda, Panda management was in flux.   At the end, only Young, who had earlier siphoned off investment funds, remained.   Wilson considered Young to be unmanageable.   Although respondent was designated as “secretary” on forms for the escrow bank account, there was no evidence respondent co-signed any document in conjunction with Young or otherwise had any control over any employee of Panda.   The in-house sales staff felt free to disregard policies respondent had recommended to it.   Wilson considered respondent as a third attorney at Panda, and he generally consulted in-house counsel Jordan first.   Wilson testified that it was common practice that the issuer provide the facts upon which the memoranda and opinions letters were based.   There was no evidence that Panda proceeded otherwise.   Wilson testified the Panda management team approved the memorandum.   In response to Wilson's concerns, respondent provided another opinion letter which, based on discussions with Panda in-house and outside counsel, provided copious legal authority for the assertion that the offering was not a security.   Panda had advertised investment opportunities before either Wilson or respondent were contacted, and it disseminated the sales materials to the prospective investors.

The record supports the conclusion of the trial court that substantial evidence supported the finding of the magistrate that respondent's acts were attributable solely to his function as legal counsel.

4. Were the other activities sufficient to support prosecution?

Appellant contends that respondent's activities in connection with answering the Departments letters and in helping Diana Cole correct her paperwork did not fall within his role as counsel and are sufficient to hold him to answer.   We disagree.

The DOC correspondence to Panda was first addressed to principal Berlin.   Respondent was apparently asked to reply to the letter.   We see no evidence other than he was asked to do so in his role as an attorney.   His response letter merely indicates that he had suggested that Panda terminate its activities until he was able to bring it into compliance and his belief that it had followed his advice.   The fact that Panda continued to do business as usual is further evidence of respondent's lack of control and influence.   His follow up response would be in connection with ongoing correspondence and does not appear to go beyond his role as counsel.

Respondent's only contact with regard to Diana Cole was related to her complaint that investment documents she received did not reflect her understanding of the investment that she had purchased.   Respondent drafted a corrected document to reflect the terms of the investment she understood she purchased.   There is no evidence that respondent was directly involved in the initial sale or offer of the investment to Ms. Cole.   His sole activity in this regard was ministerial only.

We find that the evidence suggests these related activities fell within respondent's role as attorney.   Therefore, the conclusions of the magistrate that insufficient other evidence existed to hold respondent to answer were correct and the trial court's ruling was not error.

5. Can respondent be held liable as an aider and abettor?

 A further issue exists:  whether respondent can be held responsible as an aider and abettor once he knew that the Department believed that the investments should have been registered.   Appellant suggested this concept at oral argument, arguing that respondent was culpable by responding to the Departments' letters and in aiding Diana Cole.   The issue relates to respondent's good faith belief in continuing to act once he knew that the department was challenging the legality of the offering.5

While the magistrate made no express finding that respondent undertook his activities in good faith, the clear implication of his statement is that he believed that respondent was acting in good faith in connection with the Panda investments.   Again, this is a factual finding to which we must defer.

Section 25540 incorporates the element of “willfulness” into the concept of criminal liability for violation of section 25110.   The issue of whether this incorporates the concept of good faith in connection with violation of section 25110 was addressed in People v. Clem, supra, 39 Cal.App.3d 539, 114 Cal.Rptr. 359.   The persons charged in Clem were originators of limited partnerships and of the financing scheme utilized to raise money for the entities.   As such, they were directly responsible as issuers of the offerings and were properly charged with strict criminal liability.   The court concluded that “the Legislature intended section 25540 to preserve strict criminal liability for violations of the Corporate Securities Law.”  (Id. at p. 542, 114 Cal.Rptr. 359.)   As to the term “willfully,” it held:  “ ‘all that is required is proof that the person acted intentionally in the sense that he was aware of what he was doing.   Proof of evil motive or intent to violate the law, or knowledge that the law was being violated, is not required.’ ”   (Ibid.)  It concluded:  “․ except as provided by section 25700 [6 ] advice of counsel or other evidence of good faith is not a defense to a charge of dealing in unqualified securities.”  (Id. at pp. 542–543, 114 Cal.Rptr. 359.)

Under the concept of aiding and abetting pursuant to Penal Code section 31,7 scienter is an element:  “The requirement that the jury determine the intent with which a person tried as an aider and abettor has acted is not designed to ensure that his conduct constitutes the offense with which he is charged.   His liability is vicarious․  [¶]  It follows that a defendant whose liability is predicated on his status as an aider and abettor need not have intended to encourage or facilitate the particular offense ultimately committed by the perpetrator.   His knowledge that an act which is criminal was intended, and his action taken with the intent that the act be encouraged or facilitated, are sufficient to impose liability on him for any reasonably foreseeable offense committed as a consequence by the perpetrator.   It is the intent to encourage and bring about conduct that is criminal, not the specific intent that is an element of the target offense, which Beeman holds must be found by the jury.  (People v. Beeman [1984] 35 Cal.3d 547, 556 [199 Cal.Rptr. 60, 674 P.2d 1318].)”  (People v. Croy (1985) 41 Cal.3d 1, 12, fn. 5, 221 Cal.Rptr. 592, 710 P.2d 392, emphases added.)   Therefore, in order to be found guilty of aiding and abetting, a defendant must have knowledge that a criminal act is contemplated.   Without that knowledge, a necessary element is lacking.

 In the context of an attorney participant, acting solely in the role of attorney, we conclude that the term “willfully” in section 25540 incorporates an element of subjective bad faith that must be found to establish criminal liability against the attorney for aiding and abetting a violation of section 25110.   Offering advice, giving opinions, and preparing documentation relating to securities offerings are staples in the stock-in-trade of attorneys in this specialized field.   While an attorney may be civilly liable for negligent advice,8 potential criminal liability would have a chilling effect on legitimate professional conduct.   We must avoid construing a statute to dispense with mens rea where it would outlaw a number of apparently innocent acts.  (Staples v. United States (1994) 511 U.S. 600, ––––, 114 S.Ct. 1793, 1799, 128 L.Ed.2d 608;  cf. Ratzlaf v. United States (1994) 510 U.S. 135, –––– – ––––, 114 S.Ct. 655, 660–661, 126 L.Ed.2d 615.)   Of course, an attorney who participates in an illegal offering without a subjective good faith belief, or in a role as offeror or seller, certainly should not be shielded from criminal liability.

 The evidence establishes that respondent's initial opinion was that the investments were exempt from registration.   The findings of the magistrate in this regard support an inference that he believed this advice was given in good faith.   Appellant argues that respondent's activities after he was notified by the DOC letter that the investments should have been registered are sufficient to hold him to answer.   However, the evidence supports a reasonable inference that respondent's activities after that point in time were also undertaken in good faith.   He communicated to the Department of Corporations that he advised the corporation to suspend its activities until he could bring them into compliance.   The fact that the corporation continued to do business as usual merely proves that the corporation refused to follow his advice.   The activities undertaken for Diana Cole showed his concern that at least the investment should be appropriately documented, nothing more.

We believe that the implied finding of good faith by the magistrate is supported by substantial evidence.   Therefore, it was not error for the magistrate to dismiss the action or for the superior court to deny the Penal Code section 871.5 motion.

DISPOSITION

The judgment (order denying motion to reinstate the complaint) is affirmed.

FOOTNOTES

1.   Count 1 of the information reads:  “On and between March 9, 1990 and August 17, 1990, in the County of Los Angeles, the crime of SALE OF SECURITIES WITHOUT PERMISSION, in violation of CORPORATION CODE SECTION 25110, a Felony, was committed by [respondent], who did willfully and unlawfully offer to sell and issue and cause to be sold and issued to NUMEROUS INVESTORS, a security, to wit, a promissory note, stock option, evidence of indebtedness and investment contract with PANDA RESOURCES INTERNATIONAL, LTD. and its related entities, without having first applied for and secured from the Commissioner of Corporations of the State of California a qualification of such security and transaction as required by California Corporations Code Section 25110.  [¶]  It is further alleged that in the commission of the above offense [respondent], with the intent so to do, took funds and property of a value exceeding $100,000, the property of NUMEROUS INVESTORS, within the meaning of Penal Code section [ ] 12022.6(b).”   Count 2 alleges a violation under the same code section between June 1 and August 3, 1990, lists the victim as Diana Cole, and asserts that the value of the funds and property exceeded $25,000 within the meaning of Penal Code section 12022.6, subdivision (a).

2.   As pertinent, Penal Code section 871.5 provides:  “(a) When an action is dismissed by a magistrate ․ the prosecutor may make a motion in the superior court ․ to compel the magistrate to reinstate the complaint․  [¶]  (b) ․ The only ground for the motion shall be that, as a matter of law, the magistrate erroneously dismissed the action․  [¶]  (c) The superior court shall hear and determine the motion on the basis of the record of the proceedings before the magistrate․”

3.   All further statutory references are to sections of the Corporations Code unless otherwise noted.

4.   Not pertinent to this case.

5.   Appellant points out that the case of People v. Keating, S033855, is currently before the Supreme Court on the issue of aiding and abetting in connection with securities violations.   Appellant suggests we should not undertake to decide this issue prior to the time the Supreme Court addresses it.   We disagree with this suggestion.   The issue has been directly presented by the facts of this case and we cannot avoid it.

6.   Not applicable to the instant case.

7.   Penal Code section 31 states:  “All persons concerned in the commission of a crime, whether it be felony or misdemeanor, and whether they directly commit the act constituting the offense, or aid and abet in its commission, or, not being present, have advised and encouraged its commission, and all persons counseling, advising, or encouraging children under the age of fourteen years, lunatics or idiots, to commit any crime, or who, by fraud, contrivance, or force, occasion the drunkenness of another for the purpose of causing him to commit any crime, or who, by threats, menaces, command, or coercion, compel another to commit any crime, are principals in any crime so committed.”

8.   See 1 Marsh & Volk, Practice Under the California Securities Laws (rev. ed. 1973) section 14.06[3][d], p. 14–60, citing Lubin v. Sybedon Corp. (S.D.Cal.1988) 688 F.Supp. 1425, 1455, and In re Rexplore, Inc. Securities Litigation (N.D.Cal.1988) 685 F.Supp. 1132, 1146.

HASTINGS, Associate Justice.

ARLEIGH M. WOODS, P.J., and EPSTEIN, J., concur.

Copied to clipboard