PEOPLE v. KEATING (1993)

In a 46–count second amended indictment, the Grand Jury of Los Angeles County accused Charles H. Keating, Jr., and codefendants Judy J. Wischer, Robin S. Symes, and Ray C. Fidel of committing 20 counts of sales of securities by means of false statements or omissions, in violation of Corporations Code sections 25401 and 25540;  20 counts of sales of securities without qualification, in violation of Corporations Code sections 25110 and 25540;  3 counts of making false statements to the corporations commissioner, in violation of Corporations Code sections 25166 and 25540;  and 3 counts of failing to file advertising with the corporations commissioner before use, in violation of Corporations Code sections 25300 and 25540.   It was further alleged that the statute of limitations had been tolled, within the meaning of Penal Code section 803, as to the violations in counts 3, 5, 10, 17 through 19, 23, 25, 30, 32, 37 through 39, and 41 through 46.   The district attorney alleged that the violations had occurred, and the second amended indictment was filed in the superior court on November 19, 1990.

Keating pleaded not guilty to the second amended indictment on January 11, 1991.   Counts 1, 19, and 21 through 46 were dismissed either at the prosecution's request or upon the grant of Keating's motion pursuant to Penal Code section 995.   Keating's motion to set aside the second amended indictment was denied.   Keating's motion for severance from the codefendants was granted on July 26, 1991.

The matter proceeded to trial on the remaining 18 counts on August 6, 1991.   Keating's Penal Code section 1118.1 motion for judgment of acquittal was denied.   The jury found him not guilty as to count 7 and guilty as charged in counts 2, 3, 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, and 20, all violations of Corporations Code sections 25401 and 25540.   The jury further found the statute of limitations had been tolled as to counts 3, 5, 10, 17, and 18.   Keating's motion for a new trial was denied.

Sentence was imposed on April 10, 1992.   The trial court sentenced Keating to state prison for a term of 10 years.   Count 9 was selected as the base term, for which the high term of five years was imposed;  as to counts 4, 8, 10, 12, 15, 18, and 20, terms of one-third of a two-year mid term (or eight months) were imposed, to run consecutively to the five-year base term;  as to count 11, the court again imposed a consecutive one-third of a two-year mid term, but stayed four months of that sentence;  and as to counts 2, 3, 5, 6, 13, 14, 16, and 17, the court imposed a two-year mid term for each count, to run concurrently with the five-year base term.¹  In addition, Keating was ordered to pay the maximum fine, $250,000.

Keating filed a timely notice of appeal on April 23, 1992.

STATEMENT OF FACTS

ITHE CORPORATE PERSPECTIVE

Charles Keating was the chief executive officer of American Continental Corporation (“ACC”).   The court notes that he was also a member of the bar.   ACC was founded in 1969 as a subsidiary of American Financial Corporation, and until 1976 was primarily a residential home builder.   In late 1976, Keating and others purchased control of ACC.   Keating focused ACC's home building operations on fewer markets and diversified into mortgage banking, land development, commercial real estate, and insurance services.   On October 18, 1983, ACC applied to the California Department of Savings and Loan and to the Federal Home Loan Board for approval to acquire Lincoln Savings and Loan Association, an institution with several branches in Southern California.   Following a four-month review of ACC's application, both agencies approved the acquisition of Lincoln on February 21, 1984.   Keating exercised the powers of ownership, including naming his son, Charles Keating III, chairman of the board.

Keating named Judy Wischer as president of Lincoln, Robin Scott Symes as executive vice-president, and Raymond Charles Fidel was named senior vice-president of branch administration.   Fidel reported directly to Symes.   Symes reported to Wischer or Andy Neibling, chairman of the board of American Continental Mortgage Corporation, who became chairman of the board of Lincoln in 1986.

According to the testimony of Symes, Keating changed the emphasis of Lincoln from home loans in the California market to large construction contracts in Arizona.   Keating directed that Lincoln headquarters be moved from Monterey Park to Irvine.   Of 150 employees in the headquarter offices at the time Keating took over, fewer than 20 were still employed when the move to Irvine was completed in August 1984.   In June 1984, the loan servicing, purchasing, accounting, and legal functions had been immediately transferred from Monterey Park to ACC headquarters in Phoenix, where those functions were consolidated under the joint control of ACC management.

While never an officer or a director of Lincoln, Keating appeared to be firmly in control of all phases of the operations.   He and his wife personally approved all the interior decorating and furnishings in the Irvine offices, even down to individual personal photographs that went on the walls.   Lincoln grew from $1 billion in assets at the time of acquisition to over $5 billion over the course of the next five years.   As the value of ACC assets in Denver and Phoenix deteriorated, Lincoln became the prime asset of ACC by March of 1986, representing more than of 80 percent of ACC's total assets.   By early 1988, due to Lincoln's growth and the continued deterioration of ACC's other assets, Lincoln represented more than 90 percent of all assets, thus becoming the primary operating entity of ACC.

In March of 1986, the Federal Home Loan Bank (“FHLB”) of San Francisco conducted a routine examination of Lincoln.   On July 3, 1986, Keating attended a meeting with the examiners, who expressed some concerns to him.   Keating became hostile, his voice was raised and his face flushed.   In August 1986, Keating attended another meeting with both state and federal examiners.   In that meeting the state regulatory agency indicated that the requirement that Lincoln have an officer in California was not being met.   Keating thereupon cavalierly pointed to Symes and said, “How would he do?”   The examiner said that Symes would certainly be appropriate, and Keating responded, “That's done.   We'll make him the managing officer.”   Keating thereafter stated his belief that the San Francisco FHLB was deliberately out to get him and that he intended “to take a bite out of [someone at FHLB].”  This belief was further enhanced when Lincoln's requested authorization to pay dividends to ACC was denied by FHLB of San Francisco in the fall of 1986.

Michael Patricarca was employed by the FHLB of San Francisco as one of the lead regulators in the examination of Lincoln.   He personally pointed out to Keating in December 1986 that Lincoln's risky investments in Arizona realty required greater capital and higher net worth.   He further made clear to Keating that previously in November he had expressed 14 points of concern, including two with which Lincoln was failing to comply, the direct investment regulation and not meeting its net worth requirement.   Keating remarked, “Gees, we didn't understand what that was all about.”   Patricarca sent a letter to Lincoln's board of directors on December 15, 1986, documenting the failures and again stating that Lincoln was precluded from paying any dividend to ACC.

In November 1986, Symes was the senior-most corporate officer of Lincoln at the Irvine headquarters, all the others being at the ACC Phoenix corporate headquarters.   Symes would set the interest rates for certificates of deposit at the direction of Keating.   That month Symes and Fidel were summoned to Phoenix by Keating and advised that ACC had decided to sell corporate bonds ² through Lincoln branches.   Keating expressed his desire to have the bonds sold as quickly as possible and instructed Symes and Fidel, as well as the legal staff, to do everything necessary to see that it happened.

Symes was troubled by the fact that the bonds were to be sold in the branches to customers who would come into the Lincoln facility to buy a Lincoln certificate of deposit, but would end up with a bond in the holding company instead, thereby causing Lincoln to lose that deposit.   Fidel was designated by Keating to supervise the bond sales efforts.   Fidel immediately implemented a program to inform the 27 branch managers of the bond sales and to select from Lincoln employee ranks individuals who were to become bond representatives.   Most were college graduates fresh out of school who were from 22 to 40 years of age.   The alacrity of the effort is noted in that the first bonds were sold in late November 1986, just after Thanksgiving Day.

The debentures were negotiated from a separately designated desk within each branch.   An area of 110 square feet was leased by Lincoln to ACC in each office.   Symes monitored the volume and type of bond sales in every branch daily and reported the volume of sales directly to Keating in Phoenix.

In August 1987, Symes and Fidel were again called to a meeting in Phoenix.   A huge banner awaited them which extolled, “Congratulations Ray [Fidel] and Rob [Robin Symes], [for the] 57 million dollars.”   Keating then indicated that, due to Andy Neibling leaving both ACC and Lincoln, he was moving Bruce Dickson from his position at that time as president of Lincoln to a position within ACC.   As a consequence, he offered the position of Lincoln chairman of the board and chief executive officer to Symes, and the position of Lincoln president to Fidel.

Keating became so obsessed after the San Francisco FHLB examination and his belief that he was being treated unfairly that he courted the favor of several United States senators to intercede on his behalf with the FHLB chairman in Washington, D.C.

It was also in August 1987 that Patricarca opined that Lincoln was being operated in an unsafe and unsound manner in a wide array of its business dealings.   He intended to schedule a field examination, but was instructed by a senior member of FHLB in Washington, D.C., not to pursue it at that time.

In September, Keating met with the chairman of FHLB and other regulators in Washington.   Keating complained about what he perceived as unfair treatment by the San Francisco district and said that he wanted an objective review of his differences with them.   The chairman authorized Washington regulators to review the 1986 examination to determine whether all the findings of the San Francisco FHLB could be supported.

Darrel William Dochow was the executive director of the Office of Regulatory Activities (“ORA”) of the FHLB in Washington.   ORA was an oversight operation which set standards for the industry and its regulatory staff.   On October 16, 1987, he received a memorandum from federal regulators concluding that some of the San Francisco FHLB findings were in fact supported, including a $560 million violation of the direct investment regulation.   One of the major loans extended by Lincoln was to a large luxury hotel complex owned by ACC, the Phoenician Resort Hotel, which continually lost money.   The regulators concluded that, if the Phoenician Resort Hotel had suffered the losses documented, Lincoln would be unable to meet its net worth requirement.   Although he was of the opinion that Lincoln should be placed in conservatorship, Dochow did not make that recommendation.

The findings of the San Francisco FHLB were also reviewed by William K. Black, the deputy director of the Federal Savings and Loan Association Insurance Corporation (“FSLIC”).   He was concerned that the direct investments were high and poorly underwritten, with high broker's deposits and excessive use of junk bonds.   He noted that Lincoln was failing to meet its net worth requirements, facing a $130 million loss as of September 1986, and violating the “affiliate transaction rules.”   These factors seemed to him consistent with the failure of a savings and loan.   He believed Lincoln should be placed in conservatorship or receivership.

On October 17, 1987, Forbes Magazine published an article highly critical of ACC's financial position.   Keating instructed Fidel to immediately send out a “runner” to purchase all the copies of the magazine from newsstands and grocery stores near the branches.   That same month the “Black Monday” stock market crash occurred.   Keating indicated to Symes his need to raise a large amount of cash in order to make some investments in the depressed stock market.   Symes suggested marketing a one-year maturity bond, which proved so attractive that sales increased to over $1 million daily.

During the meeting at which this decision was made, an investment banker from a well-known junk bond brokerage called and was put on the speakerphone.   He revealed that an individual or entity which held ACC bonds issued prior to the branch sales program wanted to sell their debentures at a significant discount.   After indicating on the telephone that ACC had no current plans to buy back its bonds, Keating indicated to Symes that it was a great advantage to the company to be able to buy back this debt.   Thereafter, Keating actively used the proceeds from the one-year bonds to buy back other debts at discount.

On February 2, 1988, Dochow met privately with Keating.   He told Keating exorbitant salaries were being paid out of ACC/Lincoln and said he did not want to encounter those types of salary figures being taken out of Lincoln's assets in the future.   Keating agreed that he and his family members would thereafter be paid exclusively out of ACC assets.   Dochow also discussed other funds being funneled out of Lincoln for the benefit of insiders or ACC.   He directed Keating not to divert any funds out of Lincoln for any purpose, including paying dividends or management contracts.   Keating assured Dochow that Lincoln was not funneling funds out of Lincoln to ACC, and made it clear that he was personally committed to making the corrections Dochow requested.   Keating emphasized he was the person in control.   After the private meeting, regulators and ACC/Lincoln management met to review the regulator's recommendations.

In May 1988, federal regulators recommended a new examination, without the participation of the San Francisco FHLB, which Keating had accused of being biased.   Dochow monitored the progress of the examination from Washington during July and August 1988.   He received a report that Lincoln had paid in excess of $20 million to ACC, in violation of various regulations.   He testified he found this particularly troubling, especially in view of Keating's personal assurances that Lincoln would not funnel money to ACC.

Telephone calls from numerous worried bondholders started to come into the Phoenix corporate offices.   Patricia Johnson Lanigan was employed by ACC in July 1988 as director of public relations.   In late 1988, as the number of calls increased, Keating included in her responsibilities the handling of those telephone calls from bondholders concerned about their investments.   Keating's instructions were for her to reassure the investors.   She testified she was never apprised of ACC's third-quarter loss in 1988 nor of the possible $94 million tax reimbursement due to Lincoln.

On September 6, 1988, Dochow personally brought to the attention of Lincoln's board of directors that a tax-sharing arrangement was out of balance.   ACC and Lincoln filed a consolidated tax return.   Under the terms of the agreement, ACC would pay the entire tax due and thereafter would be reimbursed by Lincoln for its share.   Lincoln had overpaid ACC some $94 million.   Dochow requested that ACC/Lincoln respond in writing by September 19, 1988, as to what the basis was for the payments and how they had been of benefit to Lincoln.

When Dochow did not receive a response by September 23, 1988, he wrote to Keating and the Lincoln board of directors indicating the lack of a response, and directed there be no further tax-sharing payments from Lincoln to ACC.   When Lincoln and Keating again failed to respond, on October 14, 1988, Dochow sent a cease-and-desist letter and revoked the approval of the tax-sharing agreement.   He then gave ACC one final opportunity to respond as to why it should not be required to forthwith reimburse Lincoln the $94 million tax funds advanced.   Keating was outraged.

On or about December 15, 1988, Dochow received the examination report on ACC.   The report concluded that ACC was pyramiding debt to sustain its own operations without providing commensurate benefits for Lincoln;  that the mode of operation placed a severe strain on Lincoln to generate dividends or cash flow to support ACC;  and that the funds sent by Lincoln to ACC were being used by ACC to fund treasury stock purchases, pay debt service, consulting fees, and exorbitant management salaries and to sustain the expenses of corporate aircraft.   The report estimated that $34 million had been expended on “Keating family benefits” over “something less than” a four-year period.   The report concluded that, despite the weakened financial condition of ACC, the company was paying $9.5 million cash to Keating family members to buy back their corporate stock while Keating family members bought more stock under an employee stock option plan, and then the company bought that stock back for an additional $6.6 million.

On December 20, 1988, Dochow directed a letter to the Lincoln board of directors indicating the seriousness of the situation.   The letter imposed 13 directives to restrict Lincoln's operations and to eliminate or mitigate unsafe and unsound activities.   It officially requested Lincoln seek reimbursement for the $94.8 million paid to ACC pursuant to the tax-sharing agreement.

Meanwhile, Fidel, as president of Lincoln, began to develop concerns about ACC's ability to withstand a requirement to repay the debt service on the bonds.   His concerns stemmed from a third-quarter loss recorded by ACC and bad media the parent holding company was receiving.   In November 1988, the one-year bonds began to mature and Keating instructed Fidel to inspire the bond representatives to send letters to these bondholders encouraging a rollover to another bond.   Keating further instructed Fidel to continue to pursue additional new bond sales.

In late December 1988 or the first week of January 1989, Keating held a meeting in Irvine, which included both bond representatives and Lincoln employees, to announce the sale of Lincoln to the Spencer Scott Group.   He indicated that, after the sale, ACC would have even greater opportunities, and encouraged the bond sales to continue.   Immediately thereafter, Keating had all of the bond representatives flown to Phoenix for a day at ACC corporate headquarters and a tour of the facility, speeches by Keating and Wischer, and lunch at the Phoenician Resort Hotel.   Fidel testified that, after this trip, the bond representatives went back to business as usual, quite enthusiastically.

On February 14, 1989, Fidel ordered the close of all bond sales, notwithstanding the fact that Keating was still encouraging bond sales.   The proposed sale of Lincoln to the Spencer Scott Group had fallen through.   Fidel felt that he could no longer in good faith sell the bonds, and ordered the end to the sales and offered the bond representatives positions with Lincoln.   He notified ACC Attorneys David Thompson and Andy Liggett that he had closed down the program.

Fidel testified that, at the time he made the decision to discontinue the bond sales, he was unaware that FHLB had concluded that ACC was in a weak financial condition, nor was he aware that FHLB had not approved ACC's debt budget for 1989.   He also had never been informed of FHLB's intention to direct ACC to reimburse Lincoln the $94.8 million which had been advanced for taxes.   He was never told of the restrictions placed on Lincoln's ability to pay dividends to ACC.   Fidel, being unaware of these financial considerations, was unable to make them known to the bond sellers, who in turn did not divulge this information to the individual investors.

Fidel was asked, “Do you recall specifically or otherwise [Keating] ever directing you to make sure that the people who were buying the bonds in southern California were aware of that fact [the inability of Lincoln to pay ACC a dividend]?”   Fidel responded, “He never did, Sir.”

Fidel also testified that he was not apprised that Moody's had provisionally rated ACC subordinate debt as below investment grade.   Symes testified that he was unaware of any effort by Keating to have any of the negative information ever made known to any potential bond purchasers.

On February 3, 1989, Dochow sent a cease-and-desist letter to Lincoln for failing to comply with his directives imposed on December 20, 1988, because Lincoln still gave every indication that it was operating for the benefit of ACC.   Despite the fact that the sale of Lincoln to the Spencer Scott Group was marginal at best, a press release issued on February 9, 1989, made it appear imminent.   Dochow was incensed, because he knew Keating personally approved all press releases.   The following day, February 10, 1989, ACC issued a second press release clarifying the earlier information, but again stated that Keating “believes that the sale is ‘on track.’ ”

On April 13, 1989, ACC filed for protection under Chapter 11 of the United States Bankruptcy Code.   The next day, the federal government regulators forced Lincoln into conservatorship.

II

THE INDIVIDUAL INVESTORSA. STEPHEN ARONSON (COUNT 2)

Stephen Aronson, a residential real estate broker for 17 years, entered the downtown branch of Lincoln on April 14, 1988.   His purpose was to start a “self-employed pension” account, similar to an individual retirement account (“IRA”).   He testified that he needed to do so for tax purposes.

He went up to the teller desk and spoke with a young man and explained his intent.   The young man introduced him to Marsha or Martha Youngblood, the branch vice-president.   After telling her he wanted to open a self-employed pension account, she stated, “Well, we have a special program right now ․ and it earns 12 percent.   But, it's a five-year term.”   She prepared the paperwork, which Aronson signed.   He gave her a check for $11,505 and received a Lincoln passbook reflecting the apparent deposit.

On April 26, 1988, Aronson received a letter thanking him for his “prompt attention to the IRA paperwork.   Enclosed, please find your receipt for your debenture purchased and your copy of the purchase agreement.”   In early 1989, Aronson received a letter from Marsha Fagan requesting that he call her regarding his ACC bonds.   It was not until after that conversation that Aronson realized that he had purchased ACC bonds.

Aronson testified that he thought his “account” was insured by the Federal Deposit Insurance Corporation (“FDIC”), because there was a sign to that effect in the Lincoln branch window, he was in fact in a bank, and he received a passbook.   He did not see any signs or posters indicating that he was in an ACC office.   No mention of insurance or lack of insurance took place in his conversation with Youngblood.   There was no conversation of the “risk” of his investment, and he received neither a prospectus nor an annual report concerning ACC.   He was unaware that he had signed documents acknowledging he had received a prospectus and prospectus supplement until that portion of his documentation was read to him in court.

Since Aronson was a real estate broker, he knew well that realty prices fluctuate.   He testified that neither Youngblood nor anyone from ACC ever indicated to him that, if the price of real estate in Arizona went down, his investment would be in jeopardy.

B. ERIKA BACHMANN (COUNT 3)

Erika Bachmann testified that she was a college graduate with a teaching credential.   She went to the Granada Hills branch of Lincoln on March 13, 1987.   Her certificate of deposit at World Savings matured on that date, and she had read in the newspaper that Lincoln was paying higher interest.   She inquired of the teller whether the investment was insured, and was assured by the teller, “It is sold by Lincoln Savings and it is insured by the Federal Government.”

Emerson Fersch came over to a desk Bachmann thought was for new accounts.   She told him it was very important to her not to take risks with her money.   Fersch told her the “papers” were better than certificates of deposit because they paid a little more interest and they were insured by FSLIC.   Fersch further assured Bachmann that Lincoln was “many billion dollars strong” because “Mr. Keating, [a] businessman from Arizona, he stepped in and he bought Lincoln Savings.”   She was not given a prospectus, only a little blue receipt for her check in the amount of $20,000.   When she left the bank, she was of the understanding that she would receive a certificate of deposit to mature in ten years, which would come in the mail in about four to six weeks.   Four weeks later she received a certificate in the mail and placed it into her safe-deposit box at World Savings.   No other documents came with the certificate.

On December 17, 1987, another World Savings certificate of deposit matured and Bachmann again went to Lincoln.   She told Fersch she was there to make another deposit.   Since the interest had been coming in on the first certificate and she trusted Fersch and accepted his reassurances at face value, she gave him another $55,000 to mature in five years.   She recalled telling him, “You know, Mr. Fersch, you better be sure that this money is safe, because this is all I have.   This is for my daughter's college education.”   Fersch told her not to worry about it, the money was safe.   Again, she received no prospectus or other documentation.

On March 16, 1988, Bachmann went to Lincoln to have her savings account passbook updated.   She had been having the monthly interest from the certificates deposited directly into a savings account at Lincoln.   She had accumulated over $3,000 in her savings account from the certificate interest.   The teller suggested she invest in another certificate, paying 11 percent interest, rather than earning only 5.5 percent on her savings passbook account.   Bachmann was reluctant because she recalled reading something in a newspaper to the effect that Lincoln was being investigated.   Bachmann testified that the teller told her she “should not worry about it at all because all the banks are insured by the federal government and the federal government keeps an eye on all the banks and they investigate periodically just to make sure that the banks don't do anything wrong with the investments.”

The teller handled this transaction at the teller window and gave her the usual blue receipt.   Again she did not receive a prospectus or any information on ACC.   The $3,000 certificate was to mature in one year.

Bachmann recalled that her husband indicated to her that her investment was a bond.   He asked her to go to the bank and obtain a prospectus.   She sought out Fersch and requested a prospectus.   He went behind the counter and returned later with a 1987 annual report, which she gave to her husband.   She went back to Fersch and again requested a prospectus, but he indicated that he had run out and did not have one.   He said he would call her when he received a new supply.   He never called her.   In February 1989, she received a maturity notice on the $3,000 bond.   It arrived in a big brown envelope containing two prospectuses.   The only portion she recalled reading was the notice that the investment was not insured by the bank.   She was immediately upset and promptly went to Lincoln.   She learned Fersch was no longer employed there and that ACC matters were being handled in a tiny office across the street.

Ron Sjoberg was the ACC representative in the office.   Bachmann complained to him that she had been deceived by Fersch about her investments being insured.   She asked for all of her money back.   Bachmann testified that Sjoberg told her that was “not possible because the money [was] tied down for a certain period of time just like a CD.”   He further assured her the money was safe.   On March 1, 1989, she took the matured certificate to Sjoberg and had the principal deposited into her Lincoln savings account.

On April 13, 1989, the day Lincoln was placed in conservatorship, Bachmann happened to drive past Lincoln and stopped when she saw a large crowd outside.   She discovered the governmental takeover, and was assured by the government official at the door that Lincoln funds up to $100,000 were safe.   She immediately walked across the street and found the ACC office to be vacant and deserted.

Bachmann testified that she was never told about the problems ACC faced with the bank examiners, that the bonds had been rated as below investment grade, that they were known as “junk bond[s],” or that Lincoln had been informed by bank examiners that it was engaging in “unsafe and unsound practices.”   Had she learned of any of this information or that the bonds were not insured, she would not have invested.   Bachmann also testified that, had she seen a prospectus which contained bold language that the bonds were not insured, she would not have invested.   Bachmann acknowledged that she had never met or spoken with Keating.

C. JOSE CONCEPCION MARTINEZ (COUNT 4)

Jose Concepcion Martinez, a foreign-born 66–year–old retired carpenter, testified that, on October 18, 1988, he went into the Lincoln branch in Downey because he had received a brochure in the mail indicating “something about a higher rate [of interest] being paid at the Lincoln Savings in Downey.”

Martinez spoke to Maria Santos, who indicated he could make an investment “that was like a savings.”   He testified that, when he inquired about the safety and security of the bond, Santos told him “there was no risk whatsoever, that they were associated with Lincoln Savings.”   He purchased a $4,000 bond, but did not receive a prospectus.   Although he spoke only Spanish, no attempt was made to relay in Spanish any information concerning risk as disclosed in the prospectus.   He left the Lincoln office with the impression that the bond was insured by the United States government.

On December 1, 1988, when Martinez's account at Home Savings matured, he took the $26,000 to Santos to invest because he trusted her and because she reassured him that he would receive an even higher interest rate, and “she repeated again that there was no danger whatsoever.”   He signed the English language purchase agreement because he trusted Santos.   Martinez testified that he did not understand that he was purchasing bonds, did not know the meaning of subordinated debenture, did not know that ACC had a weakened financial condition, would not have made the investments had he known he was actually purchasing bonds, and that he did not know Keating or have any personal contact with him regarding his investments.

D. HELEN M. BOYCE (COUNT 5)

Helen Maxine Boyce, a retired accounting department employee of a major California bank, testified she had an account at Lincoln since 1955 or 1960.   On June 25, 1987, she went to the Lincoln branch in Sherman Oaks.   In the lobby she saw an advertisement for ACC bonds.   She purchased a bond for $10,000 in joint tenancy with her sister.   Her sister purchased a bond for $7,000 in joint tenancy with Boyce.   When her sister passed away, ACC reissued the bond on February 25, 1988, for a face value of $17,000 to Boyce.   She received a prospectus, but neither she nor the bond salesperson opened it.

On November 6, 1987, she went to the Los Angeles Lincoln branch and spoke with Lawrence Goodkind.   She purchased a bond in the amount of $20,000.   On December 10, 1987, she purchased a bond in joint tenancy with her sister for $13,000.   The bond matured on December 1, 1988, and was redeemed at that time.   On December 29, 1987, she went to the Sherman Oaks branch and spoke with Steven Forrest Skolnik.   Boyce testified he told her it was “a very good place to put your money, it was safe and secure and that [it] had a good rate.”   She bought a $22,000 bond, which matured on January 1, 1989, and she redeemed it at that time.

On February 12, 1988, she went to the Sherman Oaks branch because she had a certificate of deposit coming due.   She again spoke to Skolnik and purchased a bond for $20,000.   At no time did anyone tell her that the financial condition of ACC was deteriorating, that there was a serious dispute between FHLB and Lincoln, or that Lincoln could not meet its net worth requirement.   She testified that, had she known this information, she would not have purchased the bonds.

Boyce was acquainted with Moody bond ratings.   No one ever told her that ACC bonds had been rated as below investment grade.   If she had known, she would not have bought them.

E. FRED PAUL BURNS (COUNT 6)

Fred Paul Burns is a 70–year–old retired laser manufacturer who earned a Ph.D. degree in physics from Columbia University.   He invested regularly in government insured certificates of deposit.   On March 7, 1988, he went to the Santa Monica branch of Lincoln in response to a Los Angeles Times advertisement indicating certificates of deposit at a somewhat higher rate than at other savings and loans in the area.

Within the branch he saw a sign that read, “Ask us about bonds paying more interest than CD's.”   The sign bore an “American Continental” designation.   Burns walked over to a young man, Stanton Murphy, and inquired about the bonds.   Burns testified that Murphy responded, “Well, the company is wonderful.   It is like the Rock of Gibraltar,” “And there are no problems none whatsoever.   They are profitable and they have a great future.”

As a result of these representations and the fact that the bonds were being sold in a bank setting, regulated by state and federal agencies, Burns felt safe in investing $50,000 in a two-year bond.   He received a prospectus at the time he invested, but did not take time to read it.   Murphy did not suggest he review it before investing.   Burns took the prospectus home and read it a few days later.   When Burns noted therein that the valuation of ACC depended upon real estate, he gulped and began to worry.   Burns testified he knew he could not get his principal back for two years.   ACC lasted only an additional 13 months.

When Burns was at Lincoln on March 7, 1988, he had not been told that Lincoln was failing to meet its net worth requirement, that the federal bank examiners were of the opinion Lincoln was being operated in an unsafe and unsound manner, or that Moody's and Standard and Poors had rated the bonds as below investment grade.   Since Burns considered himself a somewhat sophisticated investor, any of this information would have put him on notice as to the risk involved, and he testified that he would not have invested.   He never saw or spoke with Keating during the purchase of the bond.

F. JOHN COCHENOUR (COUNT 8)

John Hoover Cochenour is a retired maintenance repairman.   He attended school up to the 10th grade and thereafter received a general education development certificate.   On June 7, 1988, he went to the Glendale branch because his certificate of deposit had matured.   The teller introduced him to Laura Powers.   He believed her to be an employee of Lincoln.

Cochenour testified Powers told him that his deposit “was as safe as being with Lincoln Savings, safe as being a CD.”   Based upon this representation, he purchased a $5,000 bond.   On January 11, 1989, he again went to the Glendale office to purchase a certificate of deposit.   The teller informed him that he “could still get more with American Continental, but we don't have a sales office here.   We have one in Burbank.”   He went to Lincoln in Burbank and was advised that ACC's office was in the same building, down the hall from Lincoln branch operations.   In the ACC office, he met Brock Bolde.   Cochenour was assured his investment would be safe because ACC was the parent company of Lincoln.   He invested $20,000.   He was never told to look over the prospectus and did not recall if he even received one at the time of his purchases.

Neither Laura Powers nor Brock Bolde told Cochenour that the purchases were risky investments or that federal savings and loan examiners had determined that there were serious regulatory concerns with the operation of Lincoln.   He was not told that Lincoln was failing to meet its net worth requirements and was being operated in an unsafe and unsound manner, that a tax-sharing agreement controversy existed between Lincoln/ACC and FHLB, that a cease-and-desist order had been issued by the California Department of Savings and Loan, or that the bonds had been rated below investment grade by an independent rating service.   Keating did not take any personal part in Cochenour's transactions.

G. BERTHA RETTIG (COUNT 9)

Bertha Rettig, age 79, went to the Woodland Hills Lincoln branch on February 10, 1989.   She had a certificate of deposit that she wanted to roll over.   A teller told her that ACC bonds were paying “a much higher interest.”   She was directed next door and met with Doug Lagerstrom.

Rettig testified that Lagerstrom told her the bonds were paying 10.5 percent interest and that “it was a safe investment because they owned Lincoln Savings and they also owned some properties that they had on a map on the wall and the Phoenician Hotel.”   She purchased a $10,000 bond.   She subsequently received the bond certificate and a prospectus in the mail.   Lagerstrom never made Rettig aware of any negative press, the potential consequences to ACC of the tax-sharing agreement controversy, the cease-and-desist order that had been served on Lincoln, the third-quarter loss sustained by ACC in 1988, the bond rating, ACC's weak financial condition, or that the financial survival of ACC depended upon the sale of Lincoln.   Had she known the bond was risky, she would not have purchased it.

H. ROBERT BOWLUS (COUNT 10)

Robert N. Bowlus, an elementary school teacher, had an account at the Lincoln Rolling Hills branch since 1986.   In February 1987, he had a certificate of deposit which matured.   He went to Lincoln and was advised by the teller that ACC bonds paid a higher interest rate.   He was referred to Teri Naranjo at the Torrance Lincoln office.   He thought that she was a Lincoln employee.   Realizing that the bond was not insured, Bowlus expressed his concern to Naranjo.   Bowlus testified that Naranjo assured him “that it was backed by multi millions of dollars of assets and that the net—and the quote was basically next to being federally insured it was the safest thing that we could invest in.”   He purchased a four-year $4,000 bond on February 28, 1987, and received an information packet containing a prospectus at that time.   At no time prior to his buying the bond was he given an opportunity to review the prospectus.

Later that spring, Bowlus attended a seminar in the Rolling Hills office.   The crux of the presentation was a slide show demonstrating the strength of ACC assets.   When the issue of the safety of the bonds was raised, the presenter indicated the bonds were “absolutely safe.”   As a result of this presentation, Bowlus purchased an additional bond on June 10, 1987, from Naranjo, who was at that time the Rolling Hills branch manager.   This was a three-year bond for $6,000.   Again, after the purchase, he received a packet of information, including a prospectus.

Bowlus purchased a third bond on November 27, 1987, in the amount of $50,000 from Naranjo at the Rolling Hills office.   This bond was to mature on December 1, 1988.   He purchased a fourth ACC bond on December 21, 1987, for $10,000 to mature on January 1, 1989, and a fifth bond on January 24, 1988, in the amount of $40,000.   He was again assured by Naranjo that “there has never been a problem and they are continuing to pay their interest monthly and there should be no problems.”   He did not receive a prospectus.

The $50,000 bond purchased on November 27, 1987, matured on December 1, 1988.   He learned for the first time from Naranjo that ACC and Lincoln were not one and the same.   Naranjo again assured Bowlus of the safety of his investment.   On the basis of her assurances, he bought a sixth bond with the $50,000.   The interest rate was 10.75 percent, two percentage points higher than a certificate of deposit.   The $10,000 bond matured on January 1, 1989.   Bowlus purchased another similar one-year bond.   He was required to drive to the Torrance ACC office to complete the documentation of this purchase.   This final time he dealt with Alice Roe.   Bowlus testified that his losses on these transactions came to $110,000.

I. JOHN BRUNNER (COUNT 11)

John David Keables Brunner, a retired master puppeteer, for more than 25 years had invested in Lincoln certificates of deposit at the Sherman Oaks office.   On February 19, 1988, he and his wife went to Lincoln with the intent to open a certificate of deposit with funds that had matured at American Savings.   He met Skolnik, who he presumed to be a Lincoln employee because his desk was in the branch undifferentiated from any others.   Brunner testified that, when questioned as to whether the bonds were insured by FSLIC, Skolnik told him, “No, but it's even better.   They are insured by American Continental, which is the parent company of Lincoln,” “And it's even better than the government.   And believe me, we have so many billions behind us that American Continental and Lincoln will be here if the government goes broke.   Believe me, it will be—we're much stronger and have a very fine product.”   He was assured that the bond was a better investment than a certificate of deposit.

No prospectus was given at that time, but a document called a “10Q” was shown to him which convinced him that the Securities and Exchange Commission recommended the bond.   He purchased a $22,000 bond, maturing in one year, and a $23,000 bond, maturing in five years.   In May or June of that year, he was invited to attend a seminar on the ACC developments in Arizona.   Brunner testified that, as a consequence of the reassurances given at the seminar, on June 16, 1988, he bought an additional one-year bond for $31,000.   He testified that at all times he was under the impression that the bonds were insured by ACC.   Had he known they were uninsured, he would not have purchased them.   He was unaware that there was any risk, was not told they were “junk bonds,” was never told they had been rated by an independent bond rating service as below investment grade, and did not know of the serious dispute between Lincoln and bank examiners or that the bank examiners held the opinion that Lincoln was failing to meet its net worth requirements.   If he had been given this information by the bond sellers, he would not have purchased the bonds.   Prior to the day he testified, Brunner had never seen Keating.

J. GILMA ORTIZ GURDON (Count 12)

Gilma Ortiz Gurdon testified she was a 58–year–old widow and a native of Colombia.   On January 22, 1988, she went to the Santa Ana Lincoln office.   At the teller window she spoke to Beverly Figeira and was given a brochure indicating how she could obtain a higher rate of interest.   She signed the documentation necessary to purchase a $12,000 bond at the teller window.   Gurdon received a copy of a prospectus at that time.   A few days later she received the bond in the mail.   Gurdon testified she thought she was putting her money into a savings account.

On October 11, 1988, Gurdon again went to Lincoln and signed the necessary documentation at the teller window to purchase a $4,000 bond.   On January 31, 1989, Figeira came to Gurdon's home to assist her in purchasing a $12,000 bond.   She had no idea then and did not realize at any time that she was buying a bond.   If she had been told she was buying a bond, she would not have done so.   She was not aware that the documents she signed placed her funds at risk.   She was also unaware Lincoln had been told by federal bank examiners that it was operating in an unsafe and unsound manner.   She never met Keating during these transactions.

K. YSIDRO AYALA (COUNT 13)

Ysidro Ayala was educated through the 11th grade.   On November 18, 1987, he went to the Arcadia Lincoln office with the intent to purchase a certificate of deposit.   He had called five banks to ascertain which had the highest interest rate, and in the process he discovered that Lincoln was offering the best certificate of deposit rate.   Ayala testified that a young lady at the new accounts desk indicated that he could get “a much better rate” if he bought an ACC bond.   The salesperson indicated to him that the bonds “didn't have to be insured because they were backed up with millions of dollars and there was no way possible that I would lose my money.”   He purchased a $10,000 bond.

During their conversation, Ayala was not told that ACC's largest single asset was Lincoln or that Lincoln was involved in a very severe dispute with the FHLB.   He was not given a prospectus that day.

The bond matured on December 1, 1988.   At that time Ayala cashed his bond and recovered his entire principal.

L. CESAR GIL (COUNT 14)

Cesar Gil is a foreign-born retired rate clerk for a transportation company.   He had a real estate license, but was not knowledgeable about the stock market.   He held several certificates of deposit and moved them from commercial banks to savings and loans because they paid slightly higher interest.   On June 27, 1988, he went to the Lincoln branch in Alhambra.   He had clipped out an advertisement from the Los Angeles Times which indicated Lincoln was paying 9.5 percent interest.   Gil testified that the teller, Tamara Iffrig, told him the investment was a bond issued by Lincoln's parent company, ACC.   Iffrig then said, “I'm just a teller ․ I'm going to refer you to Mr. Paul Kamaleson which is a representative of Lincoln Savings.”

Kamaleson was at his desk about 15 steps away.   He told Gil that Lincoln was worth $5 billion and ACC an additional $2 billion, and that “American Continental is insured by the federal government.   And real estate, as you know, is one of the more—most secure investments that you can find so you have, five and two, seven billion dollars security.”   Gil testified that, when he asked Kamaleson about the risk, Kamaleson responded, “What, there is no risk.   What risk?   Lincoln Savings is insured by the federal government.   ACC is involved in real estate, and it is a very solid investment, as you well know, so there is no risk.”   Relying on these representations, Gil purchased a $35,000 one-year bond.   No prospectus was given to Gil at the time of the transaction.

Gil testified it was his impression that the bonds were insured by the United States government.   He did not know what a subordinated debenture was.   He was not made aware of any risk.   Had he known there was risk involved, Gil would not have invested, but rather would have continued his practice of saving in certificates of deposit.

M. VALERIE MARTINELLI (COUNT 15)

Valerie Martinelli was born in 1914.   In 1977 she retired from her occupation as a nurse.   On October 12, 1988, she went to the Lincoln office in Panorama City.   She had sold a home in July 1988, and finally in October she took the check in the amount of $150,000 representing the proceeds of the sale to Lincoln.   Christine Turner introduced herself at the new accounts desk.   Turner indicated that only $100,000 could be deposited in an FSLIC insured certificate of deposit.

Martinelli's husband, Enzo Martinelli, noticed a brochure advertising the higher interest on ACC bonds.   Martinelli inquired as to the bond's security.   She testified that Turner told her, “Sure, it's secure, very secure.”   When Martinelli asked whether the bond was insured, Turner ignored the question and replied, “It is just as secure as it can be.”   Martinelli invested in a $50,000 bond without knowing she had bought a bond.   She did not receive a prospectus or an annual report at that time, but she did receive a brochure indicating in approximately 60–point type an interest rate of 9.75 percent.   The same pamphlet stated, “These debentures are not insured by the FSLIC,” in approximately 12–point type.

Martinelli testified that she did not know Keating and had never met or spoken with him.

N. RONALD AND WANDA WRIGHT (COUNT 16)

Ronald L. Wright retired in 1987.   He had been employed as a sound man by CBS Television.   He and his wife, Wanda, first opened an account at Lincoln in 1981.   When he retired from CBS, he took part of his retirement in cash and was looking for a safe investment that would make money.   He periodically went to the Lincoln branch in Granada Hills.   On one visit while at the teller window, he noticed a brochure on ACC bonds.   Wright testified that his primary concern was safety.   When he questioned the teller about the bond's safety, two tellers impressed him with their view that the bonds were a secure investment.

On November 27, 1987, Wright met Fersch.   Wright told Fersch he needed the safe investment of his retirement money.   Wright testified that Fersch “reiterated what the tellers had told us, that American Continental had a great deal of money in there to back up the bonds.”   Wanda Wright bought two bonds, each for $10,000.   Fersch never discussed the prospectus, and did not offer or give them a copy of it or the prospectus supplement or ACC's annual report.

On February 9, 1988, Wright bought $20,000 in bonds for his own IRA.   He was never told that ACC had difficulties with bank examiners or that Lincoln, in the opinion of the bank examiners, had insufficient capital to satisfy its capital requirement.   If he had been told this negative information or that he was buying “junk bonds,” he would have considered the information significant.   Wright never met or spoke with Keating.

Wanda Wright testified she retired in 1987 from her position as a supervisor of a word processing group for a major southern California defense and aerospace contractor.   She invested her retirement funds.   She did not see an ACC prospectus.   No one ever mentioned to her that ACC earnings had been dropping;  that ACC was getting deeper and deeper into debt;  that she was the holder of a subordinated debenture and, in the event of financial difficulty, the senior debt holders would be paid first;  that Lincoln had been informed by federal bank examiners that it could not meet its net worth requirement and that it was being operated in an unsafe and unsound manner;  or that Moody's bond rating service had concluded the bonds were below investment grade and were considered “junk bonds.”   Wanda Wright testified that she never would have touched the bonds had this information been presented to her.

O. ESTHER AND LEON BONAN (COUNT 17)

Leon Bonan was 80 years old at the time he testified.   He was born in Casablanca, French Morocco.   He worked in a catering business and retired in 1970.   On April 9, 1987, he and his wife, Esther, went to the Lincoln office in Sherman Oaks.   He had previously set up some certificates of deposit at that branch.   He intended to deposit the $101,000 proceeds from the sale of his townhouse in a certificate of deposit.   The young lady at the new accounts desk called over a young man as soon as she saw the amount Bonan wanted to deposit.   Bonan testified the young man said, “I have a better deal for you than the certificate of deposit.”   The interest rate offered was about 2 percent more, but the two ACC sales representatives, one being Fersch, insisted on a five-year bond even though Bonan wanted only a one-year investment.

Before the sales transaction was concluded, Esther Bonan asked if the bonds were “insured like the bank.”   She was assured, “Yes, we do.”   Thereupon, Bonan invested the full $101,000.   He was unaware that Lincoln was in trouble with the government or that ACC was experiencing financial difficulties.   He received a folder containing a number of brochures at the time he purchased the bonds.   One item in the folder was a prospectus.   Neither salesperson suggested that he should take the time to read it, so he did not do so.   Neither salesperson told him the bonds were more risky than a certificate of deposit, that it could be characterized as a “junk bond,” that it was uninsured, that Lincoln could not meet its net worth requirement, that Lincoln was in financial difficulty according to the regulators, or that the bonds had been rated by an independent rating service as a very risky investment.   If he had any such information, he would not have purchased the bonds.

Bonan had considerable trust in Lincoln because he was a longtime customer, having first opened an account in 1964.   He testified he was unaware that ACC had purchased Lincoln in 1984 and had changed management.   Had he been aware of these changes, he would not have bought the bonds.   Bonan knew nothing about ACC, nor was he aware that there was no assurance he would ever be able to resell the bonds.   He never met Keating and had never spoken with him.

P. LINDA CORSO DE ROO (COUNT 18)

Linda Corso De Roo was a telephone marketing employee.   In March 1987, she had several accounts at the Sherman Oaks and Glendale branches of Lincoln, including a checking account, a savings account, certificates of deposit, and an IRA.   She had been banking at Lincoln for 20 years.   She did not believe in taking risks with her investments, because her husband was ill and he could no longer be employed.   She said she would depend on the interest to meet her living expenses.   During her regular banking visits, she noticed cards at the counters comparing the certificate of deposit interest rate with the rate being paid on ACC bonds.

De Roo met Doug Kempt when he worked as a teller in the Glendale branch.   He later worked at the new accounts desk.   Later that month Kempt took De Roo over to his desk.   He never indicated he was now an ACC employee.   In their conversation, Kempt assured her the bonds “had all the security of a CD because anything sold through Lincoln was federally insured, just like anything else you bought through a bank.”   De Roo testified that Kempt told her ACC was the parent of Lincoln and that Lincoln was only about 15 percent of all ACC holdings.   Kempt described the bonds as “risk free.”   On March 27, 1987, De Roo took her husband to the bank.   Kempt at that time described the bonds to both of them.   Since a certificate of deposit was maturing at the time and they had additional funds available from the sale of their business, they purchased a $50,000 bond.   De Roo testified she was under the impression that it was insured just like a certificate of deposit.   She did not receive a prospectus.

On June 2, 1987, De Roo went to the Glendale office and spoke with Kempt again.   She purchased two additional bonds, each in the amount of $50,000, one for a five-year period at an interest rate of 10 percent, and the other for a ten-year term at an interest rate of 11.75 percent.   The transactions were processed on June 8, 1987.   De Roo testified she believed that because the sum was $100,000, the bonds were automatically insured.

On March 9, 1988, De Roo went to the Lincoln office in Sherman Oaks.   She had received the final payment on the sale of her business, and because she was most content with the interest being paid on her bonds, she sought out Skolnik, who she knew as a teller.   His desk within the office was now clearly marked with ACC paraphernalia, including pictures of the Phoenician Hotel.   De Roo testified she told him she needed a secure investment.   Skolnik told her of his trip to Phoenix and that ACC was the biggest landholder in Arizona, as well as being heavily involved in hotel investments.   She was impressed, and consequently she purchased an additional five-year bond for $50,000.   She never read the purchase agreement before she signed it, and did not receive a prospectus at that time.

On October 24, 1988, De Roo went to the Sherman Oaks office.   Skolnik was not there, but another ACC representative, Rocia Escobar, recognized her as a heavy investor and greeted her inside the Lincoln office.   De Roo testified Escobar said, “I would like to show you our new office.   We are very proud of us.   We are doing so well that we cannot operate any more out of Lincoln.   We are now in our own building.”   De Roo was sufficiently impressed that she took money out of two accounts to purchase an additional $20,000 bond.   Escobar did not give her a prospectus or ever indicate that she should read any printed matter.   Until the bankruptcy occurred, she did not know that ACC was in any financial trouble, that Lincoln was subject to being taken over by the federal government, that Lincoln was failing to meet its net worth requirements, that Lincoln had been informed by federal bank examiners that it was being operated in an unsafe and unsound manner, that the bonds had been rated by an independent bond rating service as below investment grade, or that the bonds were not insured, were riskier than a certificate of deposit, and were known as “junk bonds.”   If she had known any of these facts, she would not have bought the bonds.   De Roo thought “they were insured because they were sold at the bank.”   She never met or spoke with Keating.

Q. HARRIET CHAPPUIS (COUNT 20)

Harriet S. Chappuis was born in 1925.   She started banking with Lincoln in 1982.   On October 27, 1988, she went to the West Los Angeles Lincoln office to put some money into a certificate of deposit.   She was well acquainted with two tellers at the branch, Brian and Emerson.   They assured her that a bond investment was “very safe.”   One of them mentioned to her that his family had invested in ACC bonds.   She thereupon took her money market funds of $55,000 out of savings and purchased an ACC bond.   She did not recall whether she received a prospectus, but did recall being invited to a party a week or two later showcasing an executive-type, very expensive resort hotel.

When she bought the bond, no information was provided to her with respect to the tax-sharing agreement controversy between ACC and Lincoln with the FHLB or that the bonds were in any way risky.   If she had known of the risk, she would not have bought the bond.

ISSUES

The issues presented by Keating are:  (1) aiding and abetting is an improper legal theory under Corporations Code section 25401, and for the court to create it would be ex post facto law;  (2) Corporations Code section 25401 unconstitutionally abolishes the mens rea requirement;  (3) the instructions permitted the jury to convict Keating as a direct seller or offeror;  (4) the trial court's aiding and abetting theory was at fatal variance with the grand jury indictment;  (5) there was insufficient proof on which to convict Keating or prove that he knew of or intended any misrepresentations or omissions;  (6) events during jury deliberations prevented a fair trial;  and (7) Keating's sentence should have been stayed on all but one count pursuant to Penal Code section 654.

DISCUSSION

ICRIME OF AIDING AND ABETTING A CORPORATIONS CODE VIOLATION

 Keating was convicted on 17 separate counts of the crime of violation of Corporations Code section 25401.   The trial court presented the case to the jury with instructions that conviction was possible under theories that Keating was either the direct seller or a principal who was aiding and abetting the violation of Corporations Code section 25401.   The major issue raised on appeal is whether aiding and abetting of such a Corporations Code crime statutorily exists.   Neither side has propounded any precedents regarding section 25401.   This appears to be a case of first impression on the aiding and abetting theory for this particular Corporations Code section.   Keating further contends the trial court created this crime during the course of the trial, which would thereby make the offenses ex post facto.

Corporations Code 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 light of the circumstances under which they were made, not misleading.”  (Italics added.)

It is clear from the emphasized language that a violation of this section is a crime.   A crime is defined in Penal Code section 15:  “A crime or public offense is an act committed or omitted in violation of a law forbidding or commanding it․”  The Legislature has also provided clear language on what acts constitute criminal aider and abettor liability.  Penal Code section 31 provides:  “All persons [who] aid and abet ․ any crime, are principals in any crime so committed.”

Yet Keating argues that Corporations Code sections 25401 and 25540 ³ do not provide for aiding and abetting liability in a criminal case and that liability is restricted only to direct offerers and sellers.   Keating specifically points out that the Legislature provided Corporations Code section 25504.1 ⁴ to enact civil aider and abettor liability, and thereby argues the Legislature's failure to provide a similar statute for criminal aider and abettor liability in any other section of the Corporations Code demonstrates an intent not to have such criminal liability.   We disagree.

The instant case deals with criminal rather than civil liability.   The language of Penal Code section 31 is clear.   It does not indicate that aiding and abetting can be found in all crimes except those defined in the Corporations Code.   Hence, absent any exclusionary language, we must turn to the plain language of the statute.  “In construing a statute to determine the intent of the Legislature the court ‘turns first to the words themselves for the answer.’  (People v. Knowles (1950) 35 Cal.2d 175, 182 [217 P.2d 1];  see Moyer v. Workmen's Comp. Appeals Bd. (1973) 10 Cal.3d 222, 230 [110 Cal.Rptr. 144, 514 P.2d 1224];  Select Base Materials v. Board of Equal. (1959) 51 Cal.2d 640 [335 P.2d 672].)”  (Tracy v. Municipal Court (1978) 22 Cal.3d 760, 764, 150 Cal.Rptr. 785, 587 P.2d 227.)

Even so, Keating argues without equivocation in his opening brief, “The California Corporations Code has also been interpreted to exclude aider and abettor liability.”   We find precedent to the contrary.

Martin A. Leach was convicted of violations of Corporations Code section 25000 et sequitur as a principal in a San Diego securities fraud case on an aiding and abetting theory.   Leach utilized a loan and mortgage corporation to distance himself from the actual sales of the fraudulent securities.   In affirming his conviction on numerous counts, the court ruled:  “Conceding appellant's contention that said corporation [whose salesmen sold the securities] was in fact an entity separate and distinct from appellant, nevertheless, the evidence is sufficient to bring appellant within the provisions of section 31 of the Penal Code․”  (People v. Leach (1930) 106 Cal.App. 442, 452, 290 P. 131.) ⁵

The applicable language of Penal Code section 31 is essentially the same today.   Therefore, we hold the principle under Penal Code section 31 of aiding and abetting is not new in the instant case, but has been a part of California law for 63 years.   Hence, it was not “created” by the trial court, as Keating contends, and therefore the argument that it was ex post facto is unfounded.

II

MENS REA REQUIREMENT

 Keating argues that his convictions must be reversed because Corporations Code section 25401 unconstitutionally abolishes the mens rea requirement.   We disagree.   It is a well established principle that regulatory and public welfare offenses are general intent crimes which do not require specific intent (i.e., the joint operation of act and intent, or criminal negligence).  (See 1 Witkin & Epstein, Cal.Criminal Law (2d ed. 1988) Elements of Crime, ch. II, § 97, pp. 115–116.)   Within these parameters it is up to the Legislature to determine whether a public offense is a general intent crime or a specific intent crime.

Public welfare offenses (e.g., driving a vehicle under the influence of an intoxicating beverage or drug) are general intent crimes.   The need for the public to be protected from fraudulent securities transactions is certainly as great as the need to be protected from drunk drivers.   This is not a new concept.   This court previously held, regarding Corporations Code section 25401, “ ‘The only fact to be determined in these cases is whether the defendant did the [prohibited] act.’ ”  (People v. Baumgart (1990) 218 Cal.App.3d 1207, 1220, 267 Cal.Rptr. 534, quoting People v. Corkrean (1984) 152 Cal.App.3d 35, 38, 199 Cal.Rptr. 375.)  “[T]he main objective of the securities law is to protect the public against the imposition of insubstantial, unlawful and fraudulent stock and investment schemes [citation], and to promote full disclosure of all information that is necessary to make informed and intelligent investment decisions.”  (Ibid., citing People v. Park (1978) 87 Cal.App.3d 550, 565, 151 Cal.Rptr. 146.)   As evidenced in the instant case, violations of the public trust are “ ‘acts that are so destructive of the social order ․ that in the interest of justice the legislature has provided that the doing of the act constitutes the crime, regardless of knowledge or criminal intent on the part of the defendant.’ ”   (Ibid., quoting In re Marley (1946) 29 Cal.2d 525, 529, 175 P.2d 832.)

In oral argument before this court, Keating contended that aiding and abetting requires the mens rea of specific intent and that this requirement transforms the offense from one of general intent to one which requires specific intent.   A review of the precedents is therefore appropriate.

 The definition of what constitutes aiding and abetting is long-standing.  “To be an abettor the accused must have instigated or advised the commission of the crime or been present for the purpose of assisting in its commission.   He must share the criminal intent with which the crime was committed.”  (People v. Villa (1957) 156 Cal.App.2d 128, 133–134, 318 P.2d 828.)  “[A]n aider and abettor need only have knowledge of the criminal purpose of the perpetrator and criminal intent [citations] and need not have the specific intent to commit the target crime.  [Citation.]”  (People v. Germany (1974) 42 Cal.App.3d 414, 420, 116 Cal.Rptr. 841.)  “ ‘[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․’ ”  (People v. Bunyard (1988) 45 Cal.3d 1189, 1231, 249 Cal.Rptr. 71, 756 P.2d 795, quoting People v. Croy (1985) 41 Cal.3d 1, 12, fn. 5, 221 Cal.Rptr. 592, 710 P.2d 392, italics deleted.)

 Keating's conduct satisfies the Villa requisites.   He personally instigated the bond sales.   He continued to demand bond sales even when he knew they were literally worthless because of the deteriorating condition of ACC's net worth.   He was personally warned in November 1986 (the month Keating ordered Symes and Fidel to initiate the bond sales program) by Patricarca of the FHLB of 14 specific problems, including Lincoln's failure to comply with the direct investment regulation and not meeting its net worth requirement.   In December 1986 Patricarca personally pointed out the risky nature of the investments in Arizona real estate.   In 1987 Keating sought the assistance of several United States senators to shore up his support with the FHLB Board even in the face of negative coverage in Forbes Magazine.   Keating ordered the sale of one-year bonds to generate capital in October.   In February 1988 Dochow met privately with Keating concerning the funneling of Lincoln assets to cover ACC's deteriorating financial condition.   The third-quarter 1988 loss was such a disaster for ACC that it was quite clear ACC could not repay the $94.8 million tax advance from Lincoln, much less any individual investor's principal, yet Keating brought the entire bond sales force to Phoenix where he personally exhorted greater bond sales.   Hence, when Keating encouraged any bond sale, he was well within the foreseeability parameters imposed by People v. Germany.   42 Cal.App.3d at p. 420, 116 Cal.Rptr. 841.

Keating argues that he was not personally aware of each individual bond sale.  People v. Bunyard does not require personal knowledge of each individual transaction for conviction.  (45 Cal.3d at p. 1231, 249 Cal.Rptr. 71, 756 P.2d 795.)   Rather, Keating's continued motivation of bond sales while cognizant of ACC's financial depreciation was sufficient evidence to impose liability since the reasonably foreseeable consequence of continuing bond sales had to be the fraudulent loss of the individual investor's capital.   The apparent utter disregard in failing to convey even one item of negative information (e.g., the Moody's rating for one) coupled with the findings of federal regulators that during this period an estimated $34 million had been expended on “Keating family benefits” amply evidence Keating's egregious conduct and intent to defraud each investor.

 We therefore reaffirm that “aiding and abetting a general intent crime does not require a specific intent․”  (People v. Torres (1990) 224 Cal.App.3d 763, 770, 274 Cal.Rptr. 117.)

III

JURY INSTRUCTIONS

 Keating contends that the instructions permitted the jury to convict him as a direct seller or offeror.   The following instructions were given by the trial court:

“The defendant is charged in counts 2–18 and 20, inclusive, of the indictment of having violated Sections 25401/25540 of the California Corporations Code, a felony.  [¶] Every person who willfully sells or offers to sell 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 light of the circumstances under which they were made, not misleading, is guilty of a violation of Sections 25401/25540 of the California Corporations Code.  [¶] In order to prove such crime, each of the following elements must be proved:  [¶] (1) The defendant willfully sold or offered to sell a security in the State of California, [¶] (2) By means of any written or oral communication which includes an untrue statement of material fact or omits 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.”

“A fact is material if there is a substantial likelihood that, under all the circumstances, a reasonable investor would consider it important in reaching an investment decision.  [¶] Materiality is to be determined in light of the facts existing at the time of the misstatement or non-disclosure.  [¶] It is not enough that a statement is false or incomplete if the misrepresented fact is otherwise insignificant.”

“The American Continental Corporation subordinated debentures are securities within the meaning of California Corporations Code Sections 25540/25401.”

“ ‘Offer’ or ‘offer to sell’ includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value.  [¶] ‘Sale’ or ‘sell’ includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value.”

“The persons concerned in the commission of a crime who are regarded by law as principals in the crime thus committed and equally guilty thereof include:  [¶] 1.   Those who directly and actively commit the act constituting the crime, or [¶] 2.   Those who aid and abet the commission of the crime.”

“In order to convict a defendant of aiding and abetting another person's violation of Corporations Code Sections 25401/25540, you must find with respect to each of Counts 2 through 18, and 20, inclusive, that [¶] 1) an untrue statement of material fact or omission of a material fact was made by bond sellers in connection with the sale of bonds to the bond buyers identified in Counts 2 through 18 and 20, inclusive, of the indictment, and [¶] 2) the defendant had knowledge that the bond sellers were making an untrue statement of material fact or omitting a material fact in the sales involved in each count, and [¶] 3) the defendant intended to aid, encourage or facilitate the bond sellers in making an untrue statement of material fact or omitting a material fact in the sales involved in each count, and [¶] 4) the defendant, by act or advice intentionally aided, promoted, encouraged or instigated the making of the untrue statements of material facts or the omission of material facts.  [¶] A person who aids and abets the commission of a crime need not be personally present at the scene of the crime.  [¶] Mere knowledge that a crime is being committed and the failure to prevent it does not amount to aiding and abetting.”

A reading of these instructions indicates to this court, as it must have to the jurors, that Keating was being tried on the theory that he aided and abetted in the sales of the “junk bonds” by encouraging Fidel to encourage the sales staff and by making every effort to keep negative information from reaching the investors.   The facts indicate Keating was in personal control of Lincoln, even down to the detail of which pictures could be hung on the walls;  that he selected both ACC and Lincoln officers;  that he was in personal contact with FHLB personnel who outlined for him the unsound business practices;  that he was personally aware of the deteriorating financial prospects of ACC and of its inability to repay Lincoln the $94 million advanced for taxes;  that he refused to provide negative information to anyone, going to the extent of hiring a public relations person in Phoenix to answer investors' negative telephone calls and ordering Fidel to purchase all available copies of Forbes Magazine near Lincoln offices;  that the bonds had been rated by Moody's as below investment grade;  and that, while knowing all the negative trends, he still hosted the sales personnel at a posh party in Phoenix to encourage further bond sales to unsuspecting and unsophisticated members of the public.   These facts all point to an aider and abettor as outlined in the instructions above.   Thus, we can find no fault with the instructions propounded by the trial court.

Keating further argues that the trial court failed to give the following instruction which he offered:

 “There is no claim or evidence that [Keating] actually sold or offered to sell the securities at issue in this case.   Therefore, [Keating] can be liable, if at all, only if he was the aider and abettor.”

This court has taken considerable effort to recite in its statement of facts the evidence presented at trial.   Clearly, Keating never personally sold any security to any of the individual investors.   Obviously, this fact was patently clear to the trial court as well.   It is inconceivable that there was any need to give this instruction.   To have given this instruction would be stating the obvious.   We find no reversible error.  “It is not error for a trial court to reject instructions requested when the substance of the instruction is covered by those instructions given.  (See People v. Arguello, 61 Cal.2d 210 [37 Cal.Rptr. 601, 390 P.2d 377];  People v. Galvan, 208 Cal.App.2d 443 [25 Cal.Rptr. 128].)”  (People v. Rice (1970) 10 Cal.App.3d 730, 744, 89 Cal.Rptr. 200;  see also People v. Welch (1972) 8 Cal.3d 106, 119–120, 104 Cal.Rptr. 217, 501 P.2d 225.)

 The argument that it was error to give both the aiding and abetting instruction and the definition of principal is specious.   The Attorney General properly points out that, in order for the jury to know what aiding and abetting is, it is also necessary to define a principal.   The trial court was required, in a trial for aiding and abetting, to give a jury instruction defining aiding and abetting, as well as a jury instruction defining principal.  (People v. Patterson (1989) 209 Cal.App.3d 610, 616–617 & fn. 5, 257 Cal.Rptr. 407;  see also People v. Beeman (1984) 35 Cal.3d 547, 560, 199 Cal.Rptr. 60, 674 P.2d 1318.)

IV

VARIANCE WITH GRAND JURY INDICTMENT

Keating contends that the trial court's aiding and abetting theory was at fatal variance with the grand jury indictment.   He relies heavily on Penal Code section 1009, which provides in pertinent part that “[a]n indictment ․ cannot be amended so as to change the offense charged․”

 We find the trial court did not alter or amend the charges in any manner.   Rather, the trial court determined that the theory of aiding and abetting was an avenue to prove the charges.   Keating was indicted on certain violations of the Corporations Code, those pertinent herein being sections 25401 and 25540, and the trial court, by its rulings, simply indicated how those charges could be proven—the aiding and abetting theory.   Thus, the trial court did not amend the offenses charged or charge an offense not shown by the evidence presented to the grand jury.

 Amendment for minor defect or insufficiency is even permitted.  “[I]n enacting Penal Code section 1009 the Legislature has manifested its clear intent that the remedy of amendment be available to save an indictment from ‘any defect or insufficiency,’ provided the offense which the grand jury sought to charge itself is not changed.”  (People v. Crosby (1962) 58 Cal.2d 713, 722, 25 Cal.Rptr. 847, 375 P.2d 839.)   Since no change in the charges of the grand jury indictment was made, we find Keating's contention to be without merit.

V

INSUFFICIENT PROOF

 Keating contends there was insufficient proof on which to convict him or prove that he knew of or intended any misrepresentations or omissions, yet he fails to support his claim that there was insufficient evidence.  “ ‘It is the duty of counsel by argument and citation of authority to show in what manner rulings complained of are erroneous' [citation];  where there is a failure to do so, the point must be deemed abandoned.”  (People v. Wright (1963) 216 Cal.App.2d 866, 871–872, 31 Cal.Rptr. 432, quoting Greenstone v. Claretian Theo. Seminary (1959) 173 Cal.App.2d 21, 35, 343 P.2d 161, disapproved on other grounds in Ellis v. Mihelis (1963) 60 Cal.2d 206, 221, 32 Cal.Rptr. 415, 384 P.2d 7.)   An appellate court is not required to search for legal authority to sustain an appellant's bald assertions of error.  (Davies v. Krasna (1966) 245 Cal.App.2d 535, 560, 54 Cal.Rptr. 37.)

 Even so, this court has prepared a lengthy statement of facts, enunciated ante, predicated on the participation of the principals and the observations of the individual investors.   It is black letter law that, where the verdict is attacked for insufficiency of the evidence, the appellate court must determine whether there is any substantial evidence to support it.   (Overton v. Vita–Food Corp. (1949) 94 Cal.App.2d 367, 370, 210 P.2d 757.)   To determine whether “any substantial evidence” exists, we must look to both the principals and the victims.

 Our standard of review was recently clearly expressed in Grappo v. Coventry Financial Corp. (1991) 235 Cal.App.3d 496, 507, 286 Cal.Rptr. 714:  “We must accept as true all evidence and all reasonable inferences from that evidence tending to establish the correctness of the trial court's findings and decision, resolving every conflict in favor of the judgment.   It is not our task to weigh conflicts and disputes in the evidence;  that is the province of the trial court.   Our authority begins and ends with a determination of whether, on the entire record, there is any ‘substantial’ evidence, contradicted or uncontradicted, which will support the judgment.  [Citations.]”

 Keating was the chairman of ACC.   He exercised the powers of an owner over both ACC and Lincoln by naming the officers and members of the boards of directors, directing policy, conducting negotiations with FHLB officials and other government regulators, setting the interest rates for Lincoln certificate of deposit accounts vis-à-vis ACC bonds, hiring personnel, conducting meetings to encourage bond sales, and even down to selecting the decor at the Lincoln headquarters in Irvine.   He personally reviewed all press releases prior to their issuance.   He directed policy and procedures.   He was the person in control.

The individual investors were for the most part unsophisticated and uneducated in financial and fiscal affairs, unacquainted with the need to familiarize themselves with the prospectus and prospectus supplements prior to investing, mostly elderly, and tremendously trusting with their life savings.   They were not given the pertinent information necessary to make an informed judgment—information about the losses being sustained by ACC in its real estate operations and cash flow, the discrepancies concerning the $94 million tax prepayment by Lincoln advanced to ACC, the concerns of the FHLB about the unsafe and unsound operations of Lincoln and of its inability to meet its cash requirements due in large part to excessive cash outflow to ACC for management fees and dividends, the FHLB concern about the enormous salaries paid to corporate executives, or information about the bond ratings made by Moody's, which rated the bonds as being below investment grade, risky, and generally described as “junk bonds.”   In most cases the individual investors were not even aware that they were investing in bonds, let alone subordinated debentures, but rather thought their investments were merely a form of certificate of deposit fully insured by the federal government.

We conclude from the facts that the prosecution has amply proven a persistent pattern consistent with criminal conduct whereby factual representations were made to the purchasers of debentures which were inaccurate and misleading—which representations Keating knew to be false and unfounded while contemporaneously failing to impart any negative information which, if known to the individual investors, would have provided them the basis for an informed decision.

It is clear that Keating did not personally interact with any of the individual investors.   It is equally clear that he directed the policy by which each investor was deprived of considerable capital.   The fact that one victim (Ayala) was fortunate enough to recapture his capital was more a happenstance of timing than of Keating intentionally seeing to it that he sustained no loss.   Keating's conduct, almost to the day ACC sought bankruptcy protection, was one of encouraging bond sales despite his ability to recognize the assets no longer existed from which to generate repayment of the debentures.   Since Keating had personally participated in the dissipation of Lincoln's assets, he knew or should have known that assets no longer existed to repay investors.   When, despite this personal knowledge, he continued to encourage greater and greater sales of the securities, he committed criminal aiding and abetting.

 It is not required that the People prove that in each instance Keating had personal knowledge that the individual investor would lose his investment;  it is sufficient that Keating knew the bonds were being sold without full disclosure.  (People v. Park, supra, 87 Cal.App.3d at p. 565, 151 Cal.Rptr. 146;  People v. Leach, supra, 106 Cal.App. at p. 452, 290 P. 131.)   An appellate court may not reverse a conviction on the ground of insufficient evidence unless it clearly appears “that upon no hypothesis whatsoever is there sufficient substantial evidence to support it.   [Citation.]”  (People v. Redmond (1969) 71 Cal.2d 745, 755, 79 Cal.Rptr. 529, 457 P.2d 321.)  “[T]he relevant inquiry on appeal remains whether any reasonable trier of fact could have found the defendant guilty beyond a reasonable doubt.  [Citations.]”  (People v. Towler (1982) 31 Cal.3d 105, 118, 181 Cal.Rptr. 391, 641 P.2d 1253.)   As stated above, we conclude there was ample evidence to support the jury's decision.   The jury has rendered its verdict.   We will not disturb it.

VI

JURY DELIBERATIONS

 Keating next contends that his conviction should be reversed because the events during jury deliberations prevented a fair trial.   Specifically, he alleges that the “proceedings took on certain aspects of a media circus.   An extra metal detector was installed outside the courtroom.   [ ] Portions of the trial were televised.  [ ] Extra security officers were in the courtroom.  [ ] Despite their presence, a publicity seeker managed to strike Mr. Keating with a powdered wig, and an elderly lady claiming to be a bondholder assaulted Mr. Keating in the courtroom.  [ ] Other individuals claiming to be bond purchasers kept a vigil, heckled Mr. Keating and members of the defense team, and shouted their opinions to anyone who would listen, including jurors.”   Keating also alleges two additional problems prevented a fair trial:  “(1) a juror was a shooting victim soon after the prosecutor had compared Mr. Keating to a drive-by shooter, and (2) the bailiff improperly told the jury, through an alternate, that it was wasting time and should finish the job.”

We find no error in the court providing security, with or without a metal detector or with one or more bailiffs.   Other than complain that a portion of the proceedings were televised, Keating makes no specific complaint that the California Rules of Court were violated.   Rule 980(b) permits electronic media coverage and, absent a valid allegation that the trial court erred in permitting it, we will not assume error.   Likewise, absent a showing of prejudice, this court cannot presume that the powdered wig incident or the assault in the courtroom constituted malum per se so as to automatically prejudice the jury.   We can find no California case which has reversed a judgment because of spectator misconduct.   Rather, in spectator misconduct cases, prejudice is not presumed.  (People v. Hill (1992) 3 Cal.4th 959, 1002, 13 Cal.Rptr.2d 475, 839 P.2d 984.)

Keating argues that Juror Houston could not be impartial.   While the jury was in recess over a weekend, the juror was driving his car with his arm out the window.   He heard a gunshot and then felt something strike his arm.   He looked at his arm and discovered the nose of a bullet embedded approximately two inches above his elbow.   He drove himself to a hospital, where the bullet was removed and the wound dressed.   When jury deliberations resumed the following Monday, he told some of the other jurors who noticed the bandages what had occurred.   Thereafter, the incident was not discussed any further.

 We acknowledge that, in the case of juror misconduct, there is a presumption of prejudice requiring reversal unless the prosecution can affirmatively prove the absence of prejudice.  (People v. Marshall (1990) 50 Cal.3d 907, 949–951, 269 Cal.Rptr. 269, 790 P.2d 676;  People v. Martinez (1978) 82 Cal.App.3d 1, 22, 147 Cal.Rptr. 208.)   The absence of prejudice is clearly established by the declaration of Juror Houston and the corroboration of Foreperson Murphy.   There is simply a lack of evidence that Juror Houston, or any other juror, was influenced by the minor injuries Houston sustained over that weekend.   The standard for reversal is an abuse of discretion.   (People v. Cox (1991) 53 Cal.3d 618, 694, 280 Cal.Rptr. 692, 809 P.2d 351.)   We find no abuse of discretion in the trial court's denial of a motion for a new trial based upon this issue.

 It is also Keating's contention that the trial court erred in denying his motion for a new trial because the bailiff improperly made statements to an alternate juror which were subsequently relayed to the jury foreperson.   Apparently the bailiff told Alternate Juror Brown that he felt the jury already knew what its verdict was and the jury was delaying the verdict because members of the jury did not want to resume their regular jobs.   When Brown relayed the comment to Foreperson Murphy, Murphy's response was, “No, Tom.   That's wrong.”

Murphy's declaration makes clear that, prior to the comment being made to him, several verdicts of guilty had already been reached.   Thereafter, several additional guilty verdicts were voted.   There was no impact upon the jury's deliberations;  there was no subsequent rush to judgment.   Absent any indication that the comment had any effect or the likelihood of material influence upon deliberations, decisions, or the outcome of the trial, the misconduct of the bailiff must be considered harmless.  (People v. Lee (1974) 38 Cal.App.3d 749, 756, 113 Cal.Rptr. 641.)

VII

THE SENTENCE

 Keating further contends that his sentence should have been stayed on all but one count pursuant to Penal Code section 654.   We find that People v. Lochmiller (1986) 187 Cal.App.3d 151, 232 Cal.Rptr. 20 is dispositive.

In Lochmiller, the Court of Appeal considered the applicability of Penal Code section 654 to the sales of unregistered securities within the meaning of Corporations Code section 25110.   Lochmiller sold the unregistered securities in 11 separate sales to 10 investors, making sales at different times to different individual investors.   In that case it was argued, as it is argued in the instant case, that the appellant was susceptible to punishment on only one count because there was no evidence of more than one intent.

The Lochmiller court rejected the claim and held that the single objective in selling unregistered securities to obtain money did not bar multiple punishment for each separate sale, because the unlawful sales occurred at different times, for different amounts, to different victims.   Accordingly, punishment for each separate sale to an individual investor was not prohibited by Penal Code section 654.  (187 Cal.App.3d at pp. 153–154, 232 Cal.Rptr. 20.)   Consequently, we so hold here.

DISPOSITION

The judgment is modified to reflect consecutive sentences of one year on counts 4, 8, 10, 11, 12, 15, 18, and 20, with sentence in excess of five years (i.e., three years) ordered stayed.   Judgment on counts 2, 3, 5, 6, 13, 14, 16, and 17 is modified to reflect concurrent middle terms of three years.   The aggregate state prison term remains at 10 years.   As modified, the judgment is affirmed.   The trial court is directed to send a corrected abstract of judgment to the Department of Corrections.

FOOTNOTES

FOOTNOTE.  

1.   Pursuant to Corporations Code section 25540, subdivision (b), violation of section 25401 is punishable by a state prison term of two, three, or five years.   In imposing sentence, the trial court was apparently under the misimpression that the middle term was two, rather than three years.   We shall modify the judgment to correct this error.   Because the maximum state prison term available in this case is 10 years (Pen.Code, § 1170.1, subds. (a), (g)), the modification will not affect the aggregate term.

2.   The court recognizes the distinctions between bonds and debentures.   The terms are used interchangeably by the parties, however, and in this opinion there appears to be no need to distinguish between the terms.

3.   Corporations Code section 25540 provides:“(a) Except as provided for in subdivision (b), any person who willfully violates any provision of this law, or who willfully violates any rule or order under this law, shall upon conviction be fined not more than two hundred fifty thousand dollars ($250,000) or imprisoned in the state prison, or in a county jail for not more than one year, or be punished by both such fine and imprisonment;  but no person may be imprisoned for the violation of any rule or order if he or she proves that he or she had no knowledge of the rule or order.“(b) Any person who willfully violates Section 25400, 25401, or 25402 shall upon conviction be fined not more than two hundred fifty thousand dollars ($250,000), or imprisoned in the state prison for two, three, or five years, or be punished by both such fine and imprisonment.”

4.   Corporations Code section 25504.1 provides:“Any person who materially assists in any violation of Section 25110, 25120, 25130, 25133, or 25401, or a condition of qualification under Chapter 2 (commencing with Section 25110) of Part 2 of this division imposed pursuant to Section 25141, or a condition of qualification under Chapter 3 (commencing with Section 25120) of Part 2 of this division imposed pursuant to Section 25141, or an order suspending trading issued pursuant to Section 25219, with intent to deceive or defraud, is jointly and severally liable with any other person liable under this chapter for such violation.”

5.   We requested supplementary briefing on the applicability of Leach.   Therein, Keating claims the language in the Corporate Securities Act specifically provided for criminal aider and abettor liability by using the words “authorizes,” “directs,” “aids,” “causes,” or “assists,” whereas the statute under which he was convicted (Corp.Code, § 25401) contains no such language providing for criminal aider and abettor liability.We find this argument stems from a misinterpretation of Leach.   The Leach court did not hold aider and abettor liability was proper because the Corporate Securities Act in effect at the time of the crime specifically provided for such liability.   Rather, the Leach court, as do we, based its holding solely on the existence of Penal Code section 31.   The Leach holding had nothing whatsoever to do with the “buzz words” which Keating emphasizes from the Corporate Securities Act in effect when Leach committed the crime.

ARANDA,* Associate Justice, Assigned. FN* Assigned by the Chairperson of the Judicial Council.

SPENCER, P.J., and MASTERSON, J., concur.