The PEOPLE of the State of California, Plaintiff and Respondent, v. Jerry COY, Gary Kennick, Edward G. Soukup and Richard Nuckolls, Defendants and Appellants.
Appellants Jerry Coy and Richard Nuckolls first became acquainted in the early 1970's, when both worked for the same company. In 1973, Nuckolls left his job and returned to self-employment making car parts, sauna baths and boats out of fibreglas, an enterprise he had previously engaged in from 1967 to 1970. When the two met again in 1974, Nuckolls was working out of a small warehouse on Varna Street in Hollywood.
Coy suggested at this time that he might be of assistance to Nuckolls in the latter's business, based upon Coy's superior management capabilities.
A partnership between the pair was formed in March of 1975, denominated Automated Industries International (AII), which in addition to dealing in fibreglas, contemplated, according to these appellants, the production and sale of polyurethane products such as picture frames, wall plaques and decorative clocks. It was likewise decided to subcontract the production of these articles to individuals, according to the so-called “Cottage Industry” concept.
To this end, advertisements were placed in the business opportunities sections of newspapers throughout the United States, including Los Angeles, Atlanta, St. Louis, Houston, Boston and Philadelphia. The ads typically provided that “National company needs a few individuals for out-of-plant contracting to back up in-plant production schedule” and that “With average mechanical ability, you can make ten parts per hour and you will average $1.98 per part profit.”
At least 573 persons answered the advertisements and were given sales presentations respecting the proposal by personnel of AII, including appellants Edward G. Soukup and Gary Kennick. These presentations, part oral and part written, typically described a certain history of AII and represented that a work-at-home contract could be purchased for $3,900.00; that the contractor-investor would be trained for three days by AII in the proper manner of using molds necessary for the production of parts for the various polyurethane products; that the molds and other equipment would be delivered to the contractor-investor within two weeks after completion of training; that with minimal skill a given number of parts could be produced per hour; and that the finished parts would be purchased by AII at an agreed upon price.
The 573 contractor-investors referred to entered into the arrangement proposed and paid over to AII approximately 3.6 million dollars.1 When it appeared the agreements had been made with an unlawful purpose and in violation of the Penal Code, a grand jury indictment was filed on August 13, 1976, charging appellants in its first count with conspiracy to cheat, defraud and commit grand theft (Pen.Code, § 182.) Coy and Nuckolls were charged in fourteen additional counts with grand theft. (Pen.Code, § 487.1.) Soukup was likewise charged with four of these counts, while Kennick was charged with five.
Following a trial by jury, appellants were found guilty of all counts as charged, except that, as to Kennick, the jury could not agree on a verdict respecting the conspiracy charge and one of the grand theft counts.2 Coy was sentenced to state prison for the term prescribed by law.3 Nuckolls was granted probation for five years on the condition, inter alia, that he spend the first year in county jail. Soukup and Kennick were granted probation for three years, on the same condition.
In addition to the representations made to prospective contractor-investors and which are hereinabove described, the indictment also alleged representations were made that:
1. Contractors were needed to support the in-plant production of plaques due to the high demand for these products;
2. The plaques were being sold by AII to various local and national retail stores;
3. Contractors would make an average profit of $1.98 per part;
4. Contractors would average ten completed parts per hour;
5. The contractor would receive a full refund of his investment if he decided against the venture;
6. Contractors would be paid approximately once every two weeks for their finished products;
7. The sale of contracts would be limited to a given number of persons.
It was sufficiently established upon the trial, generally, that all of these representations, with the exception of those relating to contract price and training, were false.
Credible testimony likewise adequately showed the following. From its initial Varna Street location in Hollywood, AII expanded its facilities to include a 30,000 square foot plant in Chatsworth and offices in Sherman Oaks and Woodland Hills. The latter housed Coy and Nuckolls from September of 1975 and was furnished at a cost of $50,000, such that the sumptuous executive headquarters would create the impression AII was a stable company. Throughout its brief existence, however, the company constantly experienced cash flow problems resulting in its checks, whether for payroll or other purposes, being dishonored for insufficient funds on presentation. In order to minimize the adverse effects of this fact, one Michael Volarich, AII's chief of security, with the approval of Coy, arranged to make periodic payments to Roger Strandberg, an operations officer at the Northridge Branch of Independence Bank, with the understanding Strandberg would field all inquiries to his bank concerning AII and would avoid giving anything except positive information about the company. Strandberg, in fact, did so on numerous occasions, indicating to inquirers that AII was the bank's biggest and best account while omitting to disclose accurate account balances and that the company's checks bounced on a continuing daily basis.
Similar arrangements were made with one Dorothy Brown, a public relations employee of the Sherman Oaks Chamber of Commerce, and with selected contractor-investors who received preferential treatment from AII in consideration of their being available as references for prospective investors. Brown, for example, agreed with Coy to provide letters to persons inquiring about the company which stated it had a one-half million dollar payroll, that the Chamber had received no complaints regarding it and that, as far as the Chamber knew, it was a reliable and financially sound organization. For this Brown was paid $300 per week by AII.
The selected contractor-investors used as references, by the same token, did not experience the difficulties of others in their group and accordingly, for apparently no improper motive but rather from a form of ignorance, extolled the virtues of AII to anyone seeking information about it.
From about fifteen employees in July of 1975, AII increased its personnel to as many as perhaps 150 in December, though the makeup of this work force changed frequently. In spite of its numerous employees, AII had virtually no in-plant production of parts. Its inventory which reached a level of 250,000 parts, instead came almost exclusively from contractor-investors and was stored, seemingly to gather dust, in the Chatsworth warehouse.
In September of 1975, Matthew Applegate, a marketing specialist with extensive experience was hired by AII. He was told by Coy the company had a sales volume of $5 million. When Applegate advised Coy it was late in the year to expect to generate sales, Coy told him he didn't want retail sales in 1975 anyway. In response to the inquiry of another employee as to what Applegate's job was supposed to be, Coy replied it didn't matter, since his presence gave AII a national mass merchandising “department.”
In October, Applegate, at Coy's insistence, attended a trade show in North Carolina, for the supposed purpose of obtaining retail outlets for AII's products, and to sign up new contractor-investors. Applegate was successful in acquiring 30 of the latter, while only five retailers showed any interest in the company's show exhibit during its one-week tenure. Applegate's concern over this experience, which he communicated several times to Coy, was met with casual indifference.
As the number of contractor-investors increased, so did their complaints to AII respecting inadequate performance on their agreements by the company. These were handled at a rate reaching dozens per day by various employees on the alternative bases that “everything will be all right” or “I'm not the person to talk to about that.” Though Coy and Nuckolls were personally advised of the complaints, they rarely responded to them. In Coy's case, the response when forthcoming was often made in a threatening manner alluding to legal action or the tying up of the complainer's assets.
Finally, when enough contractor-investors were unable to obtain the benefits of their bargains, when it appeared the arrangement had been misrepresented and that those persons could neither produce parts at the projected rate, have what they did produce accepted, or if accepted, paid for, nor extricate themselves with reimbursement of their invested funds, both state and federal authorities moved against AII and several of its management personnel and employees, ultimately placing the company in receivership and involuntary bankruptcy, and resulting in the convictions specified.4
We set out the numerous contentions on appeal in the order of their disposition herein, with parenthetical reference to the appellant or appellants raising them. Thus it is urged that:
1. The prosecutions against certain of the appellants were barred by Penal Code section 656 (Coy, Nuckolls, Soukup).
2. Various errors were associated with the trial court's instructions to the jury, viz.:
a. The instructions concerning the specific intent required for theft by false pretenses were deficient in failing to require a specific intent to permanently deprive an owner of his property (Coy, Kennick, Soukup).
b. The trial court erred in its instruction regarding the specific intent required to be liable as an aider and abetter (all appellants).
c. The trial court gave an incorrect specific intent instruction regarding the crime of conspiracy (Soukup).
d. The trial court erred by failing to explicitly instruct the jury that mere failure to perform a promise does not supply the required specific intent for the commission of theft by false pretenses (Kennick).
e. The trial court erred in refusing a proposed instruction regarding the responsibility of principals for the acts of their agents (Coy).
f. The trial court erred in refusing certain proposed instructions on good faith and reasonable belief (Kennick, Soukup).
3. The trial court erred in denying motions for a post-indictment preliminary hearing (Coy, Nuckolls, Kennick).
4. A motion to sever should have been granted (Coy).
5. The existence of Penal Code section 532 bars prosecution of theft by false pretenses under Penal Code section 484 (Kennick).
6. Certain statements to an FBI agent were obtained in violation of Miranda (Soukup).
7. An appellant was improperly called as a rebuttal witness by the prosecutor (Soukup).
8. Certain testimony was improperly admitted as rebuttal evidence (Soukup).
9. The prosecutor committed misconduct in his closing argument (Coy).
10. The evidence is insufficient to support the verdicts (Coy, Kennick, Soukup).
The Application of Penal Code Section 656.
It is contended initially that the previous federal prosecution (see fn. 4) serves as a bar to state prosecution of Coy, Nuckolls and Soukup for the crime of conspiracy. Additionally Nuckolls and Soukup contend that since the result of the federal prosecution was an acquittal as to both of them, convictions for the various substantive counts of grand theft must likewise be reversed since those counts rested on the theory that they were vicariously liable as co-conspirators for the acts of the other conspirators.
These contentions appear to present issues of first impression since our research discloses that previous cases dealing with the application of Penal Code section 6565 involves substantive offenses and we have found no case involving its application to the crime of conspiracy.
Penal Code section 656, which provides a defense to a defendant who has previously been acquitted or convicted in a criminal prosecution in another jurisdiction based on the same “act or omission,” is purely a creature of California statute law. Thus California decisions are controlling in interpreting and applying its provisions.
Owing to the prior prosecutions, the issue is simply whether those proceedings were based on the same “act” as the present charge of conspiracy under California law.
A trilogy of cases provides the basis for our analysis of the question, i. e., People v. Candelaria (1956) 139 Cal.App.2d 432, 294 P.2d 120; People v. Belcher (1974) 11 Cal.3d 91, 113 Cal.Rptr. 1, 520 P.2d 385 and People v. Comingore (1977) 20 Cal.3d 142, 141 Cal.Rptr. 542, 570 P.2d 723.
In Candelaria, the defendant was prosecuted sequentially in the federal and state courts for the robbery of the same bank. The federal jurisdiction was based on the status of the bank as a federally insured institution. The California Court of Appeal held that both prosecutions were based on the same “act,” and the state prosecution was barred.
The rationale of the decision was that the status of the bank as a jurisdictional fact necessary to be proved in the federal prosecution but unnecessary to the state prosecution did not pertain to the “act” of the defendant.
Belcher involved a defendant who on a single occasion assaulted and robbed two individuals, one a federal agent and one a state agent. He was tried and acquitted in the federal court for the assault on the federal officer.
Subsequently, in the state court, he was convicted of robbery of both individuals and assault with a deadly weapon. Our Supreme Court held that the state prosecution for assaulting a federal officer was barred by Penal Code section 656, since the same “act” was involved in both the federal and state prosecutions. The jurisdictional fact of the status of the victim, as in Candelaria, did not pertain to defendant's conduct.
Respecting the robbery charges, a different result obtained. The “act” of taking personal property from the possession of the victim was not an element of the federal crime.
Finally, in Comingore, the defendant stole a car in California and drove it to Oregon where he was arrested. He pleaded guilty in Oregon to unauthorized use of the vehicle. Subsequently, defendant was charged in California with grand theft and unlawful taking of the automobile.
Our Supreme Court, relying on Belcher and Candelaria, held the California prosecution was barred. Of significance here is the fact that in Comingore the People argued that while the Oregon charge was based on the same physical conduct as the California charges, the California prosecution required proof of an element not required by the Oregon statute, to wit, an intent to deprive the owner of his vehicle, either temporarily (Veh.Code, § 10851) or permanently (Pen.Code, § 484.)
The Comingore court rejected that argument and held that the “act” referred to in Penal Code section 656, did not include the intent with which the act was done. Drawing on the language of Penal Code section 20, that every crime includes an act and a mens rea, the court stated at page 148, 141 Cal.Rptr. 542, 570 P.2d 723: “Intent, then, is an element of a crime or a public offense, not of an act.”
Turning to the charge of conspiracy, under federal laws that crime consists of an agreement between two or more persons to accomplish an illegal objective. (18 U.S.C. § 371.) Similarly, California law defines conspiracy, inter alia, as an agreement to commit any crime. (Pen.Code, § 182.)
A prosecution for the crime of conspiracy under federal law requires proof that the conspirators intended to violate federal statutes. (Anderson v. United States (1974) 417 U.S. 211, 94 S.Ct. 2253, 41 L.Ed.2d 20.) Similarly, California only has jurisdiction to prosecute conspiracies which have as their objective the violation of state statutes. (People v. Buffum (1953) 40 Cal.2d 709, 256 P.2d 317.)
While both federal and California law require that the agreement, to be actionable, be followed by an overt act, the gravamen of the offense in each jurisdiction is the corrupt agreement. Stated another way, the “act” of the crime of conspiracy is the agreement while the “mens rea” of the crime is the intent to commit the offense which is the object of the conspiracy. (People v. Horn (1974) 12 Cal.3d 290, 115 Cal.Rptr. 516, 524 P.2d 1300.) While an overt act is a condition precedent to an actionable conspiracy it is not the “act” of conspiracy as that term is used in Penal Code section 656.
A conspiracy can of course have multiple objectives, but the existence of multiple objectives cannot serve as the basis for carving multiple conspiracies out of a single corrupt agreement. (See Braverman v. United States (1942) 317 U.S. 49, 63 S.Ct. 99, 87 L.Ed. 23; cf. Albernaz v. United States (1981) 450 U.S. 333, 101 S.Ct. 1137, 67 L.Ed.2d 275.)
In the case at bench there was a single agreement which had as its objective the violation of both federal and state laws. The rationale of People v. Comingore, supra, leads us to the conclusion that federal and state prosecutions were based on the same “act” even though the intent required for each prosecution was different and even though different overt acts were alleged.
The question remains whether our holding, that the state prosecution for the crime of conspiracy was barred, necessarily requires a reversal of the grand theft charges based on the theory of vicarious liability of co-conspirators. A determination of this issue as to Nuckolls and Soukup also involves the doctrine of collateral estoppel, since they were acquitted of conspiracy in the federal prosecution.
The law of conspiracy performs two functions in the criminal field. (1) It is a substantive crime punishable according to the crime which the defendant conspired to commit, and (2) it provides a basis for vicarious liability even though conspiracy is neither pleaded nor charged as a separate offense.
In our opinion, Penal Code section 656 operates only to bar prosecution for the substantive offense of conspiracy. It does not render evidence of the conspiracy inadmissible as a basis for establishing vicarious liability for other offenses during the course of the conspiracy by the co-conspirators.
The substantive offenses of grand theft are admittedly based on different acts than those in the federal prosecution. To extend the bar of Penal Code section 656 to the introduction of evidence of the conspiracy and reliance on the theory of vicarious liability, would be an extension which is unwarranted by the language of the statute or its underlying purpose.
An acquittal of the crime of conspiracy is not a bar to conviction for the substantive offenses committed in the course of the conspiracy. (People v. MacMullen (1933) 218 Cal. 655, 24 P.2d 793.) In short, a verdict of acquittal on a conspiracy charge is not inconsistent with the verdict of guilt on the substantive offenses. (Pen.Code, § 954; People v. Amick (1942) 20 Cal.2d 247, 125 P.2d 25.)
Evidence of a conspiracy is admissible to prove guilt of a substantive offense even though a defendant has previously been acquitted of the charge of conspiracy. An analogy is to be found in the rules of evidence dealing with the admissibility of evidence of other uncharged offenses to prove identity, motive, plan, etc. (Evid.Code, § 1101.) Such evidence is admissible even though the defendant has been acquitted of the other offense. (People v. James (1976) 62 Cal.App.3d 399, 132 Cal.Rptr. 888; People v. Raleigh (1948) 83 Cal.App.2d 435, 189 P.2d 70; People v. Griffin (1967) 66 Cal.2d 459, 58 Cal.Rptr. 107, 426 P.2d 507.)
We see no difference between establishing guilt by the use of evidence which tends to prove identity, intent or motive and establishing guilt by use of evidence to prove vicarious liability. Our review of the record herein persuades us such latter evidence was present in this case.
Finally, People v. Taylor (1974) 12 Cal.3d 686, 117 Cal.Rptr. 70, 527 P.2d 622, is the leading case in California on the doctrine of collateral estoppel in criminal cases. There the defendant was charged with murder on the theory that he aided and abetted another in the crime. Defendant was the driver of a getaway car in an attempted robbery where one of his accomplices was shot and killed by the victim.
The other accomplice was tried and acquitted of the murder. Defendant was subsequently convicted of the murder. Our Supreme Court reversed the conviction on the grounds of collateral estoppel in that the prior acquittal of the accomplice barred defendant's conviction for aiding and abetting in the act of which the accomplice had been acquitted.
The court traced the development of the doctrine and pointed out that it was generally limited to situations where the previous litigation involved the identical issue and the same parties.
In applying the doctrine to the factual situation in the case, the court found that the issues were identical and that the reasons for limiting the application of the doctrine to identical parties were not present. The court took particular care to limit its opinion to the facts of that case.
Here, the situation is exactly the opposite as that in Taylor. There is no question but what the accomplices or other members of the conspiracy committed the crime of grand theft. The acquittal of Nuckolls and Soukup of the charge of conspiracy occurred in a proceeding in which the State of California was not a party. We cannot be sure of the reasons for the acquittal in the federal case or that the acquittal was factually proper. As the court stated in Taylor, the doctrine of collateral estoppel should not be applied to perpetuate the error of a wrongful acquittal.
One of the reasons for not applying the doctrine of collateral estoppel where the parties are not identical is that it is unfair to bind the state when the defendant is not also bound by the results of the first prosecution.
In our opinion, it would be unfair here to apply the doctrine of estoppel to the State of California and bar it from proceeding to prove that the defendants are vicariously liable as co-conspirators for the offenses committed during the course of the conspiracy.
None of the reasons upon which the Taylor court relied in applying the doctrine to that factual situation are present here.
(a) Specific intent in theft by false pretenses.
As respondent points out, it is urged in this connection not that the law as presently developed includes within the crime of theft by false pretenses a requirement of intent to permanently deprive an owner of his property, but that it should include such a requirement, since otherwise the crime too closely resembles civil fraud not punishable in the same manner, and since it is so similar to larceny by trick and device, which does carry such a requirement and which is also “theft” within the definition of Penal Code section 4846 , as to be indistinguishable therefrom.
It is also conceded, however, that the grouping of the various crimes described in section 484 and included within the generic term of theft has not changed the component elements of the offenses thus aggregated, but was intended solely to simplify pleadings associated with the respective charges in order to avoid error arising out of variances between allegation and proof. (See People v. Jones (1950) 36 Cal.2d 373, 224 P.2d 353.) Such being the case, the question whether the particular offense here charged should be redefined is not one properly directed to this court but is rather a matter more appropriately addressed to the legislature.
(b) Intent required in aiding and abetting.
Appellants each maintain the standard instruction, given here, defining aiding and abetting as:
“A person aids and abets the commission of a crime if, with knowledge of the unlawful purpose of the perpetrator of the crime, he aids, promotes, encourages or instigates by acts or advice the commission of such crime.” (CALJIC No. 3.01 (1974 Revision).)
was inadequate in view of the decision in People v. Yarber (1979) 90 Cal.App.3d 895, 153 Cal.Rptr. 875, that under the facts of that case the trial court there was obligated on its own motion to instruct the jury that to be an aider and abetter, one must intentionally aid or instigate commission of a crime.
In Yarber a husband and wife were charged with sexual offenses involving five teenage girls. The husband was found guilty of 18 counts of oral copulation with a minor; the wife of one count thereof, based on the theory she had aided and abetted her husband in his performance of the act with a minor, by virtue of having herself first orally copulated him in the minor's presence.
The conclusion reached there respecting the aiding and abetting instruction however, was arrived at because the evidence was such that an inference could not be drawn the wife intended to aid her perpetrator husband simply because she had knowledge of his purpose to have the minor orally copulate him. Thus it was observed that:
“The Ellhamer/Ott synthesis that intent is inferred from the knowledge by the aider and abettor of the perpetrator's purpose is sound, generally, as a matter of human experience, but we cannot extrapolate therefrom, as a matter of law, that the inference must be drawn. Intent is what must be proved ; from a person's action with knowledge of the purpose of the perpetrator of a crime, his intent to aid the perpetrator can be inferred.”
(People v. Yarber (1979) 90 Cal.App.3d 895, 916, 153 Cal.Rptr. 875.)
It was likewise pointed out, however, that “In the absence of evidence to the contrary, the intent may be regarded as established.” (Id., at p. 916, 153 Cal.Rptr. 875.)
In this case, in contrast with Yarber, nothing appears in the evidence to suggest that to the extent any of the appellants knew of the unlawful purpose of the various perpetrators, he yet did not intend to aid and abet such perpetrator. Accordingly, drawing of the inference of intent from knowledge of the purpose was permissible, and the instruction given was sufficient for that purpose.
Stated another way, People v. Yarber does not mandate in every case that an instruction respecting aiding and abetting include the stated requirement that one must intentionally aid, promote, encourage or instigate the commission of a crime, but only requires it in those instances where, based upon the evidence, there is room for doubt such an intention existed, such that it cannot reasonably be inferred from knowledge of the purpose of the perpetrator alone. We reiterate, no such evidence was present here.
(c) Specific intent in crime of conspiracy.
Appellant Soukup asserts the following instruction is incorrect and when given occasioned reversible error.
“In each of the crimes in the indictment, namely, conspiracy and grand theft there must exist a union or joint operation of act or conduct and a certain specific intent in the mind of the perpetrator and unless such specific intent exists the crime to which it relates is not committed.
“In the crime of conspiracy, the necessary specific intent is to do an unlawful act or to do a lawful act by an unlawful means.
“In the crime of grand theft, the necessary specific intent is to defraud the owner of his property.” (CALJIC No. 3.31 (1975 Revision) as modified.)
So, it is claimed the formulation specifies that the specific intent involved relates to the doing of an unlawful act, rather than to the commission of grand theft. Similarly, it is said, it fails to mention anything about a specific intent to agree to commit grand theft.
The contention is specious.
In addition to the instruction set out, the trial court also instructed the jury that:
“A conspiracy is an agreement entered into between two or more persons with the specific intent to agree to commit the public offense of grand theft and with the further specific intent to commit such offense, followed by an overt act committed in this state by one or more of the parties for the purpose of accomplishing the object of the agreement ․” (CALJIC No. 6.10 (1974 Revision), as modified.)
Accordingly, if we accept the notion the jury would have been misled had only the first of these instructions been given, that could not reasonably have been the case where both were involved, together with the admonition, also given, that all instructions should be considered as a whole.
(d) Mere failure to perform promise in theft by false pretenses.
Equally specious is the contention of appellant Kennick that there was error in the trial court's refusal to instruct that “Intent to defraud must be proved in a prosecution for obtaining money or property by false pretenses, and mere failure to perform a promise, standing alone, is not sufficient.”
The trial court did instruct that:
“Every person who knowingly and designedly, by any false or fraudulent representation or pretense, defrauds another person of money, is guilty of theft by false pretense.
“In order to find any of the defendants guilty of theft by false pretense, each of the following elements must be proved:
“1. That the defendant made or caused to be made by word or conduct a promise without an intention to perform it or a false representation or pretense of an existing or past fact known to him to be false or made recklessly and without information which would justify a reasonable belief in its truth;
“2. That the representation or promise was made by the defendant with the specific intent to defraud the owner of his money;”
No more was required. (See People v. Fujita (1974) 43 Cal.App.3d 454, 474, 117 Cal.Rptr. 757.)
(e) Responsibility of principals for acts of their agents.
The same reasoning renders unmeritorious appellant Coy's claim the trial court should have instructed that:
“The defendants, Jerry Coy and (Richard) Dick Nuckolls have been charged on all counts. These defendants are considered to be principals. The law provides that in certain cases the principals are responsible for the acts of their agents, such as employees or salesmen, however, in a criminal case involving specific intent, the principals are not liable for the acts of their agents unless the evidence shows beyond a reasonable doubt that the principals instructed, adopted or ratified the acts of their agents.
“If you find from the evidence that Jerry Coy and Richard Nuckolls did not authorize, adopt or ratify lies, mistatements, or errors of their agents then you must acquit them on said agency counts.”
Assuming the requested instruction was otherwise an accurate statement of the law as applicable to the facts in the case, a questionable proposition at best, it is clear from the record the trial court did instruct adequately respecting conspiracy, aiding and abetting and specific intent. As before, nothing additional was required.
(f) Good faith and reasonable belief.
The last of the contentions having to do with jury instructions consists of the claim by appellants Kennick and Soukup that the triers of fact should have been advised that:
“A conviction of theft based upon false representations cannot be sustained if the false representations were made in the actual and reasonable belief that they were true. The burden of proof on this issue is on the prosecution and is proof beyond a reasonable doubt.”
“If the defendant made false representations, but made them on a bonafied (sic) belief, based upon reasonable grounds that they were true, no offense has been committed.”
It is also claimed the jury should have been told that:
“A salesman may rely on information supplied to him by his employer if the salesman as a reasonable and prudent person, has no reason to disbelieve the information supplied to him by the employer.”
Concerning the first two of these proffered instructions, it seems clear they are not legally accurate in the form presented since, understood literally, they would allow acquittal of all the defendants to the extent conviction would rest upon false representations, so long as the person making the representations did not himself know or have reason to believe they were false. Similarly, they fail adequately to point out the relationship between knowledge and reckless disregard for information which would supply knowledge.
More importantly, however, the instance is one, again, where instructions which were given were adequate to the purpose. Thus, the jury was advised as we have noted previously that:
“In order to find any of the defendants guilty of theft by false pretense, each of the following elements must be proved:
“1. That the defendant made or caused to be made by word or conduct a promise without an intention to perform it or a false representation or pretense of an existing or past fact known to him to be false or made recklessly and without information which would justify a reasonable belief in its truth ;
“2. That the representation or promise was made by the defendant with the specific intent to defraud the owner of his money; ․” (CALJIC No. 14.10.) (Emphasis added.)
And, while no particular instruction can be pointed to which superimposes itself over that relating to what appellants urged for describing justifiable reliance by salesmen, vis a vis information supplied by an employer, we are satisfied the proposed formulation was cumulative in view of other instructions given and that its absence could not have resulted in prejudice.
Post-indictment preliminary hearing.
On March 10, 1977, the motion of Coy, Nuckolls and Kennick for a post-indictment preliminary hearing was denied. The Supreme Court's decision in Hawkins v. Superior Court (1978) 22 Cal.3d 584, 150 Cal.Rptr. 435, 586 P.2d 916, providing that a right to such a hearing was constitutionally required, became final on December 13, 1978, and was expressly limited in its operation to that case and to those indicted defendants who had not entered a plea prior to that time. Such, clearly, was not the case here; that is to say, these appellants' pleas were made much earlier. In fact the entire trial was completed before the December 13, 1978 date.
Nevertheless, it is asserted that rationale of Hawkins should be applied, even if the decision itself may not be relied upon. This novel proposition must be rejected, in our view, since, the applicability of the decision being explicit, its import may not be resorted to as if it existed in some sort of vacuum. (See also Sherwood v. Superior Court (1979) 24 Cal.3d 183, 186, 154 Cal.Rptr. 917, 593 P.2d 862.)
Motion to sever.
Similarly without merit is Coy's claim his case should have been severed from that of the other defendants owing to the massive amount of evidence involved in the trial. The fact as noted previously is that Coy was charged in every count of the indictment. What was essential to be shown respecting those charged with him in various of the counts pertained as well to him and that evidence of course, largely would have been forthcoming in any event. Moreover, each appellant was alleged to be a conspirator with the others, with every count constituting an overt act of the conspiracy. What this court has said earlier under like circumstances is dispositive of the issue, namely that “The consolidation of charges against multiple defendants is proper where there is ‘a common element of substantial importance ․ [or] an underlying set of common facts and common evidence.’ ․ Such was the situation here.” (People v. Johnson (1971) 21 Cal.App.3d 235, 246, 98 Cal.Rptr. 393.)
Relationship of Penal Code Sections 532 and 484(1).
It is next suggested by appellant Kennick that Penal Code section 532 must be viewed as a special statute which obviates and makes improper resort to Penal Code section 484(a), under which he was prosecuted. As respondent notes, however, that argument is effectively negatived by the determination in People v. Carter (1933) 131 Cal.App. 177, 182, 21 P.2d 129, that section 484 superseded the identical provisions of section 532, as well as by the observation no prejudice has been shown by virtue of the selection in any event.
The contention of appellant Soukup that statements made by him to an FBI agent should not have been received in evidence because he was not told he was entitled to an attorney during questioning must also fail. While it is no doubt true that “an individual held for interrogation must be clearly informed that he has the right to consult with a lawyer and to have the lawyer with him during interrogation” (Miranda v. Arizona (1966) 384 U.S. 436, 472, 86 S.Ct. 1602, 1626, 16 L.Ed.2d 694, the facts here were that Soukup was not being held for interrogation (see People v. Arnold (1967) 66 Cal.2d 438, 448, 58 Cal.Rptr. 115, 426 P.2d 515) and that, in any case, he had adequately been advised of his right to counsel during questioning. So, the record is clear he was given a written advisement stating in part “You have the right to talk to a lawyer for advice before we ask you any questions and to have him with you during questioning․ If you wish to answer questions now without a lawyer present, you have the right to stop answering questions at any time.”
After receipt of this instrument, Soukup executed a waiver which specified in part that “I do not wish a lawyer and I understand and know what I am doing ․” It likewise provided that “I ․ have come to the Tarzana, Calif. office of the Federal Bureau of Investigation (FBI) of my own choice to talk with Special Agents of the FBI about a crime which they are investigating. I know that I am not under arrest and that I can leave this office if I wish to do so․”
Under these circumstances, the evidence complained of was properly admitted at the trial.
Defendant as rebuttal witness for the prosecution; Other rebuttal evidence.
Appellant Soukup also maintains he was improperly called as a witness during the prosecution's rebuttal case, thus violating his rights respecting self-incrimination; and that another witness, one Charles Hise, was erroneously permitted to offer rebuttal testimony.
It is sufficiently evident from the record the first of these claims is without foundation, since, while the testimony alluded to appears after a designation in the reporter's transcript that it is in rebuttal, we are satisfied Soukup was in reality still being cross-examined. Moreover, no objection to what occurred was made at the time.
The second claim in this regard is also without merit. After Soukup had testified in his own defense, the prosecution called Charles Hise to testify that he had responded to an AII ad in an Indiana newspaper in February of 1976; that Soukup had told Hise AII would reimburse his expenses to travel to California for further meetings if Hise ultimately invested in the venture; that Soukup also told him AII was far behind in production, that they would buy all the parts he could produce and that there were sales of the products to Sears and K–Mart for retail distribution to the public. In his own testimony, Soukup denied he had made any representations respecting production schedules or retail sales outlets. Hise also testified he had called Soukup on March 8, 1976, after his return to Indiana, regarding the failure of AII to effect reimbursement of his travel costs and was assured there was no difficulty except possibly that associated with computer or personnel foulups. Soukup's testimony, on the other hand, had been that he was wholly unaware that AII had any financial problems until the latter part of March or the first part of April.
From this it would appear the proper scope of rebuttal evidence was not exceeded, since it cannot be said Soukup made no assertions in his testimony which were not implicit in his denial of guilt. (See People v. Carter (1957) 48 Cal.2d 737, 753, 754, 312 P.2d 665.
In closing argument, the prosecution remarked concerning appellant Coy:
“Well, if I knew of one witness by name, we had his address, I would have called him in. But reverse that a minute. Mr. Coy is the one who sold these individuals, supposedly. Why didn't they call any of “those people in to say ‘This is what Mr. Coy told us and it was all the truth.’?
“(In response to a remark by defense counsel) Does he forget about (contractor-investor) Mr. Majorino who testified that after he heard Mr. Coy's presentation ․ he went up to Mr. Coy and said, ‘You lied to me. You told me that there were sales. You told me that there was enough business right now to last the entire contract, in fact, two or three years.’ He told that to Mr. Coy. Mr. Coy never denied saying that on the stand. Mr. Majorino also said the key representation to him was that he could receive a refund at any time. He got that from (AII representative) Mr. Gallo. He got that from Mr. Coy. Did Mr. Coy ever refute that? He never refuted that.'
“But just consider Frank Marsero. Mr. Coy very clearly testified on cross-examination that he was responsible for the Philadelphia Handicapped Workers going from zero to $65,000 a week. A week. And when he takes the stand, Mr. Marsero says nowhere close to that. It's twenty-seven, twenty-eight thousand dollars was the height. The average was ten thousand dollars. Mr. Coy then takes the stand and says, ‘Well I was responsible for everyone.’ Well why didn't they ask Mr. Marsero questions like that before he left, so it could be established that, sure, Mr. Coy was responsible for those?”7
These comments, it is urged constituted “flagrant prejudicial misconduct.” We disagree. The first of them did no more than point out the prosecution's case had not been resisted in a logical fashion, i. e., by testimony of witnesses other than Coy directly rebutting what had been testified to by various contractor-investors. (See People v. Demond (1976) 59 Cal.App.3d 574, 591, 130 Cal.Rptr. 590). A like observation properly was made by the People insofar as the third is concerned. As to the second, while it related to Coy's failure to deny a particular fact, it nevertheless fell within the scope of his direct testimony. (See People v. Ing (1967) 65 Cal.2d 603, 610–611, 55 Cal.Rptr. 902, 422 P.2d 590.)
Additionally, no objection was raised at the time the comments were made.
Accordingly, we are of the view the point is not well taken. (See People v. Green (1980) 27 Cal.3d 1, 164 Cal.Rptr. 1, 609 P.2d 468.)
Sufficiency of the evidence.
Finally, we address the contention of appellants Coy, Kennick and Soukup that there is insufficient evidence to support the verdicts against them.8 For this purpose, we supplement the general narrative respecting what was shown at the trial as set out hereinabove.
Testimony of contractor-investors.
Marvin and Joan Hollenbeck first contacted AII in June of 1975 in response to AII's ad in the Oakland Tribune. Kennick interviewed Mr. Hollenbeck in Burlingame, indicating equipment for production of parts would be supplied promptly upon completion of training, that earnings would average $2.00 per part and that production of eight to ten parts per hour could reasonably be expected, even though one had no particular degree of mechanical skill. Mr. Hollenbeck got the impression from Kennick and from Coy that demand for the products was significantly greater than supply. The couple did not timely receive the necessary molds and were unable to produce at the projected rate. Initial offerings of completed parts were rejected as deficient. While Mrs. Hollenbeck was paid about $500 for parts manufactured, she was ultimately owed about $1000 more. Nuckolls instructed her to submit invoices against the items not paid for by AII but when she did, directed to Nuckoll's attention, nothing happened. When she became upset about non-payment after calling on Kennick in Los Angeles, he advised her nothing could be done about it. The Hollenbecks' initial investment consisted of $5900.
Joseph Varga paid $3900 for his contract. Though he was an experienced toolmaker, he was unable to produce parts at the rate of ten per hour. His request to be relieved of his agreement was, essentially, rejected, so he decided to go forward with the project. He was never paid for any of the parts he submitted.
Robert Dunn was told by an AII representative that the company had contracts with K–Mart, Kresge's and Sears Roebuck and this information was subsequently confirmed by Nuckolls and by Coy. When Dunn experienced physical reactions from working with the components of the product and sought to be released from his contract, he was told Coy's answer was he would see him in court. Dunn's numerous efforts to talk to Coy and Nuckolls by phone met with no success and he was not reimbursed the $7990 he had paid to AII.
Robert Majorino answered an AII ad in the Los Angeles Times. He was told by a company representative that Gemco, K–Mart and others were outlets for the polyurethane products and when this was related by Majorino to Coy, Coy did not deny it. In January of 1976, Coy asked Majorino if he would be a reference for AII. Majorino agreed and was given $600 worth of urethane foam in exchange. Thereafter his parts were accepted even when they appeared to him to be defective.
Frederick Rawlins, after answering an AII ad, received a presentation by Soukup, wherein the latter assured him he could get out of the contract if he chose and that the products were being marketed by AII all over the country. Rawlins subsequently entered into two contracts for production of parts. He later asked for a refund, presenting as part of his reasons that he had been closed down by the local fire department as a hazardous operation and that he had experienced a physical reaction during manufacture. Coy's response was it was not his problem. On one occasion, Rawlins' partner in the enterprise asked Nuckolls if it were true one million polyurethane clocks had been sold in Europe. Nuckolls replied, “Yes, it is. It is a very hot item.” In February or March of 1976, Rawlins telephoned Soukup at the latter's home in Mississippi, indicating things were “really rotten” at AII. Soukup allowed that nothing more need be said. Rawlins never received a refund.
Gary Gusewell and his wife, residents of Illinois, came to Los Angeles in January of 1976 for training after entering into a contract with AII. Mr. Gusewell almost immediately had suspicions about the company's operation, since people he observed in the plant appeared to be “on their own.” When he voiced his concerns to Nuckolls and asked whether AII was going bankrupt, Nuckolls assured him it was not and that the problem really was one of catching up in production for sales to May Company, Sears and Montgomery Ward. Not satisfied, the Gusewells asked to be let out of their contract. At a meeting between them, several other discontented contractors, Coy and Nuckolls, Coy said he would refund 90% of the Gusewells' money. They refused and ultimately were never reimbursed for any part of their investment.
Claude House was told by Kennick that in-plant production could not keep up with demand and that marketing for the products was mainly back east. Similar representations were made by Kennick to George Gervan, who, like others, was also advised by Dorothy Brown of the Sherman Oaks Chamber of Commerce that AII was in good shape. Gervan bought two contracts but never received any manufacturing equipment and was denied a refund.
The same kind of representations resulting in like experiences occurred with at least seven other individuals.
Testimony from various employees of AII tended further to establish that Coy and Nuckolls met with one another on a daily basis; that it was typical for AII's payroll checks to bounce, such that employees talked about “getting to the bank in time;” that Soukup, who had started as a salesman of contracts became general manager of the Chatsworth plant in July or August of 1975; that newspaper ads were formulated by Coy; that an ever increasing number of contractor complaints were discussed with Coy, Soukup and Nuckolls; that no representative of any retail store ever visited AII; that, apparently, there were no retail sales of polyurethane products; that Soukup had specified advertisements should be placed only in newspapers not requiring financial data; that non-sufficient fund checks known to be such, were sent to contractors in order to forestall complaints; that reference contractors received preferential treatment by the company; that Coy directed sales presentations to include the claim AII had been in existence for seven years; and that salesmen generally were trained respecting presentations by Soukup. When one employee suggested to Coy and Nuckolls that they should stop sales of contracts until they were able to catch up with mold production, Coy told her to “Butt out of it,” while Nuckolls advised it was not her problem.
Charles Rathmell, a home furnishings buyer for Sears Roebuck testified that to his knowledge the seven state western region of Sears had made no purchases from AII, with the exception of two stores' unauthorized purchases totaling $500 in value.
Total sales of AII's polyurethane products amounted to approximately $26,500, while monthly income from sales of contracts ranged from $5000 in early 1975 to nearly $700,000 in March of 1976.
In an interview with FBI agents, Soukup admitted he was told when being hired by AII that there were no sales of polyurethane parts and that he was aware of the various types of contractor complaints received by the company.
In a similar interview, Kennick indicated he knew AII's only real source of income was the sale of contracts and that the company was several weeks behind in the delivery of equipment to contractors. He also acknowledged he had on several occasions throughout his employment had suspicions whether AII was living up to its contractual obligations and whether it would survive financially.
Was the evidence recited herein sufficient to support the verdicts? We think it was.
Coy's argument to the contrary is premised on the notion there was no adequate showing of an intention on the part of the conspirators permanently to deprive the contractor-investors of their money. We have concluded earlier no such requirement is here present, though it is clear to us, if it were, the requirement would be satisfied, based upon the case made by the prosecution.
The same case as that made against Coy was, essentially, made against Nuckolls. As we have noted (see fn. 8), he does not claim it was inadequate for the purpose. If he had, we would in like manner reject the claim.
Kennick, by contrast, does not dispute he made false representations which were relied upon by contractor-investors, but asserts it was not sufficiently shown he knew them to be false, and in that sense intended for them to be accepted. The contention, however, overlooks, at least, that knowledge may be imputed for purposes of criminal responsibility by virtue of reckless disregard for truth. (See People v. Schmitt (1957) 155 Cal.App.2d 87, 109, 317 P.2d 673.) In our view, either on such a basis, or through drawing reasonable inferences from the evidence that he had actual knowledge in the premises, the jury justifiably could have concluded as it did.
So also respecting Soukup, whose claim is the evidence did not establish him as a member of the conspiracy. Combinations like that present here are typically proven by circumstantial evidence showing a mutual understanding directed toward carrying out a common unlawful purpose. (See People v. Cockrell (1965) 63 Cal.2d 659, 667, 47 Cal.Rptr. 788, 408 P.2d 116.) Valid inferences drawn from the evidence adduced at trial adequately supported the determination of the triers of fact that Soukup was part of such a combination.
The judgments of conviction (or orders granting probation, as the case may be) of appellants Coy, Nuckolls and Soukup insofar as they relate to Count I (conspiracy) are reversed. In all other respects, the judgments (or orders) are affirmed.
1. While paying this amount for their contracts, the contractors in return received only about $643,000 from AII in payment for the parts which they produced. 407 of them received $500 or less for such parts (a total of about $17,500), though their total investment was $2.6 million.
2. These charges were thereafter dismissed as to Kennick on the People's motion.
3. Respondent correctly points out that:“The judgment (respecting Coy) recites contradictorily that counts I and II are to run consecutively and that all enumerated counts (all counts) are to run concurrently with each other. The oral pronouncement of judgment makes it clear that the court intended that counts I and II be served consecutively and that the remaining counts be served concurrently with each other and with counts I and II.” In the light of our decision, however, the contradiction is without significance.
4. Coy, Nuckolls and Soukup were first prosecuted under a federal grand jury indictment. Coy was convicted of one count of conspiracy (18 U.S.C., § 371), one count of mail fraud (18 U.S.C., § 1341) and four counts of interstate transportation of persons in furtherance of a scheme to defraud (18 U.S.C., § 2314). Soukup was convicted of one § 371 count and three § 2314 counts. Nuckolls was acquitted.On appeal, Coy's conviction was affirmed. Soukup's conviction was reversed on the ground there was no substantial evidence from which the jury reasonably could have determined he was a knowing participant in AII's scheme.
5. “Whenever on the trial of an accused person it appears that upon a criminal prosecution under the laws of another State, Government, or country, founded upon the act or omission in respect to which he is on trial, he has been acquitted or convicted, it is a sufficient defense.”
6. (a) Every person who shall feloniously steal, ․ the personal property of another, or who shall fraudulently appropriate property which has been entrusted to him, or who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property, or who causes or procures others to report falsely of his wealth or mercantile character and by thus imposing upon any person, obtains credit and thereby fraudulently gets or obtains possession of money, or property or obtains the labor or service of another, is guilty of theft.”
7. Frank Marsero was at the time of trial Secretary-Treasurer of “The Lime Workshop Incorporated, Pennsylvania Handicapped Workers Incorporated.” That organization was involved in sales of household products produced by handicapped workers and sold to consumers through telephone solicitations. Coy was associated with the company in 1971 with the idea he would improve their sales program and he testified he, in fact, had done so spectacularly, that is, by improving sales from zero to $65,000 per week. Marsero disputed that in the manner indicated. Coy, in rebuttal, then allowed he had not meant his own sales efforts had grossed the $65,000 figure, but that he and all the other company salesmen, for whom he claimed responsibility, had done so.
8. Nuckolls did not join in this contention. We also address the claim insofar as it would pertain to him, however, for purposes of clarifying our disposition generally.
ROTH, Presiding Justice.
FLEMING and COMPTON, JJ., concur.