The PEOPLE of the State of California, Plaintiff and Respondent, v. Richard Ashley PARKER, Defendant and Appellant.
In this case we hold that when a defendant is charged with the crime of making a material untrue statement or omission in connection with a security sale or offer, and evidence is presented of more than one such statement or omission, the trial court must instruct the jury it must agree that there is proof beyond a reasonable doubt as to the same untrue statement or omission. We further hold that such an instruction is not required to be given with respect to charges of security fraud and grand theft because these offenses came within the continuous conduct exception to the requirement of jury unanimity on a particular act.
Richard Parker was charged by information with one count of conspiring to offer or sell an unqualified or nonexempt security (Pen.Code, § 182(1) ), and with two counts each of offering to sell or selling an unqualified and nonexempt security (Corp.Code, §§ 25110, 25540), grand theft (Pen.Code, § 487(1)), making an untrue statement or omission in connection with a security sale or offer (Corp.Code, §§ 25401, 25540), and fraud or deceit in connection with a security sale or offer (Corp.Code, § 25541). A jury convicted Parker of the counts of grand theft, making an untrue statement, and fraud or deceit; it acquitted him on the remaining counts.1 The court sentenced Parker to two years imprisonment on each of the six counts, the terms to run concurrently. The court also found but withheld imposition of two one-year enhancements, pursuant to Penal Code section 12022.6, subdivision (a), for taking over $25,000.
In 1977, Parker and Charles S. Kalav formed a corporation called Techni-Chem, to synthesize luteinizing hormone (LHRH), which some magazine articles claimed had a rejuvenation effect. Claims were also made that LHRH could cure human impotence and be used in animal husbandry.
In September 1978, Kalav interested Parker in forming a health spa in the Bahamas to be an outlet for LHRH. Kalav knew Bernard Klavir, a Bahamian friend who could help them arrange a lease purchase of the South Ocean Beach Hotel (Hotel) in the Bahamas. Edgar Allard, a chemist hired to synthesize LHRH, Kalav and Parker flew to the Bahamas where they met Klavir and stayed at the Hotel. Parker negotiated for several days with Duncan Rapier, President of New Providence Development Company which owned the Hotel. Rapier found Parker's proposal to be “acceptable” if Parker made a written offer and a good faith deposit. Parker retained a Bahamian attorney to incorporate a Bahamian corporation called Spa and Country Club Management, Ltd. (Spa). Spa was incorporated on November 6, 1984. Parker was elected president, Felix Bowe, vice-president, and Klavir, secretary. On November 21 or 22, 1978, a Bahamian bank account for Spa was opened.
Parker and Klavir decided to raise $750,000 to finance Spa. Klavir said that Harold Beckwith, a Canadian client, was willing to invest $300,000 in Spa. They decided to find additional investors willing to commit at least $50,000 each. Allard, Klavir and Parker had several meetings, discussing the contents of a brochure to go to potential investors. Parker testified that Klavir actually wrote the brochure, which Parker first saw on November 6 or 7, 1978.
The brochure, titled “The Company,” included several misrepresentations. It stated that two Bahamian corporations had been established in October 1978: Spa, and a subsidiary named South Ocean Spa and Country Club Management, Limited (South Ocean). In reality, only Spa had been incorporated and this was done on November 6, 1978. The brochure also stated that a lease purchase agreement had been negotiated with New Providence for the Hotel. In reality, only informal negotiations had occurred. Spa made a written offer to New Providence on November 24, 1978. New Providence rejected the offer on December 13, 1978, and made a counteroffer which Spa did not accept. Finally, the brochure stated that investors would receive over $4 million dollars in returns within five years. Charles Kring and Alfred Talbott each received the brochure, invested $50,000 in Spa, and lost their entire investment.
Kring met with Kalav, who was introduced as executive vice-president, and Parker, who was described as president of Spa. Kalav showed Kring photos of the Hotel, gave him a copy of the brochure, and described Spa's business plans. Kalav described LHRH and the use of the Hotel as a rejuvenation facility and gave Kring articles about LHRH.
On November 17, 1978, Kring transmitted a check for $50,000 payable to “South Ocean Spa and Country Club, Limited” for the purchase of 50,000 shares. He also requested a money-back guarantee, permitting him to return the stock for a full refund anytime before escrow closed on the Hotel. Kalav orally agreed to this guarantee, which he later confirmed in a letter dated November 15, 1984.
Kring subsequently received a letter from Parker setting out short-term and long-term objectives for Spa. The first short-term objective was for Spa to purchase the Hotel's right to operate the social facilities (restaurant, bar, and ballroom) of the South Ocean Beach Country Club (Country Club). The second short-term objective was for Spa to alter and equip the Hotel to become a spa and rejuvenation clinic. The first long-term objective was to staff and operate this spa and clinic. The second long-term objective was to market and distribute LHRH. The letter also said that Spa had a contract with Christiana, a Bahamian corporation, for exclusive distribution of its LHRH. Kring testified that the letter just confirmed plans which had been discussed earlier.
Still later, Kring received a “Dear Shareholder” letter from the board of directors of Spa dated February 8, 1979 stating Spa had been incorporated on November 21, 1979. It reported that Spa had made an offer for the lease purchase of the Hotel on November 24, 1978, but had been turned down by New Providence on December 15, 1978. The letter also said a group of Arab investors were guaranteeing the purchase of the Hotel, and the Hotel would be owned by Spa. It indicated that $100,000 of equipment had been purchased from Techni-Chem in exchange for 2,500 shares of stock, and the equipment had been “assigned” to Christiana. Finally, it said that a detailed financial report would be sent out after March 31, 1979. No report was ever received and Kring never received his money back.
Albert Talbott first learned about Spa from Kring. Talbott visited the Bahamas on November 18, 1978, where he met Parker and Klavir and toured the Hotel. Parker told him that Spa had negotiated the lease purchase on the Hotel and had an option to purchase the attached golf course. Parker said there were going to be two corporations—Spa and Christiana.
Talbott was interested in investing but needed to wait a few weeks to obtain the money. He received a copy of the December 1978 letter from Parker to Kring, outlining the objectives of Spa. Talbott transmitted a check for $25,000 payable to Spa. The check was deposited in a San Diego bank account for which Parker was the signatory.
In mid February, Talbott received the February 8 “Dear Shareholder” letter from the board of directors. Later in February, he received a telephone request for the second $25,000. Talbott sent the check to Parker's address. The check was made out to Spa and was deposited in the San Diego bank account. Parker acknowledged receipt of the check in a letter dated March 5, 1979, which said that Talbott was entitled to 50,000 shares in Spa.
On June 6, 1979, Talbott wrote Parker complaining that he had not received a financial statement or been kept informed of Spa's activities. Parker responded in a letter dated June 15, 1979, in which he said the financial statements had been deferred due to the press of business. The letter also said an Arab group was purchasing the Hotel and Spa would lease a portion of the Hotel.
On July 1, 1979, Talbott wrote to Parker requesting a return of his $50,000 investment, since Talbott had assumed that Spa was purchasing the Hotel. Talbott again wrote Parker requesting a refund in August 1979. Parker never responded and Talbott never received his money back.
Parker's principal contention on appeal is that the court should have given a jury instruction such as CALJIC No. 17.01, 2 requiring the jury to agree unanimously on the act or acts committed by Parker before it could convict him. We first examine the legal doctrine surrounding CALJIC No. 17.01 and then apply it to the specific offenses of which Parker was convicted.
A. Requirement of jury unanimity on a particular act.
A defendant in a criminal case has a right to a unanimous verdict. (Cal. Const., art. I, sec. 16; People v. Wheeler (1978) 22 Cal.3d 258, 265, 148 Cal.Rptr. 890, 583 P.2d 748.) CALJIC No. 17.01 addresses the situation where the state charges a defendant with only one offense while the evidence demonstrates several acts, any one of which might constitute the charged offense.3 In such a situation, there is no assurance that a jury verdict is truly unanimous; some jurors might be focusing on one act while other jurors are focusing on another. For example, in People v. Crawford (1982) 131 Cal.App.3d 591, 182 Cal.Rptr. 536, the defendant was convicted of being an ex-felon in possession of a firearm. The evidence showed that law enforcement officers, while serving an arrest warrant, discovered the defendant in a bedroom where two handguns were found. The defendant testified that he had never seen one of the guns and the other was his girlfriend's. No jury instruction such as CALJIC No. 17.01 was given. The court reversed, noting “certain jurors might have been convinced defendant possessed one weapon, while others were convinced he possessed another weapon without all jurors at a minimum believing he possessed any one weapon. It is this unacceptable possibility which taints the verdict in this case.” (Id., at p. 596, 182 Cal.Rptr. 536.)
Courts have enunciated a “continuous conduct exception” where instructions like CALJIC No. 17.01 have not been required. This exception applies “where the offenses have such a close temporal relationship that they are part of one transaction or the offense is one that may be continuous in nature.” (People v. Bottger (1983) 142 Cal.App.3d 974, 984, 191 Cal.Rptr. 408.) Examples of such crimes include “failure to provide, child abuse, contributing to the delinquency of a minor, driving under the influence and the like.” (People v. Madden (1981) 116 Cal.App.3d 212, 218, 171 Cal.Rptr. 897.) The application of CALJIC No. 17.01 or the continuous conduct exception to criminal securities law violations is an issue of first impression in California.
B. Corporations Code section 25401: Unanimity required on material misstatements or omissions.
Parker first suggests the evidence showed multiple omissions or misstatements which might have served as the basis for his convictions under Corporations Code section 25401.4 He claims the jury must agree unanimously on a particular misrepresentation or omission and the jury was not so instructed.
We cannot determine whether one or more than one material omission or misstatement was presented to the jury. For example, Parker claims the state has shown three separate misrepresentations in the brochure “The Company.” Jurors might view these as one big misrepresentation or as many smaller but material misrepresentations. The precise number is not significant because multiple misrepresentations or omissions made in the course of one security sale or offer constitute only one violation of section 25401.5 Nonetheless, the jury is required to agree unanimously on at least one particular material omission or misrepresentation. Otherwise, there is a risk that a defendant will be convicted with six jurors believing only Statement A was a material misrepresentation and the remaining six jurors believing only Statement B was a material misrepresentation. The trial court should have given an instruction such as CALJIC No. 17.01 to assure that the jury unanimously agreed on a specific act which the Corporate Security Law makes a criminal violation. Since no such instruction was given, we must reverse Parker's conviction under Corporations Code sections 25401 and 25540.
C. Corporations Code section 25541: No unanimity required on a particular device, scheme, or artifice to defraud.
Parker next suggests the evidence showed several different acts which might constitute a violation of Corporations Code section 25541.6 Except for the word “act,” all the terms defining this offense, by their nature, describe a course of conduct. “Scheme” is defined as “a plan or program of something to be done. (Webster's New Internat. Dict. (3d ed. 1966) p. 2029.) “Device” is defined as “something that is formed or formulated by design and usually with consideration of possible alternatives, experiment, and testing.” (Id., at p. 618.) “Artifice” is defined as “a wily or artful strategem.” (Id., at p. 124.) The People did not argue and the evidence did not show more than one scheme or plan to defraud each investor. The conduct prohibited by section 25541 comes within the “course of conduct” exception to the unanimity requirement; the court was not required to give CALJIC No. 17.01 with respect to this offense.
D. Penal Code section 487: No unanimity required on the Form of Theft Committed.
Finally, Parker maintains the jury was not required to agree unanimously on the particular form of grand theft, that is, it was embezzlement or false pretenses. He insists the court erred in giving CALJIC No. 14.47,7 when the jury requested further instructions distinguishing embezzlement from false pretenses. Parker admits that CALJIC No. 14.47 correctly states the law when the two forms of theft are larceny by trick and false pretenses (see People v. Nor Woods (1951) 37 Cal.2d 584, 586, 233 P.2d 897), but he claims it is incorrect when the two forms are false pretenses and embezzlement.
The evidence in a theft prosecution often supports conviction under more than one form of theft. (See People v. Kagan (1968) 264 Cal.App.2d 648, 658, 70 Cal.Rptr. 732 [evidence supported conviction under three different theories: larceny by trick, embezzlement, and false pretenses.] ) In such cases, the jury is not required to agree on the particular form of theft that was committed. (People v. Ramirez (1980) 109 Cal.App.3d 529, 540, 167 Cal.Rptr. 174; People v. Ashley (1954) 42 Cal.2d 246, 267 P.2d 271.) Once the jury agrees the defendant has committed grand theft, disagreements over the precise point when the defendant developed a fraudulent intent are unimportant. When presented with a similar situation, the court in People v. Broes (1956) 138 Cal.App.2d 843, 292 P.2d 556, held that “[a]bsent a finding by the jury that appellant acted in good faith and with honest intentions, all the inferences as to his motives would support only a conclusion of guilt of grand theft and it was of no consequence that some of the jurors might believe that appellant intended to cheat the complainants in the beginning and others might believe that he decided to steal the money after he got his hands on it. The verdict, of course, is a rejection of the claim that appellant's conduct was free from fraudulent intentions.” (Id., at p. 848, 292 P.2d 556.) In Parker's case, the jury clearly rejected his argument that he acted in good faith and was an innocent and unwilling participant in the fraudulent scheme of others. It was unnecessary for the jury to agree unanimously on the precise time Parker decided to take Kring's or Talbott's money. The court properly instructed the jury that it need not choose between embezzlement and false pretenses. (People v. Kagan, supra, 264 Cal.App.2d at p. 658, 70 Cal.Rptr. 732; People v. Ramirez, supra, 109 Cal.App.3d at pp. 540–541, 167 Cal.Rptr. 174.)
The portion of the judgment convicting Parker under Corporations Code section 25401 is reversed.8 The remainder of the judgment is affirmed. Since Parker's sentences on the reversed convictions ran concurrently to those on the affirmed convictions, the term of his prison sentence remains unchanged.
1. Gilbert J. Gray, a co-defendant, was charged with these remaining counts and was also acquitted.
2. CALJIC Instruction No. 17.01 states:“The defendant is charged with the offense of _. He may be found guilty if the proof shows beyond a reasonable doubt that he committed any one or more of such acts, but in order to find the defendant guilty, all the jurors must agree that he committed the same act or acts. It is not necessary that the particular act or acts committed so agreed upon be stated in the verdict.”
3. Parker did not request that the court read CALJIC No. 17.01. If the facts of a case demand the giving of CALJIC 17.01, however, it must be given sua sponte. (People v. Moore (1983) 143 Cal.App.3d 1059, 1064, 192 Cal.Rptr. 374; People v. Hefner (1981) 127 Cal.App.3d 88, 96–97, 179 Cal.Rptr. 336.)
4. Corporations Code section 25401 provides:“[I]t is unlawful for any person to offer or sell a security in this state or buy or offer to buy a security in this state by means of any written or oral communication which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.”
5. Section 25401 makes it unlawful to sell a security “by means of any written or oral communication” including a material omission or misrepresentation. “Any” means “one, some, or all indiscriminately of whatever quantity.” (Webster's New Internat. Dict. (3d ed. 1966) p. 97.) A defendant cannot be prosecuted separately for each misrepresentation made in one sale or offer. Conversely, a single material false statement repeated in several offers or sales constitutes multiple offenses. (Cf. United States v. Naftalin (8th Cir.1979) 606 F.2d 809, 810 [“[e]ven though there may be a common thread of fraud among the sales ․ each sale of a security may constitute a separate [federal securities law] offense.”] )
6. Corporations Code section 25541 provides:“[A]ny person who willfully employs, directly or indirectly, any device, scheme, or artifice to defraud in connection with the offer, purchase, or sale of any security or willfully engages, directly or indirectly, in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person in connection with the offer, purchase, or sale of any security shall upon conviction be fined not more than ten thousand dollars ($10,000) 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.” (Emphasis added.)
7. CALJIC No. 14.47 states:“If you agree unanimously that defendant committed the crime of theft, you should find the defendant guilty, and you are not required to agree as to which particular form of theft the defendant committed.”
8. Since we reverse this portion of the judgment, we need not discuss Parker's argument that the trial court violated Penal Code section 654 (imposing double punishment for a single act) by sentencing him under both Corporations Code sections 25401 and 25541.
KING, Associate Justice.
LOW, P.J., and HANING, J., concur.