NEY v. BLANEY

Full title: CHRISTINE SUZANNE NEY, Petitioner, v. DOYLE BLANEY, et al., Respondents

Court: United States District Court, E.D. California

Date published: Feb 5, 2008

No. CIV S-08-0193 FCD DAD P (E.D. Cal. Feb. 5, 2008)

Opinion

No. CIV S-08-0193 FCD DAD P.

February 5, 2008

ORDER

DALE DROZD, Magistrate Judge

Petitioner, a state probationer proceeding though counsel, has filed an application for a writ of habeas corpus pursuant to 28 U.S.C. § 2254. Petitioner has paid the filing fee.

Since petitioner may be entitled to the requested relief if the claimed violation of constitutional rights is proved, respondents will be directed to file a response to petitioner's application.

In accordance with the above, IT IS HEREBY ORDERED that:

1. Respondents are directed to file a response to petitioner's application within thirty days from the date of this order. See Rule 4, Fed.R. Governing § 2254 Cases. An answer shall be accompanied by any and all transcripts or other documents relevant to the determination of the issues presented in the application. See Rule 5, Fed.R. Governing § 2254 Cases;

2. If the response to petitioner's application is a motion, the motion shall be noticed and briefed in accordance with Local Rule 78-230(b), (c) and (d);

3. If the response to petitioner's application is an answer, petitioner's reply to the answer shall be filed and served within thirty days after the answer is served; any motion for an evidentiary hearing shall be filed and served by petitioner concurrently with his reply to the answer;

4. All motions shall be noticed for hearing before the undersigned on a regularly scheduled law and motion calendar. Parties may appear at the hearing telephonically; to arrange telephonic appearance, the party shall contact Pete Buzo, the courtroom deputy of the undersigned magistrate judge, at (916) 930-4128 no later than three days prior to the hearing; and

5. The Clerk of the Court shall serve a copy of this order together with a copy of petitioner's application for a writ of habeas corpus pursuant to 28 U.S.C. § 2254 on Michael Patrick Farrell, Senior Assistant Attorney General. PETITION FOR WRIT OF HABEAS CORPUS BY A PERSON IN STATE CUSTODY (28 U.S.C. SECTION 2254)

Randy S. Kravis, Esq. State Bar #214100 12930 Ventura Blvd., #903 Studio City, CA 91604 (310) 428-6191 fax (818) 237-5432 Attorney For Petitioner CHRISTINE NEY UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA CHRISTINE SUZANNE NEY, ) No: ___________ ) Petitioner, ) ) vs. ) ) DOYLE BLANEY, Probation Officer, ) ) and ) ) VERNE SPEIRS, Chief Probation ) Officer, Sacramento County Probation ) Department, ) ) Respondents. ) ) ) ) ) ) ) ) ) ) _____________________________________)

PETITION FOR WRIT OF HABEAS CORPUS

Petitioner, CHRISTINE NEY, by and through her attorney, Randy S. Kravis, pursuant to 28 U.S.C. § 2254, petitions this Honorable Court to grant her a Writ of Habeas Corpus and states:

1. Petitioner is a citizen of the State of California, currently on probation following her felony conviction in the Superior Court of Sacramento County, State of California, case number 02F09957.

2. On March 12, 2004, a jury found petitioner guilty of one felony count of operating an endless chain scheme in violation of California Penal Code section 327.

3. On August 26, 2004, the court ordered that imposition of judgment and sentence be stayed and that petitioner be placed on five years formal probation.

4. Petitioner appealed to the California Court of Appeal, Third Appellate District, case number C048122. She raised the following four grounds:

a. Her right to due process was violated because she was convicted of operating an endless chain scheme without sufficient evidence that Women Helping Women (WHW) was an endless chain scheme or that petitioner was an "operator" within the meaning of Penal Code section 327;

b. The trial court committed instructional error in violation of petitioner's Sixth Amendment right to a fair and impartial jury by refusing to provide the jury with her proposed instruction that WHW should not be considered an endless chain scheme if it was determined that the organization did not require its members to recruit new ones;

c. If the Court of Appeal concluded that WHW was an endless chain scheme within the meaning of Penal Code section 327, then that statute was unconstitutionally vague, as interpreted;

d. She was denied her Sixth Amendment right to the effective assistance of counsel when her defense attorney failed to call witnesses who would have testified that they received compensation from the organization without recruiting new members.

5. On August 23, 2006, in an unpublished decision, the Court of Appeal rejected each of petitioner's claims and affirmed her conviction and sentence.

6. Petitioner sought review of the Court of Appeal's decision in the California Supreme Court, raising the following two grounds:

a. Her right to due process was violated because she was convicted of operating an endless chain scheme without sufficient evidence that WHW was an endless chain scheme or that petitioner was an "operator" within the meaning of Penal Code section 327;

b. Under the Court of Appeal's interpretation of section 327, that section was unconstitutionally vague.

7. The California Supreme Court — case number S146849 — summarily denied review on November 1, 2006.

8. Petitioner has not filed any habeas petitions in any state court with respect to this judgment of conviction.

9. In this Petition, petitioner states the following two grounds on which she claims she is being held in violation of the United States Constitution:

a. Her right to due process was violated because she was convicted of operating an endless chain scheme without sufficient evidence that WHW was an endless chain scheme or that petitioner was an "operator" within the meaning of Penal Code section 327. Specifically, WHW was not an endless chain scheme because an endless chain scheme, as defined by section 327, is one whereby "a participant" must recruit additional members in order to receive her payout and WHW did not place such a recruitment requirement on its members. Also, petitioner was not an "operator" of the organization because she did not have any managerial authority within the organization. Since she was not an operator, the evidence was insufficient to sustain her conviction for operating an endless chain scheme.

b. Section 327, as interpreted by the Court of Appeal, was unconstitutionally vague in violation of petitioner's right to due process. Section 327 defines an endless chain scheme as one in which each "participant" must recruit additional members in order to receive her payout. WHW had no such requirement. The Court of Appeal, however, interpreted the statute such that an endless chain scheme is one where the group as a whole must recruit new members in order to sustain itself. This was an unforeseeable expansion of the statutory definition of an endless chain scheme that denied petitioner adequate notice and fair warning of what was criminal in violation of her right to due process.

10. Petitioner has not previously filed any habeas corpus petitions in any federal court with respect to this judgment of conviction.

11. Petitioner does not have any petitions now pending in any state or federal court with respect to this judgment of conviction.

12. Petitioner is currently represented by attorney Randy S. Kravis. His address is 12930 Ventura Blvd., #903, Studio City, CA 91604. His business phone number is (310) 428-6191.

13. The conviction and sentence under which petitioner is on probation is unlawful, unconstitutional, and void because of the violation of petitioner's Fourteenth Amendment right to due process.

14. This Court has jurisdiction under the Petition and the issues raised pursuant to 28 USC section 2254 because Petitioner is on probation in violation of the Constitution and laws of the United States.

15. Petitioner incorporates by reference the attached Memorandum of Points and Authorities in support of the Petition for Habeas Corpus and the attached Exhibits.

16. WHEREFORE, Petitioner CHRISTINE NEY moves this Honorable Court to grant the following relief:

a. Accept jurisdiction over this case;

b. Require the respondent to answer the allegations in this Petition and Points and Authorities in Support;

c. Order respondent to lodge the record on appeal with this Court;

d. Issue a Writ of Habeas Corpus freeing petitioner from her unconstitutional custody.

VERIFICATION

I am an attorney at law duly licensed to practice in all courts of the State of California, the United States District Court for the Eastern District of California, and the Ninth Circuit Court of Appeals. I am the attorney for petitioner, CHRISTINE NEY, in this action. All facts alleged in the above document not otherwise supported by citations to the record, exhibits or other documents are within my knowledge and for that reason I make this verification on petitioner's behalf.

I have read the foregoing Petition and declare under penalty of perjury that the foregoing is true and correct, except as to matters stated on information and belief, and as to those matters, I believe them to be true.

This verification was executed on January 4, 2008, Studio City, CA.

/s/ Randy S. Kravis _____________________ Randy S. Kravis Attorney for Petitioner CHRISTINE NEY I am the petitioner in this action. All facts alleged in the above document not otherwise supported by citations to the record, exhibits or other documents are within my knowledge. I have read the foregoing Petition and declare under penalty of perjury that the foregoing is true and correct, except as to matters stated on information and belief, and as to those matters, I believe them to be true.

This verification was executed on January 4, 2008, Sacramento, CA.

/s/ Christine Ney _____________________ Christine Ney, Petitioner (original signature retained by attorney Randy Kravis) MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION FOR HABEAS CORPUS Randy S. Kravis, Esq. State Bar #214100 12930 Ventura Blvd., #903 Studio City, CA 91604 (310) 428-6191 fax (818) 237-5432 Attorney For Petitioner CHRISTINE NEY UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA CHRISTINE SUZANNE NEY, ) No: ____________ ) Petitioner, ) vs. ) ) DOYLE BLANEY, Probation Officer, ) ) and ) ) VERNE SPEIRS, Chief Probation ) Officer, Sacramento County Probation ) Department, ) ) Respondents. ) ) ) ) ) ) ) ) ) ) TABLE OF CONTENTS Page I. FACTS AND PROCEDURAL HISTORY A. Facts Of The Case B. Procedural History II. EXHAUSTION REQUIREMENT III. STATUTE OF LIMITATIONS IV. CUSTODY REQUIREMENT V. STANDARD OF REVIEW VI. PETITIONER'S RIGHT TO DUE PROCESS UNDER THE FOURTEENTH AMENDMENT WAS VIOLATED BY A GUILTY VERDICT TO THE CHARGE OF OPERATING AN ENDLESS CHAIN SCHEME UNDER CALIFORNIA PENAL CODE SECTION 327 WITHOUT SUFFICIENT EVIDENCE THAT WOMEN HELPING WOMEN (WHW) WAS AN ENDLESS CHAIN SCHEME OR THAT PETITIONER WAS AN "OPERATOR" WITHIN THE MEANING OF THE STATUTE A. The Evidence Was Insufficient To Show That WHW Was An Endless Chain Scheme B. The Evidence Was Insufficient To Show That Petitioner Was An Operator Of WHW VII. PETITIONER'S RIGHT TO DUE PROCESS UNDER THE FOURTEENTH AMENDMENT WAS VIOLATED WHEN THE CALIFORNIA COURT OF APPEAL INTERPRETED PENAL CODE SECTION 327 IN A WAY CONTRARY TO THE PLAIN LANGUAGE OF THE STATUTE THEREBY DEPRIVING HER OF ADEQUATE NOTICE AND FAIR WARNING THAT HER CONDUCT WAS CRIMINAL TABLE OF AUTHORITIES iv ARGUMENT 1 1 6 7 8 8 8 10 11 15 18 CONCLUSION 25 TABLE OF AUTHORITIES Constitution Page XIV Federal Cases Page Avila v. Galaza 297 F.3d 911 ^th Benson v. California 328 F.2d 159 ^th Bouie v. City of Columbia 378 U.S. 347 84 S.Ct. 1697 12 L.Ed.2d 894 Bundy v. Wainwright 808 F.2d 1410 ^th Bowen v Roe 188 F3d 1157 ^th Cervantes v. Walker 589 F.2d 424 ^th Clark v. Brown 450 F.3d 898 ^th Darnell v. Swinney 823 F.2d 299 ^th Douglas v. Buder 412 U.S. 430 93 S.Ct. 2199 37 L.Ed.2d 52 Duhaime v. Ducharme 200 F.3d 597^th Duncan v. Henry 513 U.S. 364 115 S.Ct. 887 130 L.Ed.2d 865 Early v. Packer 537 U.S. 3 123 S.Ct. 362 154 L.Ed.2d 263 Gonzales v. Carhart 127 S.Ct. 1610 167 L.Ed.2d 480 Himes v. Thompson 336 F.3d 848 ^th In re Winship 397 U.S. 358 90 S.Ct. 1068 25 L.Ed.2d 368 Jackson v. Coalter 337 F.3d 74 ^st Jackson v. Virginia 443 U.S. 307 99 S.Ct. 2781 61 L.Ed.2d 560 Jones v. Wood 114 F.3d 1002 ^th Juan H. v. Allen 408 F.3d 1262 ^th Knutson v. Brewer 619 F.2d 747 ^th Kolender v. Lawson 461 U.S. 352 103 S.Ct. 1855 75 L.Ed.2d 903 LaJoie v. Thompson 217 F.3d 663 ^th Lanzetta v. New Jersey 306 U.S. 451 59 S.Ct. 618 83 L.Ed.2d 888 Lockyer v. Andrade 538 U.S. 63 123 S.Ct. 1166 155 L.Ed.2d 144 McBoyle v. United States 283 U.S. 25 51 S.Ct. 340 75 L.Ed. 816 McMillan v. Gomez 19 F.3d 465 ^th Miller-El v. Cockrell 537 U.S. 322 123 S.Ct. 1029 154 L.Ed.2d 931 Plumlee v. Del Papa 465 F.3d 910 ^th Rabe v. Washington 405 U.S. 313 92 S.Ct. 993 31 L.Ed.2d 258 Rogers v. Tennessee 532 U.S. 451 121 S.Ct. 1693 149 L.Ed.2d 697 United States v. Chancey 715 F.2d 543 ^th United States v. Messer 197 F.3d 330 ^th Webster v. Woodford 369 F.3d 1062 ^th Williams v. Taylor 529 U.S. 362 120 S.Ct. 1495 146 L.Ed.2d 389 Wright v. West 505 U.S. 277 112 S.Ct. 2482 120 L.Ed.2d 225 State Cases Page Ex Parte Mathews 191 Cal. 35 214 P. 981 People v. Sanchez ^th 72 Cal.Rptr.2d 782 Statutes Page 28 U.S.C. § 2244 2254 327 U.S. Const. Amend. 9 , (9 Cir. 2002) 10 , (9 Cir. 1964) 8 , , , (1964) 19-20 23-24 , (11 Cir. 1987) 1 , (9 Cir. 1999) 8 , (9 Cir. 1978) 8 , (9 Cir. 2006) 21, 24 , (9 Cir. 1987) 19 , , , (1973) 20-21 24 , (9 Cir. 2000) 9 , , , (1995) 7 , , , (2002) 10 , ___ U.S. ___, , (2007) 19 , (9 Cir. 2003) 10 , , , (1970) 10 , (1 Cir. 2003) 8 , , , (1979) 11, 13 15 , (9 Cir. 1997) 11 , (9 Cir. 2005) 11 , (8 Cir. 1980) 22-24 , , , (1983) 18 , (9 Cir. 2000) 9 , , , (1939) 18-19 , , , (2003) 9 , , , (1932) 19, 24 , (9 Cir. 1994) 11 , , , (2003) 10 , (9 Cir. 2006) 9 , , , (1972) 21 , , , (2001) 19 , (11 Cir. 1983) 11 , (9 Cir. 1999) 11 , (9 Cir. 2004) 22, 24 , , , (2000) 9 , , , (1992) 11 , , (Cal. 1923) 13-15 , 62 Cal.App.4 460, (Cal.App. 1998) 15-16 8 § 9 California Penal Code § passim

POINTS AND AUTHORITIES IN SUPPORT OF PETITION FOR WRIT OF HABEAS CORPUS

I. FACTS AND PROCEDURAL HISTORY

A. Facts Of The Case

Women Helping Women (WHW) defined itself as a "gifting club." (CT Aug 5.)¹ As members of the organization, women committed a certain amount of cash (referred to as a "gift") into the organization for the purpose of receiving eight times their initial investment. (CT Aug 11.) A woman would receive this payout by moving up in rank. She received it only when she ascended to the highest level possible. She moved up in rank when additional women pledged gifts thereby filling the levels below her. (RT 536.)

1 "RT" refers to the page in the Reporter's Transcript section of the state record on appeal. "CT" refers to the Clerk's Transcript. "CT Aug" refers to the Augmented Clerk's Transcript. Petitioner believes that a review of the state record on appeal is necessary for a determination of the issues raised in this petition and respectfully requests that this Court order respondent to lodge the record with this Court. Rule 5 of the Rules Governing Section 2254 Cases in the United States District Courts, Advisory Committee Notes; see also Bundy v. Wainwright, 808 F.2d 1410, 1415 (11^th Cir. 1987) (obligation to produce state court record rests with respondent).

There were four ranks — appetizer (the lowest rank); soup and salad (the second rank); entrée (the third rank); and dessert (the highest rank). (CT Aug 25-26.) A woman first committing a cash gift entered at the appetizer level. The appetizer level was broken down into eight "plates." A woman could purchase as little as 1/8^th of a plate for $625 or as much as a full plate for $5,000. (CT Aug 25-26.) When all eight appetizer plates were filled, everyone moved up in rank. That is, those in the appetizer position moved up to soup and salad; those in soup and salad moved up to entrée; and those in entrée moved up to dessert. At this moment, those who ascended to the dessert level experienced a so-called "birthday" and received their payout. (RT 536.) Their payout was eight times their initial gift. Therefore, if one initially purchased 1/8^th of a plate for $625, she received a payout of $5,000. If one initially purchased a full plate for $5,000, she received a payout of $40,000. (CT Aug 25-26.) The "birthday girls" received their payment directly from the women in the appetizer positions. (RT 534, 1174.)

Each four-level system was referred to as a "chart." When a birthday occurred, the charts split into two brand new charts and everyone moved up one level. (RT 530; CT Aug 1.) In other words, of the women occupying the eight appetizer plates, half then occupied the four soup and salad plates on the first new chart while the other half occupied the four soup and salad plates on the second new chart. (RT 529; CT Aug 25-26.) Likewise, of the women who had occupied the four soup and salad plates, half occupied the two entrée plates on the first new chart while the other half occupied the two entrée plates on the second new chart. Finally, those previously in the entrée position on the old chart moved into the dessert positions on the two new charts. (CT Aug 25-26.) At that moment, the appetizer level remained vacant. (RT 530.) If or when the appetizer level filled up completely, a birthday occurred on the new chart, which then split into two new charts itself. (CT Aug 1.)

When a woman received her birthday payout, she had several options in what to do with the cash. She could keep all of it. She could make a voluntary donation to the charity WEAVE. (RT 1139.) She could "forfeit" a portion of the cash she received onto the soup and salad level of a new chart with the hope of eventually receiving a birthday payout from that investment. (RT 912.) Or she could "sponsor" a new member by buying a spot for her with a portion of her birthday proceeds. (RT 531.)

Accompanying the charts themselves were birthday tracking sheets, dinner party tracking sheets, and birthday gifting sheets. Birthday tracking sheets contained information pertaining to the chart, including the designated numbers for the new split charts, the names of the birthday girls, the date, time, and place of the birthday party, and the names and phone numbers of those expected to provide a gift. (RT 328.) Dinner party tracking sheets contained the names of women who had made pledges and expressed interest in attending the birthday party. (RT 282.) Birthday gifting sheets were signed receipts by birthday girls indicating that they had received their money. (RT 331.)

In addition to providing cash gifts, some women participated in WHW by holding certain positions and performing certain tasks within the organization. For instance, a "chart leader's" responsibility was to coordinate her particular chart. As Cheryl Bean, one of the high ranking members of WHW, testified, the chart leader was essentially a "scribe." (RT 590.) Her job was to place new members into available appetizer spots and write that information down on the chart. (RT 590-591.) This role became more distinctly defined by the promulgation of the "WHW Rules And Responsibilities" in July of 2002. (RT 589-590.) According to these Rules, a chart leader's job included keeping track of who was on the particular chart, keeping those people informed of important information, and faxing completed charts to the "officator." (CT Aug 17.) There were several hundred chart leaders within the WHW organization. (RT 423.)

The officiator was responsible for coordinating the "birthday party," which was the actual event where the new members on the appetizer level would pay the birthday girl. (CT Aug 18.) As Cathy Lovely, another high ranking WHW member, testified, the officiator "just kept track of who showed up." (RT 430.) Under the Rules and Responsibilities, the officiator also was responsible for following a certain set procedure if prospective members failed to show at the birthday party and for turning into the "monitor" completed birthday tracking sheets, dinner party tracking sheets, and birthday gifting sheets. (CT Aug 18.)

The monitor oversaw the chart leaders. (CT Aug 16.) In fact, she was the one to assign charts leaders for each chart. (RT 546-547; CT Aug 16.) Overseeing the monitor was the "area monitor." (CT Aug 15.) Her job was to provide chart numbers to the monitors and chart leaders, to maintain master archives, and to keep contact with WHW's attorneys and ensure that the members were following the organization's guidelines. (CT Aug 15.)

Also involved in the execution of the dinner party were the "counter" and the "hostess." As the title suggests, the counter's job was to actually count the cash that was pledged by the new members and turn it over to the birthday girls. (RT 335.) She also ensured that each birthday girl signed and dated the gifting sheets. (CT Aug 19.) Often, one of the attendees at the birthday party would volunteer to act as counter. (RT 429-430.) The hostess offered her home as a location to hold the birthday party. (RT 430-431; CT Aug 21.)

Finally, "presenters" gave presentations on WHW to prospective members. (CT Aug 20.) A presenter was required to have thorough knowledge of how WHW was run. (RT 625.) In addition to her oral presentation, the presenter also handed out a written packet, upon which she based her presentation. (RT 478, 1066.)

WHW informed prospective participants that "we do not make it mandatory that you recruit a certain number of women to the dinner parties so that you are able to receive your gift when it is your turn." (CT Aug 25-26.) Several of the former members of WHW — Cathy Lovely, Melody Hart, Geraldine Flanagan, and Doris Fitzpatrick — echoed this fact by testifying that the recruitment of additional members was not a prerequisite for receiving the prospective birthday payout. (RT 443, 1060, 1074, 1170.)

Petitioner first became involved in WHW in April of 2002. (CT Aug 32.) The prosecution attempted to document petitioner's participation through the testimony of several of its former members as well as through the presentation of various documents and computer files seized during the searches of petitioner's, Cathy Lovely's, and Cheryl Bean's residences. (RT 768, 771-772; CT 424-446.) Among the documents seized from petitioner's residence were WHW birthday gifting sheets, charts, printouts of financial summaries, sign-up and contact sheets, and printouts of WHW related e-mails. (RT 681.) The computer files also included various other files pertaining to WHW, including WHW's dinner party packet (CT Aug 25-26), its Roles and Responsibilities (CT Aug 13-24), a master list of all charts (CT Aug 1-3), a WHW overview outline (CT Aug 4-12), and e-mails pertaining to WHW matters. (CT Aug 32-248.)

By Detective Eric White's calculations, petitioner was involved with 49 separate charts. (RT 851.) This included six birthdays, a seventh birthday under the name "Katie D" (who Cathy Lovely suspected was petitioner's mother), and spots on 19 separate plates. (RT 812, 851, 939, 1142.) According to White's calculations, these seven birthdays yielded a gross payout of $72,500. (RT 959.) Of that amount, petitioner forfeited $10,000, she sponsored someone with $6,250, and $865 was stolen. (RT959.) The total value of petitioner's plates that did not birthday was $180,000. (RT 940.) Petitioner also made a donation to WEAVE at her birthday for chart 2014. (RT 890.)

Other witnesses testified that petitioner herself had expressed figures similar to those calculated by Detective White. Tara Spurgeon testified that petitioner stated during a presentation that she had made close to $80,000 in cash. (RT 1223.) Doris Fitzpatrick testified that petitioner told her that she had enjoyed five to six birthdays. (RT 1160.) Cathy Lovely, who shared a birthday with petitioner on one chart, confirmed that petitioner received $25,000. (RT 1130.)

In addition to involving herself in the gifting process, petitioner also participated in WHW by performing in some of the organization's official roles. For instance, she served as chart leader for twelve different charts. (RT 370, 376, 414-15, 432, 487, 549, 612, 909; CT Aug 70-80, 85-86, 87-88, 122, 136-39, 163, 164, 174-77, 188, 220.) She discontinued serving as a chart leader in the beginning of August 2002. (RT 1141.) Her reasons for this were partly her own health and partly her frustration with several of the new rules that had been implemented. (Exhibit 191.)

Petitioner also acted as a presenter. Many of the group's members testified at trial that they recalled petitioner's presentations. (RT 1034, 1038, 1045, 1065, 1150, 1153, 1161-62, 1204, 1208, 1211, 1220-21, 1227.) She also acted as hostess, counter, and officiator of several birthday parties. (RT 899, 902, 908, 1122, 1154, 1157, 1183.) According to both Lovely and Bean, neither remembered petitioner ever serving as monitor. (RT 434, 573.)

B. Procedural History

Based on these facts, petitioner was charged with one count of operating an endless chain scheme in violation of California Penal Code section 327. (CT 41.) The jury found her guilty as charged. (RT 1669.) The court sentenced petitioner to five years probation. (RT 1846.)

Petitioner appealed her conviction in the California Court of Appeal, Third Appellate District raising four claims, two of which are pertinent to this petition. First, she argued that her right to due process was violated when she was convicted of operating an endless chain scheme without sufficient evidence showing that either WHW qualified as an endless chain scheme within the meaning of section 327 or that she "contrived, prepared, set up, proposed or operated" such a scheme, as required by the statute. Second, she argued that if WHW was deemed an endless chain scheme within the meaning of the statute, then the statute was unconstitutionally vague, as interpreted by the state appellate court, because the language of the statute did not give sufficient notice that an organization such as WHW would fall within the purview of the statute. In an unpublished opinion filed on August 23, 2006, the Court of Appeal rejected petitioner's claims and affirmed her conviction. (Exhibit A.) Petitioner sought review of the Court of Appeal's decision in the California Supreme Court on the same two grounds. (Exhibit B.) That Court denied review on November 1, 2006. (Exhibit C.)

Petitioner now files this petition.

II. EXHAUSTION REQUIREMENT

Petitioner raises two issues in this Petition: 1) whether her right to due process was violated when she was convicted of operating an endless chain scheme without sufficient evidence showing that either WHW was in fact an endless chain scheme or that she was an "operator" of the organization, within the meaning of Penal Code section 327; and 2) if WHW was an endless chain scheme under the California Court of Appeal's interpretation, whether the language of the statute was unconstitutionally vague such that petitioner did not receive adequate notice that an organization such as WHW would be in violation.

These two issues were raised in petitioner's direct appeal before the California Court Appeal. After the California Court of Appeal affirmed petitioner's conviction on August 23, 2006, (Exhibit A), petitioner sought review in the California Supreme Court on these two grounds. That court denied review on November 1, 2006. (Exhibit C). Because petitioner raised these issues before the state supreme court, they became exhausted for purposes of petitioning this court for a writ of habeas corpus. See Duncan v. Henry, 513 U.S. 364, 365, 115 S.Ct. 887, 130 L.Ed.2d 865 (1995) (holding that state prisoner must exhaust state court remedies before petitioning for writ of habeas corpus and exhaustion has been satisfied if issue has been presented to state's highest court).

III. STATUTE OF LIMITATIONS

A state defendant seeking habeas corpus review in the federal courts has one year from the date his conviction becomes final to file his petition. 28 U.S.C. § 2244(d)(1). A conviction becomes final 90 days after the state Supreme Court denies review. Bowen v Roe, 188 F3d 1157, 1158 (9^th Cir. 1999) (holding that review does not conclude under 28 USC § 2244(d)(1) until expiration of period during which defendant could apply for writ of certiorari in United States Supreme Court).

Following her conviction, petitioner appealed in the California Courts. She sought review in the California Supreme Court, which was denied on November 1, 2006. She did not seek certiorari in the United States Supreme Court. Accordingly, her conviction became final on January 30, 2007, ninety days later. Under the one-year statute of limitations specified in section 2244, petitioner had until January 30, 2008 to file a federal habeas corpus petition raising the claims previously raised on direct appeal. Because petitioner is filing this petition before January 30, 2008, she is within the statute of limitations to file this petition.

IV. CUSTODY REQUIREMENT

Petitioner was sentenced to five years probation on August 26, 2004. (CT 933.) She is currently serving her term of probation. A person on probation is considered to be in "custody" for purpose of petitioning this court for a writ of habeas corpus. Cervantes v. Walker, 589 F.2d 424, 425 n1 (9^th Cir. 1978); Benson v. California, 328 F.2d 159, 162 (9^th Cir. 1964); Jackson v. Coalter, 337 F.3d 74, 79 (1^st Cir. 2003).

V. STANDARD OF REVIEW

Under the Antiterrorism and Effective Death Penalty Act [hereinafter AEDPA] of 1996, a federal court should grant a writ of habeas corpus on behalf of a person in state custody if the state court's decision "resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established federal law, as determined by the Supreme Court of the United States, or . . . resulted in a decision that was based on an unreasonable determination of the facts in light of the evidence presented in the state court proceeding." 28 U.S.C. § 2254(d); see also Lockyer v. Andrade, 538 U.S. 63, 123 S.Ct. 1166, 1172-73, 155 L.Ed.2d 144 (2003). A state court decision will be an "unreasonable application of" clearly established federal precedent if it "identifies the correct governing legal principle from this Court's decisions but unreasonably applies that principle to the facts of the prisoner's case." Williams v. Taylor, 529 U.S. 362, 413, 120 S.Ct. 1495, 146 L.Ed.2d 389 (2000). Under this prong, relief may not be granted unless the state court decision was "objectively unreasonable," as opposed to merely erroneous or even clearly erroneous. Lockyer v. Andrade, 538 U.S. at 75-76. A state court decision is contrary to clearly established federal law "if the state court arrives at a conclusion opposite to that reached by this Court on a question of law or if the state court decides a case differently than this Court has on a set of materially indistinguishable facts." Id.

The "indisputable focus" of the federal law at issue in a habeas corpus petition is on United States Supreme Court decisions that were the law at the time the state court rendered its decision. Plumlee v. Del Papa, 465 F.3d 910, 919 (9^th Cir. 2006); LaJoie v. Thompson, 217 F.3d 663, 669 (9^th Cir. 2000). However, circuit precedent is considered "persuasive authority for purposes of determining whether a particular state court decision is an `unreasonable application' of Supreme Court law, and also may help . . . determine what law is `clearly established.'" Duhaime v. Ducharme, 200 F.3d 597, 600 (9^th Cir. 2000).

Although this is a deferential standard, it is not empty one. "[D]eference does not imply abandonment or abdication of judicial review. Deference does not by definition preclude relief. A federal court can disagree with a state court's credibility determination and, when guided by AEDPA, conclude the decision was unreasonable or that the factual premise was incorrect by clear and convincing evidence." Miller-El v. Cockrell, 537 U.S. 322, 340, 123 S.Ct. 1029, 154 L.Ed.2d 931 (2003).

In making this determination, this Court should look to the "the state's last reasoned decision" on the issue. Avila v. Galaza, 297 F.3d 911, 918 (9^th Cir. 2002). In this case, the last reasoned decision was the August 23, 2006 opinion by the California Court of Appeal. The state court issuing that decision is not required to cite to Supreme Court cases or even be aware of them "so long as neither the reasoning nor the result of the state-court decision contradicts them." Early v. Packer, 537 U.S. 3, 8, 123 S.Ct. 362, 154 L.Ed.2d 263 (2002). If the state court, however, fails to give any reasons for its denial of the defendant's constitutional or federal claim, this Court must then independently review the state record to determine whether the court's decision was objectively unreasonable. Himes v. Thompson, 336 F.3d 848, 853 (9^th Cir. 2003).

VI. PETITIONER'S RIGHT TO DUE PROCESS UNDER THE FOURTEENTH AMENDMENT WAS VIOLATED BY A GUILTY VERDICT TO THE CHARGE OF OPERATING AN ENDLESS CHAIN SCHEME UNDER CALIFORNIA PENAL CODE SECTION 327 WITHOUT SUFFICIENT EVIDENCE THAT WOMEN HELPING WOMEN (WHW) WAS AN ENDLESS CHAIN SCHEME OR THAT PETITIONER WAS AN "OPERATOR" WITHIN THE MEANING OF THE STATUTE

"[T]he Due Process Clause protects the accused against conviction except upon proof beyond a reasonable doubt of every fact necessary to constitute the crime with which he is charged." In re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970). In the context of a habeas corpus proceeding, a challenge to the sufficiency of the evidence requires the Court to determine whether " any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." McMillan v. Gomez, 19 F.3d 465, 468-69 (9^th Cir. 1994) (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979) (emphasis in original)). This Court reviews the state court's sufficiency determination by examining whether it constituted an objectively unreasonable application of this standard. Juan H. v. Allen, 408 F.3d 1262, 1275 n. 13 (9^th Cir. 2005).

To establish sufficient evidence, "the prosecution need not affirmatively `rule out every hypothesis except that of guilt.'" Wright v. West, 505 U.S. 277, 296, 112 S.Ct. 2482, 120 L.Ed.2d 225 (1992). Moreover, "a reviewing court `faced with a record of historical facts that supports conflicting inferences must presume — even if it does not affirmatively appear in the record — that the trier of fact resolved any such conflicts in favor of the prosecution, and must defer to that resolution.'" Id. at 296-97. At the same time, "mere suspicion or speculation" has long been held to be insufficient to sustain a conviction. United States v. Messer, 197 F.3d 330, 343 (9^th Cir. 1999).

As a general rule, this Court "must respect the province of the jury to determine the credibility of witnesses. . . ." Jones v. Wood, 114 F.3d 1002, 1008 (9^th Cir. 1997). However, if the testimony of a witness is so incredible such that no rational trier of fact could have believed it, the evidence may be insufficient to sustain a conviction. United States v. Chancey, 715 F.2d 543, 546 (11^th Cir. 1983).

A. The Evidence Was Insufficient To Show That WHW Was An Endless Chain Scheme

In this case, the evidence was insufficient to sustain petitioner's conviction for operating an endless chain scheme because WHW was not an endless chain scheme within the meaning of the statute — California Penal Code section 327. Section 327 makes it a crime to contrive, prepare, set up, propose or operate an endless chain scheme. It defines an "endless chain scheme" as "any scheme for the disposal or distribution of property whereby a participant pays a valuable consideration for the chance to receive compensation for introducing one or more additional persons into participation in the scheme or for the chance to receive compensation when a person introduced by the participant introduces a new participant." Cal. Penal Code § 327.

As the language of the statute shows, the definition of an endless chain scheme is one that requires its participants to bring in new members in order to receive compensation. Under the definition, a participant has the chance of receiving compensation if one of two things occurs: either 1) that participant "introduc[es] one or more additional persons into participation in the scheme" or 2) "a person introduced by the participant introduces a new participant." Either way, an endless chain scheme, as it is defined under section 327, is one that requires each of its members to introduce new members in order to have any chance of receiving compensation.

WHW did not meet this definition because it did not make the receipt of a prospective payout contingent on the introduction of new members into the group. In fact, the evidence overwhelmingly shows the opposite to be true. Several of WHW's former members testified that one was not required to recruit new members into the organization in order to "birthday." Both Cathy Lovely and Cheryl Bean, two of the high-ranking members of the group, testified that recruitment was not mandatory. (RT 443, 592.) Other lesser-involved members, including Melody Hart, Geraldine Flanagan, and Doris Fitzpatrick, also testified that there was no requirement to introduce new participants. (RT 1060, 1074, 1170.) Even the official literature of WHW informed prospective members that no recruitment obligation existed. (CT Aug 8.)

Petitioner is not aware of any published California case law addressing section 327's applicability to an organization such as WHW. That is, there appears to be no California case involving an organization where a given individual member was not required to recruit additional members in order to receive her payout.

However, the Court of Appeal — the last court to issue a reasoned decision in this case — held that an organization such as WHW does indeed qualify as an endless chain scheme under the statute, the lack of a recruitment requirement notwithstanding. Acknowledging factually that "personal recruitment of new participants was not a `mandatory' requirement" in WHW, the state appellate court interpreted the statute in terms of "the group" as a whole. Thus, in the court's view, because the organization as a whole depended upon the recruitment of new members to sustain itself, WHW was an endless chain scheme. (Exhibit A at 4, 9.) In reaching this conclusion, the court relied chiefly on California Penal Code section 7, which provides: "[T]he singular number includes the plural, and the plural the singular." (Exhibit A at 9.) It further relied on a 1923 California Supreme Court case — Ex Parte Mathews, 191 Cal. 35, 214 P. 981 (Cal. 1923), a case involving an ordinance banning a person from keeping goats within a certain distance from another's property. The state Supreme Court in that case held that the statute, although it phrased the proscribed activity in terms of a singular person, applied also to goats owned by several individuals in common. Pointing to the rule that "in the absence of an express declaration that it shall include the plural, `person' may or may not include `persons,' according to the context," the Court held that the "ordinance involved herein would be entirely ineffectual, if not discriminatory, if it made the keeping of goats lawful when done by several persons and unlawful when done by one." Id. at 43.

Turning to the case sub judice, the Court of Appeal's decision was an unreasonable application of the Jackson v. Virginia standard to the facts of this case. From a factual standpoint, the Court of Appeal may be correct that the organization as a whole depended upon recruitment to sustain itself. But that is not how the legislature chose to define endless chain schemes. Had it done so, it easily could have drafted language referring to the scheme as a whole. For instance, it could have defined an endless chain scheme as one which requires the recruitment of new members in order to sustain itself, or words to that effect. Instead, it defined it in terms of the obligations of the individual participant. Section 327 defines an endless chain scheme as that in which "a participant," in exchange for the chance to receive compensation, introduces one or more additional persons into participation.

The Court of Appeal is also correct that California Penal Code section 7 addresses the interchangeability of the singular and the plural. But as the Matthews case — the California Supreme Court case cited by the Court of Appeal — holds, under California law, that interchangeability is not applied automatically. Rather, the plural "may or may not" be substituted for the singular depending on the context of the statute. Matthews, 191 Cal. at 43. In Matthews, it made sense that the language of the ordinance, although expressed in the singular, included the plural since the nuisances created by goats (i.e the smell and noise) would be felt equally regardless of the number of people who owned the goats.

The same cannot be said of endless chain schemes. An organization that makes payout contingent on the recruitment of new members is very different from one that does not. In the case of the former, a participant would suffer losses if she was not able to meet the recruitment requirement. Thus, under such a scheme, each individual would be required to take affirmative steps to bring in new members or suffer a monetary loss. On the other hand, in an organization such as WHW, where recruitment is not a requirement, a participant is not compelled to meet such a requirement. In WHW, a woman could receive her payout regardless of whether she was adept at recruiting new members or not. Thus, on an individual basis, participants in an organization such as WHW are less likely to suffer losses than they would be in an organization that requires recruitment, even if the group as a whole needs new members to sustain itself.

Therefore, Penal Code section 327 is not a statute whereby the plural should be substituted for the singular as it was in the Matthews case. Unlike the Matthews case, where the harm caused was the same regardless of the number of people involved, the possibility of harm differs depending on whether the singular or plural is used in section 327. Had the statute targeted organizations that, as a whole, required new members to sustain itself, then, yes, WHW would be an endless chain scheme. But because the statute targeted organizations that required each participant to bring in new members, WHW was not an endless chain scheme.

Accordingly, the evidence was legally insufficient to sustain petitioner's conviction under section 327 because WHW was not an endless chain scheme. The state appellate court's holding otherwise was an unreasonable application of the sufficiency of the evidence standard set forth in Jackson v. Virginia.

B. The Evidence Was Insufficient To Show That Petitioner Was An Operator Of WHW

In addition to its burden of proving that WHW was an endless chain scheme, the prosecution also was required to prove that petitioner contrived, prepared, set up, proposed or operated such a scheme. Cal. Penal Code § 327. There was no evidence that petitioner contrived, prepared, set up or proposed WHW. Rather, the issue at trial was whether petitioner was an "operator."

In a previous case by one of California's intermediate appellate courts — People v. Sanchez, 62 Cal.App.4^th 460, 72 Cal.Rptr.2d 782 (Cal.App. 1998) — the court defined the term "operate" for purposes of section 327 as follows:

"[T]o cause to function usually by direct personal effort: work (a car) (operating a drill press) . . . to manage and put or keep in operation whether with personal effort or not (operated a grocery store)." Unlike the words "contrives," "prepares," "sets up" or "proposes," which envision preparatory activity, the word "operates" denotes ongoing conduct which advances the progress of an existing entity. This term stands apart from the others, which describe various stages of formulation of the scheme; one who "operates" a scheme may carry it along after its inception. . . .

The word "operate" does not, however, as the drafters well understood, encompass mere participation, as would the phrase "aids in the operation." The meaning of "operates" — to manage and to keep in operation — clearly precludes "participation" in an endless chain scheme as a basis of guilt.

Id. at 471. The trial court in this case instructed the jury with this language. (CT 384.)

The Court of Appeal held that petitioner was an operator of WHW. Citing the Sanchez case, the court pointed out that an operator does not need to "control the entire scheme." (Exhibit A at 14.) In the court's opinion, petitioner was an operator because she "kept the scheme going and growing by her active, energetic efforts." (Exhibit A at 14.)

Petitioner believes the Court of Appeal's determination that the evidence was sufficient to show that she was one of WHW's operators was unreasonable. Petitioner is not suggesting that it is necessary for an individual to control the entire scheme in order to be considered an operator. However, under the Sanchez definition, that person does need to exert some form of managerial control over the organization. Here, petitioner unquestionably participated in the organization in several capacities — presenter, counter, hostess, officiator, and chart leader. However, these positions were not managerial in nature and did not necessarily elevate one from participant to operator.

As a presenter, petitioner gave presentations to prospective participants, providing them a general overview of the group. There was no evidence that presenters managed WHW or otherwise were responsible for keeping it in operation. On the contrary, presenters were nothing more than glorified announcers or speakers who relied on a previously prepared packet in making their presentations. (RT 478, 1066.)

The same is also true of petitioner's roles as counter, officiator, and hostess. The counter just counted the money that was gifted at a birthday party and often was an attendee at the party who volunteered her service. (RT 335, 429-430.) The officiator coordinated the birthday party and, as Cathy Lovely testified, did little more than "just [keep] track of who showed up." (RT 430.) The hostess merely offered her home as a venue for the birthday party. (RT 430-431; Exhibit 40-Y at p. 9.)

Finally, petitioner's position as "chart leader" did not make her an operator of WHW. Arguably this position required a higher degree of participation than those previously described. However, chart leaders still were not managers of the organization. The fact that there were "several hundred" of them is a good indication that they had little, if any, managerial say in the organization. (RT 423.) As Cheryl Bean acknowledged, a chart leader was nothing more than a "scribe." (RT 590.) Her job simply was to record the names of those on a particular chart and keep track of its progress. (RT 590-591.) A chart leader had no input in assigning the chart numbers or in determining how fast the positions on the chart filled. Moreover, she had no role in maintaining the group's master archives or in ensuring that the organization's rules were being followed. Those were the responsibilities of the monitor, a position in which petitioner did not serve. (RT 434, 573; CT Aug 15.)

Therefore, even though the Court of Appeal was technically correct that one does not need to "control the entire scheme" in order to be an operator of an endless chain scheme, an operator still must exert some managerial control over the scheme. (Exhibit A at 14.) Despite petitioner's service in the aforementioned positions, she did not manage WHW, unlike Cathy Lovely and Cheryl Bean.

That petitioner may have helped "[keep] the scheme going and growing by her active, energetic efforts" also did not make her an operator. (Exhibit A at 14.) Many individuals played a role in WHW's maintainability, including mere participants who helped it along by virtue of their mere participation. Petitioner may have been particularly enthusiastic in her support of the organization than perhaps others. But that does not mean she exercised the requisite managerial control to make her an operator. Put differently, a person could perform many different tasks within an organization without necessarily being an operator. That was the case with petitioner.

Accordingly, the evidence was insufficient to sustain petitioner's conviction because it failed to sufficiently show that she was an operator. The Court of Appeal's determination otherwise was an unreasonable application of the Jackson v. Virginia standard to the facts of this case.

VII. PETITIONER'S RIGHT TO DUE PROCESS UNDER THE FOURTEENTH AMENDMENT WAS VIOLATED WHEN THE CALIFORNIA COURT OF APPEAL INTERPRETED PENAL CODE SECTION 327 IN A WAY CONTRARY TO THE PLAIN LANGUAGE OF THE STATUTE THEREBY DEPRIVING HER OF ADEQUATE NOTICE AND FAIR WARNING THAT HER CONDUCT WAS CRIMINAL

"A penal statute [must] define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement." Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 75 L.Ed.2d 903 (1983). Indeed, "[n]o one may be required at peril of life, liberty or property to speculate as to the meaning of penal statutes. All are entitled to be informed as to what the State commands or forbids." Lanzetta v. New Jersey, 306 U.S. 451, 453, 59 S.Ct. 618, 83 L.Ed.2d 888 (1939). A statute is unconstitutional vague when it is fails to give people "of ordinary intelligence a reasonable opportunity to know what is prohibited" or when it "encourages arbitrary or discriminatory enforcement." Gonzales v. Carhart, ___ U.S. ___, 127 S.Ct. 1610, 1628-1629, 167 L.Ed.2d 480 (2007). As the Supreme Court explained in a case involving the interpretation of the term "motor vehicle" in a criminal statute:

Although it is not likely that a criminal will carefully consider the text of the law before he murders or steals, it is reasonable that a fair warning should be given to the world in language that the common world will understand, of what the law intends to do if a certain line is passed. To make the warning fair, so far as possible the line should be clear. When a rule of conduct is laid down in words that evoke in the common mind only the picture of vehicles moving on land, the statute should not be extended to aircraft simply because it may seem to us that a similar policy applies, or upon the speculation that if the legislature had thought of it, very likely broader words would have been used.

McBoyle v. United States, 283 U.S. 25, 27, 51 S.Ct. 340, 75 L.Ed. 816 (1932).

The central principle underlying the vagueness doctrine is that of "fair warning." Darnell v. Swinney, 823 F.2d 299, 301 (9^th Cir. 1987). Deprivation of the right to fair warning "can result both from vague statutory language and from an unforeseeable and retroactive judicial expansion of statutory language that appears narrow and precise on its face." Rogers v. Tennessee, 532 U.S. 451, 457, 121 S.Ct. 1693, 149 L.Ed.2d 697 (2001) (emphasis added).

The seminal case addressing this latter situation is Bouie v. City of Columbia, 378 U.S. 347, 84 S.Ct. 1697, 12 L.Ed.2d 894 (1964). In that case, two African-American men were convicted of criminal trespass after they sat at a restaurant reserved for whites only. They were not informed that they were prohibited from being there until only after they had already sat down. The South Carolina Supreme Court affirmed their convictions construing "the statute to cover . . . the act of remaining on the premises of another after receiving notice to leave." Id. at 350. Under that plain language of the statute, however, the prohibited conduct was entry upon land of another after notice. Remaining on the premises after receiving notice to leave was not proscribed by the statute, and the statute had never been interpreted in such a way as to proscribe that conduct. The United States Supreme Court reversed. While acknowledging that the evidence was sufficient to sustain the defendants' convictions under the state supreme court's new interpretation of the trespass statute, it held that their right to due process was violated because they were deprived of not only fair warning, but any warning whatsoever that their conduct violated the trespass statute. Id. at 355. It held, "If the Fourteenth Amendment is violated when a person is required `to speculate as to the meaning of penal statutes,' . . . or to `guess at (the statute's) meaning and differ as to its application,' . . . the violation is that much greater when, because the uncertainty as to the statute's meaning is itself not revealed until the court's decision, a person is not even afforded an opportunity to engage in such speculation before committing the act in question." Id. at 352. The Court pointed out that there was nothing in the wording of the statute itself nor in any prior South Carolina judicial decisions that gave the defendants warning that their conduct would be considered criminal. On the contrary, the statute was "narrow and precise." Id.

Other decisions following Bouie resulted in similar outcomes. In Douglas v. Buder, 412 U.S. 430, 93 S.Ct. 2199, 37 L.Ed.2d 52 (1973), a defendant's probation was revoked after he failed to report a traffic citation that he had received. The probation condition he was alleged to have violated required him to report all "arrests." Id. at 430. The Supreme Court rejected the state's argument that the traffic citation should be deemed an arrest. Relying on Bouie, the Court noted the absence of any prior decisions treating traffic citations as arrests. As a result, any such expansive interpretation would violate the defendant's right to due process. Id. at 432.

The Supreme Court reached the same result in Rabe v. Washington, 405 U.S. 313, 92 S.Ct. 993, 31 L.Ed.2d 258 (1972), a case in which the operator of a Drive-In movie theatre was convicted for showing a racy movie under the state's obscenity statute. The state Supreme Court acknowledged that the movie was not technically obscene, but interpreted the statute in such a way that a non-obscene movie could be deemed obscene by virtue of "the context of its exhibition." Id. at 315. The state court felt that because the movie was shown at a drive-in, the context of the movie's exhibition rendered it obscene. The United States Supreme Court reversed, holding that the statute "so construed, is impermissibly vague as applied to petitioner because of its failure to give him fair notice that criminal liability is dependent upon the place where the film is shown." Id. at 315-16. The Court pointed out that the statute made no reference to the context or location where the movie was shown. As a result, the defendant's "conviction was thus affirmed under a statute with a meaning quite different from the one he was charged with violating." Id. at 315.

And in Clark v. Brown, 450 F.3d 898 (9^th Cir. 2006), the Ninth Circuit found the California Supreme Court had violated a capital defendant's right to due process when it re-interpreted one of its previous cases — People v. Green — that defined the scope of the felony-murder special circumstances statute used to impose the death penalty. After examining the state supreme court's previous decisions from the time of Green to the present, the Ninth Circuit found the state court's new interpretation to be a sea-change that "retroactively chang[ed] the felony-murder special circumstance statute to reach [the defendant's] conduct." Id. at 909. The state court's new interpretation was thus unforeseeable.

By contrast, the Ninth Circuit rejected the defendant's due process argument in Webster v. Woodford, 369 F.3d 1062 (9^th Cir. 2004). In that case, the defendant, who was convicted of robbery-murder, challenged the state supreme court's interpretation of the felony-murder and lying-in-wait special-circumstance statutes that made him eligible for the death penalty. Addressing the felony-murder statute, the defendant first argued that because the car he stole was a quarter-mile away from the location of the murder, it did not occur in the "immediate presence" of his victim and no judicial construction of the phrase put him on notice otherwise. Id. at 1070. The state supreme court, however, interpreted the statute to include a quarter-mile distance within the defendant's immediate presence. The Ninth Circuit rejected the defendant's argument in large part because prior California Supreme Court decisions had long-held that that one could be convicted of robbery, which requires "immediate presence," by taking property outside the victim's sensory perception and by being in constructive, and not actual possession of the property. Id. at 1071-72. Such decisions put the defendant on notice that his actions constituted robbery. The Ninth Circuit also rejected the defendant's argument that the state supreme court's determination that a jury could find the special circumstance of "lying in wait" in the absence of physical concealment was an unforeseen expansion of the statutory elements in violation of his due process rights. As was the case with the felony-murder statute, the California Supreme Court's prior decisions made it foreseeable that it would reach the interpretation it did in the current case. Id. at 1073-74.

In Knutson v. Brewer, 619 F.2d 747 (8^th Cir. 1980), the Eighth Circuit reached the same result in the case of an Iowa state defendant convicted of kidnapping for ransom. The statute defined "ransom" as "any money, property, or thing of value." The Iowa Supreme Court held that the defendant was guilty of kidnapping for ransom because the sexual gratification he obtained while he forced the victim to sodomize him constituted a "thing of value." The Eighth Circuit distinguished the case from that of Bouie in that the defendant was "far from innocent." It held:

"[W]e think it significant that the issue of construction involved here is not the drawing of a line between legal conduct and illegal conduct. What Knutson did was unlawful under any interpretation of Iowa law, and he makes no contention to the contrary. His position, reduced to its simplest terms, is that he had a right to expect that he would be convicted for kidnapping only, rather than for kidnapping for ransom. This kind of reliance interest is not, in our view, entitled to a great deal of weight. When a person does an act that he well knows to be a violation of some law, and when a statute is later interpreted to cover his conduct in a way that does not do violence to the ordinary understanding of the English language, the Fourteenth Amendment is not offended.

Id. at 750.

Applying these principles to the instant case, petitioner's right to due process was violated by the state appellate court's unforeseen interpretation of Penal Code section 327. Like the trespass statute in Bouie, section 327 is "narrow and precise." Bouie, 378 U.S at 352. It specifically defines an illegal endless chain scheme as one "whereby a participant pays a valuable consideration for the chance to receive compensation for introducing one or more additional persons into participation in the scheme or for the chance to receive compensation when a person introduced by the participant introduces a new participant." It says nothing about the group as a whole and its need to recruit new members, but rather precisely delineates a recruitment requirement for each individual participant. Just as the defendants in Bouie had no fair warning that their act of remaining at the restaurant would be criminal under a statute that predicated the crime of trespass on the person's knowledge at the time of entry, petitioner had no fair warning that her participation in WHW would be criminal under a statute that defines an endless chain scheme as one where each participant must recruit members in order to receive a payout.

Also, like in Bouie, Douglas, and Clark, and unlike in Webster, there appear to be no prior California cases that addressed a scheme such as WHW, which might have given petitioner fair warning that it was illegal. Indeed, petitioner is not aware of any case law that would have put her on notice that WHW fell within the purview of the statute despite the language defining an endless chain scheme in terms of the individual participant. Moreover, unlike in Knutson, where the defendant knew he was engaging in illegal activity, petitioner's activity was not illegal under any criminal statute other than section 327 as interpreted by the Court of Appeal. It was not as if petitioner knew she was in violation of "some law," as Knutson himself was.

The Court of Appeal rejected petitioner's vagueness argument based on the maxim that "[i]t is common knowledge you do not get something for nothing. An eightfold return from new subscriptions manifestly cannot be sustained indefinitely." (Exhibit A at 12.) This is an unreasonable application of the Bouie vagueness doctrine to the facts of this case. Whether petitioner subscribed to this principle of "common knowledge," or understood that WHW could not sustain itself indefinitely is beside the point. The fact is that without any other case law stating otherwise, petitioner was entitled to rely on the "narrow and precise" language of the statute to determine whether her own conduct was legal. As the Bouie court held, she should not have "to speculate as to the meaning of penal statutes,' . . . or to `guess at (the statute's) meaning and differ as to its application. . . ." Bouie, 378 U.S at 352. As the McBoyl court held, a "statute should not be extended . . . simply because it may seem to us that a similar policy applies, or upon the speculation that if the legislature had thought of it, very likely broader words would have been used." McBoyl, 283 U.S. at 27. Petitioner should not be expected to know that section 327, even though it frames the recruitment requirement in terms of the individual participant, really refers to the group as a whole because the group cannot sustain itself indefinitely. If in fact the statute does mean the latter, as the Court of Appeal held, then petitioner was not given fair warning of this given that the plain language of the statute does not state this and was only interpreted in this way after she had already engaged in such conduct. The fact that a district attorney from a neighboring county expressed his opinion that WHW was a legal organization, while admittedly not dispositive of the fact itself, is at least empirical evidence that the statute was vague and failed to provide fair warning to its illegality. (CT 616, 625.)

For these reasons, the statute was vague as interpreted by the Court of Appeal and petitioner's right to due process was denied. Her conviction should be reversed.

CONCLUSION

WHEREFORE, Petitioner Christine Ney moves this Honorable Court to grant the following relief:

a) Accept jurisdiction over this case;

b) Require the respondent to answer the allegations in this Petition and Points and Authorities in Support;

c) Order the State to lodge the record on appeal with this Court;

d) Issue a Writ of Habeas Corpus freeing petitioner from his unconstitutional confinement.

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento) THE PEOPLE, C048122 Plaintiff and Respondent, (Super.Ct. No. 02F09957) v. CHRISTINE SUZANNE NEY, Defendant and Appellant. During the spring and summer of 2002, defendant Christine Suzanne Ney played various roles in Women Helping Women (WHW), a pyramid scheme. In a pyramid scheme early participants recover more than they contribute. The additional money must be paid in by those who join later. As new and necessarily larger generations join in, the structure resembles a pyramid. Inevitably, since the number of possible participants is finite, growth of such a scheme has to end. This stops the payouts, causing the great majority of participants at the base levels of the pyramid to lose money.

In November of 2002, defendant was charged with operating an "endless chain" as defined in and prohibited by Penal Code section 327.^1a After a jury trial she was convicted of that offense. She appeals from the judgment granting her probation on conditions of community service and payment of restitution and fines.

1a Undesignated statutory references are to the Penal Code. The text of section 327 is in footnote 2, at page 7, post.

Her principal claim on appeal is that WHW was not an endless chain within the definition of section 327 because it did not require every participant to introduce new participants in order to obtain compensation. She also contends she did not "operate" the scheme within the meaning of section 327 because she did not have management authority over the whole scheme. As her contentions lack merit we shall affirm the judgment.

FACTUAL BACKGROUND

WHW called itself a "gifting club." Participation was limited to women. The WHW terminology, like the name "Women Helping Women," has a homey, domestic theme. WHW purported to be "a group of women devoted to helping and supporting one another."

A typical WHW attestation tugs the charitable heartstrings: "I first heard about WHW from my sister who is a manicurist in Shingle Springs. She told me about this gifting club that was for women only, and the intent of the club was to help women like ourselves. Women who have big bills to pay, who have faced cancer [and] have hospital bills, who are raising children on their own, who have family members in need or kids to put through college, women who have [gone] through bankruptcy, who are getting divorced, who have attorney bills or are just plain struggling."

The core of the WHW scheme is as follows: Entering participants make a cash "gift" for the purpose of receiving eight times their initial investment. The entering participants' subscriptions fill eight positions of $5,000 each at the first level of the scheme. These positions were called "appetizer plates." Participants could subscribe for the whole $5,000 plate and receive $40,000 at payout or they could subscribe for a portion of a plate, e.g., one-quarter for $1,250 resulting in a $10,000 payout. Each plate was divided into eighths, worth $625 apiece.

If the following second generation of recruits' subscriptions fill in 16 appetizer plates, the entire first generation advances through the second level of the scheme. The second level positions were called "soup and salad plates."

If the following third generation of recruits' subscriptions fill in 32 appetizer plates, the entire first generation advances through the third level of the scheme and the entire second generation through the second level. The third level positions were called "entree plates."

If the following fourth generation of recruits' subscriptions fill in 64 appetizer plates, the entire first generation advances through the fourth level of the scheme ("dessert plates") and receives the eightfold $40,000 payout, a so-called "birthday," from those subscriptions. The second and third generations also move up a level.

As each subset generation of eight appetizer plates ascended a level they were divided into two fiscally separate groups. Thus, if recruitment goes well, after three generations, each is at the apex of a subordinate pyramid, or in WHW lingo a "chart," of two entrees, four soup and salads, and eight paying appetizers.

As a result of this division, the charts are free to proceed independently, at different rates. Some chart branches with successful recruiters proliferate rapidly, while others could take longer to generate payouts, if at all. Defendant did not feel sorry for charts that were progressing slowly, as "they weren't working hard enough."

Under WHW's guidelines personal recruitment of new participants was not a "mandatory" requirement to reach the payout apex of the pyramid. However, personal recruitment of three additional participants per chart was explicitly urged as a duty of all. For example, the guidelines provide that if those a participant bring in do not recruit their share, they "need to take that responsibility and work to bring their [three] ladies in for them." If a participant fulfills her duty to recruit three others then, after her "birthday" payout, she was permitted to rejoin, to ascend another derivative chart toward another payout.

WHW became a sizeable enterprise. It claimed to have 10,000 participants from Auburn to Bakersfield and to have paid out over $11 million. WHW's administration was provided by the participants.

Potential recruits, sometimes as many as 100 at a time, were given a sales pitch at a WHW social event by a "presenter." The presenter was required to understand the WHW program and to explain it to potential recruits. WHW provided a detailed script for the presenter's pitch. The presenter was also responsible for dealing with "uninvited guests (District Attorney, Police, troublemakers, etc.)"

The key event of the WHW organization was the "birthday party," where the cash subscriptions for appetizer plate status were paid to the dessert plate participant(s) at the apex. A WHW "officiator" was in charge of the entire event, seeing to organization of the room, security, calling upon the appetizer plate women to make their payments, responding to problems, and turning in reporting documents to WHW.

The "counter" had the role of counting the payments for the officiator and paying them over to the birthday girls. The counter was also responsible for signing and dating the receipt sheets.

"Hostesses" provided their home or a business facility for use for a meeting. They would provide WHW literature and snacks and soft drinks.

A "chart leader" was the participant on a WHW chart who documented the activity of the chart. Chart leaders would communicate with chart participants weekly, encouraging them and inviting them to WHW dinner parties. They taught other participants their responsibilities concerning birthday parties.

When a chart was complete the chart leader made the arrangements for scheduling and conducting the birthday party. This included telephoning (or delegating the task to a "gift line confirmer") to confirm the lineup of appetizer plate participants making the cash payments.

Defendant first became involved in WHW in April of 2002. She became a participant on 49 charts. Subtracting money she reinvested into the scheme, she drew about $55,000 in payouts from WHW, all or part of the proceeds from seven WHW birthdays.

She was the chart leader on 12 charts. She was a hostess, using her home for several WHW events. She served as a gift line confirmer, a counter and an officiator. She was also a frequent, enthusiastic and accomplished presenter. Her voluminous WHW e-mail correspondence evinces an intense, time-consuming and sustained role in administering WHW charts and exhorting her compatriots on in their recruitment efforts.

DISCUSSION I. WHW Qualified as an Endless Chain

The defendant claims WHW was not an "endless chain" as defined by section 327.^2a She argues that definition requires the participants to bring in new members in order to receive compensation. She submits that was not the case with WHW because personal recruitment of additional participants was not mandatory. Her argument is not persuasive and the contentions of error based upon it are not meritorious.^3a

Section 327 defines an "endless chain" as a scheme where "a participant" pays to receive compensation for introducing others into the scheme. Defendant argues that since the WHW guidelines allowed compensation even if a participant did not recruit any additional persons it cannot be an endless chain.

The provisions of the Penal Code "are to be construed according to the fair import of their terms, with a view to effect its objects and to promote justice." (§ 4.) The manifest object of section 327 is to prevent the fraudulent losses inevitable in a pyramid scheme, i.e., one where ongoing compensation requires recruitment of an endless chain of new participants. The inherent fraud is that earlier participants acquire their gains at the expense of the later participants who are left holding the bag when the scheme collapses.

That pernicious outcome remains inevitable in a scheme like WHW where recruitment by every participant is not technically "mandatory." Nonetheless, the early participants must on average recruit approximately three new participants each or there is no payout and the chart fails. If one does not "take that responsibility . . . [another participant must] work to bring their [three] ladies in for them." Review of the history of defendant's group of WHW charts revealed that overall 13 percent of the participants were "winners" and 87 percent were "losers."

Regardless of the chance of a non-recruiter/participant receiving compensation through WHW, it is still a fair description of the scheme to say that "a [typical, average, usual, or ordinary] participant pays" to receive compensation for introducing others into the scheme. (§ 327.) The introduction of others into the scheme is the essential element on which compensation depends. No recruits equal no compensation.

A non-recruiting WHW participant may occasionally have reached the apex of a four-generation pyramid chart and received compensation. But even in that unusual case, as a group, the "participant[s] pay a valuable consideration for the chance to receive compensation for introducing one or more additional persons into participation in the scheme [or when those persons introduce others]." (§ 327.) As a group, the participants' compensation from the WHW scheme necessarily depends upon their recruitment of new participants.

Another way to pose the defendant's question is to ask whether the phrase "a participant pays" in section 327 should be read in the singular only as "every participant pays" or, in the plural, as "the participants pay." The defendant, in effect, suggests that the singular reading is required.

Section 7 says: "[T]he singular number includes the plural, and the plural the singular." This allows the singular in statutory language to be read as including the plural, when necessary to achieve the manifest purpose of a provision.

In In re Mathews (1923) 191 Cal. 35, the defendant sought to avoid liability for violating an ordinance banning one person from keeping goats within a prescribed distance of another's dwelling because the goats were owned by several persons in common. The Supreme Court answered as follows: "The ordinance involved herein would be entirely ineffectual, if not discriminatory, if it made the keeping of goats lawful when done by several persons and unlawful when done by one. Construing the word `person' as including the singular only, the intention of the [L]egislature would be defeated and an absurd result reached. We are therefore of the opinion it should be read as including the plural. . . ." ( Id. at p. 43.)

Similar reasoning applies here. If those who contrive, prepare, set up, propose or operate an endless chain scheme could evade section 327 by allowing for a few rare participants to receive compensation without personal recruitment, the statute would be entirely ineffectual and a similarly absurd result reached. Accordingly, we read section 327 to include the plural in the definition of an "endless chain": It is a scheme in which "[the participants pay] for the chance to receive compensation for introducing one or more additional persons into participation in the scheme. . . ." ( Ibid.) WHW was such an endless chain scheme.

Therefore, defendant's several contentions that turn on the claim that WHW is not within the definition of section 327 lack merit. The contention that there is no substantial evidence of an endless chain fails because WHW was within the statute's definition.

The defendant's request for an instruction that WHW was not an endless chain if it "does not require participants to recruit new members" was properly denied as an incorrect statement of the law. (See, e.g., People v. Moon (2005) 37 Cal.4th 1, 31.)

Defendant's trial counsel did not provide ineffective assistance in failing to call witnesses who received payouts without personal recruitment. The testimony would have been immaterial, as well as duplicative.

Lastly, section 327's definition of "endless chain" is not unconstitutionally vague in including WHW within its reach. There are a number of distinct kinds of vagueness claims. (See Amsterdam, The Void-for-Vagueness Doctrine in the Supreme Court (1960) 109 U.Pa. L. Rev. 67 (hereafter Amsterdam.) The defendant's vagueness claim is one analogous to the common law canon that penal statutes are to be strictly construed. (See ibid., fn. 3.) She suggests that the definition in section 327 is ambiguous as to inclusion of the WHW and for that reason fails to "`define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited.'" ( People v. Heitzman (1994) 9 Cal.4th 189, 199.)

Our earlier discussion implicitly rejects this view. In order for section 327 to be ambiguous, it must be reasonably susceptible of two constructions. (See People v. Irwin (1984) 155 Cal.App.3d 891, 897.) However, as we have explained, there is no reasonable basis to conclude that the definition in section 327 is meant to exclude a pyramid scheme on the extraneous basis that a few participants could achieve a payout without personal recruitment of new participants. That construction is not reasonable and affords no tenable basis for the claim that the statute is vague for failing to provide fair warning.

Defendant argues that "proof positive of the confusion created by section 327" is "[t]he fact that WHW [unabashedly] held itself out as a legal organization." This is, of course, no proof at all. The question is whether the statute provides fair warning, not whether those self-interested in evading its proscription take that warning.

Moreover, an organization confident of its legality does not instruct its functionaries on how to deal with the police and district attorney when they arrive at its presentations. WHW materials advising that it was not a pyramid scheme and did not violate section 327 are irrelevant.

It is common knowledge you do not get something for nothing. An eightfold return from new subscriptions manifestly cannot be sustained indefinitely. The vagueness doctrine will not lend itself to the pretextual evasion of section 327. (See Amsterdam, supra, 109 U.Pa. L. Rev. at p. 87, fns. 98 99.)

II. Defendant "Operated" the Endless Chain

The defendant's remaining contention is that the evidence is insufficient to show she "operated" the WHW endless chain within the meaning of section 327. She argues that term requires "managerial say in" or "managerial control over" the endless chain and the evidence does not show she was a manager of the WHW organization. The argument is unpersuasive and the contention of error fails.

Defendant points to the following definition of "operate" in People v. Sanchez (1998) 62 Cal.App.4th 460, 471 ( Sanchez): "`[T]o cause to function usu[ally] by direct personal effort: work (a car) ( operat[ e] a drill press) . . . to manage and put or keep in operation whether with personal effort or not ( operate a grocery store).' Unlike the words `contrives,' `prepares,' `sets up' or `proposes,' which envision preparatory activity, the word `operates' denotes ongoing conduct which advances the progress of an existing entity. This term stands apart from the others, which describe various stages of formulation of the scheme; one who `operates' a scheme may carry it along after its inception. We reject [the defendants'] claim that `operate' applies only to the creators and designers of the scheme. [¶] The word `operate' does not, however, as the drafters well understood, encompass mere participation, as would the phrase `aids in the operation.' The meaning of `operates' — to manage and to keep in operation — clearly precludes `participation' in an endless chain scheme as a basis of guilt."

Defendant seizes on the word "manage" in the foregoing passage and asserts that because she did not set policy for WHW she was not a manager and could not have "operated" the scheme.

As the Attorney General notes, the definition "to manage and to keep in operation," was satisfied in the holding of Sanchez: "The role of each [defendant] as testified to by the prosecution witnesses can aptly be described as that of one who `operate[d]' the endless chain. [The defendants] called the other individuals to announce the time and location of the meetings, most of which were held at the home of [the defendants]. [The defendants] then conducted the meetings, lectured at the meetings, explained the rules and requirements, prepared pyramid charts, and collected the money." ( Sanchez, supra, 62 Cal.App.4th at p. 469.) The Sanchez holding squarely fits defendant's role in "operating" WHW.

We agree with the Sanchez opinion that to "operate" an endless chain does not require control of the entire scheme. (Accord, People v. Ramirez (2000) 79 Cal.App.4th 408, 414-415 [operation only requires "active involvement," not a supervisory role].) The line between participant and operator drawn in section 327 is that between victim and victimizer.^4a The defendant's activities are of the latter order.

4a Defendant notes that Civil Code section 1689.2 allows a participant in an endless chain scheme to recover losses, notwithstanding the ordinary bar of in pari delicto. She submits this implies that one can remain a mere "participant" rather than an "operator" despite having received a "birthday" payout. We do not rest our view that defendant was properly found an "operator" solely upon her payouts from the scheme. Moreover, section 1689.2 has no application to a participant like defendant whose payouts exceed the consideration she paid into the scheme.

Defendant kept the scheme going and growing by her active, energetic efforts. She bears responsibility for a large number of participants joining and staying active; at one point she boasted the number of "[m]y girls" was "about 100." Her activities were far beyond the level of a mere participant. The evidence is adequate to show that she "operated" the WHW endless chain scheme within the meaning of section 327.

DISPOSITION

The judgment is affirmed.

BUTZ ________________, J. We concur: MORRISON ___________, Acting P. J. HULL ___________, J. IN THE SUPREME COURT OF THE STATE OF CALIFORNIA PEOPLE OF THE STATE OF ) Third District Court of Appeal CALIFORNIA, ) # C048122 ) Plaintiff-Respondent ) Sacramento County Superior Court ) # 02F09957 vs. ) ) CHRISTINE SUZANNE NEY, ) ) Defendant-Appellant. ) _________________________________) Appeal from the Superior Court of Sacramento County The Honorable Emily Vasquez, Judge Presiding ________________________________________________ Petition for Review After the Unpublished Decision of the Court of Appeal, Third Appellate District Affirming the Judgment of Conviction ________________________________________________ Randy S. Kravis Bar #214100 12930 Ventura Blvd. #903 Studio City, CA 91604 (310) 428-6191 Fax (818) 237-5432 Attorney For Petitioner Christine Ney Table of Contents Page I. REVIEW SHOULD BE GRANTED SO THAT THIS COURT CAN DETERMINE WHETHER PETITIONER'S RIGHT TO DUE PROCESS WAS VIOLATED WHEN SHE WAS CONVICTED OF OPERATING AN ENDLESS CHAIN SCHEME BASED ON HER MERE PARTICIPATION IN WOMEN HELPING WOMEN, AN ORGANIZATION THAT DOES NOT REQUIRE ITS PARTICIPANTS TO RECRUIT NEW MEMBERS IN ORDER TO RECEIVE COMPENSATION AND THUS DOES NOT QUALIFY AS AN ENDLESS CHAIN SCHEME UNDER PENAL CODE SECTION 327 A. Women Helping Women Was Not An Illegal Endless Chain Scheme Because Individual Participants Were Not Required To Introduce New Participants In Order To Receive A Chance At Receiving Compensation B. The Evidence Was Insufficient To Show That Petitioner Was An "Operator" of Women Helping Women II. REVIEW SHOULD BE GRANTED SO THAT THIS COURT CAN DETERMINE WHETHER SECTION 327 IS UNCONSTITUTIONALLY VAGUE IN DEFINING THE TERM "ENDLESS CHAIN SCHEME" PETITION FOR REVIEW 1 ISSUES PRESENTED FOR REVIEW 2 NECESSITY FOR GRANTING REVIEW 2 STATEMENT OF THE CASE AND FACTS 2 REASONS FOR GRANTING REVIEW 3 3 5 7 11 CONCLUSION 13 CERTIFICATION OF WORD COUNT 14 APPENDIX 15 Table of Authorities Constitution Page ^th Federal Cases Page Hoffman Estates v. Flipside, Hoffman Estates 455 U.S. 489 102 S.Ct. 1186 71 L.Ed.2d 362 12 In re Winship 397 U.S. 358 90 S.Ct. 1068 25 L.Ed.2d 368 3 Jackson v. Virginia 443 U.S. 307 99 S.Ct. 2781 61 L.Ed.2d 560 3 Kolender v. Lawson 461 U.S. 352 103 S.Ct. 1855 75 L.Ed.2d 903 11 Lanzetta v. New Jersey 306 U.S. 451 59 S.Ct. 618 83 L.Ed.2d 888 11 O'Sullivan v. Boerckel 526 U.S. 838 119 S.Ct. 1728 144 L.Ed.2d 1 2 State Cases Page In re Carlos E. ^th People v. Bolin ^th People v. Edwards 54 Cal.3d 787 7 People v. Haynes ^th People v. Heitzman ^th People v. Johnson 26 Cal.3d 557 3 People v. Maciel ^th People v. Marshall ^th People v. Overstreet 42 Cal.3d 891 7 People v. Redmond 71 Cal.2d 745 4 People v. Reyes 12 Cal.3d 486 4 People v. Sanchez ^th People v. Stanley ^th People v. Torres ^th People ex rel. Gallo v. Acuna ^th Statutes Page U.S. Const., 14 Amend 3, 11 (1982) [, ] (1970) [, ] , 4 (1979) [, ] (1983) [, ] (1939) [, ] (1999) [, ] (2005) 127 Cal.App.4 1529 7 (1998) 18 Cal.4 297 4 (1991) (1998) 61 Cal.App.4 1282 4 (1994) 9 Cal.4 189 11, 12 (1980) (2003) 113 Cal.App.4 679 11 (1997) 15 Cal.4 1 4 (1986) (1969) (1974) (1998) 62 Cal.App.4 460 6, 7-8, 10 (1995) 10 Cal.4 764 3 (1996) 43 Cal.App.4 1073 4 (1997) 14 Cal.4 1090 12 Civil Code § 1689.2 10 Penal Code § 7 6 § 327 4-5, 7, 12, 13 California Rules of Court, Rule 28 1, 2, 6 Rule 28.1 14

TO: THE HONORABLE CHIEF JUSTICE AND ASSOCIATE JUSTICES OF THE SUPREME COURT OF THE STATE OF CALIFORNIA:

Pursuant to Rule 28 of the California Rules of Court, Christine Ney, defendant/petitioner, respectfully petitions this Honorable Court for review in the above-entitled matter after the unpublished decision by the Court of Appeal, Third Appellate District, filed August 23, 2006, affirming the judgment of conviction. A copy of the opinion of the Court of Appeal is attached hereto as appendix "A".

Respectfully submitted, September 6, 2006 Randy S. Kravis, Attorney for Petitioner

ISSUES PRESENTED FOR REVIEW

1) Was petitioner's right to due process violated because of her conviction for operating an endless chain scheme based on insufficient evidence showing that Women Helping Women qualified as an endless chain scheme and that petitioner was one of its "operators?"

2) If Women Helping Women was an endless chain scheme because the organization as a whole needed to continually recruit new members, is section 327 unconstitutionally vague because it defines endless chain schemes not in terms of the organization as a whole but one in which each individual participant must introduce new members in order to receive her chance at compensation?

NECESSITY FOR GRANTING REVIEW

Petitioner's claims are premised on federal constitutional principles. This petition for review is necessary so that petitioner may exhaust her state remedies. ( O'Sullivan v. Boerckel (1999) 526 U.S. 838, 842 [ 119 S.Ct. 1728, 144 L.Ed.2d 1].) This petition for review is also necessary because it addresses an important and unsettled question of law. (Cal. Rules of Court, rule 28(b)(1).)

STATEMENT OF THE CASE AND FACTS

For purposes of this petition of review only, petitioner adopts the statement of the facts and case set forth by the Court of Appeal. (Slip opn., pp. 1-6.)

REASONS FOR GRANTING REVIEW I. REVIEW SHOULD BE GRANTED SO THAT THIS COURT CAN DETERMINE WHETHER PETITIONER'S RIGHT TO DUE PROCESS WAS VIOLATED WHEN SHE WAS CONVICTED OF OPERATING AN ENDLESS CHAIN SCHEME BASED ON HER MERE PARTICIPATION IN WOMEN HELPING WOMEN, AN ORGANIZATION THAT DOES NOT REQUIRE ITS PARTICIPANTS TO RECRUIT NEW MEMBERS IN ORDER TO RECEIVE COMPENSATION AND THUS DOES NOT QUALIFY AS AN ENDLESS CHAIN SCHEME UNDER PENAL CODE SECTION 327 The Fourteenth Amendment provides that no state shall "deprive any person of life, liberty, or property, without due process of law. . . ." (U.S. Const., 14^th Amend.) This clause "protects the accused against conviction except upon proof beyond a reasonable doubt of every fact necessary to constitute the crime with which he is charged." ( In re Winship (1970) 397 U.S. 358, 364 [ 90 S.Ct. 1068, 25 L.Ed.2d 368].) The test to determine a claim of insufficiency of the evidence in a criminal case is whether, on the entire record, a rational trier of fact could find a defendant guilty beyond a reasonable doubt. ( People v. Johnson (1980) 26 Cal.3d 557, 576-578; Jackson v. Virginia (1979) 443 U.S. 307, 318-319 [ 99 S.Ct. 2781, 61 L.Ed.2d 560].) In making this determination, this Court must view the evidence in the light most favorable to the prosecution and presume in support of the judgment of conviction the existence of every fact the trier of fact could reasonably deduce from the evidence. ( People v. Stanley (1995) 10 Cal.4^th 764, 792-93.)

However, before determining that evidence is sufficient to sustain a verdict, the appellate court must conclude that that evidence is "substantial." ( People v. Torres (1996) 43 Cal.App.4^th 1073, 1078.) Substantial evidence is that which is reasonable, credible, and of solid value. ( People v. Haynes (1998) 61 Cal.App.4^th 1282, 1291.) Reversal of a conviction is warranted if "it appears `that upon no hypothesis whatever is there sufficient substantial evidence to support [the conviction].'" ( People v. Bolin (1998) 18 Cal.4^th 297, 331, quoting People v. Redmond (1969) 71 Cal.2d 745, 755.)

Based on these principles, "mere speculation" cannot support a conviction. ( People v. Marshall (1997) 15 Cal.4^th 1, 35.) Consequently, "[i]mplicit in [the appellate court's] duty to determine the legal sufficiency of evidence to sustain a verdict is [the court's] obligation, in a proper case, to appraise the sufficiency and effect of evidence admitted or otherwise indubitably established as precluding or overcoming, as a matter of law, inconsistent inferences sought to be derived from weak or inconclusive sources." ( People v. Reyes (1974) 12 Cal.3d 486, 499.) Thus, the testimony of witnesses which is "inherently insubstantial", and which is contradicted by other "solid and believable evidence", is an inadequate foundation to support a criminal conviction. ( Ibid.)

Petitioner was convicted of operating an endless chain scheme in violation of Penal Code section 327 based on her participation in Women Helping Women (WHW). She believes that her conviction stands in violation of In re Winship and her right to due process under the Fourteenth Amendment for two reasons. First, the evidence is legally insufficient to show that WHW was an endless chain scheme as that term is defined under section 327. Second, even if WHW was an endless chain scheme, the evidence was legally insufficient to show that she was an "operator" of that organization.

A. Women Helping Women Was Not An Illegal Endless Chain Scheme Because Individual Participants Were Not Required To Introduce New Participants In Order To Receive A Chance At Receiving Compensation

Section 327 makes it a crime to contrive, prepare, set up, propose or operate an endless chain scheme. (Pen. Code § 327.) It defines an "endless chain scheme" as "any scheme for the disposal or distribution of property whereby a participant pays a valuable consideration for the chance to receive compensation for introducing one or more additional persons into participation in the scheme or for the chance to receive compensation when a person introduced by the participant introduces a new participant." ( Ibid.)

In her appeal, petitioner argued that WHW did not qualify as an endless chain scheme because it did not require each participant to recruit new members into the organization in order to receive her compensation, otherwise known as her "birthday" payout. The People argued that WHW was an endless chain scheme because the organization as a whole would collapse if new members were not constantly recruited. The Court of Appeal boiled down the issue to whether the term "a participant," as it is used in section 327, should be construed in the singular or in the plural. (Slip opn., p. 9.) That is, if the People are correct and "a participant" is really a plural reference to the group as a whole, then WHW would be an endless chain scheme because the group as a whole did in fact need to recruit new members in order to sustain itself. However, if petitioner is correct and the term "a participant" really means what it says — a singular participant — then WHW was not an endless chain scheme because the organization did not require its individual participants to introduce new members in order to receive a chance at compensation. The Court of Appeal concluded that the People's interpretation was the correct one based largely on Penal Code section 7, which provides that the singular includes the plural and vice versa. (Slip opn., p. 9.)

Petitioner believes that this case is a good candidate for review by this Court because it is necessary to address an unsettled and important issue of law. (Cal. Rules of Court, rule 28(b)(1).) To this date, petitioner is unaware of any decision by this Court addressing this issue and is aware of only one Court of Appeal case that touches upon the meaning of section 327 — People v. Sanchez (1998) 62 Cal.App.4^th 460. In Sanchez, however, each individual was in fact responsible for bringing in more members. ( Id. at p. 465.) If a member failed to meet this obligation, he or she would be expelled. ( Ibid.) Since each participant was required to recruit new members, the Sanchez court never needed to reach the issue faced here.

Petitioner believes her interpretation is correct. The Court of Appeal's interpretation of section 327 may be a reasonable one. However, petitioner's interpretation is more congruent with the precise language used in section 327 — "a participant." As a rule of statutory construction, "[i]f the statutory language is clear and unambiguous, the plain meaning of the statute governs." ( In re Carlos E. (2005) 127 Cal.App.4^th 1529, 1537 [citations omitted].) Courts should also give words their usual or ordinary meaning. ( People v. Edwards (1991) 54 Cal.3d 787, 833.) These principles dictate that when section 327 unequivocally defines the recruitment requirement in terms of "a participant," it should be construed as meaning "a participant." Moreover, to the extent this phrase is ambiguous, the rule of lenity demands that the interpretation most favorable to petitioner be adopted. ( People v. Overstreet (1986) 42 Cal.3d 891, 896.) This would mean that the statutory phrase should be interpreted in the singular and that WHW was not an endless chain scheme.

For these reasons, this Court should accept review of this issue.

B. The Evidence Was Insufficient To Show That Petitioner Was An "Operator" of Women Helping Women

In addition to its burden of proving that WHW was an endless chain scheme, the prosecution also was required to prove that petitioner contrived, prepared, set up, proposed or operated such a scheme. (Pen. Code § 327.) There was no evidence that petitioner contrived, prepared, set up or proposed WHW. Rather, the issue at trial was whether petitioner was an "opeartor."

The Court of Appeal in People v. Sanchez defined the term "operate" for purposes of section 327 as follows:

"[T]o cause to function usually by direct personal effort: work (a car) (operating a drill press) . . . to manage and put or keep in operation whether with personal effort or not (operated a grocery store)." Unlike the words "contrives," "prepares," "sets up" or "proposes," which envision preparatory activity, the word "operates" denotes ongoing conduct which advances the progress of an existing entity. This term stands apart from the others, which describe various stages of formulation of the scheme; one who "operates" a scheme may carry it along after its inception. . . . The word "operate" does not, however, as the drafters well understood, encompass mere participation, as would the phrase "aids in the operation." The meaning of "operates" — to manage and to keep in operation — clearly precludes "participation" in an endless chain scheme as a basis of guilt.

( Sanchez, supra, 62 Cal.App.4^th at p. 471.) The trial court instructed the jury with this exact language. (2CT 384.)

Under this definition, petitioner was not an operator of WHW. There is no question she participated in the organization. She did so in several capacities — presenter, counter, hostess, officiator, and chart leader. However, none of the duties associated with these positions required her, or for that matter authorized her, to "manage" WHW's affairs. As a presenter, petitioner gave presentations to prospective participants, providing them a general overview of the group. There was no evidence that presenters managed WHW or otherwise were responsible for keeping it in operation. On the contrary, presenters were nothing more than glorified announcers or speakers who relied on a previously prepared packet in making their presentations. (2RT 478; 4RT 1066; CT Aug 20^1b.) There also is nothing in the record to suggest that presenters had any sort of hand in drafting the packet. Therefore the mere fact that petitioner gave presentations did not make her an operator of WHW.

1b "CT Aug" refers to the Augmented Clerk's Transcript.

The same is also true of petitioner's roles as counter, officiator, and hostess. The counter just counted the money that was gifted at a birthday party and often was an attendee at the party who volunteered her service. (2RT 335, 429-430.) The officiator coordinated the birthday party and, as Cathy Lovely testified, did little more than "just [keep] track of who showed up." (2RT 430.) The hostess merely offered her home as a venue for the birthday party. (2RT 430-431; CT Aug 21.) One would be hard-pressed to argue that a participant rose to the level of operator solely by serving in these capacities.

Finally, petitioner's position as "chart leader" did not make her an operator of WHW. Arguably this position required a higher degree of participation than those previously described. However, chart leaders still were not managers of the organization. The fact that there were "several hundred" of them is a good indication that they had little, if any, managerial say in the organization. (2RT 423.) As Cheryl Bean acknowledged, a chart leader was nothing more than a "scribe." (2RT 590.) Her job simply was to record the names of those on a particular chart and keep track of its progress. (2RT 590-591.) A chart leader had no input in assigning the chart numbers nor in determining how fast the positions on the chart filled. Moreover, she had no role in maintaining the group's master archives or in ensuring that the organization's rules were being followed. Those were the responsibilities of the monitor, a position in which petitioner did not serve. (2RT 434, 573; CT Aug 15.)

Petitioner's lack of managerial control of WHW was highlighted in two e-mails she drafted. In those e-mails, petitioner expressed her frustration with the promulgation of new rules and procedures by those she termed the "elders." (CT Aug 214, 238.) The fact that she was being instructed "to adhere to them and to support the decision of the `elders'" is a good indication that she was not a high-ranking official responsible for managing or keeping WHW in operation. (CT Aug 214.) Rather, she was a mere participant who aided in the group's operation, but who still was required to follow the mandates of its managers.

Therefore, the positions that petitioner occupied did not make her an operator of WHW. They may have made her a participant who aided in the organizations operation. However, as Sanchez held, that does not make one liable under section 327.

The same is also true of the fact that she personally received several birthday payouts. As petitioner pointed out in her Memorandum Of Points And Authorities submitted at trial, Civil Code section 1689.2 provides that a "participant" in an endless chain scheme must deduct any amounts she received from the scheme from any recovery she otherwise would be entitled to receive. (1CT 102.) Implicit in this statute is the notion that one remains a "participant" even after receiving compensation from the chain scheme. Consequently, even if one "birthdays," that does not, in and of itself, elevate her to the status of "operator."

Notwithstanding her active participation in WHW, the evidence was insufficient to show that petitioner was an "operator," as that term is defined in Sanchez. Accordingly, this Court should grant review on this issue.

II. REVIEW SHOULD BE GRANTED SO THAT THIS COURT CAN DETERMINE WHETHER SECTION 327 IS UNCONSTITUTIONALLY VAGUE IN DEFINING THE TERM "ENDLESS CHAIN SCHEME"

"The Fourteenth Amendment to the United States Constitution and article I, section 7 of the California Constitution, each guarantee that no person shall be deprived of life, liberty, or property without due process of law." ( People v. Heitzman (1994) 9 Cal.4^th 189, 199.) In accordance with these provisions, criminal statutes require "a reasonable degree of certainty in legislation." ( Ibid.) "A penal statute [must] define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement." ( Kolender v. Lawson (1983) 461 U.S. 352, 357 [ 103 S.Ct. 1855, 75 L.Ed.2d 903].) Indeed, "[n]o one may be required at peril of life, liberty or property to speculate as to the meaning of penal statutes. All are entitled to be informed as to what the State commands or forbids." ( Lanzetta v. New Jersey (1939) 306 U.S. 451, 453 [ 59 S.Ct. 618, 83 L.Ed.2d 888].) "Vague laws trap the innocent by not providing fair warning." ( Heitzman, supra, 9 Cal.4^th at p. 199.) Therefore, "[i]f a criminal statute is not sufficiently certain and definite, it is unconstitutionally vague and therefore void." ( People v. Maciel (2003) 113 Cal.App.4^th 679, 683.)

In order to show that a statute is unconstitutionally vague, the petitioner must show "not that it affects a substantial number of others, but that the law is vague as to her or `impermissibly vague in all of its applications.'" ( People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 1116 quoting Hoffman Estates v. Flipside, Hoffman Estates (1982) 455 U.S. 489, 497-498 [ 102 S.Ct. 1186, 71 L.Ed.2d 362][Emphasis in original].) In making this determination, courts "look first to the language of the statute, then to its legislative history, and finally to the California decisions construing the statutory language." ( Heitzman, supra, 9 Cal.4^th at p. 200.)

To be clear, petitioner believes that section 327 is unambiguous. The statute clearly defines an endless chain scheme in terms of the individual participant and requires that each participant recruit additional members in order to be able to receive compensation. Because WHW unquestionably did not impose such a requirement on its members, it did not qualify as an endless chain scheme.

The Court of Appeal has interpreted this statute differently. It has concluded that the plural really means the singular and that the recruitment requirement under section 327 is defined in terms of the organization as a whole, not the individual participant. (Slip opn., p. 9.) If the Court of Appeal is correct in this interpretation then the statute is necessarily vague. The statute defines endless chain schemes in terms of " a participant's" requirement to recruit new members. If the statute really means that it is the organization's need for continued recruitment that serves as the defining factor, as the Court of Appeal believes, then one is hard-pressed to conclude that the statute gives fair warning as to what is proscribed. Stated otherwise, how can an "ordinary" person be expected to know that an organization is illegal because it, as a whole, requires recruitment of new members when the statute defines the illegal organization as one where a single participant must introduce new members in order to receive her chance at compensation?

Since this Court has yet to address the issue of the statutory definition of "endless chain scheme" as it is used in section 327, the issue of whether the Court of Appeal's decision renders that section vague is also a question of first impression for this Court. Petitioner respectfully submits that it should grant review on this issue.

CONCLUSION

For the reasons stated herein, review should be granted and the judgment reversed.

CERTIFICATION OF WORD COUNT IN THIS PETITION

Pursuant to California Rules of Court, Rule 28.1(e)(1), I, Randy S. Kravis, certify under penalty of perjury that, according to my word processing program, Microsoft Word 2002, there are 3,162 words in this petition for review filed on behalf of petitioner Christine Ney.

APPENDIX A PROOF OF SERVICE

I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action. My business address is 12930 Ventura Blvd., #903, Studio City, CA 91604.

On September 6, 2006, I served the foregoing document described as PETITION FOR REVIEW on the following:

California Court of Appeal

900 N Street

Third Appellate District #400 Mr. Matthew Chan PO Box 944255 Central California Appellate Program Suite 301 Sacramento County Superior Court 720 9th Street Ms. Mary Simmons 901 G Street Petitioner

I placed true copies of the foregoing document in sealed envelopes addressed as stated on the attached service list. I placed each such envelope, with postage thereon fully prepaid, for collection and mailing in a registered U.S. mailbox.

Executed on September 6, 2006 Studio City, California.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. S146849 IN THE SUPREME COURT OF CALIFORNIA En Banc

Court of Appeal, Third Appellate District — No. C048122 THE PEOPLE, Plaintiff and Respondent, v. CHRISTINE SUZANNE NEY, Defendant and Appellant. Petition for review DENIED.