Opinion
G051148
02-28-2017
THE PEOPLE, Plaintiff and Respondent, v. ROBERT E. BARTH, Defendant and Appellant.
Barbara A. Smith, under appointment by the Court of Appeal, for Defendant and Appellant. Kamala D. Harris, Attorney General, Gerald A. Engler, Chief Assistant Attorney General, Julie L. Garland, Assistant Attorney General, Charles C. Ragland and Kathryn Kirschbaum, Deputy Attorneys General, for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 13ZF0178) OPINION Appeal from a judgment of the Superior Court of Orange County, Kimberly Menninger, Judge. Affirmed. Barbara A. Smith, under appointment by the Court of Appeal, for Defendant and Appellant. Kamala D. Harris, Attorney General, Gerald A. Engler, Chief Assistant Attorney General, Julie L. Garland, Assistant Attorney General, Charles C. Ragland and Kathryn Kirschbaum, Deputy Attorneys General, for Plaintiff and Respondent.
A jury convicted defendant Robert E. Barth of two counts of making untrue statements in the sale or purchase of a security (Corp. Code, § 25401; counts 1 & 4); three counts of grand theft (Pen. Code, § 487, subd. (a); counts 5, 6, & 7); and one count of theft from an elder (§ 368, subd. (d); count 3). The jury also found true an enhancement that defendant engaged in a pattern of related fraudulent felony conduct taking over $100,000. He was sentenced to nine years, four months in prison, with sentences on counts 3 and 6 stayed under section 654.
All further statutory references are to this code.
Defendant appealed as to counts 3, 5, and 6 only, alleging instructional error. He claims the court erred by failing to give a mistake of fact instruction based on his genuine though mistaken belief his victims consented to his use of their funds. He also maintains the embezzlement instruction erroneously incorporated claim of right language. Finally, he contends the uncharged crimes evidence instruction erroneously required reasonable belief in the victims' consent.
We conclude there was no reversible error and affirm.
FACTS AND PROCEDURAL HISTORY
1. Mark Zeleznick - Grand Theft (Count 6) - $360,000
Defendant was a certified financial planner who met clients through his child's private school. Defendant advised Zeleznick on financial planning. Defendant convinced Zeleznick to transfer $360,000 from his traditional individual retirement account (IRA) to a self-directed IRA to diversify his investments. Defendant said he would invest the money in Coachella Valley Entitlement (Coachella), a purported real estate development and entitlement company. They signed a contract in which defendant promised Zeleznick he would earn 10 times his investment over the next 10 years. Otherwise his money would be refunded without any conditions. Zeleznick signed many documents that were completely or mostly blank; defendant was to complete them on Zeleznick's behalf.
Self-directed IRA's allow for broader investments than traditional IRA's that are restricted to stocks, bonds, and mutual funds.
Coachella was defendant's company and existed only on paper. There were no other investors, the company had been set up only a few days prior, and defendant was the sole signer on the bank account into which Zeleznick transferred his money. There was no evidence of any real estate development or entitlement transactions in connection with that account. Zeleznick would not have invested in Coachella had he known these facts. Defendant later admitted there were no land developments and none of Zeleznick's money was used for any real estate related business. Instead defendant transferred Zeleznick's money to his personal accounts and used it to pay his personal expenses. Not all of the money could specifically be traced.
At some point Zeleznick became suspicious and began to ask defendant for documents to show there had actually been an investment. Defendant told Zeleznick not to worry and made excuses, telling Zeleznick he was busy and would deliver the documents as soon as possible. Defendant sent periodic statements for the account that did not alert Zeleznick to any fraud. But Zeleznick never received the promised tenfold increase or his initial investment back.
Before Zeleznick became suspicious of defendant he made a separate agreement with him to start an ice hockey business. He invested an additional $1 million-plus in that business. He never intended any of his $360,000 IRA money to be invested in the ice hockey concern. 2. Barry Klatzker - Elder Theft (Count 3) - $41,000
Klatzker, who was 66, initially approached defendant about setting up a family trust. Defendant and Klatzker then began discussing Klatzker's retirement plans. Defendant told Klatzker he could get a better return than Klatzker was getting on his traditional IRA and persuaded him to transfer those funds, $41,000, to a self-directed IRA. Defendant said he would invest the money in Coachella, which would be a tax-deferred, conservative investment.
Klatzker signed documents defendant provided and transferred the money. Defendant then put the entire amount in his own accounts and used it primarily for his own expenses, including car payments, groceries, and Starbucks. All of Klatzker's money went missing. 3. Scott and Toni Faerber - Grand Theft (Count 5) - $57,000
Scott Faerber and defendant were best friends. Defendant persuaded the Faerbers to transfer money they held in traditional IRA's to a self-directed IRA. Defendant told them he would invest the money in California Home Loans (California), one of his companies, and purchase mortgage notes through another one of his companies, REB Emerald Mortgage (REB). Defendant was the sole shareholder, officer, and director of REB; and REB was later suspended. The Faerbers signed documents in blank that defendant was to complete. The Faerbers believed their investment was in a reputable, safe, and legitimate company.
Mr. Faerber died from cancer during the time he had the transactions with defendant.
Later the company administering the Faerbers' self-directed IRA notified them it had not been able to obtain any documents to substantiate their investment from REB and asked the Faerbers for documents such as a promissory note, assignment, or recorded mortgage. The Faerbers had no such documents.
Mrs. Faerber ultimately learned there was no money in her self-directed IRA. Defendant did not return any part of her investment or any profit from the investment. 4. Stanley Neminsky and Howard Heimstra - Uncharged Crimes
In 2001 Heimstra gave $79,000 to defendant for an investment in mortgage notes from California. The money was sent to REB. Heimstra did not know defendant also owned REB. After a couple of years Heimstra realized every statement he received was the same. He began calling defendant but defendant did not return the calls. Heimstra and a friend who was a financial planner demanded documentation for the investment. Defendant did not respond immediately. When he finally did, he told Heimstra he would "make things right," not to do anything "crazy," and not to "make this [into] a nightmare."
Neminsky invested almost $64,000 in California. He too noticed the statements defendant sent him never changed. Eventually defendant told him the investment went "sideways."
Neminsky also invested in Coachella in 2005. Nothing ever happened with the company. Although his name was on some of the documents, he was not involved in any way with the company. 5. Defendant's Testimony
Defendant testified he did not steal from any of his clients. He explained many of them, including the Faerbers, needed money that was tied up in their traditional IRA's and by transferring the money to the self-directed IRA's he gave them access to their funds without them paying taxes and penalties. Thus, he did not invest the money for them. Defendant stated those clients knew the self-directed IRA's were "simply an entity, basically a vehicle for them to borrow out of their IRA." It was their "obligation . . . to pay it back and refill it up."
Defendant admitted Klatzker, among others, actually intended that defendant invest his money. Defendant "overlooked" and "did not remember" having to do so. Defendant could not explain what happened to Klatzker's money and testified, "with all the things that I had to do, it just went good-bye."
As to Zeleznick, defendant conceded he told him to transfer the funds from his IRA to a self-directed IRA so defendant could invest it in Coachella. Defendant invested it in the ice hockey business instead. He testified he did this with Zeleznick's consent.
Defendant said essentially the same procedure was used for Neminsky as was used for the Faerbers. Neminsky wanted the money out of his IRA's. The self-directed IRA was created. Neminsky signed an investment direction form and the money was funneled through REB back to Neminsky when he needed it.
As to Heimstra, defendant focused on the ice hockey business and neglected his investment, the same as had occurred with Klatzker.
DISCUSSION
1. Introduction
Defendant contends counts 3, 5, and 6 must be reversed because the jury was not properly instructed as to his consent defense. Specifically he claims the instructions given and the omission of another mistakenly informed the jury his good faith belief the victims consented to his use of their funds had to be reasonable. He argues this was error because even an unreasonable but good faith belief is a sufficient defense.
As discussed below none of these claims is sufficient to support a reversal. 2. Standard of Review
We review a claim of instructional error de novo. (People v. Posey (2004) 32 Cal.4th 193, 218.) A jury instruction must be given only when supported by the evidence. An instruction is not required for a defense unless it is supported by substantial evidence. (People v. Oropeza (2007) 151 Cal.App.4th 73, 78.) "The trial court is not required to present theories the jury could not reasonably find to exist." (Ibid.) We must review evidence in the light most favorable to defendant to determine whether it could establish an affirmative defense. (People v. Mentch (2008) 45 Cal.4th 274, 290.)
In considering whether there is prejudice from an erroneous instruction, we determine "whether any rational fact finder could have come to the opposite conclusion." (People Mil (2012) 53 Cal.4th 400, 417-418, italics omitted.) Instructional error does not require reversal unless it is reasonably probable there would have been a more favorable result absent the error. (People v. Cardona (2016) 246 Cal.App.4th 608, 615.) 3. Counts 3 and 5 - Mistake of Fact Defense
Count 3 was the elder theft charge as to Klatzker; count 5 was the embezzlement charge regarding the Faerbers. Defendant argues he made a mistake of fact in believing Klatzker and the Faerbers consented to his use of the funds and the court should have given CALCRIM No. 3406, the mistake of fact instruction, sua sponte.
CALCRIM No. 3406 would have provided something to the effect of: "The defendant is not guilty of embezzlement if he did not have the intent or mental state required to commit the crime because he did not know a fact or mistakenly believed a fact. [¶] If the defendant's conduct would have been lawful under the facts as he believed them to be, he did not commit embezzlement. [¶] If you find that the defendant believed that the Faerbers consented to his use of the funds as he did, he did not have the specific intent or mental state required for embezzlement. [¶] If you have a reasonable doubt about whether the defendant had the specific intent or mental state required for embezzlement, you must find him not guilty of that crime." Defendant argues a similar instruction should have been given for elder theft.
Defendant notes an instruction must be given on a defense theory even without a request and regardless of the credibility of defense evidence. (People v. Cook (2007) 40 Cal.4th 1334, 1362.) But here the issue is not the credibility of defendant's evidence, it is the complete lack of it.
As to count 3, defendant points to no evidence he believed, mistakenly or otherwise, Klatzker consented to him using funds for personal expenses such as Starbucks, movie tickets, or groceries, as the prosecution's evidence shows. Defendant ignores these facts in his argument. Even relying on defendant's version of the facts, he testified he forgot about Klatzker's money and did not know what happened to it. He does not claim Klatzker consented to having his money just go "good-bye." Thus, no mistake instruction of fact was required.
Defendant's reliance on his acquittal on a separate count of grand theft to show a close call as to his credibility is not well taken. The grand theft count was an alternative to count 3 and the court instructed the jury it could convict on one or the other.
Further, we see no merit in, and no law is cited in support of, defendant's argument the order of instructions somehow informed the jury it was not to rely on any mistake theory.
And defendant's brief mention of his lack of knowledge Klatzker was over age 65 has nothing to do with whether Klatzker consented to defendant failing to pay attention to his money.
Neither was a mistake of fact instruction required for count 5 regarding the Faerbers. Defendant's evidence was that he took the money from the Faerbers' IRA's and gave it to Mr. Faerber to free up the money for the Faerbers' use. Defendant claims the Faerbers wanted to withdraw money from their traditional IRA's and authorized defendant to transfer it to their non-traditional IRA's and then hand it over to the Faerbers. He claims he did not use the money for himself.
Defendant's testimony he had not fraudulently used or converted the money illustrates why a mistake instruction was not required. His theory is: I did not steal. "[I] never had any (even temporary) intent to deprive them of their money, and in fact . . . did not [do] so." I gave the Faerbers their money. This goes to an element of the crime—conversion of the property with the intent to keep it for himself—not a consent defense, i.e., his mistaken belief the Faerbers authorized or consented to his use of the money for his own benefit.
The other facts that defendant highlights, including whether Mr. Faerber forged Mrs. Faerber's signature on some documents, or whether defendant did, and whether they were in agreement as to their investment plan or whether she even knew what he was doing, have no bearing on the ultimate question of defendant's purported mistake.
Defendant conflated an element of the charged offense, i.e., his fraudulent use or conversion of the money to own benefit, with an affirmative defense, his mistaken belief the Faerbers had consented to or authorized his use of their money. If the jury had believed him and rendered a not guilty verdict, it would not have been because of consent but because he did not embezzle the money to begin with. By rendering a guilty verdict the jury necessarily rejected his testimony. 4. Count 6 - Mistake of Fact Defense
Count 6 concerns Zeleznicks' $360,000. According to defendant, although Zeleznick told him to transfer those funds to a self-directed IRA for investment in Coachella, Zeleznick also consented to defendant's investment of that sum in the start-up ice hockey business. On that evidence, had he requested it defendant was entitled to a mistake of fact instruction, like CALCRIM No. 3406.
The prosecution argues defendant forfeited his right to this instruction by failing to request it. Defendant argues if a request had to be made, defense counsel's failure to do so was ineffective assistance of counsel. The prosecution contends there was no ineffective assistance of counsel because defendant was not prejudiced by the failure to request the instruction. We decline to address these arguments and instead decide the issue on the merits.
In the context of count 6, CALCRIM No. 3406 would have provided that if the jury found defendant had believed Zeleznick consented to use the IRA funds for the ice hockey venture instead of Coachella, defendant lacked the intent element of the grand theft charge.
Assuming the CALCRIM No. 3406 instruction should have been given, there is no reasonable likelihood the result of the trial would have been different. The embezzlement instruction told the jury defendant's good faith belief he was authorized to use the funds was a defense. The instruction did not state the belief had to be reasonable. Thus CALCRIM No. 3406 was merely duplicative and failure to give it does not require reversal. (People v. Russell (2006) 144 Cal.App.4th 1415, 1431 disapproved on another ground in People v. Covarrubias (2016) 1 Cal.5th 838, 824 [failure to give mistake of fact instruction not reversible unless reasonably likely giving instruction would have produced more favorable result for defendant].)
Defendant also argues other instructional errors to bolster his claim that failure to give the mistake of fact instruction constitutes reversible error. His arguments are not persuasive.
He contends the version of the embezzlement instruction given (CALCRIM No. 1806) was incorrect, claiming parts of it were taken from CALCRIM No. 1863, a claim of right instruction. He maintains claim of right is a different defense with different, more difficult, requirements. This argument is without merit.
The CALCRIM No. 1806 given stated the elements of embezzlement as follows: "1. An owner or the owner's agent entrusted his/her property to the defendant; [¶] 2. The owner or owner's agent did so because he/she trusted the defendant; [¶] 3. The defendant fraudulently converted/used that property for his own benefit; [¶] AND [¶] 4. When the defendant converted/used the property, he intended to deprive the owner of its use."
The instruction continued, "A good faith belief in acting with authorization to use the property is a defense. [¶] In deciding whether the defendant believed that he had a right to the property and whether he held that belief in good faith, consider all the facts known to him at the time he obtained the property, along with all the other evidence in the case. The defendant may hold a belief in good faith even if the belief is mistaken or unreasonable. But if the defendant was aware of facts that made that belief completely unreasonable, you may conclude that the belief was not held in good faith."
The court also instructed the jury that as to all counts, defendant had to have acted with the necessary specific intent or mental state; and if it reasonably concluded circumstantial evidence did not show defendant had the required intent, it must decide the circumstantial evidence did not prove intent.
Contrary to defendant's claim, the CALCRIM No. 1806 given, including some optional bracketed provisions, was the standard instruction for a charge of embezzlement. Those provisions, in part, instructed the jury to consider whether defendant had a good faith belief he was authorized to use the funds. This is the essence of defendant's argument.
In addition, defendant's interpretation of CALCRIM No. 1806 is flawed. He attacks the language that directs the jury to decide whether the defendant "believed that he had a right to the property." He contends this goes to a claim of right defense where the defendant believes he owns the property in question. Defendant specifically denies he relied on a claim of right defense.
But the language of CALCRIM No. 1806 does not support this interpretation. The sentence preceding the challenged language plainly deals with consent. It explains that a good faith belief the defendant is authorized to use the embezzled property is a defense, but does not mention a claim of right. (CALCRIM No. 1806.) The first sentence of the next paragraph, including the challenged language, goes on to explain what a good faith belief entails. This relates back to the statement regarding a good faith belief defendant is authorized to use the funds.
CALCRIM No. 1806 use notes do not discuss a claim of right theory. --------
Moreover, defendant's construction of the phrase "a right to the property" is overly technical, not the ordinary and usual understanding of the language. Defendant's construction conflicts with the instruction given that unless words or phrases are specifically defined they are to be given their everyday, ordinary meaning. (CALCRIM No. 200.)
We cannot presume the jurors would have understood claim of right meant claim of ownership. Defendant himself argues the difference between these two defenses is nuanced and subtle. Given the context of the contested phrase and all the evidence and argument dealing with consent, we cannot not agree the instruction was ambiguous or misled or instructed the jury to believe the instruction dealt with a claim of right. (People v. Nelson (2016) 1 Cal.5th 513, 544 [no "'"reasonable likelihood that the jury misunderstood and misapplied the instruction"'" ].)
Further, the court told the jurors to consider the instructions as a whole, and we must presume they did. (People v. Prince (2007) 40 Cal.4th 1179, 1295.) This precludes the jury examining the phrase "a right to the property" segregated from the remainder of the instruction. Likewise, in our review of claimed instructional error, we must consider the instructions as a whole, not in isolation. (People v. Nelson, supra, 1 Cal.5th at p. 544.) As a whole, nothing instructs the jury to consider a claim of right defense. 5. Uncharged Crimes Evidence
Defendant also challenges the uncharged crimes evidence instruction given as to Heimstra and Neminsky. (CALCRIM No. 375.) The jury was instructed it could consider the uncharged crimes evidence only if it first found the prosecution had proved those crimes by a preponderance of the evidence. If so, the jury was allowed but not required to consider the uncharged crimes evidence to decide whether defendant acted with an intent to defraud; whether the alleged acts were not a result of an accident or mistake; whether defendant had a scheme or plan to commit those alleged acts; or whether defendant reasonably and in good faith believed the victims of the uncharged crimes consented. The uncharged crimes instruction additionally stated this evidence alone was not sufficient to prove defendant had committed the crimes but was only one piece of evidence to consider.
Defendant argues, correctly, that his good faith belief did not have to be reasonable. (See People v. Givan (2015) 233 Cal.App.4th 335, 343 [for specific intent crime, mistake of fact defense requires only actual mistaken belief].)
But this is not a cause for reversal. The instruction specifically applied only to the uncharged crimes. Again, we assume the jury followed the instructions and thus we cannot presume it applied the reasonableness requirement in the uncharged crimes instruction to the charged crimes. And defendant acknowledges the embezzlement instruction did not contain any language requiring reasonableness.
Moreover, there was no evidence of defendant's good faith belief in consent as to Heimstra or Neminsky. Just as with the Faerbers and Klatzker, defendant testified he paid no attention to Heimstra's investment and he gave Neminsky's funds directly to him.
In sum, after reviewing the evidence in the light most favorable to defendant, there is no basis to reverse the judgment based on any of the alleged instructional errors. There were no facts supporting a mistake of fact instruction as to counts 3 and 5. As to count 6, the mistake of fact language is contained in the embezzlement instruction. The standard embezzlement instruction was also correct as given. Although the uncharged crimes evidence instruction should not have included a reasonableness requirement, it was specifically limited to the uncharged crimes and we presume the jury followed that limitation.
DISPOSITION
The judgment is affirmed.
THOMPSON, J. WE CONCUR: BEDSWORTH, ACTING P. J. ARONSON, J.