Opinion
H022069
Filed August 28, 2002
Appeal from the Superior Court of Santa Clara County, No. C9925460.
After 11 days of trial testimony, a jury convicted defendant Tina Subana of 76 crimes in connection with her marketing of the opportunity to invest in foreign currency trading. The jury found that defendant committed five kinds of crimes against 11 married couples and nine single individuals.
Defendant was convicted of 20 counts of making untrue statements and omitting material facts in selling a security (Corp. Code, §§ 25401, 25540) and 20 more counts of offering and selling securities not qualified with California's Commissioner of Corporations (§§ 25110, 25540) to the following people: Florentina and Apolinario Galzote (74, 75), Isidro Bagon (72, 73), Edward and Luz Gardner (63, 64), Reggie and Lorna Justo (60, 61), Douglas Lien (69, 70), Alicia Borje (56, 57), Armelina and Isidoro Julian (52, 53), Cristeta and Vicente Bobila (66, 67), Ronald and Ida Gatdula (45, 46), Ricardo and Victorina Gatdula (33, 34), Thomas Muolic (49, 50), Flor Balaoro (41, 42), Lolita and Reynaldo Andaya (24, 25), Virgilio and Angelita Garces (29, 30), Timothy Overacker (37, 38), Juliana San Antonio (15, 16), Dionisia and Felixberto Vigilla (20, 21), Flordeliza Salud (10, 11), Josefa and Fortunata Adalim (3, 4), and Willie Funtanilla (6, 7).
Unspecified section references are to the Corporations Code.
We list the victims in chronological order of their investments and in parentheses include first the factual omission count and second the unqualified security count as to each set of victims.
Defendant was convicted of 12 counts of using a device, scheme or artifice to defraud some of these investors in the sale of a security (§ 25541): the Justos (59), Borje (55), Ronald and Ida Gatdula (44), Ricardo and Victorina Gatdula (32), Muolic (48), Balaoro (40), the Andayas (23), the Garceses (28), San Antonio (14), the Vigillas (19), Salud (9), and the Adalims (2).
Defendant was convicted of five counts of grand theft (Pen. Code, §§ 474- 487) from her latest investors: San Antonio (13), the Vigillas (18), Salud (8), the Adalims (1), and Funtanilla (5).
Defendant was convicted of 19 counts of issuing checks on insufficient funds (Pen. Code, § 476a) in the following amounts to the following people: $5,210 to the Galzotes (76), $2,600 to the Gardners (65), $2,400 to the Justos (62), $750 to Borje (58), $2,000 to the Julians (54), $1,800 to Ronald and Ida Gatdula (47), $20,000 to Ricardo and Victorina Gatdula (35), another $1,604.16 to Ricardo and Victorina Gatdula (36), $375 to Muolic (51), $375 to Balaoro (43), $875 to the Andayas (26), another $1,750 to the Andayas (27), $396.66 to the Garceses (31), $450 to Overacker (39), $5,000 to San Antonio (17), $720 to the Vigillas (22), and $750 to Salud (12).
The jury also found that all the crimes except the sale of unqualified securities involved the taking of over $150,000 (Pen. Code, § 12022.6), indeed the taking of over $500,000 by a pattern of related conduct including fraud (Pen. Code, § 186.11).
The trial court sentenced defendant to prison for seven years as follows: the midterm term of three years for count 3, making false statements to the Adalims in selling a security (§ 25401), enhanced by two years for the pattern of fraudulent conduct resulting in taking over $500,000, and by two more years for taking over $150,000. The court found that the grand theft from the Adalims (count 1) and the other securities violations pertaining to the Adalims (counts 2, 4) were incidental to the violation of section 25401 and stayed the sentences on those counts pursuant to Penal Code section 654. The court imposed concurrent three-year sentences on the other violations of section 25401 (counts 6, 10, 15, 20, 24, 29, 33, 37, 41, 45, 49, 52, 56, 60, 63, 66, 69, 72, 74) and concurrent two-year sentences on the insufficient funds counts (12, 17, 22, 26, 27, 31, 35, 36, 39, 43, 47, 51, 54, 58, 62, 65, 76.). The court stayed all the related counts pending completion of the concurrent sentences.
The court ordered victim restitution as follows: $15,000 to the Adalims, $60,000 to the Andayas, $11,000 to Bagon, $5,000 to Balaoro, $50,000 to the Bobilas, $15,000 to Borje, $10,000 to Funtanilla, $67,000.91 to the Galzotes, $20,000 to the Garceses, $60,000 to the Gardners, $25,000 to Ronald and Ida Gatdula, $10,000 to Ricardo and Victorina Gatdula, $50,000 to the Julians, $60,000 to the Justos, $25,000 to Lien, $5,000 to Muolic, $5,000 to Overacker, $10,000 to Salud, $5,000 to San Antonio, $30,000 to the Vigillas. The court also imposed a $10,000 restitution fine.
On appeal defendant contends that the trial court erred in excluding evidence and instructing the jury on the basis that section 25110 does not require guilty knowledge. Also, the court erred in not giving a sua sponte instruction limiting the evidence of uncharged crimes. Defense counsel at trial was incompetent for not objecting to evidence of uncharged crimes. For the reasons stated below, we will affirm the judgment.
TRIAL EVIDENCE
From about July of 1995 through October of 1996, defendant, a licensed real estate agent, offered people an opportunity to invest in spot foreign currency trading. Defendant touted Dolly Juntilla as an experienced trader who never lost money with the International Financial Trading Network (IFTN). Juntilla made presentations at defendant's San Jose office. Defendant sometimes described her own company, Jenovar Trust, as succeeding in the trading business and never losing money. Defendant encouraged investors to bring in other investors, offering to pay them for doing so. Ronald Gatdula was one who actually received payment for getting his parents, Ronald and Ida Gatdula, and his uncle, Thomas Muolic, to invest.
Each investor who testified at trial was motivated by the rate of return guaranteed by defendant in a written investment contract. Defendant promised different investors different interest rates. Florentina Galzote was the earliest investor, first investing $33,654.91 on August 1, 1995. Defendant initially promised her 10 percent interest per month and return of her principal on two weeks' written notice. Galzote invested $14,346.00 more on August 11, 1995. Defendant lowered the interest rate to 8 percent. Galzote eventually invested another $19,000.
Isidro Bagon was the next investor. He gave defendant $5,000 on October 5, 1995. She promised him 5 percent interest per month and return of his principal on request. He eventually invested a total of $16,000.
Josefa and Fortunato Adalim were among the last investors, giving $15,000 defendant on October 26, 1996. Defendant promised them 3 percent interest per month with payments every three months and return of their principal on 15 days' written notice.
William Funtanilla invested $10,000 with defendant on October 31, 1996. She promised him 3 percent monthly interest and return of his principal on 15 days' written notice.
Other investors testified that they invested the following amounts with defendant, some investing more than once: $60,000 by Edward Gardner, $60,000 by Lorna and Reggie Justo, $25,000 by Doug Lien, $15,000 by Alicia Borje, $50,000 by Armelina Julian, $50,000 by Cristeta Bobila, $25,000 by Ronald Gatdula, $50,000 by Ricardo Gatdula, $5,000 by Thomas Muolic $5,000 by Flor Balaoro, $60,000 by Lolita Andaya, $5,000 by Timony Overacker, $5,000 by Juliana San Antonio, $30,000 by Dionisia and Felixberto Vigilla, and $10,000 by Flordeliza Salud.
Armelina Julian invested $20,000 on March 17, 1996, and more later. She testified that defendant told her before she invested that defendant had $3 million on deposit with IFTN. Defendant's oldest son was the youngest millionaire. Her husband had a big logging concession in Indonesia. Both of them would help in a financial crisis.
Most investors received regular monthly interest payments until July 1996, when a number of checks bounced. Some July checks were redeposited and made good. In September 1996 defendant sent a number of investors a letter explaining that market performance had been poor. All November 1996 interest payments were returned for insufficient funds. The Jenovar bank account was closed on November 27, 1996 due to excessive overdrafts.
Most investors lost their principal. Defendant repaid $40,000 to Ricardo Gatdula. There was evidence that Bagon was repaid $5,000.
When the following people were considering investing, defendant offered them security or collateral in the form of a straight promissory note sometimes purportedly secured by a deed of trust on property defendant owned in the Los Angeles area: Lorna and Reggie Justo, Alicia Borje, Ronald Gatdula, Ricardo Gatdula, Thomas Muolic, Flor Balaoro, Lolita Andaya, Virgilio Garces, Juliana San Antonio, Dionisia and Felixberto Vigilla, Flordeliza Salud, and Josefa and Fortunato Adalim.
In fact, defendant gave a number of investors the same deed of trust. It did not establish that she owned the property. She was a lender receiving payments as the trust deed beneficiary. According to a real estate expert, giving someone a copy of your deed of trust offers them no security unless you endorse it over to them and give them an assignment for collateral.
Defendant testified that she also invested $90,000 with Dolly Juntilla in foreign currency trading in June 1995. The agreement she signed warned her she might lose all her money. Juntilla promised defendant 20 percent interest a month, which was part of Juntilla's commission for doing volume trading. Juntilla promised interest regardless of whether she made a profit buying and selling currency.
According to defendant, other people heard of her attractive investment through their friends and wanted to pool their money with her. Some of them asked her for referral fees.
Segunda Macaraeg convinced defendant to let Flor Galzote invest with her. Macaraeg suggested documenting the transaction with a promissory note and securing it with a deed of trust. According to defendant, she gave people a deed of trust as evidence that she had a source of income that she would share with them in case their investment did not work out. Because many of the investors knew each other, they asked for the same collateral others had received from defendant.
Defendant used to send new investments from her Jenovar account to Juntilla's IFTN account. Juntilla sent interest payments from IFTN to Jenovar. According to defendant, near the end of 1995, Juntilla told defendant that instead of mutual transfers, it would be simpler for accounting if defendant simply paid interest from new investments and Juntilla would reflect the appropriate credits on her account. Defendant began doing this in May 1996.
In July 1996 the IFTN account lost money. Defendant did not mention these July losses to those who invested after July, including San Antonio, the Vigillas, Salud, the Adalims, and Funtilla.
Defendant did not qualify the investment contracts as securities with California's Department of Corporations. She knew nothing about securities law.
Ranjit Singh testified as follows in rebuttal. Defendant came to her house in August or September 1995. Juntilla came with her. Defendant promised her 20 percent monthly interest. Singh ultimately invested $150,000 and received a promissory note from defendant.
1. CORPORATIONS CODE SECTION 25110
On appeal defendant contends that a criminal violation of section 25110 requires an element of knowledge, so the trial court erred by precluding evidence on this issue and in its instructions to the jury.
Section 25110 states in part: "It is unlawful for any person to offer or sell in this state any security in an issuer transaction (other than in a transaction subject to Section 25120), whether or not by or through underwriters, unless such sale has been qualified under Section 25111, 25112 or 25113 (and no order under Section 25140 or subdivision (a) of Section 25143 is in effect with respect to such qualification) or unless such security or transaction is exempted or not subject to qualification under Chapter 1 (commencing with Section 25100) of this part." Section 25540 provides criminal penalties for violating section 25110 and other sections of the Corporations Code, including 25401.
Section 25540 states: "(a) Except as provided for in subdivision (b), any person who willfully violates any provision of this division, or who willfully violates any rule or order under this division, shall upon conviction be fined not more than one million dollars ($1,000,000), or imprisoned in the state prison, or in a county jail for not more than one year, or be punished by both such fine and imprisonment; but no person may be imprisoned for the violation of any rule or order if he or she proves that he or she had no knowledge of the rule or order.
"(b) Any person who willfully violates Section 25400, 25401, or 25402, or who willfully violates any rule or order under this division adopted pursuant to those provisions, shall upon conviction be fined not more than ten million dollars ($10,000,000), or imprisoned in the state prison for two, three, or five years, or be punished by both such fine and imprisonment."
During trial the court sustained the prosecutor's objections when defense counsel asked defendant if she knew that the investment agreements were regulated by the Department of Corporations and that it was a crime to fail to qualify them. The court also sustained the prosecutor's objections when defense counsel asked defendant why she neither qualified any investment contract with the Department of Corporations nor told any investor the contract was not qualified. In the jury's absence the trial court rejected defendant's argument that a violation of section 25110, like 25401, requires "guilty knowledge," "something more than just the willfulness to do the act." The trial court refused defendant's request to instruct the jury that a violation of section 25110 requires "some kind of guilty knowledge," since the crime involves "fraud or deception."
The jury was instructed in part as follows. To violate section 25110, a defendant has willfully offered or sold a security that was not qualified with the Commissioner of Corporations of California. To violate section 25401, a defendant, among other things, has made a statement when she knew or should have known it was false or omitted information she knew or should have known was material. To violate section 25541, a defendant had to act "with the specific intent to defraud another person." Ignorance of the requirements of the securities laws is no defense.
Defendant's argument is essentially that a criminal violation of section 25110 requires an element of guilty knowledge, just like section 25401 does, as construed by People v. Simon (1995) 9 Cal.4th 493 ( Simon). Simon recognized that section 25401 "itself does not expressly require knowledge of the false or misleading nature of a statement or omission to disclose, made in the sale of a security, as an element of the unlawful act it defines." ( Simon, supra, 9 Cal.4th at p. 507.) Several considerations supported the court's conclusion "that knowledge of the falsity or misleading nature of a statement or of the materiality of an omission, or criminal negligence in failing to investigate and discover them, are elements of the criminal offense described in section 25401." ( Id. at p. 522.)
First, section 25401 is enforceable by civil action under section 25501, but damages are recoverable " only if the seller was aware of or was negligent in failing to be aware that his representations were misleading." ( Simon, supra, 9 Cal.4th at p. 516.) It would be unreasonable to conclude that the Legislature "intended to dispense with any element of knowledge or scienter" when authorizing the greater sanctions of criminal punishment. ( Ibid.)
Second, most crimes involve mens rea and it is usually inferred when not expressly provided for. There are some "regulatory or malum prohibitum crimes" that do not involve criminal intent or negligence, but usually "the penalties are relatively light." ( Simon, supra, 9 Cal.4th at p. 521.) The penalty for a criminal violation of section 25401 is three years' imprisonment or a fine of as much as $10 million. ( Id. at p. 522.)
Third, the drafters of section 25401 indicated that criminal sanctions only applied to intentional misstatements. ( Simon, supra, 9 Cal.4th at pp. 513-514, 522.) Fourth, this construction is consistent with the federal law on which section 25401 was patterned. ( Id. at pp. 509-513, 522.)
The court also stated: "The legislative intent underlying section 25540 does not itself answer the question we face here because the penalties that section prescribes apply to criminal violations of any provision of the Corporate Securities Law of 1968, including violations of rules or orders promulgated under that law or of which the violator had knowledge. We hesitate to assume that the Legislature intended that scienter be an element of every regulatory aspect of the Corporate Securities Law of 1968. . . ." ( Simon, supra, 9 Cal.4th 493, 509, fn. omitted.)
Simon did not consider whether section 25110 defines a strict liability offense, even though the defendant in that case was also convicted of violating that statute. Instead, the court found that the defendant was prejudiced by the trial court's failure to instruct the jury that it was the defendant's burden only to raise a reasonable doubt whether an exemption to section 25110 applied. ( Id. at pp. 502, 506.)
People v. Corey (1995) 35 Cal.App.4th 717 ( Corey) confronted this issue left open by Simon, whether section 25110 is a strict liability offense. Corey noted: "In footnote 13, the court made the following plea to the Legislature: 'We encourage the Legislature to clarify which of the criminal violations of the Corporate Securities Law of 1968 that are punishable under either subdivision (a) [including section 25110] or (b) of section 25540 are strict liability offenses and what mental states are elements of those which require scienter.' ( People v. Simon, supra, 9 Cal.4th at pp. 509-510.)" ( Id. at p. 727.)
Distinguishing the reasoning of Simon, Corey stated, "In contrast to section 25501, section 25503, . . . the statute providing for recovery of damages in a civil action for violation of section 25110, does not contain a scienter element. Also, the magnitude of potential criminal penalties for violation of section 25110 is much less than for violation of section 25401; up to $1 million in fines and up to one year imprisonment. . . . Therefore, the rationale applied in Simon does not support a similar outcome with regard to section 25110.
"Courts have long considered a violation of section 25110 to be a strict liability offense which has as its purpose the protection of the public. '[T]he main objective of the securities law is to protect the public against the imposition of insubstantial, unlawful and fraudulent stock and investment schemes [citations], and to promote full disclosure of all information that is necessary to make informed and intelligent investment decisions [citations].' ( People v. Park (1978) 87 Cal.App.3d 550, 565.)" ( Corey, supra, 35 Cal.App.4th at pp. 728-729, fns. omitted.) Also, the drafters of section 25510 described it as a strict liability offense. ( Id. at p. 729.) Corey concluded "that section 25110 does not include scienter as an element which must be proved to establish that a person who offers or sells an unregistered and unexempt security is in violation of the statute." ( Corey, supra, 35 Cal.App.4th at p. 729.)
Defendant contends that Corey "fails adequately to address the concerns disfavoring strict liability." We consider Corey to have appropriately analyzed and distinguished Simon.
We do not believe People v. Fine (1997) 52 Cal.App.4th 1258 ( Fine) compels a different conclusion. The issue in that case was whether the statute of limitations for an offense under section 25110 was tolled under Penal Code section 803. As Fine pointed out, section 803, subdivision (c)(3) specifically extends tolling to any violation of section 25540, which includes the "strict liability offense" of section 21550. ( Id. at p. 1265.) This specific provision was controlling over the more general statutory provision that tolling only applies to felony offenses "'a material element of which is fraud or breach of fiduciary duty.'" ( Id. at p. 1264.) The court also stated: "While a violation of that section [25110] can be proven without evidence of a specific intent or motive to defraud, it nonetheless involves a deception upon the buyer by the unqualified securities seller. Such a seller is unlawfully obtaining funds from an investor who is entitled to assume that the sale of the securities is legally sanctioned." ( Id. at p. 1265.)
This Fine characterization of the statute as involving deception does not undermine its recognition that section 25110 is a strict liability offense.
People v. Coria (1999) 21 Cal.4th 846, on which defendant also relies, has nothing to do with securities laws. That decision concluded "the Legislature did not intend to create a strict liability offense of manufacturing methamphetamine." ( Id. at p. 871.)
Defendant offers no persuasive reason for us to disagree with Corey. We conclude that the trial court did not err either in its instructions or its exclusion of evidence regarding defendant's awareness that securities had to be qualified by the Corporation's Commissioner. Since there was no error, there was no federal constitutional error.
2. UNCHARGED OFFENSES
On appeal defendant contends that the trial court erred in failing to give a sua sponte limiting instruction regarding evidence of uncharged offenses and that his trial counsel inadequately objected to this evidence.
Prior to jury selection the prosecutor expressed an interest in proving an uncharged offense involving Ranjit Singh to establish total takings of over $500,000 as required by the "aggravated white collar crime enhancement" described in Penal Code section 186.11. Defense counsel agreed that an uncharged offense could be so employed, but requested an Evidence Code section 402 hearing to determine whether the uncharged offense was truly related to the charged offenses. The prosecutor offered to gather more evidence before putting on a witness for this purpose. The court stated, "If the witness does testify, we can talk about an admonition that's appropriate to give the jury at that time." Ultimately, Ranjit Singh testified in rebuttal. There was no admonition given or requested during her testimony.
Penal Code section 186.11 states in part: "(a)(1) Any person who commits two or more related felonies, a material element of which is fraud or embezzlement, which involve a pattern of related felony conduct, and the pattern of related felony conduct involves the taking of more than one hundred thousand dollars ($100,000), shall be punished, upon conviction of two or more felonies in a single criminal proceeding, in addition and consecutive to the punishment prescribed for the felony offenses of which he or she has been convicted, by an additional term of imprisonment in the state prison as specified in paragraph (2) or (3). This enhancement shall be known as the aggravated white collar crime enhancement. The aggravated white collar crime enhancement shall only be imposed once in a single criminal proceeding. For purposes of this section, 'pattern of related felony conduct' means engaging in at least two felonies that have the same or similar purpose, result, principals, victims, or methods of commission, or are otherwise interrelated by distinguishing characteristics, and that are not isolated events. For purposes of this section, 'two or more related felonies' means felonies committed against two or more separate victims, or against the same victim on two or more separate occasions.
"(2) If the pattern of related felony conduct involves the taking of more than five hundred thousand dollars ($500,000), the additional term of punishment shall be two, three, or five years in the state prison."
At the express request of both counsel, the trial court gave no limiting instruction like CALJIC No. 2.50 regarding the relevance of evidence of uncharged offenses. The jury was instructed as follows. Fifty-six enumerated counts, all except for those pertaining to the sale of unqualified securities, were alleged to be "related, that a material element of the crimes is fraud, that the crimes involve a pattern of related felony conduct and that the pattern of the related felony conduct by the Defendant involves the taking of more than $500,000 in violation of Penal Code Section 186.11."
Defendant argues at length that "[t]he face of the statute makes clear that it contemplates that only the charged conduct is to be used to establish the required pattern." Defendant complains that the trial court did not identify and describe the felonies alleged to constitute the pattern of conduct. The Attorney General responds that the enhancement "does not require that the taking of the requisite amount be from only these identified victims."
We need not decide on the correct construction of the statute. As just explained, the jury was instructed in the terms desired by defendant. The jury was instructed to consider only the enumerated charged offenses in determining the aggravated white collar crime enhancement. This instruction essentially served as a limiting instruction making Singh's testimony irrelevant to this enhancement, even though no other limiting instruction was given regarding uncharged offenses. Under these circumstances, we conclude that defendant was not prejudiced regarding the enhancement by trial counsel's failure to request an instruction like CALJIC No. 2.50 limiting the relevance of Singh's testimony.
Defendant recognizes that the general rule is that trial courts are not required to give limiting instructions regarding uncharged crimes sua sponte. ( People v. Collie (1981) 30 Cal.3d 43, 63; People v. Hawkins (1995) 10 Cal.4th 920, 942.) We see no extraordinary circumstances in this case requiring an exception to this rule.
We disagree with defendant that what Singh described was "conduct far more prejudicial than that alleged in the charged counts." Defendant's opening brief contends that Singh alone testified to repeated solicitations by defendant. In fact, Alicia Borje testified that defendant sent her a flyer in the mail and called her several times before coming to her house. Defendant called Borje several more times before Borje made a second investment. Defendant's reply brief acknowledges that other investors described her "aggressive tactics."
Defendant contends that Singh was the most sympathetic victim, as she was recently widowed and used money intended for her children's future. Cristeta Bobila testified that defendant convinced her to withdraw money from her retirement account to invest, falsely promising to pay the withdrawal penalty. In these respects, Singh's testimony about uncharged offenses was essentially cumulative of testimony by other victims of the charged offenses. Though it was partly cumulative, Singh's testimony was also probative of defendant's intent and common plan. (Evid. Code, § 1101.) Considering that over 20 victims of the charged offenses testified to similar conduct by defendant, it is easy for us to conclude that there is no reasonability probability that Singh's testimony affected the outcome of the trial. In short, defendant was not prejudiced by its admission. (Evid. Code, § 353.)
Defendant also suggests that his counsel should have objected when defendant explained during cross-examination that she had written checks on the Jenovar account "to pay for clerical help, to buy a gift for Juntilla and to pay rent" without disclosing this to the investors. We do not regard this conduct as uncharged offenses or this evidence as objectionable. What defendant did with the investments was most relevant to the charges in this case. Defense counsel cannot be faulted for failing to object to this area of cross-examination.
DISPOSITION
The judgment is affirmed.
We Concur:
MIHARA, J.
RUSHING, J.