People v. Avignone
| Decision Date | 30 September 2021 |
| Docket Number | D075948 |
| Court | California Court of Appeals Court of Appeals |
| Parties | THE PEOPLE, Plaintiff and Respondent, v. WILLIAM ALAN AVIGNONE et al., Defendants and Appellants. |
NOT TO BE PUBLISHED
Order Filed Date 10/20/21
APPEAL from a judgment of the Superior Court of San Diego County No. SCD250640, Melinda J. Lasater, Judge.
John L. Staley, under appointment by the Court of Appeal, for Defendant and Appellant William Alan Avignone.
Christine M. Aros, under appointment by the Court of Appeal for Defendant and Appellant Susan Joy Avignone.
Xavier Becerra, Attorney General, Lance E. Winters, Chief Assistant Attorney General, Julie L. Garland, Assistant Attorney General, A. Natasha Cortina and Annie Featherman Fraser Deputy Attorneys General, for Plaintiff and Respondent.
THE COURT: It is ordered that the opinion filed herein on September 30, 2021, be modified as follows:
1. On page 2, in the second line of the first full paragraph the space after the word "Georgia" is removed.
2. On page 62, the first sentence after the heading "The Existence of Two Tests to Determine If an Instrument Is a Security Did Not Violate Susan's Equal Protection Rights" is removed and replaced with:
Susan, with William joining, argues that because the existence of a security is determined using two tests-the risk capital and Howey tests-her equal protection rights were violated.
There is no change in judgment.
The motion to file a late petition for rehearing is denied as moot.
William and Susan Avignone solicited funds for a real estate investment scheme in Georgia, promising their inexperienced, and naive investors regular interest payments at high rates of interest and the return of all principal plus large profits. The Avignones told their victims the investment was guaranteed, safe and that their principal was not at risk. Several investors were also promised first lien positions on the properties. Through their company, SABA Investments, William and Susan did purchase several homes in Georgia. However, most of the money they were entrusted with was used for personal expenses. In the end, the pair spent most of the money, filed for bankruptcy, and closed their business without repaying hundreds of thousands of dollars lent to them by the victims.
An initial guilty plea by both defendants was withdrawn after this court determined their sentences were unlawful. Eventually the pair was brought to trial and Susan and William were each convicted of six counts of grand theft and nine counts of securities fraud. The jury also found true white collar crime enhancements. William was sentenced to 13 years in state prison and Susan was sentenced to seven years in state prison. Both now appeal their judgments of conviction on various grounds.
William challenges his conviction on multiple bases and Susan joins each of these arguments. First, William asserts the six grand theft convictions should be consolidated into one conviction as a matter of law in accordance with People v. Bailey (1961) 55 Cal.2d 514 (Bailey). Alternatively, William argues the court's failure to give a jury instruction based on Bailey was error. William next argues the trial court erred by failing to give a unanimity instruction requiring the jury to agree that the basis for each theft conviction was either false pretenses or embezzlement. William also asserts that the court prejudicially erred by giving a conspiracy instruction, which allowed the jury to improperly convict based on conspiracy to commit a negligent act, a legal impossibility. Similarly, William argues that the instructions on the excessive takings enhancement under Penal Code section 186.11 constituted error because they allowed the computation of losses to include securities fraud and theft by false pretenses. William also challenges the trial court's jurisdiction over the crimes related to victims who resided in Arizona. Finally, William argues there was insufficient evidence to support the jury's findings that the promissory notes used to complete the fraud were securities.
Susan also challenges the sufficiency of the evidence to support her securities fraud convictions, arguing there was no evidence she personally made, aided or abetted, or conspired to make any false statement or omission of material fact. She also challenges the sufficiency of the evidence to support the jury's finding that the false statement and omissions were material. Finally, Susan asserts her equal protection rights were violated because California law allows two alternative tests to determine whether a transaction is a security.
As we shall explain, we reject the Avignones' arguments and affirm the judgments of conviction.
A. The Prosecution's Case
William and Susan were financial advisors specializing in variable life insurance products when they opened their own firm, SABA Financial, in 2006. William stated he did not like the way his prior employer, World Financial Group, did business, so he decided to strike out on his own. In 2009, William was introduced to Mark Evans. William attended a seminar put on by Evans, who impressed William with his expertise in a method of real estate investment using private investments, backed by promissory notes, to purchase properties to rent to tenants eligible for assistance from the federal housing voucher program known as Section 8. William partnered with another financial advisor he met at the seminar to purchase Evans's business model for $18, 000.
Using Evans's method, William planned to obtain cash from his clients and in exchange write them promissory notes. William and Susan then planned to purchase "undervalued" properties in Atlanta, Georgia (using Evans's contacts) to refurbish and rent to Section 8 tenants. The scheme included promises to the investors of first lien positions on properties, giving clients peace of mind that their investments were secure. William testified that he believed he could give himself and his investors a great return using Evans's plan. William and Susan quickly began soliciting funds for their new scheme, looking to their unsophisticated life insurance clients.
William and Susan's first investors in the real estate scheme were existing clients Eric and Kristen Van De Ven, who resided in Topock, Arizona. In 2006, the Van De Vens were introduced to the Avignones by Susan's brother, who was the pastor at the church the Van De Vens attended. Eric Van De Ven is a drywall contractor who dropped out of school in tenth grade. After their initial meetings, the Van De Vens were persuaded by William and Susan to complete a cash-out refinance of their home. The Van De Vens' monthly mortgage payments were just $355 per month, and Eric expressed concern to Susan that he could not afford a higher payment. Kristen also did not think refinancing their home was a good idea.
Susan told the Van De Vens that Eric could use the proceeds of the refinance to start his own business, which would increase his income and support the higher monthly mortgage payments. Eric was eventually persuaded and with Susan completing the paperwork, the couple took $125, 000 in equity from their home. Their mortgage payment increased to $1, 200 per month. The Van De Vens used the money to pay off debt, purchase tools for Eric's business, and on the Avignones' advice, deposit $75, 000 into an 'TNG Account." On William's recommendation, the Van De Vens then each invested $12, 500 from the ING Account into two Midland National life insurance policies. The Van De Vens made another $12, 500 investment into each policy the following year.
In 2009, William contacted Eric by phone and told him about the new real estate investment opportunity. William told Eric the new opportunity would provide higher returns than the Midland National policy. The money would be invested in property in Georgia, and the Van De Vens could expect a 10% rate of return, and quarterly interest payments of $675 for five years. The properties would then be sold at a profit, and the Van De Vens would receive back 50% of that profit. William also told Eric they would have a first lien position on the property, which Eric interpreted to mean he had an ownership interest in the property that would provide security and control, and the ability to liquidate his position before five years. William also told Eric he could get his money back whenever he needed it.
An email Willian sent to Eric after their phone call to solicit the investment, explained the money would be used to purchase
The Van De Vens agreed to the investment, and on the Avignones' advice and with William and Susan's assistance, withdrew $27, 000 from their Midland National life insurance policies. The Van De Vens received two checks from Midland, which they deposited into their checking account. The Van De Vens then wrote SABA Financial a check for $27, 000 and mailed it to the Avignones' offices in San Diego. After receiving the check, in April 2009, William emailed Eric a promissory note which the Van De Vens printed, signed, and faxed back to William. The note stated the Van De Vens would receive the promised quarterly payments of $675, 50% of the profits on the sale of...
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