People v. Baumgart

• Court: California Court of Appeals
• Writing for the Court: LILLIE
• Citation: People v. Baumgart, 267 Cal.Rptr. 534, 218 Cal.App.3d 1207 (Cal. App. 1990)
• Decision Date: 19 March 1990
• Docket Number: No. B020395,B020395
• Parties: The PEOPLE, Plaintiff and Respondent, v. Roy BAUMGART, Defendant and Appellant.

Page 534

267 Cal.Rptr. 534

218 Cal.App.3d 1207

The PEOPLE, Plaintiff and Respondent, v. Roy BAUMGART, Defendant and Appellant.

No. B020395.

Court of Appeal, Second District, Division 7, California.

March 19, 1990.

[218 Cal.App.3d 1210] Linn Davis, Norco, for defendant and appellant.

John K. Van de Kamp, Atty. Gen., Richard B. Iglehart, Chief Asst. Atty. Gen., Edward T. Fogel, Jr., Sr. Asst. Atty. Gen., Donald J. Oeser and William H. Davis, Jr., Deputy Attys. Gen., for plaintiff and respondent.

LILLIE, Presiding Justice.

A jury found defendant Baumgart guilty of six felony counts, of sale to six victims of securities without a permit (counts 19, 28, 31, 36, 56, and 58; Corp.Code, §§ 25110 and 25540) and guilty on count 59 of the felony of using false statements in the sale of securities (Corp.Code, §§ 25401 and 25540). The jury acquitted defendant on six counts of grand theft (Pen.Code, § 487, subd. 1). ¹

Proceedings were suspended and defendant was placed on five years' formal probation on certain terms and conditions one of which was that defendant pay restitution of $106,500. He appeals from the judgment.

Appellant claims that as to count 59 the court erred in failing to instruct the jury on criminal negligence; contends as to the other counts (selling securities without a permit) that this court should disregard existing authority that the offense is a strict liability crime and should import an element of knowledge or intent; and challenges the validity of the restitution order, claiming that the portion of the $106,500 imposed for selling securities without a permit, to wit, $57,900, represents victims' losses not proximately caused by his criminal conduct, but by the fraudulent scheme of codefendant Gomez.

FACTS

Prosecution Case

A. Sale of Securities without a Permit to Day, Figurski, Heinz, Lambert, Wojciechowski (Counts 19, 28, 31, 36, and 56).

In 1978 defendant was employed selling insurance when he met Robert Gomez through their church; Gomez asked defendant if he knew anyone who might be interested in investing in equity real estate purchases; defendant referred his insurance clients to Gomez and defendant received commissions from Gomez; defendant would get 10 percent of the money invested and another six percent if the investor reinvested the same money. In 1979, defendant formed his own insurance agency and rented office space from Gomez; defendant began to spend 25 percent of his time referring clients to Gomez; in late 1979 or early 1980, defendant went to work full-time as a commissioned salesman for Gomez's company, Financial Designs, until he left in January 1982.

Defendant was told that Financial Designs would be raising money, that another of Gomez's companies, Homeowner's Equity, would then use the money to buy properties, fix them up, and resell them. Gomez was president and owner of the company; defendant had no authority in the company other than as a salesman to solicit funds; most of the time defendant signed the investment agreements of the people he solicited, while Gomez made out the grant deeds and acquired properties; after about a year with Gomez, defendant was allowed to select properties for investors from a black notebook, which contained a legal description of the property, its market value, and equity.

At one time, before defendant left Gomez's company, defendant was told he was made president, but his authority and duties did not change.

In January 1982, defendant and codefendant Paul Curtis, defendant's brother-in-law, formed their own company, California Diversified Investors.

Neither defendant, Gomez, Curtis, nor any of their companies had a permit to sell securities and they were granted no exemption from the permit requirement. In the opinion of the supervising counsel of the enforcement division of the California Department of Corporations, all of the investment contracts and promissory notes involved in this case were securities.

The following facts relate to counts 19, 28, 31, 36, and 56, which involve transactions arising out of defendant's activities on behalf of Financial Designs.

In August 1981, Joyce Figurski's husband answered an advertisement about an investment in the Ontario Pennysaver; defendant came to their home and told her the company used investors' money to buy up properties in foreclosure and sell them at a profit, they handled three to seven a week and the company had many homes and land and was "very safe." The Figurskis met with defendant twice and Gomez once before investing; defendant told Joyce Figurski that she would be the only investor on the properties, that she would get a copy of a title report on the properties and, as security, she would get a grant deed and a trust deed. Joyce Figurski gave defendant a check for $20,000 for a six-month investment; she received an investment contract and a grant deed as security; defendant told her that the grant deed could not be recorded until after 180 days if they were not paid.

When the investment came due in February 1982, Figurski got a bad check for the interest due; she was told that the only way they could get their money back was to reinvest in four separate $5,000 investments; the Figurskis never got any of their money back; they discovered that a grant deed was "phony," for a nonexistent piece of property. The Figurskis never got a copy of any title report.

Walter Wojciechowski saw an advertisement about a company offering a 20 percent interest payment; he called the company, and defendant, who introduced himself as a representative of Financial Designs, came out to his home; defendant gave him a choice of two properties in which to invest; he chose one and withdrew $15,000 from a T-bill in a savings and loan and gave it to defendant in December 1980; defendant told him the company would pick up what Wojciechowski would be losing for pulling funds out of the T-bills early. Wojciechowski received a deed and a note. In June 1981, Wojciechowski reinvested for six months, turned in his deed and note, and received new documents; in this transaction, he dealt with Gomez; defendant had introduced him to Gomez; Wojciechowski understood they were equal partners in the company.

In April 1982, Wojciechowski tried to get his money out; Gomez said he could have it May 1; on May 15, 1982, Wojciechowski found out that the company had no money in the bank and there was no way he could get any money; he never got any money back from Gomez or defendant.

In August 1980, John Heinz gave defendant $12,000 for investment and received a grant deed; defendant told him the investment would be for six months, he would receive 15 to 20 percent interest, and if after six months Heinz did not get his money back, he could take over the property. Heinz got an interest payment and rolled over the principal into a new investment; he got new documents and a new investment agreement. In late 1981, Heinz gave defendant another $10,000 to invest; even though defendant told him he could get his money back any time he needed it, he received nothing. Defendant did not tell Heinz that others would be given grant deeds to the same property. Defendant told Heinz that he was a partner at Financial Designs; when defendant left that company to form a new company, defendant asked Heinz to invest in it, but Heinz did not do so.

Theron Lambert knew both defendant and Gomez from their church affiliation; from October 1980 to early January 1982, the Lamberts engaged in a total of 15 transactions with defendant; some of the transactions were reinvestments or rollovers of prior investments. At the time defendant resigned from Financial Designs in January 1982, the Lamberts held promissory notes indicating they had invested $107,000.

Defendant told Lambert that his money would be used to assist Financial Designs in purchasing property; the security was to be in the form of a promissory note, a grant deed to the property to be purchased, and an investment agreement. Defendant signed the investment agreements and Gomez signed the promissory notes and grant deeds. In early 1982, defendant telephoned Lambert to tell him that two investments had been rolled over, even though the Lamberts had not given their approval. When Lambert learned that defendant was resigning from Financial Designs, he arranged a meeting with Gomez. In the spring of 1982, Gomez made out a check to Mrs. Lambert for about $13,000, which was a bad check; they never got any money from it, although in September 1982, Gomez gave them $500. None of the grant deeds given to the Lamberts as security for their investments proved worth the cost of going after; one of the properties did not belong to Gomez and some of the deeds contained inaccurate legal descriptions such that the title company could not prepare a property profile.

In April 1981, another investor, Owen Day, gave defendant $10,000 for investment; defendant told him that Financial Designs needed six months to buy property, rehabilitate it, and sell it for a profit. Day received a grant deed, promissory note, and investment agreement; defendant told him that if anything went wrong with the investment, Day could record the deed and the property would be his, but Day could not record the deed until the due date of the investment in six months. In October 1981, Day received an interest payment and rolled over the $10,000 into another property, receiving a new set of documents. He was never told that other people would be given grant deeds to the same property.

At that time, defendant also told him of a "fantastic investment" in property in the San Gabriel Valley for a short term; the property was already in escrow and the investment offered 10 percent in 30 days; Day gave defendant $25,000 for this investment. In November, Day received a check for $17,100, but it "bounced"; in March 1982, Day was told by Gomez that defendant was no longer with Financial Designs. Day expected full payment...