People v. Collins

• Decision Date: 02 June 1966
• Docket Number: Cr. 9560
• Citation: 242 Cal.App.2d 626,51 Cal.Rptr. 604
• Court: California Court of Appeals Court of Appeals
• Parties: The PEOPLE, Plaintiff and Respondent, v. Joseph H. COLLINS, Defendant and Appellant.

Page 604

51 Cal.Rptr. 604

242 Cal.App.2d 626

The PEOPLE, Plaintiff and Respondent, v. Joseph H. COLLINS, Defendant and Appellant.

Cr. 9560.

District Court of Appeal, Second District,

Division 4, California.

June 2, 1966.

Rehearing Denied June 22, 1966.

Hearing Denied Aug. 24, 1966.

Burton Marks, Beverly Hills, for defendant and appellant.

Thomas C. Lynch, Atty. Gen., William E. James, Asst. Atty. Gen., and Norman H. Sokolow, Deputy Atty. Gen., for plaintiff and respondent.

FILES, Presiding Justice.

This appeal is from a judgment following a jury trial in which the defendant was convicted of conspiracy to commit grand theft (Pen.Code, § 182) and six counts of grand theft (Pen.Code, §§ 484, 487).

Defendant was the dominant figure in Pacific Trust Deed Association which operated between January 1960 and November 18, 1960, following which it went into receivership. The victims of the various offenses are persons who paid money to Pacific to be invested in second trust deeds.

The Evidence

The facts upon which the judgment rests will be stated in accordance with the familiar rule that an appellate court must accept as true every fact and inference which the jury could reasonably have deduced from the evidence. (People v. Newland, 15 Cal.2d 678, 681, 104 P.2d 778.)

In the latter part of 1959, defendant Collins suggested to Cornelius L. Witt that they organize the business which was to become known as Pacific Trust Deed Association. Collins put in the initial capital of $20,000, and Witt put in some cash as loans which were later repaid to him. The two agreed to be equal owners of the business. Although a corporation was formed, no stock was issued. Witt was designated president, but Collins, who held no office, made all of the major decisions and was the final authority on all matters.

Witt was indicted along with Collins, but pleaded guilty and testified for the prosecution against Collins.

The business of Pacific was purchasing notes secured by real property trust deeds and reselling them to investors at a price which would yield the investor an interest rate of 10 percent. The plan, as presented to the public, was that the investor's money would first be placed in a trust account in the California Bank. Pacific would select a second trust deed and offer it to the investor for his approval. If the investor approved, he would sign an authorization for the withdrawal of his funds from the trust account, whereupon the trust deed would be transferred to him and recorded in his name. The claimed advantages of this kind of investment were described in printed brochures, radio advertising, and personal solicitation by the company's salesmen. Some of the representations appearing the pamphlet which the company distributed to prospective investors are the following:

'The skillful and experienced appraisers composing this (appraisal) department make a physical examination of each parcel of property involved in a purchase transaction. * * *'

'A thorough analysis of the credit information, title, appraisal and area involved is made (by Pacific's loan committee) before the purchase of a Trust Deed is consummated.'

'Pacific handles all details of each transaction, makes collections on your behalf and mails you a check (or credits your account) each month for your 10% Earnings with no charge to you for these services.'

'(E)very Pacific employee is covered by an Errors and Omissions Policy to insure safety in proper documentation of your account.'

'Your funds are always kept in a trust account until legal title to a trust deed (approved by you) is vested in your name!'

'Legal title is vested and recorded in your name.'

The actual operation of the company differed markedly from what the advertising promised.

Mr. Arens, the victim of the theft described in count II of the indictment, invested $7,500 on and prior to March 24, 1960. He received one trust deed valued at $2,000. He was offered additional trust deeds over the telephone only but not any specific ones. He never received the return of his money.

Mr. Mogul (the victim in count III) invested $5,000 on April 28, 1960. He agreed to accept one trust deed for $3,000 and one for $2,479.04. He received the former but not the latter. He never received any interest or any of his money back or any other trust deed.

Mr. Bek, the victim in counts IV and VIII, read the advertising, and in reliance thereon sent in a check for $2,262 with the understanding that $2,000 was to be invested and $262 returned. On July 6, 1960, he signed a printed 'customer account authorization' supplied by Pacific which provided that the funds would be deposited in his name in an escrow account pending selection and assignment of a trust deed to him. The printed form contained this statement 'Should you (Pacific) not conclude a transaction to my (our) satisfaction, it is understood that I (we) may have my (our) funds returned in full.'

Bek's check for $2,262 was in fact deposited in the name of Pacific Trust Deed Association, Inc. in its 'trust account' in the California Bank.

Around November 1, Bek sent in an additional $1,516. He received a letter from Pacific dated November 7 stating that his note and trust deed were '* * * in the process of being recorded at the County Recorder's Office. * * *' The correspondence indicates that the trust deed being assigned to Bek was one made by Earl and Mary Conarty. Bek received back $262 from his first payment, the odd $16 from his second payment, and three checks totaling less than $100 as purported interest, but never received any trust deed or any return of his principal. The evidence shows that in November 1960 Pacific had purchased from Ballbrook Investment Company a trust deed made by Earl and Mary Conarty as trustors, for a price of $2,310.50. The check which Pacific gave Ballbrook was dishonored at the bank, so Ballbrook took back the Conarty trust deed.

Mr. Finochio, the victim in count V, signed 'confirmations' for the purchase of two specifically described trust deeds and turned over $5,000 to Pacific on July 30. He received one trust deed for which he was charged $2,759.19. The balance of his money was not returned.

Mrs. Bates, the victim in count VI, sent Pacific a check for $1,500 on February 16. In August Pacific sent her a description of a trust deed and asked her to sign documents indicating her acceptance of it and her consent to the withdrawal of funds from the trust account. She signed and returned the documents, but she never received a trust deed or interest or a return of her money.

Several other investors similarly testified that they had been attracted by the advertising, had paid in money expecting it to be held in trust until a trust deed was transferred. Each had received neither a trust deed nor a return of his money.

When the receiver took over the business immediately after November 18, 1960. the records of the company were found to be in appalling confusion. The outside accountant employed by Pacific testified that this disorder had existed from the beginning, and that he had informed defendant Collins that it was impossible to determine the status of the business from its records.

When Pacific closed its doors on November 18, 1960, its general bank account had a balance of $5.75 and its trust account had an overdraft of $2.24. As of that date there were 455 investor accounts. 97 investors who had paid in a total of $268,089.58 had been assigned no trust deeds, though the money had been spent. 93 other investors had been 'under-assigned.' That is, these investors had paid in more money than the price which Pacific had charged them for the trust deeds assigned to them. These under-assignments aggregated $135,092.29. 23 investors had been 'equally assigned' and 242 investors were 'over-assigned,' in the total amount of $64,506.12.

Substantial amounts of cash had been taken from the trust account and used for operating expenses without any assignment of trust deeds to the investors. The company had been troubled with a shortage of cash from the outset. There had been heavy expenses for advertising. Approximately $46,000 had been sent to Arizona to provide working capital for a subsidiary to be organized there. A total of $27,544.88 had been paid out to or for the account of defendant Collins. When an attachment was levied on the company's bank account, investors' trust funds were turned over to a bonding company as collateral for a release of attachment bond.

In the acquisition of trust deeds the procedure actually employed did not resemble that described in the promotional literature. There was no 'loan committee' in the ordinary sense of the term. Witt, Collins and various employees decided from time to time on the purchase of trust deeds. Sometimes purchases were made solely upon the recommendation of a selling broker, without any independent investigation or confirmation. There was no errors and omissions policy covering any employee of the company. Collins had tried to purchase such a policy and had been refused.

Collins, testifying on his own behalf, asserted that others were running the company, that he had no idea trust deeds were not being assigned to investors, that he believed the company was operating in accordance with its advertising literature. The jury was of course entitled to reject these protestations in the light of the other evidence.

Defendant Collins argues here that the evidence is insufficient to show a specific intent to commit theft. We may assume that he never intended that the business should fail or that the investors should lose. But the evidence does show that Collins intended to solicit funds by making representations of fact which were so egregiously false that he could not possibly have believed them to be true. The evidence also compels the finding that moneys paid into a trust account were, under his direction, withdrawn for an alien purpose. Both as a case of theft...