People v. Frankfort
| Decision Date | 12 December 1952 |
| Docket Number | Cr. 4677 |
| Parties | PEOPLE v. FRANKFORT et al. |
| Court | California Court of Appeals Court of Appeals |
Sidney Traxler, Los Angeles, for appellants.
Edmund G. Brown, Atty. Gen., Frank Richards, Deputy Atty. Gen., S. Ernest Roll, Dist. Atty., Jere J. Sullivan and Logan Lindley, Deputies Dist. Atty., Los Angeles, for respondent.
Defendants Frankfort and Nudelman were convicted, by the court sitting without a jury, of 68 counts of Grand Theft and one count of Conspiracy to commit Grand Theft, and were sentenced to the penitentiary. They appeal from the judgment and the order denying their motion for a new trial. 1
This prosecution arose out of defendants' participation in a club and subdivision project in which various individuals were induced to invest their money through fraudulent representations allegedly made by them. The sales scheme developed on a step by step basis. The modus operandi was as follows: First, potential buyers were offered an associate membership in a country club, then a charter membership, and finally a conversion membership, each of which was sold at progressively higher prices. These were followed by building-lot sales, and collection of maintenance fees. The sales inducements varied from time to time. Initially, the lure was a gift lot, then an equity bond, and finally a lot-purchase discount proposition. Out of these operations defendants collected some $450,000.
In the summer of 1945 defendant Frankfort purchased the property and facilities here involved, which were located at Lake Elsinore, California. Defendant Nudelman became associated with him. A considerable portion of the property had been previously owned by the Clevelin Realty Corporation, which had for a number of years carried on a subdivision program and had sought to develop both a country club and a beach club, and had accordingly sold a great many memberships throughout Southern California. The Clevelin Realty Corporation went defunct and the holder of the trust deed became the owner of the property through foreclosure. In acquiring the property Frankfort arranged to get a list of all former holders of membership privileges in the Clevelin Realty organization. In December, 1945, defendants Frankfort and Nudelman (together with a third party who some months later disposed of his interest to them) organized the Spa Corporation, which took over these properties. The parties had already created the Spa Country Club, which was a fictitious name. It become the property of the Spa Corporation. These defendants then embarked on a campaign to sell memberships and lots. To that end a sales organization was recruited. Sales meetings were held by Frankfort, who also gave individual instructions. He prepared the forms, literature and brochures that were used in making the sales.
The first membership drive was for associate members at a rather nominal annual fee. The former members of the Clevelin Realty Corporation as well as the public generally were circularized and solicited. Between 5,000 and 6,000 such memberships were sold. The purpose of this membership was not alone to obtain the fees involved but the opportunity to get people acquainted with the club at a cheap price and then sell them a charter membership or a conversion membership and ultimately a building lot.
The charter memberships were offered to the former members of the Clevelin Realty group and to the associate members. The price varied from time to time but ranged from $225 to $435. This class of membership provided for a gift to each member by the Spa Corporation of a piece of unimproved real property situated some 2 1/2 or 3 miles from the club house. All of these charter memberships had a promissory note attached which varied in amount from $270 to $360, which was payable on either an annual or semi-annual basis over a ten-year period. This was said to be for maintenance. Each member was required to sign the note as a part of the membership purchase. The gift deed could be used in the acquisition of a building site in the improved section. In 1947, upon the demand of the Real Estate Division, the use of the gift deed was discontinued. Defendants offered in its place, in connection with the sale of charter memberships, an equity bond which had a value of $750 when applied toward the purchase of a building site. The use of this equity bond was, however, soon discontinued at the request of the Real Estate Division.
Early in 1948 defendants discontinued the sale of charter memberships and in their place offered a conversion membership to all associate and Clevelin members. The price of this membership was $615 plus a $360 maintenance fee, payable in semi-annual installments over a ten-year period. With this conversion membership defendants offered a discount agreement by which a member could buy property from the corporation at a reduced price. Defendants continued to sell this class of membership until September, 1948, when their operations were closed down.
As a part of this project defendants formed the Spa Hot Springs Corporation. The avowed purpose of this corporation was to develop a hot springs, mineral bath and health resort at the Spa Country Club to be run in connection with the activities of the country club.
Defendants contend that Count I (Conspiracy) fails to state a public offense. They point out that a false representation is a necessary element of the crime of obtaining money by false pretenses. They then proceed to analyze the allegations of the conspiracy count and reach the conclusion that no false representations are in fact alleged; that the allegations are mere matters of opinion, or are promissory in character, or relate to collateral rather than material matters. Their analysis, however, is not sound. Only a few references to these allegations need be made to demonstrate their error. It is alleged, for example, that defendants falsely and fraudulently represented that with the purchase of each charter membership there would be given a parcel of land to be exchanged for a lot in a selected rental area upon which a cottage would be constructed and furnished; also, that the Spa Corporation and the Spa Hot Springs Corporation would construct a large sanitarium and bath facilities near Lake Elsinore and had developed a source of mineral water to be piped to such sanitarium and bath facilities; and that the maintenance fee was for the upkeep of the cottages and that the government agencies and lending institutions required payment of such fees in advance of construction. It is clear that the foregoing charges relate to material and not merely collateral matters, and that they are not in the realm of opinion. If it be said that some of these and other allegations in the conspiracy count are of a promissory character the answer is that it is alleged that the defendants conspired to obtain money by false pretenses and by false promises with fraudulent intent not to perform such promises. The charge here is in the language of Penal Code section 182(4) and since the amendment of section 952, Penal Code, in 1927 such a pleading is sufficient to state a public offense. People v. Chait, 69 Cal.App.2d 503, 513, 159 P.2d 445; People v. Gordon, 71 Cal.App.2d 606, 610, 163 P.2d 110.
Defendants contend that the evidence is insufficient to sustain their conviction on the conspiracy count. The gist of a criminal conspiracy is a corrupt agreement of two or more persons to commit an offenses prohibited by statute, accompanied by some overt act in furtherance of the objects of the agreement. Pen.Code, secs. 182, 184; People v. Brownstein, 109 Cal.App.2d 891, 892, 241 P.2d 1056; People v. Pierce, 110 Cal.App.2d 598, 610, 243 P.2d 585. The existence of the conspiracy may be established by circumstantial evidence. People v. Steccone, 36 Cal.2d 234, 237-238, 223 P.2d 17. The agreement may be inferred from the acts and conduct of the defendants in mutually carrying out a common purpose in violation of the statute. People v. Benenato, 77 Cal.App.2d 350, 358, 175 P.2d 296; People v. Brownstein, supra. It is not necessary that the over acts be criminal. People v. Gordon, supra, 71 Cal.App.2d at page 628, 163 P.2d 110. If such acts are done as a step toward the furtherance of the conspiracy they are sufficient. People v. Gilbert, 26 Cal.App.2d 1, 23, 78 P.2d 770. Also the overt act may be performed by any one of the conspirators and yet be sufficient, for the members of the conspiracy are bound by all acts of all members done in furtherance of the agreed plot. People v. Creeks, 170 Cal. 368, 374, 149 P. 821; People v. Pierce, supra. Finally, once the conspiracy is established all evidence of the substantive crimes becomes admissible against all participants, even though the other conspirators were not present. People v. Temple, 15 Cal.App.2d 336, 339, 59 P.2d 417; People v. Gordon, supra.
It should also be borne in mind in passing on the sufficiency of the evidence to sustain a conviction that, before a reversal may be had, it must be made clearly to appear that upon no hypothesis whatever is there sufficient substantial evidence to support the conclusion reached in the court below. People v. Newland, 15 Cal.2d 678, 681, 104 P.2d 778. We must assume in support of the judgment the existence of every fact which the trial court could have reasonably deduced from the evidence, and then determine whether the facts 'justify the inference of guilt.' People v. Deysher, 2 Cal.2d 141, 149, 40 P.2d 259, 263. If the circumstances reasonably justify the determination of the trier of fact, the opinion of the reviewing court that those circumstances might also reasonably be reconciled with the innocence of the defendant will not warrant a reversal. People v. Newland, supra; People v. Gould, 111 Cal.App.2d 1, 243 P.2d 809. Applying these principles it is clear that the trial court was amply...
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