People v. Skelton
| Decision Date | 26 August 1980 |
| Docket Number | Cr. 8922 |
| Citation | 167 Cal.Rptr. 636,109 Cal.App.3d 691 |
| Court | California Court of Appeals Court of Appeals |
| Parties | , Blue Sky L. Rep. P 71,580 The PEOPLE, Plaintiff and Respondent, v. Donald Eugene SKELTON et al., Defendants and Appellants. |
Appellate Defenders, Inc., under appointment by the Court of Appeal, and Stephen J. Perrello, Jr., San Diego, for defendant and appellant James Evans Mack.
William James Zumwalt, San Diego, for defendant and appellant John Richard Curtin.
George Deukmejian, Atty. Gen., Robert H. Philibosian, Chief Asst. Atty. Gen., Daniel J. Kremer, Asst. Atty. Gen., A. Wells Petersen and Keith I. Motley, Deputy Attys. Gen., for plaintiff and respondent.
After a nine-month trial, the jury convicted Donald Eugene Skelton, James Evan Mack and John Richard Curtin (appellants) of multiple counts of grand theft (Pen. Code, § 487.1), sale of unqualified securities (Corp. Code, § 25110), securities fraud (Corp. Code, §§ 25401, 25541), and conspiracy to commit grand theft (Pen. Code, §§ 182.1, 487.1).
Before trial, the court denied defense motions to suppress evidence, to set aside the indictment for failure to comply with statutory procedures and a Johnson (Johnson v. Superior Court, 15 Cal.3d 248, 255, 124 Cal.Rptr. 32, 539 P.2d 792) motion to dismiss for claimed withholding exculpatory evidence and to sever defendants and the conspiracy count.
The jury convicted Skelton of 25 counts of grand theft, 1 count of conspiracy to commit grand theft, 27 counts in violation of Corporations Code section 25110, 35 counts in violation of Corporations Code section 25401, and 6 counts in violation of Corporations Code section 25541. Mack was convicted of 33 counts of grand theft, 1 count Motions for a new trial were denied. Skelton and Mack were sentenced to prison for the term prescribed by law for one count of grand theft. The remaining counts were ordered concurrent with the exception of conspiracy to commit grand theft, which was ordered stayed pending service of the sentence on the other counts. Curtin's sentence was suspended and probation was granted for a period of nine years on the conditions he serve eight months in county jail, perform 200 hours of volunteer labor and make restitution.
of conspiracy, 35, 39 and 6 counts in violation of sections 25110, 25401 and 25541 of Corporations Code, respectively. Similarly, Curtin was convicted of 19 grand theft counts, 1 conspiracy, 19, 17 and 3 counts in violation of Corporations Code sections 25110, 25401 and 25541, respectively.
Robert Ryan created Ryan Group West (RGW) from a sole proprietorship through which he conducted his insurance business. Ryan attempted in 1972 to cover money shortfalls by organizing various investment programs under the umbrella of RGW.
These programs were broadly divisible into dairy and land investment. The dairy programs consisted of Professional Agricultural Management Company (PAMCO), Dairivest Limited Partnership (Dairivest Ltd.) and RGW Warehousing Joint Ventures (Warehousing).
PAMCO was an investment concept in which dairy cows were leased to individual investors under a management agreement. One unit of PAMCO, consisting of 50 head of cattle, was leased for $6,850. This money was represented to be used to secure feed. The investor was to receive a 20 percent return on his investment, secured from profits from the sale of milk, plus a return of capital in five years. PAMCO was portrayed as a "tax shelter." PAMCO became Dairivest Farms, Inc., 1 although PAMCO continued to be listed as the management company in later leases.
Dairivest Ltd. was conceived as 20 limited partnership units at $8,500 each. This satellite operation of RGW was to take place in Yakima, Washington. The general partner was represented to be Cow Palace Limited.
None of the dairy programs were profitable enough to make promised payments to investors. Because many of these investors were also insurance customers of RGW, any loss resulting from closure of the dairies would have been disastrous to Ryan's insurance business. To obviate such a financial crisis, payment to old investors was made out of funds supplied by new investors.
In an attempt to keep the dairies afloat, bring in new money, a new investment concept was conceived to purchase hay and grain in advance, to store it for use by dairies. Warehousing contemplated a minimum investment of $3,000 into a pool until a unit of $60,000 was obtained. Skelton and Curtin assured investors money received was to be held in reserve until the target $60,000 was reached and grain was purchased. However, no grain was ever purchased and the funds were diverted to the Dairivest account, were used for salaries and operating expenses. Investment funds received from the several programs were not applied to any particular account but were diverted on an as-need basis to other programs, other needs of Ryan and the appellants.
This "pyramid" type bubble finally collapsed in December of 1974 when only 900 cows of dubious health remained to fulfill the unit (lease) obligations for 2,750 cows owed to investors. At all times, the maximum head count of cattle leased by PAMCO (Dairivest) and Dairivest Ltd. was 1,500, 1,250 under the 2,750.
RGW land programs consisted first of the "11 percent option plan" with investments The land subject to this scheme was located in Antelope Valley. It was worth less than the $10,000 claimed. It was not free and clear as represented but was mortgaged to 90 to 95 percent of its value. Further, most of the notes securing the trust deeds were owned by other entities, Trend Corporation, Land Wholesalers and Investment Administrators Incorporated, corporations controlled by principals of RGW. Again money generated was misused, embezzled, misappropriated to other investment schemes. The special program designed for Captain John Brown illustrates the land scheme in operation. In the summer of 1974, just before the collapse of RGW, Brown was promising a 15 percent return secured by specific trust deeds in exchange for $54,000. Brown's money was spent immediately to cover pressing financial needs, no trust deeds were ever assigned.
from $1,000 to $10,000 in trust deeds. The investor was to receive 11 percent interest per year on his investment paid from [109 Cal.App.3d 702] interest on the notes secured by deeds of trust and "they would also put in a two and-a-half-acre piece of land." At the end of ten years, RGW would return their investment or a percentage of the value of the 2.5 acre parcel supposedly worth $10,000.
Skelton, Curtin and Mack each participated at high levels in the operation of RGW's various investment programs. Skelton spearheaded PAMCO sales teams in 1973 and by November took over the construction portion of RGW. By January 1974, Ryan turned over to Skelton responsibility for the entire organization which included control of the RGW warehousing dairy, medical complex and fourplex programs. During this period he was in control of the flow of funds in RGW. At his direction, Warehousing funds were put in the Dairivest Ltd. account. Skelton assured investors Dairivest Ltd. was financially solid and accepted investments well after he knew no new leases of cows were secured to meet the promises to the investors.
Curtin was legal counsel for RGW and held himself out as "primarily concerned with the financial responsibility" of RGW. He presented and explained the PAMCO and Dairivest Ltd. programs. He assured prospective investors they were private offerings exempt from requirements of registered securities. In letters to investors Curtin assured the soundness of the programs and their success.
Additionally, Curtin drafted the RGW warehousing program. All of Curtin's convictions arose out of the dairy and warehousing program, 2 excepting the conspiracy count which encompasses all of his various activities from 1971-1974.
Mack occupied various high level executive offices in RGW and its investments. He served as executive vice-president and for a period of time served as president.
Briefly he served as president of Investment Administrators Inc., the land division of RGW. In April 1972 Mack became one of five directors to RGW and eventually he became executive vice-president. As executive vice-president he maintained substantial power controlling the inside operation of RGW.
In the fall of 1973 Mack became president and director of PAMCO and of Alameda Construction Co. related to construction of Palmdale Medical Complex. His position in PAMCO made him signator on the checking account and gave him responsibility for daily decisions as to which obligations to pay. Mack did most of the negotiating for leasing the cows in the dairy programs. He was aware there were insufficient cows to meet investment obligations, yet he continued to accept new investments.
Mack transferred or directed others to transfer money from one trust purpose to another by moving funds from one program to another, e. g., from the dairy accounts to the insurance accounts. Mack and Ryan would make joint daily decisions on where to put money to cover hot spots, i. e., overdrawn accounts. Mack frequently ordered Mack's participation in corporate efforts to raise money to solidify RGW's position was significant. The executive secretary, who took orders from Mack and others, typed two different versions of the same financial statement; and one statement would be more supportive of financial solvency. The more favorable statement was used for sales presentations.
the bookkeeper to use investors' money for operating expenses.
Appellants 3 contend (1) the indictment was defective as exculpatory evidence known to the district attorney...
To continue reading
Request your trial
-
People v. Cooks
...212 Cal.App.2d 210, 216, 27 Cal.Rptr. 805; People v. Lynn (1971) 16 Cal.App.3d 259, 267-269, 94 Cal.Rptr. 16; People v. Skelton (1980) 109 Cal.App.3d 691, 715, 167 Cal.Rptr. 636, cert. den., 450 U.S. 917, 101 S.Ct. 1361, 67 L.Ed.2d 343.) Or, as is also said, evidence of uncharged crimes may......
-
People v. Feno
...transaction was exempt. The defendant has the burden of proving these affirmative defenses. (§ 25163; People v. Skelton (1980) 109 Cal.App.3d 691, 724, 167 Cal.Rptr. 636, cert. den., 450 U.S. 917, 101 S.Ct. 1361, 67 L.Ed.2d 343; People v. Park (1978) 87 Cal.App.3d 550, 566-567, 151 Cal.Rptr......
-
People v. Ramirez
...not adequately assure jury unanimity on the overt act underlying a conspiracy conviction was rejected in People v. Skelton (1980) 109 Cal.App.3d 691, 715-717, 167 Cal.Rptr. 636, certiorari denied 450 U.S. 917, 101 S.Ct. 1361, 67 L.Ed.2d 343. Skelton, following United States v. Armone (2d Ci......
-
People v. Figueroa
...37 Cal.2d 765, 768, 235 P.2d 601), the court held that there had been no error in the giving of such an instruction. (109 Cal.App.3d at pp. 713-714, 167 Cal.Rptr. 636.) Inexplicably, none of these cases addressed the due process and jury trial rights which are arguably violated by such an i......