Filed 3/27/24 P. v. Anderson CA4/1

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

THE PEOPLE,

Plaintiff and Respondent,

v.

RAYMOND CHARLES ANDERSON,

Defendant and Appellant.

 D081078

 (Super. Ct. No. SCD276015)

APPEAL from a judgment of the Superior Court of San Diego County, 

Evan P. Kirvin, Judge. Affirmed.

Ava R. Stralla, under appointment by the Court of Appeal, for 

Defendant and Appellant. 

Rob Bonta, Attorney General, Lance E. Winters and Charles C. 

Ragland, Assistant Attorneys General, Arlene A. Sevidal and James Michael 

Toohey, Deputy Attorneys General, for Plaintiff and Respondent. 

A jury convicted Raymond Charles Anderson of five counts of grand

theft (Pen. Code, § 487, subd. (a); counts 4 (as to victim M.D.), 22 (as to victim 

K.L.), 36, 40, 42 (as to victim S.S.)) and three counts of securities fraud (Corp. 

Code, § 25401; counts 37, 39, 43 (all as to victim S.S.)). It found Anderson not 
2

guilty on counts 1, 2, 3, 5, 12, 17, 19, 23, 24, 26, 31, 41, 45, 49, 51; and hung 

on the remaining counts,1 as well as on a white-collar enhancement 

allegation. The court dismissed a section 1203, subdivision (e)(4) allegation 

at the prosecution’s request.

It sentenced Anderson to a total term of nine years, consisting of a fiveyear upper term on count 43; consecutive eight-month terms (one-third the 

midterm) on each of counts 4, 22, and 40; a consecutive one year (one-third 

the midterm) on each of counts 37 and 39; and stayed eight-month terms 

(one-third the midterm) on each of counts 36 and 42. The court ordered 

Anderson to serve eight years in local custody (§ 1170, subd. (h)) and one year 

under community supervision. It ordered him to pay various fines, 

assessments, and restitution.2

Anderson contends that the federal due process clause, section 487 as 

amended by Assembly Bill No. 2356, and the principles set out in People v. 

Bailey (1961) 55 Cal.2d 514 (Bailey) require this court to consolidate his 

grand theft convictions (counts 4, 22, 36, 40 and 42) into a single theft 

conviction. He further contends the trial court prejudicially misinstructed

the jury on the definition of fraud in CALCRIM No. 1806, requiring reversal 

of his grand theft convictions. Anderson finally contends the evidence was 

1 The court accordingly declared a mistrial on counts 13-16, 18, 20, 21, 

25, 27-30, 32-35, 38, 44, 46-48, 50, 52, and 53. 

2 Specifically, these were a $300 restitution fine and a $300 suspended 

parole revocation fine (§§ 1202.4, subd. (b) & 1202.45); a $320 court 

operations assessment (§ 1465.8); a $240 criminal conviction assessment

(Gov. Code, § 70373); a $41 theft fine (§ 1202.5); and victim restitution of 

$50,000 to M.D., $25,000 to K.L., and $53,500 to S.S. (§ 1202.4, subd. (f)). It 

granted Anderson 452 days total credits and ordered various conditions of 

community supervision.
3

insufficient as a matter of law to prove the promissory notes underlying his 

securities fraud convictions were securities within the meaning of 

Corporations Code section 25109 and 25401. We affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Anderson does not challenge the evidence supporting the elements of 

his individual grand theft convictions or contend his conduct does not 

constitute grand theft; his sole contention regarding the grand theft 

convictions is that under the law—specifically section 487, Bailey, supra, 55 

Cal.2d 514, and principles of due process—they must be consolidated into a 

single conviction because he acted pursuant to one intention, general impulse 

or plan. Indeed, Anderson asserts the underlying facts are undisputed for 

purposes of applying Bailey. The question entails analysis as to Anderson’s 

intentions and how the thefts were committed. Hence, our recitation of the 

relevant facts focuses on that inquiry.

Anderson’s Background and Criminal History

Anderson began inventing at a young age, with a specific interest in 

electronics, and started a series of businesses. Through some of his ideas, in 

particular a traffic alert system to notify drivers of an approaching 

emergency vehicle and a lighted bicycle helmet, he later became acquainted 

or friends with some prominent politicians and famous people, including 

boxer Ken Norton, NBA basketball player/coach Stacy Augmon and musician 

Marion Meadows. He claimed that through Norton he met Jay Leno, but 

conceded Leno “at a distance . . . just said ‘Hi.’ ” Anderson solicited investors 

for his companies, which he called Helmet Alert, Traffic Alert and Select One 

Technologies. He involved his then girlfriend, Kathie Taylor, in the 
4

business.3 Taylor did not invest but had some journalism experience and 

would take notes or write proposals or solicitations for the company. 

Anderson convinced others to invest, telling them they could get rich and 

giving them the impression he was a successful businessman. However, in 

2008 or 2009, Anderson was arrested and prosecuted for his conduct related 

to these companies, and ultimately pleaded guilty to fraud in connection with 

misusing investor funds. Taylor cooperated in the prosecution. 

In 2014, Anderson founded another business, Strategic Technologies 

Group (STG), focused on creating a lighted motorcycle helmet. Taylor agreed 

to be involved and serve as STG’s president given Anderson’s past criminal 

history. In building a prototype, Anderson got to know K.L., who managed a 

local electronics store. K.L. later became part of STG’s engineering team. 

Anderson was the head sales person; he ran day-to-day operations, did all the 

marketing and regularly spoke about the project with people in an effort to 

seek investors. However, he did not tell investors about his criminal history

regarding his past business ventures; that he was a convicted felon who in 

2009 had pleaded guilty to six felony counts of grand theft for investors losing 

over $500,000 in investments and as a result had gone to state prison. His 

name did not appear on STG’s website. 

In 2017, a District Attorney investigator became involved after one of 

STG’s investors, believing he had been a victim of fraud, filed a complaint 

about Anderson. Bank records led the investigator to eventually interview 

M.D., S.S. and another individual who had invested money with STG. 

Anderson and Taylor were arrested in March 2018. 

3 Anderson and Taylor married in 2017, but separated after their arrest. 

She pleaded guilty to one felony of being an accessory to a crime. 
5

Grand Theft as to M.D. (Count 4)

M.D., a long-time businessman, learned of Anderson through M.D.’s 

friend who had accompanied Anderson to a helmet manufacturer as well as a 

patent attorney’s office, and who had invested in STG. M.D. liked the lighted 

helmet idea, met with Anderson and K.L. who demonstrated the product, and 

also eventually invested money with Anderson. M.D. viewed it as an 

investment in the product, not Anderson, though they both had to perform. 

Anderson asked M.D. to invest $100,000, which M.D. understood would go 

toward refining the product and paying off vendors, not for Anderson’s 

personal expenses. 

In exchange for two $50,000 investments wired in June 2015, M.D. 

received promissory notes stating he would get 25 percent interest to be paid 

April 1, 2016, as well as a $2-per-unit royalty from April 1, 2016, through 

December 31, 2016. The notes guaranteed M.D. no less than $30,000 in 

royalty income per year. M.D. made subsequent investments in 2015 and 

2016. M.D. never got paid on any of the notes. As of February 2018, M.D. 

determined Anderson owed him over $299,000 on the notes. 

Anderson did not tell M.D. about his prior start-up business that never 

made a profit, or that he had pleaded guilty to six felonies. But he mentioned 

celebrities who were assertedly involved in the product, such as Norton, Leno 

and Augmon. About three or four months after the first investment, M.D. 

learned of Anderson’s criminal history, but Anderson told M.D. he had been 

wrongly accused and was in the midst of suing the person who sent him to 

prison. M.D. would not have invested with Anderson if he knew he had 

committed six felony frauds, or that the money was going to meals, coffee, 

trips and cars. 
6

Grand Theft as to K.L. (Count 22)

K.L. met Anderson in 2014 when Anderson came into an electronics 

store that K.L. managed. K.L. eventually helped him install lights into 

different helmets. K.L. thought Anderson had good ideas, and in 2015, K.L. 

agreed to act as an engineer for STG and helped draft STG’s bylaws. His title 

was chief technical officer. K.L. had the impression that Anderson was an 

excellent sales person based on Anderson introducing him to famous or 

noteworthy people. Anderson also told K.L. he had once met Jay Leno. K.L. 

traveled to different states to show off the technical aspects of the helmet to 

different investors, including M.D. 

K.L. observed that Anderson was not identified on STG’s web site as 

part of its management team. Anderson told him he did not want to be in the 

spotlight, and K.L. never asked any follow up questions. 

K.L. and his mother invested $25,000 in STG in 2015, after K.L. had 

been working on a helmet prototype. They received a promissory note in 

September 2015 for that sum to be paid back 24 months from its execution. 

Anderson asked K.L. to invest so as to pay for K.L.’s computer, as well as 

travel expenses for trips to see other investors, potential buyers, and the 

company that actually produced the helmet. Anderson also asked K.L. if he 

knew of any other investors. K.L. expected return of his principal investment 

and to share 10 to 15 percent in the $300 million profit from sales, which they 

calculated based on nationwide saturation of the patented helmets. He 

expected his investment would be used for STG purposes; to build the 

company and the individuals running it in STG’s interests. The money K.L. 

and his mother invested was never paid back. When K.L. asked about 

repayments to investors, Anderson told him they would be paid as soon as 
7

STG started making money. But STG never made a profit. K.L. learned of 

Anderson’s and Taylor’s arrest shortly after it happened. 

Anderson never told K.L. about his prior company dedicated to a 

lighted helmet, that the company never made a profit, or that he had earlier 

used investor funds to pay earlier investors. He did not disclose his prior 

grand theft convictions, his conviction for identity theft, his admission to 

fraud-related conduct leading to investors losing over $500,000, or that he 

still owed money to those investors.

Grand Theft and Securities Fraud as to S.S. (Counts 36, 37, 39, 40-43)

S.S. is married to Anderson’s brother. In 2016, Anderson and Taylor 

dropped by S.S.’s Christmas Eve party. Anderson came to visit the next day 

with a binder or booklet about the company as well as a helmet prototype to 

talk to S.S. and his brother about his business ventures. He told them the

helmet had been approved by the Department of Transportation, and that he 

had big-name investors helping to promote the product, including Leno,

Augmon, Meadows, Shaquille O’Neal, Diane Watson, Maxine Waters, and 

then Secretary of Transportation Elaine Chao. S.S. understood the big name 

people would help spread the word, and that the politicians would help pass 

legislation regarding the product because it was a safety helmet. Anderson 

initially told them investments were closed, but because they were family he 

would allow them to invest and make more money than the average person. 

He felt the company would be worth billions of dollars. S.S. was excited 

about the product and seriously thought about investing. 

Anderson followed up with an e-mail to S.S. setting out his background, 

but not anything about his felony convictions and incarceration. Another email stated the helmet was patented in the United States and other 

countries, that it had been tested by the Federal Communications 
8

Commission, and that it had been “received” by the law enforcement 

community. S.S. learned that one of the biggest motorcycle helmet 

distributors for law enforcement was involved. Anderson told S.S. that her

investments would be spent on the helmets, crowdfunding, and paying

engineers and other ongoing bills dedicated to the helmets. S.S. expected she 

would make a profit through her investments and the work of others involved 

with selling the product. 

In December 2016, S.S. gave Anderson a $10,000 cashier’s check made 

out to STG, and signed a promissory note with an 18 percent return and .5 

percent of the initial production run. That note was to be paid within six 

months. She invested additional funds in February and March 2017, via 

promissory notes with the same terms.4 In casual conversation at about that 

time, S.S. asked about Anderson’s prior criminal matter, and he told her he 

was involved with men who stole his idea and was wrongly convicted, but the 

conviction was overturned and afterwards he sued the State of California, 

using over a million dollars in damages to restart his company. 

Through the period of time that S.S. was investing in STG, Anderson

communicated daily with her, supplying her information about the company’s 

success, sending copies of emails showing STG was in touch with the 

Secretary of Transportation, sending marketing plans showing the product 

was patented in 2015, and showing S.S. that important people were backing 

the product. The information made S.S. feel that there was a lot of progress 

being made and the company was on the right track. In April 2017, S.S. wire 

4 In cross-examination, S.S. testified that her entire investment was 

$70,000, even though the promissory notes totaled more than that. The 

apparent discrepancy is of no moment to the question of whether the 

promissory notes are securities, and as indicated, Anderson does not 

challenge the evidence of his individual grand theft convictions.
9

transferred $6,500 to STG. That month, she helped her mother invest 

$30,000 in STG on the same terms after Anderson told her he had decided to 

open up investment in the company to her as well, “to gain extra cash for the 

benefit of the grandchildren going to college and assistance and things like 

that.” S.S. wire transferred a final $10,000 to STG in July 2017. That same 

day, she received a phone call from an investigating detective and learned 

that Anderson’s claim of being wrongfully convicted was not true. 

S.S. never received her principal, interest or anything else from her 

initial investment or any of her other investments. S.S. would not have 

invested had she known about the failed helmet lighting business, that none 

of the investors in that business got their money back, or that her money was 

paying for expenses such as trips, jewelry, and cars.

DISCUSSION

I. Consolidation of Grand Theft Convictions

A. Legal Principles

Grand theft is defined in section 487, providing with exceptions not 

applicable here that it is committed “[w]hen the money, labor, real property,

or personal property taken is of a value exceeding nine hundred fifty dollars 

($950).” (§ 487, subd. (a).) Effective January 1, 2023, the Legislature 

amended section 487 to add subdivision (e), which provides: “If the value of 

the money, labor, real property, or personal property taken exceeds nine 

hundred fifty dollars ($950) over the course of distinct but related acts, the 

value of the money, labor, real property, or personal property taken may 

properly be aggregated to charge a count of grand theft, if the acts are 

motivated by one intention, one general impulse, and one plan.” (Stats. 2022, 

ch. 22, § 1.) The Legislature expressly stated that the amendment was 
10

“declaratory of existing law in [Bailey, supra,] 55 Cal.2d 514.” (Stats. 2022, 

ch. 22, § 2.)

At the time relevant to Bailey, felony grand theft required theft of 

property worth more than $200. (Bailey, supra, 55 Cal.2d at p. 518; People v. 

Tabb (2009) 170 Cal.App.4th 1142, 1148.) The question before the California 

Supreme Court in Bailey was “whether [the defendant] was guilty of grand 

theft or of a series of petty thefts since it appears that she obtained a number 

of [welfare] payments, each less than $200 but aggregating more than that 

sum.” (Bailey, at p. 518.) The court stated: “The test applied in these cases 

in determining if there were separate offenses or one offense is whether the 

evidence discloses one general intent or separate and distinct intents. . . . 

[W]here a number of takings, each less than $200 but aggregating more than 

that sum, are all motivated by one intention, one general impulse, and one 

plan, the offense is grand theft. [Citations.] [¶] Whether a series of wrongful 

acts constitutes a single offense or multiple offenses depends upon the facts of 

each case, and a defendant may be properly convicted upon separate counts 

charging grand theft from the same person if the evidence shows that the 

offenses are separate and distinct and were not committed pursuant to one 

intention, one general impulse, and one plan.” (Bailey, at p. 519.) 

In July 2014, a majority of the California Supreme Court decided

People v. Whitmer (2014) 59 Cal.4th 733 (Whitmer), which interpreted Bailey

and disapproved some of the appellate authorities that had expanded on its 

rule (Whitmer, at p. 741), concluding they had “interpreted Bailey more 

broadly than is warranted.” (Id. at p. 735.) Whitmer involved a manager of a 

motorcycle dealership who was convicted of 20 counts of grand theft, after he 

had arranged for the sale of 20 different vehicles to fictitious buyers through 

the use of falsified financing agreements, resulting in monetary losses to the 
11

dealership. (Ibid.) The 20 transactions occurred on 13 different dates, to 

distinct fictitious buyers. (Ibid.) The Court of Appeal rejected the 

defendant’s argument based on Bailey that he could be convicted of only one

count of grand theft and affirmed his convictions. (Whitmer, at p. 736.) 

On the defendant’s petition for review raising whether he was properly 

convicted of multiple grand theft counts, the Whitmer court found the 

question turned on the proper interpretation of Bailey. It explained that in 

Bailey, the defendant made a single fraudulent misrepresentation resulting 

in a series of payments; there were not separate and distinct fraudulent acts. 

(Whitmer, supra, 59 Cal.4th at p. 740.) But in Whitmer involving the 

dealership manager, and other cases Bailey had relied upon but 

distinguished, the defendant had committed similar, but separate and 

distinct, fraudulent acts. (Whitmer, at p. 740.) “Defendant committed a 

series of separate and distinct, although similar, fraudulent acts in preparing 

separate paperwork and documentation for each fraudulent transaction. 

Each fraudulent act was accompanied by a new and separate intent to 

commit that fraud.” (Ibid.) According to the Whitmer majority, this made 

“all the difference.” (Ibid.) It held “a defendant may be convicted of multiple 

counts of grand theft based on separate and distinct acts of theft, even if 

committed pursuant to a single overarching scheme.” (Id. at p. 741.) It 

adopted the Court of Appeal’s reasoning that “a serial thief should not receive 

a ‘felony discount’ if the thefts are separate and distinct even if they are 

similar.” (Id. at pp. 740-741.)

Whitmer relied upon cases that Bailey had distinguished but did not 

overrule, including People v. Rabe (1927) 202 Cal. 409, and People v. Ashley

(1954) 42 Cal.2d 246. As Whitmer summarized: “In Rabe, the defendant 

fraudulently obtained money and property by falsely representing that he 
12

intended to use the funds and property to establish a corporation. [Citation.] 

From one individual he secured investments on three separate dates: a 

payment for $1,250, a payment for $4,000, and a contribution of real property 

worth $11,000. [Citation.] . . . [T]he Supreme Court rejected his contention 

that he had committed only a single offense, reasoning that ‘[i]n each count of 

the indictment the property . . . was obtained at a different time and was 

different in character and value . . . .’ ” (Whitmer, supra, 59 Cal.4th at p. 738, 

citing Rabe, at p. 417.) 

“ ‘In Ashley, the manager of a corporation obtained funds from two 

individuals by falsely representing that the funds would be used for one of 

the corporation’s business projects. [Citation.] Because the manager 

received two payments from each individual, each of which exceeded the 

threshold amount for grand theft, he was charged with four counts of grand 

theft. [Citation.] Before the Supreme Court, he contended that he could be 

convicted on only one count of grand theft with respect to each victim. 

[Citation.] Relying on Rabe, [supra, 202 Cal. 409], the court rejected this 

argument.’ ” (Whitmer, supra, 59 Cal.4th at p. 738, citing People v. Ashley, 

supra, 42 Cal.2d at pp. 252-257, 273.) But Whitmer could not retroactively 

apply its rule to the defendant because of “the long, uninterrupted series of 

Court of Appeal cases . . . that have consistently held that multiple acts of 

grand theft pursuant to a single scheme cannot support more than one count 

of grand theft.” (Id. at p. 742.)

B. Contentions

Anderson contends he is entitled to the retroactive benefit of section 

487, subdivision (e). According to Anderson, notwithstanding Whitmer, 

supra, 59 Cal.4th 733, the law requires that his five grand theft counts as to 

M.D., K.L, and S.S. be consolidated into a single count of grand theft even 
13

though there were multiple victims, because as evidenced by the record, the 

prosecutor’s arguments, and case law, he committed the thefts “pursuant to a 

single impulse, plan or scheme.” Anderson maintains Whitmer’s judicial 

narrowing of Bailey does not apply to the present case given the Legislature’s 

recent amendment of section 487, and thus all of his grand theft convictions

must be consolidated into a single conviction and the matter remanded for 

resentencing. 

C. Analysis

We need not decide whether the amendment to section 487, subdivision 

(e) should apply retroactively to Anderson, because as we explain, the 

amendment declarative of Bailey has no effect on Anderson’s convictions.

As indicated, Bailey did not involve multiple grand thefts committed 

against multiple victims as here; Bailey involved a series of petty thefts, as 

each payment was less than $200, but amounted to more than that sum in 

total. (Bailey, supra, 55 Cal.2d at p. 518.) Bailey pointed to cases holding 

that “where as part of a single plan a defendant makes false representations 

and receives various sums from the victim the receipts may be cumulated to 

constitute but one offense of grand theft.” (Id. at pp. 518-519.) It continued: 

“The test applied in these cases in determining if there were separate 

offenses or one offense is whether the evidence discloses one general intent or 

separate and distinct intents. The same rule has been followed in larceny 

and embezzlement cases, and it has been held that where a number of 

takings, each less than $200 but aggregating more than that sum, are all 

motivated by one intention, one general impulse, and one plan, the offense is 

grand theft.” (Id. at p. 519, italics added.) 

When the Legislature amended section 487 to add subdivision (e), it 

was not codifying the law pertaining to the commission of multiple grand 
14

thefts but was declarative of Bailey’s petty theft aggregation rule. 

Subdivision (e) involves situations where “the value of the money . . . taken 

exceeds nine hundred fifty dollars ($950) over the course of distinct but 

related acts . . . .” Further, the statute relates to charges, not convictions. It

permits, but does not require (“the value . . . may properly be aggregated”),

the prosecution to “aggregate[ ]” the value of the money “to charge a count of 

grand theft, if the acts are motivated by one intention, one general impulse, 

and one plan.” (§ 487, subd. (e).) Indeed, the Whitmer majority

acknowledged it was not deciding “whether the Bailey rule regarding a series 

of petty thefts applies similarly to a series of grand thefts” and observed that 

Bailey was “factually distinguishable.” (Whitmer, supra, 59 Cal.4th at p. 

740.) Because subdivision (e) of section 487 does not speak to multiple grand 

theft convictions, it does not warrant consolidation of Anderson’s multiple 

grand theft convictions to a single grand theft conviction.

Rather, because all of Anderson’s grand theft offenses occurred after 

the July 2014 Whitmer decision, Whitmer’s holding applies to permit 

Anderson’s multiple convictions for his grand thefts that occurred at different 

times, involved differing sums of money and different individuals. As in 

Rabe, “ ‘the property . . . was obtained at a different time and was different in 

character and value . . . .’ ” (Whitmer, supra, 59 Cal.4th at p. 738, quoting 

People v. Rabe, supra, 202 Cal. at p. 413.) Anderson thus “may be separately 

punished for obtaining additional property from [a single victim such as S.S.], 

even though [his] initial misrepresentations ‘were still operating upon the 

mind’ of [S.S.].” (Whitmer, at p. 738, quoting Rabe, at p. 413.) That is true 

notwithstanding Anderson may have had “a single overarching scheme.” 

(Whitmer, at p. 741.) 
15

II. Claim of Instructional Error

The court read CALCRIM No. 1806 to the jury in relevant part as 

follows: “To prove that the defendant is guilty of theft by the theory of theft 

by embezzlement, the People must prove that; one, an owner entrusted his or 

her property to the defendant; and, two, the owner did so because he or she

trusted the defendant; and, three, the defendant fraudulently converted or 

used that property for his own benefit; and, four, when the defendant 

converted or used the property, he intended to deprive the owner of it. [¶] A 

person acts fraudulently when he takes undue advantage of another person 

or causes a loss to that person by breaching a duty, trust or confidence.”5

Conceding his counsel did not object to the instruction, Anderson 

contends the trial court erred by instructing the jury with it. He maintains 

CALCRIM No. 1806 contains an “overly expansive definition of ‘fraud,’ ”

which allowed the jury to convict him based on mere negligence, 

mismanagement, or failing to live up to the victims’ trust or confidence, when 

the law requires that he fraudulently intend to deprive the victims of their 

5 The instruction continues: “A good faith belief in acting with 

authorization to use the property is a defense. In deciding whether the 

defendant believed that he had a right to the property and whether he held 

that belief in good faith, consider all the facts known to him at the time he 

obtained the property along with all the other evidence in the case. [¶] The 

defendant may hold a belief in good faith even if the belief is mistaken or 

unreasonable. But if the defendant was aware of facts that made that belief 

completely unreasonable, you may conclude that the belief was not held in 

good faith. [¶] An intent to deprive the owner of property even temporarily 

is enough. Intent to restore the property to its owner is not a defense.” 
16

property.6 He further argues in connection with this problem the language of 

the fourth element regarding intent to deprive created an ambiguity in that 

“the jury most likely understood the phrase, ‘intended to deprive’ as conduct

described as fraudulent in the third element of the instruction.” Anderson 

continues that the instruction “was confusing even if the jury did not read the 

jury instruction in that manner” because “[t]he definition of fraudulent in the 

third element required something less than specific intent for the defendant 

to appropriate the victim’s property to his own benefit and the phrase,

‘intended to deprive,’ did not explain the requirement of specific intent.” 

According to Anderson, “[u]nder these instructions, the jury could not have 

known whether conduct that was merely negligent, or a breach of duty, which 

had the effect of depriving the victim of his or her property, established a 

violation of section 487 under an embezzlement theory or whether something 

more was required.” 

Anderson maintains the error was prejudicial under any standard 

because the jurors rejected much of the prosecution’s case; they were not 

required to agree on the form of theft in reaching their verdicts but “obviously 

viewed [him] as having responsibility for the money/property M.D., K.L. and 

S.S entrusted to him”; and the prosecutor argued he fraudulently intended to 

use the money to live off of it “with intent not to give it back.” In making his

prejudice arguments Anderson paints the facts underlying his convictions in 

a light favorable to him, arguing he had a good idea that looked promising to 

6 Anderson argues: “Fraud is not established merely by taking 

advantage of someone.” He maintains the instruction “allowed the jury to 

conclude [he] acted fraudulently if he merely failed to adequately safeguard 

property that had been entrusted to him” or if he “violat[ed] the trust or 

confidence the owner of the property placed in the holder . . . .” Anderson 

says “violating a trust or confidence does not establish specific intent to 

appropriate property for one’s own benefit.”
17

succeed and took steps to bring it to fruition, but because he “was not adept 

at keeping records and handling investors’ property/money does not mean he

had committed grand theft under a theory of embezzlement.” 

The People argue Anderson forfeited the challenge, and we agree in 

part. “In general, a defendant may raise for the first time on appeal 

instructional error affecting his or her substantial rights. [Citations.] But 

‘[a] party may not argue on appeal that an instruction correct in law was too 

general or incomplete, and thus needed clarification, without first requesting 

such clarification at trial.’ ” (People v. Buenrostro (2018) 6 Cal.5th 367, 428; 

see also People v. Hart (1999) 20 Cal.4th 546, 622 [“Defendant’s failure to 

request . . . a clarifying instruction at trial . . . waives his claim on appeal”].) 

Anderson’s claim that the instruction was confusing as to fraud or specific 

intent without further explanation “is forfeited because, at bottom, it is an 

argument that the instruction was incomplete” and thus Anderson “was 

obligated to request a clarifying instruction and failed to do so, thereby 

forfeiting [his] appellate challenge.” (Buenrostro, at p. 428.) 

Though we may consider Anderson’s argument that the instruction was 

incorrect as to fraud (People v. Buenrostro, supra, 6 Cal.5th at p. 428), we 

reject the contention. We review Anderson’s claim de novo, “ ‘in the context of 

the instructions as a whole and the trial record to determine whether there is 

a reasonable likelihood the jury applied the instruction in an impermissible 

manner.’ ” (People v. Rivera (2019) 7 Cal.5th 306, 326; see also People v. 

Lewis (2023) 14 Cal.5th 876, 900; People v. Thomas (2023) 14 Cal.5th 327, 

382; People v. Tran (2022) 13 Cal.5th 1169, 1199.) “ ‘Jurors are presumed 

able to understand and correlate instructions and are further presumed to 

have followed the court’s instructions.’ ” (People v. Thomas, at p. 382.)
18

“[E]mbezzlement involves ‘an initial, lawful possession of the victim’s 

property, followed by its misappropriation.’ ” (People v. Gonzales (2017) 2 

Cal.5th 858, 864.) Section 503 defines embezzlement as “the fraudulent 

appropriation of property by a person to whom it has been intrusted.” (See 

ibid.) Courts have cited CALCRIM No. 1806 as a correct statement of the 

elements of embezzlement(see, e.g., People v. Selivanov (2016) 5 Cal.App.5th 

726, 764 [citing CALCRIM No. 1806 for the elements of embezzlement]; 

People v. Fenderson (2010) 188 Cal.App.4th 625, 636-637) and we agree the 

instruction correctly and completely addresses the elements.

In particular, the instruction tells the jury that the defendant must 

intend to deprive the owners of their property when he or she fraudulently 

converted or used it. The fourth element defining what it means to act 

“fraudulently” refers to the conversion or use of the property by undue 

advantage or by breaching a duty, trust or confidence, not to the defendant’s 

intent or mental state. Thus, we disagree with Anderson’s argument that the 

portion of the instruction discussing the meaning of fraudulent “defined the 

mental state required for embezzlement.” 

Nor do we accept Anderson’s comparison to People v. Whitney (1953) 

121 Cal.App.2d 515. Whitney involved numerous errors of the lower court in 

instructing the jury on embezzlement, including by failing to distinguish 

between grand theft and petty theft, authorizing the jury to convict the 

defendant of grand theft “regardless of the amount taken,” and instructing 

the jury regarding trustee duties under the Civil Code. (Id. at pp. 519-520.) 

The instruction told the jury that “ ‘if you find from the evidence to a moral 

certainty and beyond a reasonable doubt that the defendant did unlawfully, 

fraudulently and feloniously convert, embezzle and appropriate the money 

mentioned in the information, or any part thereof, to his own use and 
19

contrary to his trust as such agent, then your verdict must be guilty.’ ” (Ibid.) 

According to the Whitney court, that portion of the instruction “omit[ted] the 

most important element required by the Penal Code sections, the 

appropriation of such property with fraudulent intent.” (Whitney, at p. 520.) 

In other words, the Whitney jury received no instruction on the intent

element of the crime of embezzlement. “By the instructions thus given and 

emphasized the jury would naturally understand that any conversion of the 

trust property was sufficient to establish the criminal offense of 

embezzlement.” (Ibid.) Here, the jury was instructed they had to find intent 

to deprive. No similar instructions were given in Whitney, and therefore 

Whitney has no bearing here. 

Because the instruction required the jury to find Anderson intended to 

deprive the owners of their property, it did not allow them to convict 

Anderson based on a breach of duty or mere negligence. Further, the trial 

court more specifically instructed the jury that the crime of grand theft by 

false pretenses or embezzlement as charged in the relevant counts “and any 

lesser crimes require a specific intent and/or mental state” and “[f]or you to 

find the defendant guilty of these crimes, the defendant must not only 

intentionally commit the prohibited act, but must do so with a specific intent 

or mental state” as “explained in the instruction for that allegation.” 

Having rejected Anderson’s claim of instructional error, we need not 

reach prejudice. But in any event, we presume the jury followed the 

instructions and determined Anderson had the requisite intent to convict him 

of the theft charges, thus, it was not “reasonably likely it convicted him of 

grand theft under a theory of embezzlement without concluding he intended 

to appropriate their property to his own use and benefit” as Anderson claims. 
20

III. Substantial Evidence S.S.’s Promissory Notes Were Securities for 

Purposes of Securities Fraud Convictions

Anderson contends that the evidence was insufficient as a matter of 

law that the promissory notes given to S.S. were securities within the 

meaning of Corporations Code sections 25019 and 25401. Comparing the 

evidence in this record to that found insufficient in People v. Black (2017) 8 

Cal.App.5th 889 (Black), Anderson argues S.S.’s investments met all the 

characteristics there because “(1) the promissory notes were individually 

negotiated; (2) there was no prospect the notes would be publically [sic]

traded; (3) there was no widespread marketing of the investment

opportunity; and (4) the notes were secured by property.”7 He points out the 

notes additionally made his business unconditionally legally responsible for 

payment. Anderson asks us to reverse the securities fraud convictions of 

counts 37, 39 and 43. 

A. Standard of Review

We apply settled standards. “ ‘ “In reviewing a challenge to the 

sufficiency of the evidence, we do not determine the facts ourselves. Rather, 

we ‘examine the whole record in the light most favorable to the judgment to 

determine whether it discloses substantial evidence—evidence that is 

reasonable, credible and of solid value—such that a reasonable trier of fact 

could find the defendant guilty beyond a reasonable doubt.’ [Citations.] We 

presume in support of the judgment the existence of every fact the trier could 

7 Elsewhere, Anderson argues: “Case law establishes the promissory 

notes were not securities because: (1) the promissory notes resulted from

personal negotiations and meetings between [him] and [S.S.]; (2) few people 

(only [S.S.)]) were involved in the investments; (3) security in the properties 

was either included in the promissory notes or orally promised to the 

investor; and (4) the promissory notes were unconditional promises to pay by 

STG, [his] business.” 
21

reasonably deduce from the evidence. [Citation.] [¶] The same standard of 

review applies to cases in which the prosecution relies primarily on 

circumstantial evidence . . . . [Citation.] ‘[I]f the circumstances reasonably 

justify the jury’s findings, the judgment may not be reversed simply because 

the circumstances might also reasonably be reconciled with a contrary 

finding.’ [Citation.] We do not reweigh evidence or reevaluate a witness’s 

credibility.” ’ ” (People v. Ramirez (2022) 13 Cal.5th 997, 1117-1118; see also 

People v. Ware (2022) 14 Cal.5th 151, 167; People v. Leavel (2012) 203 

Cal.App.4th 823, 832-833.) 

B. Legal Principles

Sections 25401 and 25540 of the Corporate Securities Law of 1968 

“ ‘criminalize the sale or purchase of securities by means of oral or written 

communications which either contain false or misleading statements or omit 

material facts . . . .’ ” (Black, supra, 8 Cal.App.5th at p. 899.)

Corporations Code section 25019 defines security as including “any 

note; stock; . . . evidence of indebtedness; certificate of interest or 

participation in any profit-sharing agreement; . . . investment contract; 

. . . or, in general, any interest or instrument commonly known as a 

‘security’ . . . .” Under that statute, “[a]ll of the foregoing are securities 

whether or not evidenced by a written document.” (Corp. Code, § 25019.) 

“The list of instruments which come within the statutory definition of a 

‘security’ . . . is an expansive one.” (People v. Figueroa (1986) 41 Cal.3d 714, 

734; People v. Graham (1985) 163 Cal.App.3d 1159, 1164.) But “the court will

look through form to substance” in deciding the question. (Figueroa, at p. 

737; Silver Hills Country Club v. Sobieski (1961) 55 Cal.2d 811, 814

[analyzing section 25019’s predecessor statute, former Corporations Code 

section 25008].) Thus, even if a transaction involves an instrument that is 
22

listed in Corporations Code section 25019, “[t]he crucial question 

nevertheless remains whether the [transaction] comes within the regulatory 

purpose of the Corporate Securities Law.” (Silver Hills, at p. 814; accord, 

Figueroa, at p. 735.)

California courts have used two distinct tests to evaluate an alleged 

security, the “risk capital” test and the Howey test (S.E.C. v. W.J. Howey Co.

(1946) 328 U.S. 293). (Black, supra, 8 Cal.App.5th at p. 900.) The trial court 

in this case instructed the jury on the Howey test.8 This test “asks ‘whether 

the scheme involves an investment of money in a common enterprise with 

profits to come solely from the efforts of others.’ A common enterprise ‘may 

be established by showing “that the fortunes of the investors are linked with 

those of the promoters,” ’ such as by a profit sharing arrangement. [Citation.] 

8 The court instructed: “In order to find the defendant guilty of 

securities fraud, the People must prove each element of the offense beyond a 

reasonable doubt. If the People have not met this burden, you must find the 

defendant not guilty. [¶] A security is also called an investment contract. In 

order to prove an offering is a security, the People must prove that, one, an 

investment was made; two, in a common enterprise; three, with the 

expectation of profit, income or some financial benefit derived from the 

managerial efforts of practices [sic].” Though the court may have made a 

misstatement about the managerial efforts element, the People in closing 

argument made clear that the element involved “financial profit . . . derived 

from the managerial efforts of others.” 

The risk capital test “describes ‘ “[1] an attempt by an issuer to raise 

funds for a business venture or enterprise; [2] an indiscriminate offering to 

the public at large where the persons solicited are selected at random; [3] a 

passive position on the part of the investor; and [4] the conduct of the 

enterprise by the issuer with other people’s money.” ’ This test reflects the 

court’s assessment that the term ‘security’ is defined broadly in order ‘to 

protect the public against spurious schemes, however ingeniously devised, to 

attract risk capital.’ ” (Black, supra, 8 Cal.App.5th at p. 900.)
23

An expectation of profits produced by the efforts of others exists ‘when “ ‘the 

efforts made by those other than the investor are the undeniably significant 

ones, those essential managerial efforts which affect the failure or success of 

the enterprise.’ ” ’ ” (Black, at p. 900; see also People v. Smith (1989) 215 

Cal.App.3d 230, 237 [touchstone of a security is the “ ‘presence of an 

investment in a common venture premised on a reasonable expectation 

of profits to be derived from the entrepreneurial or managerial efforts of 

others’ ”].) The Howey test is a “ ‘flexible rather than a static principle, one 

that is capable of adaptation to meet the countless and variable schemes 

devised by those who seek the use of money of others on the promise of 

profits.’ ” (Reiswig v. Department of Corporations (2006) 144 Cal.App.4th 

327, 335; see also Smith, at pp. 237-238.)

“[T]he corporate securities laws do not contain an ‘all-inclusive formula 

by which to test the facts in every case. And the courts have refrained from 

attempting to formulate such a test. Whether a particular instrument is to 

be considered a security within the meaning of the statute is a question to be 

determined in each case. In arriving at a determination the courts have been 

mindful that the general purpose of the law is to protect the public against 

the imposition of unsubstantial, unlawful and fraudulent stock and 

investment schemes and the securities based thereon.’ ” (People v. Figueroa, 

supra, 41 Cal.3d at p. 736.)

In Black, the Sixth District Court of Appeal decided whether a single 

promissory note offered for an investment in a real estate development 

scheme was a security. (Black, supra, 8 Cal.App.5th at p. 892.) The parties 

amended the note several times to extend its maturity date. (Ibid.) The 

promissory note was negotiated with the individual investor (Knarr) and

stated the limited liability company in which Black was the managing 
24

member would pay Knarr either (1) his principal and interest at a certain 

rate based on profit if the property was sold; (2) a certain portion of the 

property if it were developed; or, (3) if the property was not sold or developed 

in a year, at Knarr’s election, the principal invested and interest at a rate of 

10 percent. (Black, supra, 8 Cal.App.5th at pp. 892-893.) Black put up 

separate property as collateral on the loan. (Id. at p. 892.) The trial court 

determined the note and its amendments were not securities under either the 

risk capital or Howey tests, and granted Black’s motion to dismiss. (Id. at p. 

897.) 

The Court of Appeal affirmed: “Whether the promissory notes may be 

deemed securities presents a mixed question of law and fact: ‘ “The definition 

of a security is a matter of law. It is the judge’s duty to instruct the jury 

concerning that definition: the way in which a security is identified. Whether 

a particular piece of paper meets that definition, however, is for the jury to 

decide.” ’ ” (Black, supra, 8 Cal.App.5th at p. 899.) The court found

significant the “unique nature of the agreement” (id. at p. 902) between the 

two, particularly the fact it was contingent on the guaranteed return 

regardless of the property’s sale or development. Examining federal and 

state authorities to assess those factors, the court found Knarr’s investment 

“represented an individually negotiated, one-on-one transaction,” which was

unlike investment products found to be securities in another case. (Id. at p. 

906.) Further, Knarr traveled with Black to see the property, which the 

investor called “ ‘an obsession for both of us.’ ” (Ibid.) There was also no 

indication that the note could have been traded publicly, or offered more 

widely. (Ibid.) The presence of two other investors in the land deal did not 

alter the court’s assessment, the court noted, “since neither individual 

appears to have been recruited in a similar manner or subject to similar 
25

terms as those contained in the promissory notes to Knarr.” (Id. at p. 906, fn. 

8.) The guaranteed return, combined with Black binding his own property to 

enforce payment, “inserted an element of redress that would be unlikely to 

‘fall within “the ordinary concept of a security.” ’ ” (Id. at p. 906.) And Black 

“was unequivocal that he owed Knarr the money.” (Id. at p. 907.) “Thus, the 

‘ “ ‘character the instrument is given in commerce by the terms of the offer 

. . . and the economic inducements held out to the prospect’ ” ’ [citation] are 

markedly different from those cases in which the promise to repay, or the 

fixed rate of return, echo hollow based on the grand scale of the scheme and 

concomitantly insufficient collateral.” (Ibid.)

The Black court pointed to People v. Miller (1987) 192 Cal.App.3d 1505 

as an example of notes to be securities: In Miller, “the defendant generated 

notes to multiple investors in connection with a luxury home purchase 

scheme. In finding the notes and trust deeds to be securities, the court 

observed that ‘the loans obtained by Miller were so far in excess of the value 

of the secured interests that no resale or foreclosure could recoup more than a 

few cents on the dollar to the individual lenders. Moreover, these investors 

were solicited from the general public and had no control over the success of 

the venture in which their money was placed.’ ” (Black, 8 Cal.App.5th at p. 

907.) Black cited for the opposite proposition People v. Davenport (1937) 13 

Cal.2d 681, explaining a “contract in which the ‘alleged purchaser of the 

“security” . . . had a right to be paid whether the business prospered or not

. . . ’ was not a security.” (Black, at p. 906.) 

Black also distinguished People v. Park (1978) 87 Cal.App.3d 550, 

which involved a “comparable investment arrangement . . . .” (Black, supra, 

8 Cal.App.5th at p. 908.) The defendant in Park obtained $40,000 

investments from two individuals in exchange for the first $55,000 of profits 
26

to be realized from the sale of a completed land development and 

condominium project. (Park, at pp. 557-558.) The Park court held that the 

transaction “f[e]ll[ ] squarely within [the Howey court’s] definition of 

investment contract . . . . [T]he transaction involved an investment of funds 

in [Park]’s alleged land development and condominium project to be built in 

the future; . . . the profit to be realized from the investment was expected 

solely from [Park]’s efforts; . . . the investors had no control over the 

management of the enterprise and had no power whatsoever to affect the 

fortune of the project; and . . . the success of the enterprise depended solely on 

the honesty and managerial skill of [Park].” (Id. at p. 563; see Black at p. 

908.) Black observed that Park was unlike the circumstances before it “in 

that there was no evidence of an individually negotiated agreement providing 

a repayment option that was not contingent on the success of the enterprise.” 

(Black, at p. 909.) 

In concluding the notes at issue were not securities, the court in Black 

emphasized it was not “finding that all one-on-one contracts are excluded as a 

matter of law from the definition of a security. Rather, the individualized 

nature of the transaction is one factor that must be considered in determining 

whether that transaction comes within the regulatory purpose and purview of 

the securities law.” (Black, supra, 8 Cal.App.5th at p. 909.)

C. Analysis

Here, Anderson convinced S.S., a family member, through promotional 

materials about the company and marketing plans, to invest and provided 

her promissory notes with an 18 percent return and .5 percent of helmet 

sales. He initially painted it as an exclusive investment opportunity, but 

later convinced her that it would be a good idea for her mother to also invest

on the same terms for the benefit of their family. S.S. testified she expected 
27

to make a profit through the work of others involved with selling the product. 

These circumstances meet Howey’s test: an investment in a common 

enterprise or profit sharing arrangement, in which the success or failure of 

the helmet product was dependent on others. (Black, supra, 8 Cal.App.5th at 

p. 900; People v. Smith, supra, 215 Cal.App.3d at p. 237; People v. Park, 

supra, 87 Cal.App.3d at p. 563.)

Though Anderson characterizes his and S.S.’s transaction as a 

negotiation, the record does not support the claim. S.S. testified Anderson 

was “going to allow us to make more money than the average person since we 

were family” and “[b]ased on the way he explained it, it was an 18 percent 

return [and] we were to receive 5 percent off of the sales of the first round or 

something similar to that.” (Italics added.) The jury reasonably could 

conclude from this that Anderson set out the promissory note terms. And 

S.S.’s mother received the same terms on her note, undermining Anderson’s 

effort to claim these were individually negotiated agreements like the note in 

Black.

Anderson also argues there was no evidence he engaged in mass 

marketing or otherwise attempted to make the investment available to a 

large number of people, nor was there a prospectus for a public offering. But 

mass marketing or a public prospectus, while perhaps relevant to the risk 

capital test (see People v. Smith, supra, 215 Cal.App.3d at p. 237) are not 

elements of the Howey test for a security, which is a “ ‘flexible . . . principle’ ” 

in any event. (Reiswig v. Department of Corporations, supra, 144 Cal.App.4th 

at p. 335.) The evidence shows S.S. and the others “had no control over the 

success of the venture in which their money was placed” (People v. Miller, 

supra, 192 Cal.App.3d at pp. 1510-1511; People v. Park, supra, 87 Cal.App.3d 

at p. 563), akin to instruments found to be securities. This was unlike the 
28

note in Black, which had a repayment option independent of the success of 

the real estate venture. (Black, supra, 8 Cal.App.5th at p. 909.)

We disagree with Anderson’s comparison to Black. S.S.’s promissory 

notes were properly characterized as securities under the Howey test, not 

akin to the individualized note negotiated in Black. Rather, on this record, 

the jury’s finding the promissory notes are securities is not only supported by 

the evidence, but it is in keeping with the “ ‘ “general purpose of the law . . . 

to protect the public against the imposition of unsubstantial, unlawful and 

fraudulent . . . investment schemes and the securities based thereon.” ’ ”

(Black, supra, 8 Cal.App.5th at p. 900, quoting People v. Figueroa, supra, 41 

Cal.3d at p. 736; see also Silver Hills Country Club v. Sobieski, supra, 55 

Cal.2d at p. 814.)

DISPOSITION

The judgment is affirmed.

O’ROURKE, Acting P. J.

WE CONCUR:

DATO, J.

DO, J.