Court Opinion

ID: 9955113
Source: CourtListenerOpinion
Date Created: 2024-03-27 18:02:31.090152+00
Date Added: 2024-06-11T08:15:16.419133
License: Public Domain

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

                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                 DIVISION ONE

                                         STATE OF CALIFORNIA

 THE PEOPLE,                                                          D081078

           Plaintiff and Respondent,

           v.                                                         (Super. Ct. No. SCD276015)

 RAYMOND CHARLES ANDERSON,

           Defendant and Appellant.

         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
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 five-
year 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.
                                         2
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

                                          3
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.
                                       4
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.

                                       5
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

                                        6
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 e-
mail stated the helmet was patented in the United States and other
countries, that it had been tested by the Federal Communications

                                        7
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.
                                      8
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

                                        9
“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

                                       10
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

                                       11
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

                                       12
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

                                        13
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.)

                                        14
                       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.”

                                       15
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.”
                                       16
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.)

                                         17
      “[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

                                       18
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.

                                       19
    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.”
                                       20
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

                                         21
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.)

                                      22
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

                                        23
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

                                        24
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

                                          25
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

                                        26
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

                                         27
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.

                                        28