Civil Code Violations (B&P Code, etc.)
Category > Civil Code Violations (B&P Code, etc.)
The promissory note was not a security for purposes of corporate securities law because it provided for repayment regardless of the success of the real estate deal. Defendant was charged with using false statements in the sale of a security (Corporations Code section 25401 and 25540(d) after he persuaded an acquaintance to invest in a real estate opportunity in Idaho in return for a promissory note, the terms of which were amended and extended but never realized. However, the promissory note was not a security as it provided for repayment regardless of whether the Idaho deal succeeded.id: 25124
A violation of misappropriating funds by a public official requires an intentional violation of a known legal duty.Penal Code section 424 prohibits various acts and omissions regarding the appropriation of public funds. Defendant was charged with provisions under section 424 that criminalize acting without authority or failing to act as required by law or legal duty. The offenses require that defendant knew, or was criminally negligent in failing to know, the legal requirements that governed the act or omission.id: 22335
Convictions for selling securities without a broker's license were reversed where the instructions eliminated the affirmative defense of good faith belief.Defendants were convicted of several counts of selling securities without a license in violation of Corporations Code section 25210. The convictions were reversed because the trial court's instructions eliminated the affirmative belief that one is exempted from the licensing requirement.id: 19913
Court erred in failing to instruct the jury that if the victim of forgery and false filing could have reasonably discovered the crimes more than three years before the action, it could not convict the defendant of that offense.Defendant's forgery and false filings were aspects of his rent skimming scheme. Therefore both offenses arose from the same conduct and the running of the statute of limitations was tolled by the arrest warrant for the rent skimming offenses. The trial court instructed that defendant could not be convicted of forgery and false filing if the jury found law enforcement officers were reasonably diligent in discovering the crimes more than three years before the commencement of the action. However, the court erred in failing to inform the jury that if it found the victim could have reasonably discovered the crimes more than three years before the commencement of the action, it could not convict defendant of that offense. The error was prejudicial as the false filings played an important part in the rent skimming scheme.id: 10384
Supreme Court says knowledge of illegality is an element of offense of structuring cash transactions.Defendant was convicted of structuring transactions in violation of 31 U.S.C. 5322(a) and 5324(3), so that banks would not report his cash transactions exceeding $10,000. The trial judge instructed the jury that the government had to prove defendant's knowledge of the banks' reporting obligation and his attempt to evade that obligation, but did not have to prove defendant knew the structuring was unlawful. In a 5-4 opinion authored by Justice Ginsburg, the Supreme Court reversed the conviction and held that to give effect to the statutory requirement of willfulness, the government must prove defendant knew the structuring he undertook was unlawful. The majority was not persuaded by the government's argument that structuring is so obviously evil or inherently bad that the willfulness requirement is satisfied irrespective of the defendant's knowledge of the illegality of structuring.id: 10855
Selling securities by means of false statements or omissions is not a strict liability offense and requires proof of scienter.Defendant was convicted of selling a security by means of false statements or omissions in violation of Corporations Code section 25401. The trial court instructed the offense was a strict liability crime. However, it is not a strict liability offense and the prosecution must prove the element of scienter. Given that the prosecution was unaware of its burden to prove scienter, and that the trial court prevented defendant from fully eliciting evidence on this issue, instructing that such evidence was irrelevant, the conviction was reversed. The court also found that the sale of unregistered securities pursuant to section 25110 does not include scienter as an element.id: 10853
Rent skimming convictions based on acts committed more than three years after the acquisition of the last parcel of property were barred by the statute of limitations.Defendant and his wife were convicted of multiple counts of rent skimming - failure to apply rental payments from the property to the mortgages. Civil Code section 892 provides the statute of limitations for the offense and requires a prosecution must be within three years after the date of the acquisition of the last parcel of property that was subject to skimming by the defendants. Because several of the charged acts occurred more than three years before the commencement of the prosecution the convictions as to those acts were reversed.id: 10851
Money improperly spent on state contracts was not stolen and therefore restitution was not authorized under former section 1203.04.Defendant, the state superintendent of education was convicted of making illegal contracts in which he had a financial interest. As part of his probation he was ordered to pay restitution in the amount of $274,754. He argued the restitution order was improper because the losses suffered did not come within the list of reimbursable losses in former Penal Code section 1203.04, subdivision (d.) The prosecution argued the wrongful state expenditures constituted stolen property. However, defendant did not steal the funds in question; he caused them to be improperly expended on contracts in which he had financial interests. Consequently, the court was neither authorized nor compelled to order restitution under the provisions of section 1203.04. The matter was remanded to determine whether to impose restitution as a probation condition.id: 10849
Offenses charged under Corporations Code sections 25110 and 25540 regarding the offer or sale of unqualified securities come within the statute of limitations tolling provision set forth in Penal Code section 803, subdivision (c).Penal Code section 803, subdivision (c) provides for a discovery rule which tolls the otherwise applicable statute of limitations with respect to those offenses, a material element of which is fraud or breach of a fiduciary obligation, and which specifically includes a violation of section 25540, of any type, or section 25541 of the Corporations Code. The trial court erred in refusing to apply this statutory tolling rule to 17 counts of a criminal information charging violations of Corporations Code section 25110 - proscribing the offer or sale of unqualified securities.id: 10850
Since the alleged victim had earlier moved out of the house, defendant did not violate the Home Equity Sales Contract Act, and defense counsel rendered ineffective assistance by permitting the guilty plea.Defendant pled guilty to a violation of the Home Equity Sales Contract Act, under Civil Code section 1695. The Act prohibits unfair practices by those seeking to acquire residences from distressed homeowners. By its terms, the Act applies when the owner of a residence in foreclosure is approached while residing in the home. No crime was committed in the present case since the alleged victim moved out of the house in question several weeks before she was approached by defendant. Defense counsel rendered ineffective assistance of counsel by advising or permitting the guilty plea.id: 16543
Court erred in failing to instruct that defendant accused of securities violation need only raise a reasonable doubt that the securities sold were not exempt.Corporations Code sections 25401 and 25540 criminalize the sale or purchase of securities by means of oral or written communications which contain false or misleading statements, or omit material facts. The trial court prejudicially erred in failing to instruct on the magnitude of a defendant's burden of proof when offering an exemption defense to a charge of violating section 25110 which prohibits the sale of unqualified securities. The court also prejudicially erred in instructing that sections 25401 and 25540 create an offense that does not require knowledge of the false or misleading nature of the misrepresentation or of the materiality of the omission, or criminal negligence in failing to acquire such knowledge.id: 10846
Evidence supported the commodities fraud convictions for the defendants who made misrepresentations in non-commodities contracts between investors and money managers.Defendants argued there was insufficient evidence to support their convictions for commodities fraud under Corporations Code section 29536 because they entered into money management contracts with their clients, not contracts for the sale or purchase of commodities. However, the Legislature did not intend to limit the meaning of “commodity” or “commodity contract” to any particular type of account, agreement or contract.id: 25199
Defendants who owned a medical marijuana clinic could be charged with practicing medicine without a license even though they never examined patients or prescribed medical marijuana.A person who does not have a medical license or certificate may be criminally charged with practicing medicine without a license in violation of Business and Professions Code section 2052 for owning a corporation that operates a medical marijuana clinic in which licensed physicians examine the patients and issue medical marijuana recommendations to patients.id: 23283
Trial court properly denied the motion to set aside the information due to evidence that the defendants as members of the pension board had a financial interest in the contracts they negotiated.Defendants were former members of the retirement board of
the San Diego City Employees Retirement System. They were charged with violating Government Code section 1090 which prohibits public officials from having a financial interest
in contracts they make in their official capacity. The trial court did not err in denying the motion to set aside the information because the increase in pension benefits was subject to their approval, pension benefits are within the definition of "salary" for purposes of the statue and various statutory exceptions did not apply to the proceedings.id: 19846
Chain scheme which bilked money from investors also involved securities fraud.Defendants argued the evidence was insufficient to support the convictions for violating California securities law (Corporations Code sections 25110, 25401 and 25441) because the chain scheme programs were not securities within the meaning of section 25019 since the members actively participated in the venture. However, evidence supported the finding that the program was a security where members believed they were investors and co-owners.id: 19257
Good faith belief that a security is exempt from registration under section 25110 is an affirmative defense.Defendants were convicted of selling unregistered securities. A seller who believes reasonably and in good faith that a security is exempt is not guilty of violating Corporations Code section 25110. However, guilty knowledge is not an element. Rather, a defendant's reasonable good faith belief that a security is exempt from registration is an affirmative defense on which the defendant bears the burden of proof. As such, the Court must instruct on the issue only when the defense has presented evidence sufficient to raise a reasonable doubt that the defendant knew, or negligently failed to know, the security was not exempt.id: 18916
Financial Code section 1823 which prohibits the unlicensed transmission of money to a foreign country is a general intent crime.Financial Code section 1823 makes it a felony for any person who has not complied with the Department of Financial Institutions' licensing requirements to represent that he or she is authorized to receive or solicit money for transmission to a foreign country. Defendants were convicted of violating section 1823 and argued it required a mental state element that they knew they lacked the Department's license at the time they committed the offense. However, the Legislature did not intend to import a specific intent into section 1823.id: 18924
Employees of a corporation can be convicted of the unlicenced transmission of money to a foreign country in violation of Financial Code section 1823.Defendant argued that as a "mere employee" of a corporation, he could not be convicted of the unauthorized receipt of money for transmission abroad in violation of Financial Code section 1823 because the statute only applies to officers and directors of corporations. However, the plain language of the statute shows that it applies to every person, including individuals, who engages in the business of receiving money for the purpose of transmission abroad without a licence.id: 18717
Trial court did not err by failing to instruct the jury that scienter is an element of the offense of selling unregistered securities.Defendant argued the trial court erred by failing to instruct the jury that some degree of scienter had to be found in order to convict him of selling unqualified securities in violation of Corporations Code sections 25110 and 25540. However, there was no error in failing to instruct that defendant was only guilty of selling unqualified securities if he knew the buyers were not accredited investors or acted with criminal negligence in failing to ascertain that fact.id: 18189
Sale of unqualified securities is a general intent crime which carries a knowledge element.The sale of unqualified securities under Corporations Code section 25110 is a general intent crime which carries a knowledge requirement. Although the trial court properly instructed the jury regarding general intent, it neglected to advise the jury as to the knowledge requirement. The error was prejudicial as to one defendant, but harmless to the other who knew or should have known that more than 35 investors had invested money in an entity formed to purchase a certain property.id: 17950
Agency instructions did not eliminate the elements of control and knowledge from the jury's consideration of the alleged securities fraud violation.Defendant was convicted of several counts of grand theft and making false statements in the sale of a security. He argued the court's instruction on "Agency and Agent" required reversal because it eliminated the elements of control and knowledge from the jury's consideration under Corporations Code section 25401. The instruction given referred to a principal who directly authorizes or "otherwise causes" a crime to be committed. However, the "otherwise causes" phrase cannot be interpreted without considering its modifying language which provided its context. Considered in their totality, the court's instructions adequately informed the jury of the elements required under agency liability.id: 17869
Defendant who falsified his address when running for city council to comply with residency requirements was not entitled to expert testimony on the meaning of "residence" in the political arena.Defendant was running for city council but was not a city resident. To meet the residence requirement he used the address of a friend as a mailing address. He signed under penalty of perjury official forms giving that mailing address. He was convicted of perjury and Elections Code violations. Defendant was not entitled to mistake-of-fact instructions based on a mistaken definition of "residence" since his mistake in believing the law did not require him to sleep in the city was one of law not fact. Moreover, he was not entitled to expert testimony on the meaning of "residence" in the political arena since that term does have a different meaning for elected officials.id: 17323
Furnishing alcohol to a minor who causes injury or death is a regulatory strict liability offense and it need not be shown that the person furnishing the alcohol knew the other person was a minor.Business and Professions Code section 25658, subd.(c) makes it a misdemeanor to sell or furnish alcohol to a person under the age of 21 who thereafter proximately causes great bodily injury or death. In order to violate this statute, the person furnishing the alcohol need not know that the person to whom it is furnished is under the age of 21.id: 17223
ABC's failure to comply with regulations regarding use of underage decoys is not a defense in criminal prosecutions.The failure of the law enforcement officers to comply with the regulatory guidelines for the use of underage decoys established by the Department of Alcoholic Beverage Control does not constitute a defense to Business and Professions Code section 25658 criminal prosecutions in light of the statement in California Code of Regulations Title 4, division 1, article 22, section 141 that failure to comply with the standards adopted by the Department "shall be a defense to any action brought pursuant to Business and Professions Code section 25658." The defense established by the departmental regulation is limited to administrative actions taken by and within the authority of the Department, and does not apply to criminal prosecutions.id: 15596
Magistrate erred in dismissing a complaint against a company for water contamination based on a finding of necessity where the company had not exhausted all reasonable alternatives.Defendant corporation was charged with discharging pollutants into a creek. The magistrate erred in dismissing the charge based on the finding that defendant's conduct was legally justified under the doctrine of necessity. Assuming the necessity defense applies, defendant failed to prove an essential element - that it did not contribute to the emergency. Assuming that some discharge was necessary to avert the dam from breaking on March 24, 1995, the evidence did not support the finding that defendant utilized the least harmful alternative.id: 15597
Trial court is not required to instruct that fee splitting provisions require a specific intent.Business and Professions Code section 650 and Insurance Code section 750 prohibit the offering of a rebate or other consideration as an inducement for referring patients. With respect to the offender's state of mind, the gravamen for each crime is the motivation for the rebate: to induce referrals. In the abstract both may be characterized as specific intent crimes because in certain circumstances their commission contemplates an intention to bring about future acts. Nevertheless, the conduct prescribed in the statutory definition fully incorporates the requisite mental state. The Court refused to impose any additional instructional obligation on the trial court, unless the defendant has proffered a mental state defense.id: 15598
Attorney General properly undertook prosecution of a state official where several counties were involved and it would have been difficult for any local prosecutor to initiate the action.Defendant, the state superintendent of education, was charged with making official contracts in which he had a financial interest in violation of Government Code sections 1090 and 1097. He argued the state Attorney General lacked authority to prosecute the action. However, such prosecution is appropriate if the A.G. is of the opinion the law is not being adequately enforced by a county. No pattern of inadequate enforcement is necessary. The instant case involved several counties statewide and lacked a clear situs. These factors and the fact that defendant was a state official, made it difficult for a local prosecutor to take action. The Attorney General did not abuse its discretion in deciding to undertake prosecution.id: 10844
Contractor's failure to pay workers the prevailing wage subjected him to prosecution under Labor Code section 1778.Defendant, the owner of a construction company, failed to pay public works project employees the prevailing wage required by law. Payment of less than the prevailing wage lends itself to the conclusion that defendant took or conspired to take the worker's legal wages and he was properly held to answer to the Labor Code section 1778 felony. Moreover, despite other provisions directed at punishing Labor Code violations, section 1778 provides the penalty or remedy for a contractor's violation of the prevailing wage laws. Finally, California's prevailing wage law is not preempted by the National Labor Relations Act.id: 10845
False statements in the sale of securities is a strict liability offenseDefendant was convicted of using false statements in the sale of securities under Corporations Code section 25401. Since that provision is a strict liability offense, the court was not required to instruct on criminal negligence.id: 10847
In the case against a state official for improper government contracts the instructions that financial interest included potential benefits did not lower the standard to possible rather that probable misconduct.Defendant, the state superintendent of education, was convicted of making illegal contracts in which he had a financial interest under Government Code sections 1090 and 1097. Contrary to defendants claim the prohibited financial interest need not have a foreseeable material effect on the public officers source of income, thus requiring an instruction on materiality. Moreover, the courts instruction that the phrase financially interested included thecontingent possibility of monetary or proprietary benefit and actual or potential pecuniary benefits directly or indirectly to the state officer did not lower the standard from a probability to a mere possibility that the contracts in question would have any financial effect on defendant.id: 10848
Rent skimming statutes did not violate the constitutional prohibition against punishment for failure to pay a debt since they fell under the fraud exception to the prohibition.Defendants were convicted of multiple counts of rent skimming - failure to apply rental payments from the property to the mortgages. They argued the statute criminalizing rent skimming, Civil Code section 892, was unconstitutional and conflicted with the prohibition against punishment for failure to pay a debt. However, the constitutional provision was not violated by the criminal rent skimming statutes since they fall under the fraud exception to the prohibition against imprisonment for debt. Because the statutes only criminalize the willful diversion of specific funds actually in the possession of the defendant they do not violate the prohibition against imprisonment for debt.id: 10852
Selling securities without complying with the terms and conditions of the qualification authorizing their sale is a crime.The prosection theorized that the defendants violated the corporate Securities Law by selling securities (bonds) without complying with certain terms and conditions of the qualification granted by the corporations department authorizing the sale. The defendants successfully argued that such acts are not crimes under the Corporate Securities Law. However, selling securities without complying with the terms and conditions of the qualification authorizing their sale is a crime and the court erred in holding otherwise.id: 10854
The definition of a security does not depend upon whether or not it is exempt from qualification under the California Corporate Securities Act.Defendant was convicted of grand theft and securities fraud and argued the trial court erred in rejecting his proffered instruction which would have required the jury to find that he made an indiscriminate offering to members of the general public as an element of the definition of a security. However, the definition of a security in California does not depend upon whether or not it is exempt from qualification under the California Corporate Securities Act.id: 10856
Water pollution statute is a felony despite the absence of the words felony and state prison.Water Code section 13387, subdivision (c) provides that a water polluter who knowingly violates section 13387, subdivision (a) shall be punished by a fine of not less than $5,000 nor more than $50,000 for each day of violation or by imprisonment for not more than three years, or both. Notwithstanding the exclusion of the words felony or state prison violation of the statute is a felony.id: 10857
About Pat Ford
Pat Ford is a criminal defense lawyer in San Diego who works on appeals in some of the most difficult cases around the state. He has a great record for success and integrity. Pat has also published a criminal case law digest since 1984 that's used by judges and lawyers around the state. He also speaks and writes articles for criminal lawyers as well as consumers interested in the law. The consumer-related articles are intended to be informative but do not constitute legal advice.
Case of the Day
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Exclusion of 18-25 year-olds from the youthful offender provisions of section 3051 did not violate equal protection. Penal Code section 3051 establishes a parole eligibility hearing for juveniles convicted of special circumstance murder and sentenced to life without the possibility of parole. Excluding persons 18-25 from the youthful offender parole hearing provision did not violate equal protection principles.id: 27245