P. v. Young

Filed 9/29/05 P. v. Young CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or
ordered published for purposes of rule 977.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
THE PEOPLE,
Plaintiff and Respondent,
v.
JAMES IRVIN YOUNG III,
Defendant and Appellant.
B175732
(Los Angeles County
Super. Ct. No. BA202316)
APPEAL from a judgment of the Superior Court of Los Angeles County, Bob S.
Bowers, Jr., Judge. Affirmed as modified.
Cheryl Barnes Johnson, under appointment by the Court of Appeal, for Defendant
and Appellant.
Bill Lockyer, Attorney General, Robert R. Anderson, Chief Assistant Attorney
General, Pamela C. Hamanaka, Senior Assistant Attorney General, Lawrence M. Daniels
and Lance E. Winters, Deputy Attorneys General, for Plaintiff and Respondent.
____________________

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INTRODUCTION
Defendant James Irvin Young III appeals from a judgment of conviction entered
after a jury found him guilty of nine counts of sale of securities without qualification
(Corp. Code, § 25110), eight counts of using false statements in the sale of a security (id.,
§ 25401), one count of fraudulent practices in the sale of securities (id., § 25541), and six
counts of grand theft (Pen. Code, § 487, subd. (a)). The jury found true the allegations
that the property loss on four counts exceeded $150,000 (id., § 12022.6, subd. (a)(2)).
Following his conviction, the trial court sentenced defendant to state prison for a term of
13 years and ordered him to pay restitution to his victims.
On appeal, defendant challenges the sufficiency of the evidence to support the
finding the prosecution commenced within the limitations period, and he claims
instructional and sentencing error. While we affirm the convictions, we agree there was
sentencing error and modify the judgment accordingly.
FACTS
In September 1994, Aubrey Fenderson (Fenderson) saw an ad for employment as
a telephone salesperson for Telephonic Yellow Pages (TYP). He met with defendant,
who hired him. His job was to telephone businesses, inform them of TYP’s services and
ask if they wanted to participate. In December 1994, defendant held a meeting, at which
he stated that he was looking for investors in TYP. Fenderson invested $15,000 with
defendant.
In January 1995, Daniel Webb (Webb) called Ric Bullard (Bullard), looking for
investors in TYP. Bullard said he did not have any money to invest. Webb said he could
use his credit card. Bullard spoke to defendant, who repeated what Webb had told
Bullard. Bullard invested $27,000. Defendant mailed him some promissory notes.
Bullard received some payments, but about $25,000 remained unpaid.

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No one informed Bullard that defendant previously had been convicted of selling
unqualified securities, selling securities by misrepresentation and fraudulent practices in
the sale of securities. No one informed Bullard that in March 1993, defendant had been
served with an order to cease and desist selling securities in connection with Panda
International Resources or any other unqualified or nonexempt securities.
Webb called Hassan Atef-Vahid (Atef-Vahid) in June 1995. Webb was looking
for investors in TYP. He said investors would make a lot of money when the company
went public. Webb guaranteed a 12 percent return. Webb offered Atef-Vahid a $15,000
unit at half price. Atef-Vahid invested $7,500.
No one told Atef-Vahid about defendant’s previous convictions or the cease and
desist order. No one told Atef-Vahid that TYP was losing money.
A telemarketer called Ken Massey (Massey) in June 1995 seeking investors in
TYP. When told he could invest $7,500 and receive credit for $15,000, Massey invested
the $7,500. While Massey received a subscription agreement, he did not recall seeing the
portion indicating that defendant had pled no contest to securities violations. No one told
Massey about defendant’s previous convictions, the cease and desist order or that TYP
was losing money.
Paul Herman (Herman) received a telephone call in August 1995 regarding
investment in TYP. Herman requested additional information. Defendant called
Herman, told him he would receive a return of 12 percent on his investment, and said he
had invested $100,000 of his own money in the company. On November 13, 1995,
Herman invested $5,000 in TYP.
Although Herman received a prospectus for TYP, he saw nothing in it regarding
defendant’s previous convictions. No one told him about defendant’s previous
convictions, the cease and desist order or that TYP was losing money.
Larry Hegland (Hegland) learned about TYP from one of his partners in late 1995.
He loaned $20,000 to TYP. In February 1996, Hegland met with defendant, who told
him TYP was doing well and urged him to invest in the company. Hegland gave
defendant a check for $100,000 and asked that his prior loan be considered part of his

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investment. On February 26, Hegland invested an additional $80,000. No one told
Hegland about defendant’s previous convictions, the cease and desist order or that TYP
was losing money.
In April 1996, Robert Strange (Strange) received an unsolicited telephone call
asking him to invest in TYP. When he said he was interested, defendant spoke to him
and told him the company already was profitable. Strange invested $10,000. No one told
him about defendant’s previous convictions, the cease and desist order or that TYP was
losing money.
William Potter (Potter) received a telephone call about investing in TYP in May
1996. He received a second call at the end of the month, then a third call, this one from
defendant. Potter was told that TYP was making a profit, and he was promised an 18
percent return on his investment. He sent TYP a check for $20,000. He never received a
return on his investment. No one told him about defendant’s previous convictions, the
cease and desist order or that TYP was losing money.
Michelle Heaton received a flier advertising TYP in 1995. Because her husband
Gary was confined to a wheelchair, Webb came to their house to talk to them. Mr.
Heaton told Webb he wanted to invest but could not afford to do so. He said he would
try to cash in a life insurance policy. Eventually, he was able to cash it in for $65,000.
Defendant arranged to bring the Heatons to TYP’s office. They gave defendant a
check for $55,000. They filled out a subscription agreement but did not read it. At
defendant’s direction, Mrs. Heaton wrote that she had invested in high risk investments
before and was aware of the risk. Defendant did not tell the Heaton’s about his previous
convictions, the cease and desist order or that TYP was losing money. The Heatons
received $8,000 to $10,000 on their investment.
Kathy Holguin (Holguin) is an investigator with the California Department of
Corporations. Holguin had investigated defendant and assisted in prosecuting him in
1990.
On May 16, 1996, Holguin received a prospectus and offering material for TYP.
The material identified defendant as one of the partners in the company. It offered

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prospective customers the opportunity to invest in a company that was in operation and
already profitable.
Holguin investigated and learned that TYP did not have a permit to sell securities
to the public. While notices claiming an exemption for qualification had been filed,
exemption had not been granted.
Department of Corporations Forensic Examiner Steven Rodman (Rodman) went
to TYP’s office in early 1997 and spoke to defendant. Pursuant to a subpoena, defendant
gave Rodman profit and loss statements for TYP. These showed a loss for 1995 of
$942,382 and for 1996 of $794,555, and a total loss of $1,718,721. Rodman also
received a list of investors. The total invested in the company was $2,085,283, with
$300,000 in income unaccounted for. The action in this case commenced on May 12,
2000.
Defense
George Anderson (Anderson) knew both defendant and Hegland. At some point
in the mid-1990s, after talking with defendant, Anderson invested several hundred
thousand dollars in TYP. From the investment material he received, he learned of
defendant’s previous securities convictions. No one told him about the convictions or the
cease and desist order.
Anderson told Hegland about TYP. He told Hegland about defendant’s previous
convictions. He also told Hegland that because TYP was growing, it presently was losing
money.
Corporate securities attorney Bennett Yankowitz began representing TYP in 1995.
He prepared a private offering memorandum for TYP. He placed a paragraph in the
memorandum summarizing defendant’s prior convictions. He was unaware of the cease
and desist order.
Defendant was released from prison in July 1993 and started TYP in August 1994.
He incorporated TYP in September 1994 and became the chief executive officer.
Interested in bringing in investors, he hired Webb in December 1994 to be TYP’s

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Director of Acquisitions. Other employees were hired to work with Webb in March or
April 1995.
Webb sent investors an investment package. If defendant received an investment
package back from an investor, he tried to speak personally to the investor. He spoke to
the majority of the investors.
Defendant saw a February 1995 financial statement for TYP in April 1995. At
that time, he thought TYP was in good financial condition. He did not see another
financial statement until September or October 1995. He did not know before then
whether TYP was making a profit.
At some point, defendant had to move money from one account to another to pay
expenses. By May 1996, defendant sensed that TYP’s expenses were exceeding income.
Defendant told investors that TYP was generating income, but he did not tell them that
expenses were exceeding income. Additionally, the cover letter sent to investors told
them TYP already was profitable.
Defendant acknowledged speaking to Bullard regarding investing in TYP. He
denied suggesting that Bullard use a credit card when Bullard said he did not have access
to any money at that time. He told Bullard about his prior convictions and that TYP had
a positive cash flow.
Defendant never told Massey he could receive a $15,000 share of TYP for $7,500.
He told Massey about his prior convictions and that TYP was generating a lot of revenue.
He did not tell Massey or other investors about the cease and desist order, in that he did
not think it was material.
Defendant did not solicit an investment from Fenderson. He told Fenderson about
his prior convictions.
Defendant did not tell Herman about his prior convictions. When Herman said he
could not fill out the financial portion of the subscription agreement, defendant said it
would not be a problem. Defendant believed Herman qualified as an investor, in that he
owned his own business.

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Defendant sold options to Hegland because he could not sell any more shares of
TYP. He did not tell Hegland about his prior convictions.
When defendant spoke to Heaton’s husband, Mr. Heaton said he had invested
before, he had sold his business and paid off his house. The Heatons did not tell him
their sole source of income was Social Security or that they would have to cash in a life
insurance policy in order to invest. Defendant read the entire subscription agreement to
the Heatons and believed they were qualified as investors based upon their history of
investment.
Early in 1997, defendant realized TYP was going to fail. He closed the business.
He lost $100,000 of his own money on TYP. He acknowledged that this was money he
drew as salary from TYP. He also acknowledged using a company credit card for
personal expenses but insisted that he reimbursed TYP for all charges. He denied that
TYP was a scam or that he lied to investors or used tricks or scams to get their money.
Defendant liked to believe that he knew what was going on with TYP. He knew
that what Webb was selling was securities. He thought the securities were unqualified or
exempt.
CONTENTIONS
Defendant contends the evidence is insufficient to support the jury’s finding that
the prosecution was commenced within the limitations period. We disagree; the evidence
is sufficient.
Defendant further contends the trial court erred in instructing the jury regarding
the scienter required for the crime of selling unqualified securities. The instruction given
was correct.
Defendant asserts his sentence must be modified to avoid the proscription against
multiple punishment. We agree and modify his sentence.
Finally, defendant contends imposition of the upper term sentence violated his
Sixth Amendment right to a jury trial. The contention lacks merit.

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DISCUSSION
Sufficiency of the Evidence
The jury was required to determine whether the prosecution was commenced
within the limitations period. The court instructed the jury that the prosecution was
commenced May 12, 2000. The jury could convict defendant only if it found the thefts
were discovered within four years of the commencement of the prosecution. The court
further instructed the jury that it could not convict defendant if the prosecution could
have been commenced more than four years prior to May 12, 2000 because, with the
exercise of reasonable diligence, the victims or law enforcement could have discovered
the thefts. The court defined discovery as awareness of loss or misconduct and that it
was caused by criminal means.
Defendant claims that the Department of Corporations received information
sufficient to put it on inquiry on January 26 and December 24, 1995, when defendant
filed the exemption notices for the private placement offerings for TYP. When Holguin
later received the prospectus for TYP, she recognized defendant’s name and checked to
see if the Department had issued to defendant a permit to sell qualified securities. In
checking, she learned of the exemption notices and the lack of permits.
Defendant argues that in 1995 the Department of Corporations had the same
information that Holguin received in 1996, and it was familiar with defendant’s name,
having served him previously with the cease and desist order. It therefore could have
begun its investigation on January 26 or December 24, 1995, more than four years prior
to the commencement of the prosecution.
As the People point out, the Department of Corporations did not have the same
information as Holguin: it did not have the prospectus indicating that defendant had
begun selling securities despite not yet having received a permit to do so. It had no
additional information to suggest defendant was using fraud to sell the securities. It thus
did not have “actual notice of circumstances sufficient to make [it] suspicious of fraud

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thereby leading [it] to make inquiries which might have revealed the fraud.” (People v.
Zamora (1976) 18 Cal.3d 538, 572, italics omitted.)
The record showed that Holguin received the prospectus on May 16, 1996 and
began her investigation. The prosecution was commenced on May 12, 2000, within four
years of her receipt of the prospectus. Substantial evidence thus supports the jury’s
determination that the prosecution was commenced within the limitations period.
(People v. Zamora, supra, 18 Cal.3d at p. 565.)
Jury Instruction
Corporations Code section 25110 (section 25110)1 prohibits the sale of any
security unless it has been qualified or is exempt from qualification. Corporations Code
section 25540 (section 25540) makes it a crime to violate section 25110 willfully.
The trial court instructed the jury that “[i]t is unlawful for any person to willfully
offer or sell a security in an issuer transaction without first having obtained a
qualification of such security from the Commissioner of Corporations of the State of
California unless such security is exempted.” In order to prove the commission of the
crime, the prosecution was required to prove “1. That a security was offered or sold in
this state; [¶] 2. That such conduct was willful; and [¶] 3. That at the time the security
was offered or sold, such offer or sale had not been qualified with the Commissioner of
Corporations of the State of California.”
The court also instructed the jury pursuant to CALJIC No. 1.20 that “[t]he word
‘willfully’ when applied to the intent with which an act is done or omitted means with a
purpose or willingness to commit the act or to make the omission in question. The word
1 Section 25110 provides in pertinent part: “It is unlawful for any person to offer or
sell in this state any security in an issuer transaction . . . unless such sale has been
qualified . . . or unless such security or transaction is exempted or not subject to
qualification . . . .”

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‘willfully’ does not require any intent to violate the law, or to injure another, or to acquire
any advantage.”
It is defendant’s position that the trial court’s instructions were erroneous, in that
the crime also requires knowledge that the security is unqualified and not exempt from
qualification.2 In support of his position, he relies on People v. Simon (1995) 9 Cal.4th
493.
Simon addressed the mental state necessary for conviction of a violation of
Corporations Code section 25401 (section 25401), which makes it “unlawful for any
person to offer or sell a security in this state . . . by means of any written or oral
communication which includes an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.” Section 25540 penalizes
willful violation of section 25401.
The question before the court was whether sections 25401 and 25540 required
knowledge of the false or misleading nature of the statement for conviction, despite the
lack of an express requirement to that effect in the statutes. (People v. Simon, supra, 9
Cal.4th at p. 507.) The court first acknowledged an appellate court holding that the
Legislature’s omission of a knowledge requirement indicated that knowledge was not an
element of the offense. (Id. at pp. 507-508; see People v. Johnson (1989) 213
Cal.App.3d 1369, 1375.)
The court proceeded to examine federal securities laws, on which California’s
securities laws were patterned, but it found no clear answer to its question in the federal
statutes. (People v. Simon, supra, 9 Cal.4th at pp. 509-513.) The court then examined
California’s statutory scheme. Section 25401 was included in part 5 of Division 1 of the
2 The issue is before the Supreme Court in People v. Salas (2004) 119 Cal.App.4th
805, review granted September 29, 2004, S126773. Salas held that the crime of violation
of section 25110 includes a requirement of knowledge that the security was unqualified
and not exempt.

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Corporate Securities Law of 1968, which identifies fraudulent and prohibited practices.
(Simon, supra, at p. 514.) Section 25540 falls within section 6, governing enforcement of
securities laws. (Simon, supra, at p. 514.)
Violation of section 25401 may be addressed by administrative action (Corp.
Code, § 25530), civil suit for rescission or damages (id., § 25501) or criminal prosecution
(§ 25540). (People v. Simon, supra, 9 Cal.4th at pp. 514-515.) Knowledge of the false or
misleading nature of the statement made is not required for an administrative action. (Id.
at pp. 515-516.) It is, however, required for a civil suit. (Id. at p. 516.) The court did not
believe that the Legislature could have intended that knowledge be required for civil
liability but not for criminal liability. (Id. at pp. 516-522.) It therefore concluded that
knowledge of the false or misleading nature of the statement made is required for
conviction of the violation of section 25401. (Id. at p. 522.)
Section 25110 is included in part 2 of Division 1 of the Corporate Securities Law
of 1968, which addresses qualification of securities. Violation of this section, as with a
violation of section 25401, may be addressed by administrative action (Corp. Code,
§ 25530), civil suit for damages (id., § 25503) or criminal prosecution (id., § 25540). A
civil suit for damages based on a violation of section 25110, however, does not require
knowledge that the securities sold were unqualified or not exempt from qualification.
(Id., § 25503.)
As noted in People v. Corey (1995) 35 Cal.App.4th 717 at page 729, in addition to
the difference in requirements for civil enforcement of sections 25110 and 25401, the
potential criminal liability for violation of section 25110 is much less than for violation of
section 25401. Because of these distinctions, the Corey court concluded that the
rationale behind the decision in Simon does not apply to section 25110. (Corey, supra, at
p. 729.) The Corey court thus held that knowledge is not required for criminal conviction
of violating section 25110. (Ibid.)
We agree with Corey. In the absence of a statutory knowledge requirement or a
compelling basis for imposing one, we hold that knowledge that the securities sold were
unqualified or not exempt from qualification is not required for conviction of a violation

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of section 25110. The trial court therefore did not err in instructing the jury as to this
offense.
Penal Code Section 654
Penal Code section 6543 protects against multiple punishment for “multiple
statutory violations produced by the ‘same act or omission.’” (People v. Harrison
(1989) 48 Cal.3d 321, 335.) It applies when multiple offenses were “merely incidental
to, or were the means of accomplishing or facilitating one objective.” (Ibid.)
Here, the trial court imposed prison terms for using false statements in the sale of
a security, imposed concurrent terms for sale of securities without qualification, and
stayed the sentences for grand theft under Penal Code section 654. Defendant contends,
and the People agree, that the concurrent sentences imposed for the sale of securities
without qualification also must be stayed under section 654. We agree as well. All
offenses were the means of accomplishing a single objective: the sale of securities in
order to take the victims’ money. Accordingly, we will modify the judgment to stay the
sentences on counts 3, 5, 8, 14, 22, 24, 27 and 30 and the enhancements on counts 22
and 30.
Upper Term Sentence
Defendant’s contention that the imposition of the high term on counts 1 and 2
violated his Sixth Amendment right to a jury trial is based on the holding of Blakely v.
Washington (2004) 542 U.S 296, ___ [124 S.Ct. 2531, 2537], that the maximum sentence
a judge may impose is that permitted by the facts established by the jury verdict or
admitted by the defendant. The California Supreme Court recently has held that Blakely
3 Penal Code section 654 provides: “An act or omission that is punishable in
different ways by different provisions of law shall be punished under the provision that
provides for the longest potential term of imprisonment, but in no case shall the act or
omission be punished under more than one provision. . . .” (Subd. (a).)

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does not preclude exercise of judicial discretion to impose the upper term sentence based
on aggravating factors found by the court. (People v. Black (2005) 35 Cal.4th 1238,
1244.) We consequently reject defendant’s contention.
The judgment is modified to stay, pursuant to Penal Code section 654, the
sentences on counts 3, 5, 8, 14, 22, 24, 27 and 30 and the enhancements on counts 22 and
30. As so modified, the judgment is affirmed. The clerk of the court is directed to
prepare an amended abstract of judgment and forward a copy to the Department of
Corrections.
NOT TO BE PUBLISHED
SPENCER, P.J.
We concur:
MALLANO, J.
ROTHSCHILD, J.

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