People v. Doolittle

177 Cal.Rptr.3d 333

The PEOPLE, Plaintiff and Respondent,

v.Kenneth Mark DOOLITTLE, Defendant and Appellant.

H037391

Court of Appeal, Sixth District, California.

Filed September 8, 2014

J. Wilder Lee, under appointment by the Court of Appeal for Kenneth Mark Doolittle: Defendant and Appellant.

Kamala D. Harris, Attorney General, Dane R. Gillette, Chief Assistant Attorney General, Gerald A. Engler, Senior Assistant

Attorney General, Rene A. Chacon, Supervising Deputy Attorney General, Linda M. Murphy, Deputy Attorney General, for The People: Plaintiff and Respondent.

RUSHING, P.J.

Defendant Kenneth Mark Doolittle was sentenced to 13 years in prison after the trial court, sitting without a jury, found him guilty on three counts of theft by false pretenses ( Pen.Code, § 532, subd. (a) ), six counts of theft from an elder or dependent adult ( Pen.Code, § 368, subd. (d) ), nine counts of false statements or omissions in the sale of securities ( Corp.Code, §§ 25401, 25540, subd. (b) ), one count of selling unregistered securities ( Corp.Code, §§ 25110, 25540, subd. (a) ), and one count of sale of a security by willful and fraudulent use of a device, scheme, or artifice to defraud ( Corp.Code, § 25541 ). He challenges the judgment on the grounds that 10 of the charges were barred by the statute of limitations, that two were not supported by substantial evidence, that when modified to accommodate these deficiencies the findings cannot sustain a sentence enhancement based upon the taking or loss of more than $500,000, and that the sentence on two of the charges violated the statutory proscription against multiple punishment ( Pen.Code, § 654 ). We conclude that (1) defendant may challenge the judgment on the grounds that the trial court's implied finding of timely prosecution is not supported by substantial evidence; (2) his challenge on that ground is well taken with respect to two of the charges; (3) the remedy in such cases is to remand for a further hearing on the timeliness of the affected charges; (4) further hearing may also be necessary to resolve several issues affecting applicability of the sentence enhancement for aggregate losses over $500,000; and (5) on the facts of this case, defendant's conviction for sale of unregistered securities and sale of securities by means of a fraudulent device does not rest on the same conduct as the counts in which he was charged, and on which he was convicted, of fraud against specific victims, and his sentence on the former counts therefore does not offend the proscription against duplicative punishment.

BACKGROUND

A. The Mobile Home Venture

Defendant was the proprietor of Monterey Bay Securities, a registered securities broker/dealer, and Monterey Bay Investment Corporation, a registered investment advisor. He or his corporations held licenses, permits, or certificates to engage in various additional activities including real estate and insurance brokerage and tax preparation. He testified that while he initially conducted a "general securities business," the "emphasis" later "changed more into real estate," specifically "[r]eal estate financing" and associated ventures. Around 1990 his primary business became "trust deeds investments," in which "you [would] have borrowers that would want to borrow funds secured by real property but, for whatever reason, couldn't get a bank loan and would go to a private source." He "would arrange groups of investors together to buy those loans or to fund those transactions for different types of individuals and institutional borrowers."

Defendant testified that the venture at issue here had its germ in discussions with Larry Kroeker, a "friend who was a mobile home contractor." Kroeker suggested "that we consider going into business to purchase and finance mobile homes because of what he saw in the marketplace at that time." This led to defendant's "selling mobile home notes to investors." He testified that this may have commenced as early as 1997, but bank records show October 1998 as the month when he began making deposits in a bank account designated Mobile Home Trust Account. Deposits continued until September 2005—the year in which, defendant testified, he ceased doing business. The records, which were apparently incomplete, showed total deposits of $14,889,506.68. Apparently, however, this sum included both income from the venture and investments in it.

B. Montgomery Investment

Of the 10 victims named in this matter, Jacquelyn Montgomery was the earliest to place funds in the mobile home venture. She testified that her history with defendant dated to 1992, when she and her father invested funds with him. After that investment paid off, defendant approached them about an investment in mobile homes. He said their rate of return would be 15 percent. As he described the venture to them, "He would buy mobile homes. And, when the people paid him, we would get our payment with princip[al] with the interest." He said that while there was "always risk," there was "very little in this mobile home investment." He said it was "pretty secure." He told her that if the buyer stopped paying, she "would still receive the interest."¹

On November 12, 1998, Montgomery wrote a check investing $25,000 in the mobile home venture.² These funds apparently went into a trailer whose first purchaser promptly defaulted on the associated loan. The trailer then went through the hands of several successive purchasers, with monthly payments sometimes stopping and restarting, until one of the purchasers paid off the entire loan. When that happened, apparently in February 2002, the proceeds were reinvested in another trailer without Montgomery's knowledge or consent. At the time of trial Montgomery had received all but six of the payments due on that trailer.

C. Perdue Investments

Another early investor was Joseph Perdue, who was "80–something" at the time of trial and who had died by the time of sentencing.³ He was the victim named in counts 8 and 18 of the information, which respectively charged defendant with theft from an elder ( Pen.Code, § 368, subd. (d) ) and false statements and omissions in connection with an offer of a security ( Corp.Code, §§ 25401, 25540, subd. (b) ).

Mr. Perdue invested $50,000 in October 1999 and another $50,000 in February 2000. Each of these investments was confirmed in letters from defendant. In the first letter, dated October 4, 1999, defendant acknowledged that Perdue had invested "$50,000.00 into mobile home notes through our office." He wrote that the term of the notes was seven years and that investors generally held them to maturity, adding, "However, our office has made a practice of maintaining a secondary market for these notes in case an investor needs to liquidate their note for cash prior to it's [sic ] maturity. Please accept this letter as a firm commitment from me personally to sell your note to another client (without loss) should the need arise."

The second letter, dated February 18, 2000, stated that Perdue had "agreed to lend us $50,000.00 to be used for the purchase and sale of mobilehomes," that "we" would "place[ ] [the funds] in our trust account" and "spend" them "to acquire, repair (if necessary), and resell bank repossessed and distress sale mobilehomes throughout the United States." The firm would "hold financing contracts on the mobilehomes and w[ould] create promissory notes that [it] w [ould] hold in [its] name." It assumed responsibility for collecting monthly payments, and undertook to pay monthly interest to Perdue at a 15 percent annual rate.⁴ The letter specified that "[t]he $50,000.00 balance that we have borrowed from you will result in you receiving $625.00 as monthly interest payments." The concluding paragraph stated, "Should you decide to withdraw your funds from your loan to us, we will refund to you the full or partial requested amount to you upon no less than sixty days notice."

The third letter, dated February 21, 2000, reconfirmed Perdue's second investment and contained identical recitals except for the concluding paragraph, which stated, "You have asked that we agree to a two year term for this loan. This will mean that this loan will mature on 2/21/2002. Should you decide not to withdraw your funds from your loan to us at that time, we can renegotiate the terms for a possible extension at that [sic ]. Should you have any further questions, please do not hesitate to call."

Beginning in March or April of 2000, Perdue received four successive monthly payments totaling about $5,000. After that he apparently received nothing more from his investment.

D. Repetti Investments

Mary Repetti was 68 years old when she commenced a series of investments in the mobile home venture. She had been investing with defendant for years, having met him around 1988 or 1989. When defendant first told her and her husband about the mobile home venture, Mr. Repetti, "being an old real estate broker, was very skeptical and ... really didn't want to go along with the program." But defendant was "a good salesman" and "convinced us that they were a safe investment." He said "he would be collecting the payments, distributing them to us," as well as "taking care of any foreclosure matters," a subject they discussed "in detail." He "kept mentioning 15 percent." He "guarantee[d]" this rate of return. He said their investment would be secured "[b]y notes." He informed them in writing that if a purchaser stopped paying on the note, he would "take care of all expenses." "[T]here would be no servicing charges on our part."

The Repettis initially invested $100,000. Defendant memorialized the investment in a letter dated November 9, 1999. It included the statement, "We agree to guarantee to you the timely repayment of principal and interest on each note that you hold throughout the duration of each note." It also said, "The interest rate you will receive will be 15% on the remaining principal balance."

The Repettis received an ...