People v. Martinez

Filed 3/9/17; pub. & mod. order 4/6/17 (see end of opn.)

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

THE PEOPLE, D067052

Plaintiff and Respondent,

v. (Super. Ct. No. SCD219673)

FRANCISCO JOSE MARTINEZ et al.,

Defendants and Appellants.

THE PEOPLE, D067561

Plaintiff and Respondent,

v. (Super. Ct. No. SCD219673)

MARCELLUS LOPES LEE,

Defendant and Appellant.

CONSOLIDATED APPEALS from judgments of the Superior Court of San Diego

County, Peter C. Deddeh, Judge. Remanded with directions; affirmed as modified.

Charles R. Khoury, under appointment by the Court of Appeal, for Defendant and

Appellant, Francisco Jose Martinez.
 Cynthia M. Jones, under appointment by the Court of Appeal, for Defendant and

Appellant, Daniel P. Romero.

Barbara A. Smith, under appointment by the Court of Appeal, for Defendant and

Appellant, Marcellus Lopes Lee.

Kamala D. Harris, Attorney General, Kathleen Alice Kenealy, Chief Deputy and

Acting Attorney General, Gerald A. Engler and Julie L. Garland, Assistant Attorneys

General, Sharon Rhodes and Ryan H. Peeck, Deputy Attorneys General, for Plaintiff and

Respondent.

A jury found Marcellus Lopes Lee, Daniel Paul Romero and Francisco Jose

Martinez, Jr. (together, appellants or the defendants) guilty of fraud in the offer or sale of

commodities. (Corp. Code, § 29536.)1 Lee and Romero were also convicted of

conspiracy and grand theft of personal property. (Pen. Code, §§ 182, subd. (a)(4), 487,

subd. (a).) The jury found that the takings exceeded certain dollar amounts and that the

victims' losses were in excess of $150,000. (Pen. Code, §§ 186.11, subds. (a)(2) & (a)(3),

12022.6, subd. (a)(2) (collectively, aggravated white collar criminal enhancements).)

The trial court subsequently granted the defendants' motions for a new trial on some of

the counts and dismissed other counts for insufficiency of the evidence. The People

appealed. (People v. Lee (Mar. 7, 2014, No. D061235) [nonpub. opn.] (Lee).)

In Lee, we concluded that the trial court abused its discretion in reversing the

jury's verdicts. We reversed the trial court's orders and remanded the case with

1 Unless otherwise specified, further statutory references are to the Corporations
Code.
2
instructions to reinstate the verdicts rendered by the jury and sentence the defendants

accordingly. In the interests of justice, we ordered the proceedings on remand to be

heard before a trial judge other than the judge whose orders were reviewed on appeal.2

(Lee, supra, No. D061235, Disposition.)

On remand, at the People's request, the sentencing court dismissed the counts on

which the defendants were subject to retrial. The court sentenced Romero to a total of

seven years in prison. Martinez received a one-year jail sentence and a five-year

probation term. Lee was sentenced to a total of five years in prison.

In the instant appeal, Appellants assert there is not sufficient evidence to support

their convictions for commodities fraud because they entered into money management

contracts with their clients, not contracts for the sale or purchase of commodities.

Martinez also argues there is not sufficient evidence to sustain his convictions even if

money management contracts qualify as commodities contracts within the meaning of

section 29536. Appellants claim the trial court prejudicially erred by failing to instruct

the jury that scienter is an element of the offense of commodities fraud. They also

contend reversal is required because the sentencing court refused to consider a motion for

a new trial on grounds not decided by the trial court.3

2 We refer to the court to which we remanded the case as "the sentencing court."

3 In his petition for habeas corpus, Romero claims he receive ineffective assistance
of counsel when his trial counsel did not join in Martinez's motion for a new trial.

3
 Romero argues the trial court did not properly instruct the jury about the statute of

limitations requirement for conspiracy. He contends the sentencing court erroneously

ordered him to pay restitution to several alleged victims for crimes for which he was not

convicted, and duplicating the amount of restitution owed to one of the victims. Romero

and Martinez maintain there is insufficient evidence to support an aggravated white collar

crime enhancement under Penal Code section 186.11, subdivision (a)(2), which requires a

taking to be greater than $500,000. Finally, Romero contends the sentencing court erred

by reinstating count six, which the court later dismissed at the People's request, and by

reinstating his conviction on count seven, and sentencing him for that offense.4

The People concede the sentencing court erroneously reinstated counts six and

seven, and we accept their concession. The People also concede the trial court erred

when it did not instruct the jury that scienter is an element of the offense of commodities

fraud, but contend the error was harmless. The People ask this court to review the

possibility the sentencing court may not have imposed a mandatory fine under Penal

Code section 186.11, subdivision (c).

We conclude that the restitution award to Ricky Lutz was incorrectly determined.

We vacate Romero's conviction on count seven and remand for resentencing. Otherwise,

we find no error and affirm.

4 Romero filed a supplemental brief arguing the trial court erred in presenting
embezzlement and larceny by trick as theories of a single theft offense not requiring
unanimity. He withdraws this argument in view of People v. Vidana (2016) 1 Cal.5th
632, in which the California Supreme Court held that larceny and embezzlement are not
separate offenses, but rather two ways of committing the single offense of theft. (Id. at
pp. 648-649.)
4
 FACTUAL AND PROCEDURAL BACKGROUND

We detailed the factual and procedural background of this case in our earlier

decision, Lee, supra, No. D061235. We need not repeat those details here. Instead, we

summarize the background of the case where relevant to the issues raised in these

appeals.5

In early 2004, Romero and Martinez became interested in international currency

trading. They had no background in trading or foreign currency. Romero and Martinez

contacted Lee, a former stockbroker who had started trading in off-exchange foreign

currency (forex). Lee's company was New England Capital Traders (NECT).

In August 2004, Romero opened an account with a futures commodity merchant

(FCM). He acknowledged receiving a risk disclosure statement from the FCM, which

stated stop-loss or stop-limit orders intended to limit losses to certain high returns and

minimal risk through stop-loss discipline may not be effective because market conditions

may make it impossible to execute such orders. Notwithstanding this advisement,

Martinez developed a web site for his and Romero's company, Kingdom Advisors, which

stated: "Investors may lower their exposure to risk by employing risk-reducing strategies

such as 'stop-loss' or 'limit' orders."

Romero and Martinez solicited and received more than $600,000 in loans from

two individuals to start trading. Using Lee as a trader, they had highly favorable returns

for three to five months and were able to recruit other investors. After the initial period,

5 We deny Romero's motion for judicial notice, dated May 14, 2016, and the
People's motion for judicial notice, dated July 6, 2016, as unnecessary.
5
Lee began to incur large trading losses. Despite the losses, Lee personally profited from

every trade. Based solely on Lee's short-lived success, Lee, Romero and Martinez

solicited several million dollars from other persons for the purpose of trading forex

contracts. Lee and Romero told potential investors they had significant success trading

foreign currency. They promised high rates of return and said they mitigated risk by

implementing stop-loss procedures.

Unhappy that Lee was taking commissions, Romero and Martinez opened a

trading account with another FCM, and received commissions or rebates on every trade

regardless of performance. Romero and Martinez contracted with another trader, who

was inexperienced and incurred large losses. Their clients lost most or all of their money.

According to Romero's estimates, during a period of 16 to 18 months, Kingdom Advisors

received from 10 to 30 percent of several million dollars in commissions from trading

forex contracts.

In approximately late 2005, Romero and Martinez, together with Lee, decided to

stop trading in the forex market and start an FCM, which they named TradeCo. They

told existing clients the only way to recoup their losses was to invest in TradeCo. They

solicited other persons to finance their new enterprise by promising high rates of return

and the possibility of equity positions. After operating for two to three months, the NFA

increased TradeCo's capitalization requirements and TradeCo ceased functioning.

On March 25, 2009, the People charged Lee, Romero and Martinez with

conspiracy to defraud, commodities fraud and grand theft. The People alleged defendants

falsely claimed substantial expertise and success trading foreign currency, promised

6
returns of 10 to 15 percent per month on investment funds and guaranteed investors they

would not lose more than 20 percent of the initial value of their portfolio through the use

of stop-loss mechanisms. The People also alleged as a result of their misrepresentations,

defendants took more than 2.4 million dollars from individual victims, who lost most or

all of their investments.

Trial began on February 28, 2011, and concluded on April 6, 2011. In the

interests of brevity, we discuss only those counts for which the defendants were

convicted and sentenced. Additional facts are set out in Discussion where relevant to the

issues raised on appeal.

Count One (Conspiracy)

The People charged Lee, Martinez and Romero with conspiracy to defraud and

alleged they committed 19 overt acts in furtherance of their conspiracy, including

obtaining $100,000 from Robert Smith on or about November 3, 2004; $260,000 from

Ricky Lutz between August to September 2005; $45,000 from Curtis Brown and

$100,000 from Michael Mauch on or about November 28, 2005; $10,000 from Greg

Hughes on or about March 30, 2006; $110,000 from Greg Sabal between May 10 and

July 5, 2006; and $150,000 from Paul Cannon between September 25 and 28, 2006. The

complaint alleged the defendants failed to return all but a small fraction of the money to

their victims, despite demands by the victims for its return.

Counts Eight and Nine (Robert Smith)

The People charged the defendants with grand theft of personal property and fraud

in the offer or sale of a commodity to Robert Smith. After several meetings with Romero

7
and Martinez, and with Lee, Romero and Martinez, Brian Smith, a financial advisor,

advised his client, Robert Smith, to invest with the defendants. Brian Smith was aware

that forex trading was high risk. Romero told Brian Smith they could provide a monthly

return of six percent and had clients who were earning that rate. Brian Smith discussed

foreign currency markets, liquidity leverage, technology and stop-loss as risk mitigation

in technical terms with Lee. Brian Smith said the strategies Lee described for managing

risk included stop-loss discipline and were "very reassuring."

In November 2004, Robert Smith invested $100,000 with Kingdom Advisors. He

received a six percent return each month for three or four months. Kingdom Advisors did

not provide any account or trade summaries. When Kingdom Advisors stopped sending

checks, Brian Smith kept communicating with Romero, who assured him that Robert

Smith's principal was intact and profits would resume. Robert Smith received one or two

additional payments in the third quarter of 2005. Brian Smith never learned what

happened to Robert Smith's principal.

Forensic accounting showed that Robert Smith's funds were commingled in a

Kingdom Advisors trading account where Lee's company, NECT, had trading authority.

The total initial balance was $478,385. Of that amount, there were trading losses of

$149,630.50 and withdrawals of $328,754.50. The withdrawals included payments of

$78,638 to Kingdom Advisors, $15,000 to Martinez, $11,000 to Martinez's organization,

Luz de Vida, and transfers totaling $53,000 to Romero's personal bank account. In April

2005, Kingdom Advisors made a $5,000 payment to Robert Smith from another

investor's account.

8
Counts Ten and Eleven (Brian Smith et al.)

The People charged the defendants with grand theft and commodities fraud from

Brian Smith. At various times, six investors gave a total of $460,000 to Brian Smith,

which he invested with the defendants through his company, Olympia Capital

Management (Olympia). A few weeks later, the account suffered losses of approximately

70 percent. Brian Smith contacted Romero, who blamed the trading loss on a young

trader. Brian Smith had met the trader but had not expected him to have any direct role

in trading his accounts. When the trader suffered initial trading losses, he abandoned

stop-loss discipline in hopes of recovering the funds, compounding the losses.

Brian Smith met with Romero and Martinez, who said Smith could recover his

assets by investing in TradeCo. Martinez told Smith they could provide seven percent

interest a month while maintaining safety on the principal. Smith invested the funds

remaining in his trading account in TradeCo. He never learned what happened to those

funds.

According to a forensic accountant, Jeremy Connelly deposited $10,000 in a

Kingdom Advisors bank account in June 2005. That $10,000, along with other deposits,

was withdrawn in various transactions that month. Kingdom Advisors received $4,300 of

Connelly's money, of which $2,500 went to Romero's personal account. Between

February and June 2006, Connelly received approximately $3,000 in payments from

Olympia.

In November 2005, Michael Mauk deposited $100,000 with Olympia, which was

wired to a trading account where Kingdom Advisors had trading authority. The trading

9
account had losses of $69,514 in two months, including commissions. From November

28, 2005 to January 26, 2006, Kingdom Advisors received approximately $63,500 in

payments from the trading account. Romero personally received $9,500. Four thousand

dollars was transferred to another one of Romero's business accounts.

Curtis Brown deposited $45,000 with Olympia in November 2005. A month later,

Brown's funds were deposited in a trading account. There were transfers from the trading

account to Olympia in February, May and June 2006 totaling $34,076.76. Those funds

became part of Olympia's $75,000 deposit with Kingdom Advisors for TradeCo in July

2006. Of those funds, $69,000 was deposited in a TradeCo bank account. The remaining

$6,000 was used to pay part of a settlement in a civil lawsuit that Romero owed to a third

party.

Greg Hughes deposited $10,000 with Olympia in March 2006. Those funds,

together with Greg Sabal's $100,000 deposit, were distributed as follows: In May,

$30,000 was placed in a trading account; $35,000 was transferred to a Kingdom Advisors

bank account; and the remaining funds were part of Olympia's $75,000 transfer to

Kingdom Advisors for TradeCo. Romero used the funds that were transferred to

Kingdom Advisors for his personal expenses, included a $24,500 payment to Hoehn

Motors, and other payments to Disney Resort, Romero's credit cards, airlines, hotels and

restaurants, and to replenish another client's trust account.

In September 2006, Cannon deposited a total of $152,600 with Olympia. His

funds comprised a large portion of a $140,000 transfer to Kingdom Advisors. Of that

10
transfer, a $10,000 check made out to Daniel Romero's wife was deposited in Romero's

personal account. Cannon's money was never deposited in any trading account.

Counts Twelve and Thirteen (Lutz)

Romero and Lee were charged with grand theft and fraud in the offer or sale of

commodities to Ricky Lutz. In early 2005, Lutz contacted Romero for information about

forex. Romero sent him a brochure stating Kingdom Advisors had returns of 10 to 14

percent a month. The brochure stated "the investment manager has established a stop-

loss policy with authorized traders such that they are to cease trading should any account

suffer a 20 percent loss below the series' most recent highest asset valuation."

Lutz spoke to Lee on numerous occasions about stop-loss. Lee told him if the

investment funds dropped below 80 percent of their original amount, trading would stop

and the investor would be notified. Lee showed Lutz returns showing that investors had

doubled their money in eight months. Lutz knew that a forex investor could make a lot of

money and could lose a lot of money. That was why he was "such a stickler" about the

stop-loss provision. Lutz believed that a loss of 20 percent of his investment was the

worst case scenario.

Relying "100 percent" on Lee and Romero's representations, Lutz recruited four

other investors. Together, they deposited $260,000 in Lee's trading company in August

and September 2005. In early September, Lee sent Lutz an e-mail stating the investment

was up 67 percent. Approximately three weeks later, Lutz learned that one of his

accounts had lost more than 50 percent of its initial value and another account was down

approximately 40 percent. Lutz told Lee he was in violation of their agreement and

11
demanded that Lee restore the accounts to 80 percent of their original value. Lee said the

lack of notice to Lutz at the 20 percent mark was an oversight. He had some safer, small

trades that would bring the account balances back to their original amounts. Lutz

authorized Lee to continue trading.

On October 12, 2005, Lutz told Lee to close his accounts and return the balance of

$105,000 to him. On November 6, Lee notified Lutz he had closed the trading account

and was ending his forex trading career. Lee said Lutz's account was down

approximately 90 percent but he had a solution that would help them both succeed. He

asked Lutz to invest his investors' remaining funds, and additional funds, in TradeCo.

Lee promised Lutz he would return the expected profits on his original investment to

him. After declining Lee's offer, Lutz received a payment of $24,162, which he returned

to one of his investors.

The Defense Case

Martinez testified he was not responsible for the way trades were conducted. He

said he did not have access to trading accounts or records, or authority over the

disbursement of funds from Kingdom Advisors. Martinez said he did not misrepresent

Kingdom Advisors' success to any prospective clients or guarantee that a client would not

lose his or her investment. Martinez testified he confronted Romero about his use of

Kingdom Advisors funds. Romero had built a pool at his home, and purchased a Porsche

and a BMW, all-terrain vehicles, a trailer and jewelry. Martinez acknowledged he was

vice president of Kingdom Advisors, a partner in TradeCo, but said he did not have an

ownership interest in the company. Martinez acknowledged he had signatory authority

12
for Kingdom Advisors' bank accounts and signed documents as the vice president of

Kingdom Advisors, and he had trading authority over its accounts.

Romero testified when he spoke to potential clients, he simply relayed his

experience in the market during the early months of trading. He promised "best efforts"

but never guaranteed a specific rate of return. Romero was not responsible for Kingdom

Advisors' Web site, which stated that stop-loss discipline would be used to limit losses.

Martinez developed the Web site with content from an FCM.

Lee did not testify on his own behalf.

Jury Verdicts

The jury convicted Romero of conspiracy (count one), commodities fraud (counts

seven, nine, eleven and thirteen) and grand theft (counts eight, ten and twelve). The jury

found Martinez guilty of commodities fraud (counts nine and eleven). As to Lee, the jury

returned guilty verdicts on the counts of conspiracy, commodities fraud (counts nine,

eleven and thirteen) and grand theft (count twelve). As to all of the defendants, the jury

made true findings on three white collar penalty enhancements under Penal Code sections

186.11 and 12022.6.6

Post-Trial Proceedings

The defendants filed new trial motions under section 1181, subdivision (6) on the

ground there was insufficient evidence to support the verdicts. The trial court granted

6 The jury acquitted Martinez and Lee of counts six and seven. The jury did not
reach a verdict on the following counts: Lee—counts two, three, four, five, eight and ten;
Romero—counts two, four and six; and Martinez—counts one, eight and ten.
13
new trials on counts nine, eleven and thirteen, and dismissed counts two, three, four, five,

eight, nine, twelve and thirteen. The trial court also dismissed count one as to Martinez,

and count ten as to Martinez and Lee. (Lee, supra, No. D061235, at pp. 16-17.)

The People appealed. Our court determined the trial court erred in granting the

motions for new trial on grounds of instructional error. In addition, the trial court applied

an incorrect legal standard in dismissing the defendants' convictions for legal

insufficiency of the evidence. (Lee, supra, No. D061235, at p. 3.) We reversed the trial

court's orders and remanded the matter to the superior court with instructions to reinstate

the jury verdicts and sentence the defendants accordingly. The People had the discretion

to seek a retrial on the counts that ended in mistrial. (Lee, at p. 60.)

Remand

After the matter was remanded to the sentencing court, Martinez filed an opposed

motion for new trial on his convictions for commodities fraud. He argued the trial court

did not rule on his new trial motion and he was entitled to a decision on the merits. The

sentencing court denied the motion for a new trial, stating it had an obligation to follow

the order on remand to reinstate the verdicts and sentence the defendants.

At the sentencing hearings,7 the court sentenced Martinez to one year in the

county jail and five years of probation for his convictions on two counts of commodities

fraud. The court did not impose a sentence on the white collar criminal enhancements.

7 Lee's trial counsel was ill on the date set for the sentencing hearing, which was
continued to January 8, 2015.
14
Martinez was ordered to pay various fines and fees, and provide restitution to his victims

in an amount to be determined.

The sentencing court denied Romero's request for probation and sentenced him to

a total of seven years in prison, as follows: two years on count seven, which the court

designated as the principal count; two years, stayed, for conspiracy; count nine, one year,

consecutive; count ten, two years, stayed; count eleven, one year, consecutive; count

twelve, two years, stayed; and count thirteen, one year, consecutive. In addition, the

sentencing court imposed a two-year consecutive sentence on aggravated white collar

criminal enhancements. In addition to fines and fees, the court ordered Romero to pay

restitution in the amount of $81,500 to McClelland, $110,000 to Capell, $395,282 to

Lutz, $40,000 to Shemtov, and an amount to be determined to Brian Smith.

As to Lee, the sentencing court imposed a total of five years' imprisonment. The

court set the principal term of three years on count nine, and sentenced him to three years

each on counts eleven and thirteen, to run concurrently. The court imposed, and stayed, a

one-year sentence for conspiracy and two years for grand theft (count twelve). Lee

received an additional two-year term on the white collar criminal enhancement. Lee was

ordered to pay fines, fees, and restitution in an amount to be determined to Brian Smith

and John Shea Buenas,8 and restitution in the amount of $81,500 to McClelland;

$110,000 to Capell; $395,282 to Lutz; and $40,000 to Shemtov.

DISCUSSION

8 The name John Shea Buenas does not appear in any of the charging documents or
in Lee's probation report.
15
 I

COMMODITIES FRAUD

A

The Parties' Arguments

The People charged Romero, Lee and Martinez with violations of section 29536,

subdivision (b) (the statute), which states, "It is unlawful for any person, directly or

indirectly, in connection with the purchase or sale of, the offer to sell, the offer to

purchase, the offer to enter into, or the entry into, a commodity, commodity contract, or

commodity option to . . . willfully make any false report, enter any false record, make any

untrue statement of a material fact, or omit to state a material fact necessary in order to

make the statements made, in the light of the circumstances under which they were made,

not misleading."

Appellants contend there is not sufficient evidence to support their convictions on

charges of commodities fraud. They state section 29536 is limited to misrepresentations

connected to actual contracts to purchase commodities, and does not include

misrepresentations that may have been made in non-commodities contracts between

investors and money managers. Appellants contend the relationship between the

defendants and the investors did not involve currency trading because their clients opened

money management accounts, and did not enter into commodities contracts.

Romero argues merely informing potential clients they could trade in commodities

contacts was not an offer to buy or sell commodities, and any alleged misrepresentations

16
underlying the commodity fraud charges were therefore not made in connection with the

purchase or sale of a commodity.

Martinez claims the contracts that were discussed in his presence were money

management contracts, not commodities contracts. He argues a discretionary trading

account is not an investment governed by section 29536. Martinez further argues there is

insufficient evidence to support his convictions on commodities fraud. He asserts he was

a clerk and office manager, and had nothing to do with the sale or offer of commodities.

Lee asserts that as a trader, he never acted as a buyer or seller of commodities or

commodities options. He argues the contracts he signed with retail customers were

several steps removed from being contracts for commodities sales or purchases. Lee

joins in Romero's and Martinez's argument.

The People contend Appellants' interpretation of section 29536 is overly narrow.

They argue section 29536 prohibits the use of fraud and other specified conduct by any

person in connection with the offer or sale of foreign currency, regardless of how the

parties characterize and structure their agreement. The People assert there is substantial

evidence to support Martinez's convictions for commodities fraud.

B

The Legislature Did Not Intend to Limit the Meaning of "Commodity" and "Commodity
Contract" to Any Particular Type of Account, Agreement or Contract

The parties' arguments raise an issue of statutory interpretation we must address

before considering the sufficiency of the evidence in this case. (Burden v. Snowden

17
(1992) 2 Cal.4th 556.) Statutory interpretation is de novo. (Ibid.) "The rules governing

statutory construction are well settled. We begin with the fundamental premise that the

objective of statutory interpretation is to ascertain and effectuate legislative intent.

[Citations.] 'In determining intent, we look first to the language of the statute, giving

effect to its "plain meaning." ' [Citations.] Although we may properly rely on extrinsic

aids, we should first turn to the words of the statute to determine the intent of the

Legislature." (Id. at p. 562.)

In arguing their conduct did not come with section 29536, Appellants rely on

CFTC v. White Pine Trust Corporation (2009 9th Cir.) 574 F.3d 1219 (White Pine Trust),

which held that discretionary trading accounts are not contracts to purchase commodities

under the federal Commodity Exchange Act, 7 U.S.C. section 1 et seq. Appellants'

reliance on White Pine Trust is misplaced.

In enacting the California Commodities Law of 1990, the Legislature intended to

fill a regulatory void with respect to the offer and sale of commodities and commodity

contracts due to the lack of jurisdiction over case transactions in commodities and

commodity contracts by the Commodities Futures Trading Commission (CFTC) under

federal law, including the Commodity Exchange Act (the Act) and California law

governing securities (section 25000 et seq.). (Stats.1990, ch. 969, § 1 (A.B.4253).) Thus,

a case interpreting the Act has little, if any, relevance to questions of statutory

interpretation under the California Commodities Law of 1990, which governs acts over

which the CFTC does not have jurisdiction.

18
 Further, even if it were relevant, White Pine Trust, supra, 574 F.3d 1219 does not

assist Appellants here. Instead, it illustrates the differences between the narrow

definitions in the Act and the expansive statutory language in the California Commodities

Law of 1990. The issue in White Pine Trust is whether the CFTC has jurisdiction to

bring a civil proceeding against a person who fraudulently solicited investments for

trading in the spot and options markets for foreign currency, but whose employer

commingled investor funds with general funds and then stole the money for himself. (Id.

at p. 1221.) In construing relevant provisions of the Commodities Exchange Act (the

Act), the reviewing court noted that title 7 United States Code section 2(c)(1)(A) exempts

agreements, contracts and transactions in certain financial instruments, including foreign

currency. However, title 7 United States Code section 2(c)(2)(B)(i)(I)-(II) restores

coverage over a specific subset of foreign currency transactions. (White Pine Trust, at

p. 1223.) The reviewing court held that the CFTC can bring an action only if it can show

" 'an agreement, contract or transaction in foreign currency . . . that is . . . an option[ ] and

is offered to, or entered into with, [a retail investor].' " (Ibid.)

Unlike 7 United States Code section 2(c)(1)(A), which governs civil proceedings,

the California statutory scheme governing a criminal action for commodities fraud under

Corporations Code section 29536 contains no such exemptions for "agreements, contracts

and transactions in certain financial instruments." The California legislature defines

19
"commodity contract"9 as "any account, agreement, or contract for the purchase or sale,

primarily for speculation or investment purposes and not for use or consumption by the

offeree or purchaser, of one or more commodities, whether for immediate or subsequent

delivery or whether delivery is intended by the parties, and whether characterized as a

cash contract, deferred shipment or deferred delivery contract, forward contract, futures

contract, installment or margin contract, leverage contract, or otherwise." (Corp. Code,

§ 29505, italics added.) By definition, the term "commodity" includes any foreign

currency. (Corp. Code, § 29504.)

We conclude that the Legislature did not intend to limit the meaning of

"commodity" and "commodity contract" to any particular type of account, agreement or

contract. Section 29505 states the parties' characterization of the type of account,

agreement or contract is not determinative. The use of the word "otherwise" in section

29505 indicates the language is to be interpreted broadly. We conclude that section

29536 encompasses any investment account, agreement or contract that is used for the

purchase or sale of commodities. Thus, the parties' characterization of the type of vehicle

that is used "for the purchase or sale, primarily for speculation or investment purposes

9 "A 'commodity contract' includes a commodity option as defined in Section
29510, unless otherwise specified." (§ 29505.) " 'Commodity option' means any account,
agreement, or contract giving a party thereto the right but not the obligation to purchase
or sell one or more commodities or one or more commodity contracts, or both, whether
characterized as an option, privilege, indemnity, bid, offer, put, call, advance guaranty,
decline guaranty, or otherwise, but shall not include an option traded on a national
securities exchange registered with the United States Securities and Exchange
Commission." (§ 29510.)

20
and not for use or consumption by the offeree or purchaser, of one or more commodities,"

is not determinative. (§ 29505.)

Appellants argue the accounts they set up for their clients were not for the

purchase or sale of commodities. We disagree. The record shows Romero, Martinez and

Lee offered forex trading to prospective clients. Kingdom Advisors' website offered

forex trading. Romero and Lee discussed their methods to mitigate risk in forex trading,

informed prospective clients of their successes in forex trading, and did not disclose the

losses their clients had suffered in forex trading. Each victim who testified said they

believed they were investing money with the defendants to trade on the forex market.

Brian Smith testified his client Robert Smith wrote a check for $100,000 and Brian Smith

sent it to Romero "for investment in the Forex markets." Two of the victims had access

to online accounts where they could monitor forex trading on their behalf.

We are not persuaded by Lee's argument his convictions for commodity fraud

must be reversed because, as a trader, he never acted as a buyer or seller of commodities

or commodities options. Similarly, we reject Romero's contention he merely informed

potential clients they could possibly trade in commodities contracts. Section 29536 does

not require that a person personally buy or sell commodities or commodities options to be

held responsible for fraud. Its language is plain. Instead, a person is criminally liable for

commodities fraud if he or she "directly or indirectly, in connection with the purchase or

sale of, the offer to sell, the offer to purchase, the offer to enter into, or the entry into, a

commodity, commodity contract, or commodity option to" willfully makes any false

21
report, any untrue statement of a material fact, or omits to state a material fact that is

necessary to make the statements made not misleading. (§ 29536, italics added.)

The record shows that Romero and Lee solicited investments after experiencing

heavy losses, lied to investors about the nature of the risk of forex trading, and assured

investors their principal was intact, when in fact it had been lost in trading or used to

maintain the appearance of profitability or transferred to the defendants' personal

accounts. In so doing, they made false reports and untrue statements of material fact, and

omitted to state material facts that were necessary to make their representations not

misleading, in connection with offers to conduct transactions in foreign currency.

C

There Is Substantial Evidence to Support Martinez's Convictions for Commodities Fraud

Martinez contends there is not sufficient evidence to support his convictions for

commodities fraud notwithstanding the argument the client accounts did not come within

the meaning of section 29536. The record belies Martinez's argument he was only a clerk

and office manager, and had nothing to do with the sale and offer of commodities. He

argues Brian Smith acknowledged testifying at his preliminary hearing Martinez never

said anything of substance and Smith was not aware of any representations or

misrepresentations by Martinez.

"When a jury's finding of fact is attacked on the ground that there is not any

substantial evidence to sustain it, the power of an appellate court begins and ends with the

determination as to whether, on the entire record, there is any substantial evidence,

contradicted or uncontradicted, which will support the finding of fact, and when two or

22
more inferences can reasonably be deduced from the facts, a reviewing court is without

power to substitute its deductions for those of the jury. It is of no consequence that the

jury, believing other evidence or drawing other inferences, might have come to a contrary

conclusion." (People v. Mendonsa (1982) 137 Cal.App.3d 888, 891, citing People v.

Johnson (1980) 26 Cal.3d 557, 576-577.)

The record contains substantial evidence to support the jury's conclusion that

Martinez was guilty of commodities fraud on counts nine (Robert Smith) and eleven

(Brian Smith). Martinez developed Kingdom Advisor's website, which falsely claimed

the defendants' forex trading program was able to mitigate risk through stop-loss

mechanisms. In late 2004, after several other investors had lost substantial sums of their

investments in defendant's forex trading program, Romero and Martinez met with Brian

Smith to discuss forex trading. Martinez told Brian Smith their venture was profitable

and could provide a return of approximately seven percent per month "with a lot of safety

on principal." Brian Smith testified in meetings in which he and Romero discussed forex

trading and their methods of mitigating risk, Martinez would "echo" and "amplify"

Romero's remarks. Thus, there is substantial evidence in the record to show Martinez

willfully made an untrue statement of a material fact in violation of section 29536.

Martinez argues there is insufficient evidence to show that Brian Smith relied on

any of his statements in deciding to invest with the defendants. Brian Smith testified

when he heard Romero and Martinez said their clients were earning six percent per

month, and Smith and his client could earn that amount, he questioned their statements.

Brian Smith said Romero and Martinez did not characterize the rate of return as a

23
guarantee, and if they had, he would not have believed them. Brian Smith testified he

knew the venture was "high risk, very fast, very, very liquid." He explained he was

"seeking some safety and something to mitigate the risk that I knew was there. And their

descriptions for how they manage that aspect of the program were very reassuring." The

record shows that Brian Smith knew that forex trading was high risk but relied on the

defendants' representations they could mitigate that risk. The jury could reasonably

conclude that Brian Smith relied on Martinez's statements "echoing" and "amplifying"

representations by Romero and Lee concerning risk management before recommending

the venture to Robert Smith and other investors. Thus there is substantial evidence to

show Brian Smith relied on Martinez's statements in deciding to invest in defendants'

trading scheme.

In addition, forensic accounting shows that Martinez omitted to state material facts

necessary in order to make the statements made, in the light of the circumstances under

which they were made, not misleading. (§ 29536.) Robert Smith's funds were

commingled in a Kingdom Advisors trading account. The total initial balance in that

account was $478,385. Of that amount, there were trading losses of $149,630.50 and

withdrawals of $328,754.50. The withdrawals included payments of $15,000 to Martinez

and $11,000 to Martinez's organization, Luz de Vida. There is no record of Martinez

disclosing his intent to divert a portion of Robert Smith's investment to his own accounts,

instead of using it for forex trading. Thus, the record shows that Martinez failed to state

material facts relating to Robert Smith's investments in the defendants' forex trading

24
scheme. We conclude that there is substantial evidence to support Martinez's convictions

for commodity fraud under section 29536.

Because we sustain Martinez's convictions for commodity fraud, we need not

consider his argument the reversal of his convictions for commodities fraud necessarily

requires reversal of the aggravated white collar criminal enhancement.

II

INSTRUCTIONAL ERROR

A

Scienter

1. The Parties' Arguments

In People v. Simon (1995) 9 Cal.4th 493 (Simon), a case addressing the elements

of securities fraud under section 25401, the California Supreme Court held that

"knowledge of the falsity or misleading nature of a statement or of the materiality of an

omission, or criminal negligence in failing to investigate and discover them, are elements

of the criminal offense described in section 25401."10 (Id. at p. 522.) Relying on Simon,

Appellants argue the trial court had a sua sponte duty to instruct the jurors that to find the

defendants guilty of commodities fraud, they must find that the defendants knew or

10 "It is unlawful for any person to offer or sell a security in this state, or to buy or
offer to buy a security in this state, by means of any written or oral communication that
includes an untrue statement of a material fact or omits to state a material fact necessary
to make the statements made, in the light of the circumstances under which the
statements were made, not misleading." (§ 25401.)

25
should have known that their statements were false at the time the statements were

uttered. Appellants contend the trial court's failure to do so was prejudicial error.

The People agree scienter is an element of commodities fraud. They argue the

error is harmless beyond a reasonable doubt because there is overwhelming evidence to

show the defendants had guilty knowledge of the falsity of their statements and the

prosecutor's argument clearly stated jurors were required to consider the defendants'

guilty knowledge in deciding whether to convict them on charges of commodities fraud.

2. Legal Principles and Standard of Review

"We review de novo whether a jury instruction correctly states the law. [Citation.]

Our charge is to determine whether the trial court ' "fully and fairly instructed on the

applicable law." [Citation.]' [Citation.] We look to the instructions as a whole and the

entire record of trial, including the arguments of counsel. [Citation.] Where reasonably

possible, we interpret the instructions ' "to support the judgment rather than [to] defeat

it." ' " (People v. Mason (2013) 218 Cal.App.4th 818, 825.)

An "instructional error that improperly describes or omits an element of an

offense, or that raises an improper presumption or directs a finding or a partial verdict

upon a particular verdict" is subject to review under Chapman v. California (1967) 386

U.S. 18, 24 (Chapman). (People v. Flood (1998) 18 Cal.4th 470, 502-503 (Flood).)

Under Chapman, the harmless error analysis "is 'whether it appears "beyond a reasonable

doubt that the error complained of did not contribute to the verdict obtained." ' " (Flood,

supra, at p. 494.)

3. Additional Factual Background

26
 The trial court reviewed each proposed jury instruction with counsel. The agreed

upon instructions for commodities fraud tracked the statutory language for each relevant

statute, including the definition of commodity (§ 29504), the definition of commodity

contract (§ 29505), the definition of offer (§29513), and the definitions of sale and sell (§

29516). As to the substantive offense of fraud in the offer or sale of commodities (§

29536), the trial court instructed the jury, without objection:

"To prove that a defendant is guilty of this crime, the People must
prove that:
1. The defendant, directly or indirectly, in connection with the
purchase or sale of, the offer to sell, the offer to purchase, the offer
to enter into, or the entry into a commodity, commodity contract, or
commodity option; and
2. willfully [did make] any false report, entered any false record,
made any untrue statement of a material fact, or omitted 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."

During closing argument, the prosecutor told the jury: "Commodities fraud. It's

lying to someone with the hope they will rely [on your statements], you get the money."

The prosecutor pointed out Romero made false statements when he applied for a trading

account to facilitate forex trading. Romero represented he made $250,000 a year, had a

million dollars in total assets, including $800,000 in liquid assets. None of those

statements were true. The prosecutor said Romero deceitfully omitted other relevant

facts from other documents, including his resume. For example, Romero failed to

disclose he did not have any experience in the financial sector or forex trading. The

prosecutor argued, "If they're willing to lie to open up these trading accounts, to facilitate

their business ventures, their fraud, their theft, you think for a minute they wouldn't be

27
willing to lie to their potential customers, to their clients? The prosecutor characterized

the defendants as "con men" and their conduct as "lying to get other people's money."

Romero's trial counsel concluded his closing argument by stating, "I ask you [the

jury] to find Mr. Romero not guilty on all counts based on a complete lack of evidence

that he or anyone else lied to any of the investors. Referring to the fact the defendants

received money for each trade whether it made or lost money, Martinez's trial counsel

said, "So as long as there's no lie at the beginning, it doesn't really matter if they were

getting paid at both ends."

4. Analysis

The defendants were charged with violating section 29536, subdivision (b), which

makes it unlawful to "willfully make any false report, enter any false record, make any

untrue statement of fact, or omit to state a material fact necessary in order to make

statements made, in the light of the circumstances under which they were made, not

misleading" in connection with, directly or indirectly, "the purchase or sale of, the offer

to sell, the offer to purchase, the offer to enter into, or the entry into, a commodity,

commodity contract, or commodity option." We agree with the parties that a violation of

section 29536 requires "scienter," which is guilty knowledge of the false or misleading

nature of a representation, or omission to disclose, at the time the representation or

omission occurs. (Simon, supra, 9 Cal.4th at p. 507.)

Section 29536 requires the misrepresentation is made willfully. "Where

'willfulness' is made a vital ingredient of a crime, it implies 'knowledge and purpose to do

wrong.' " (People v. Armentrout (1931) 118 Cal.App.Supp. 761, 773.) "Consistent with

28
that requirement, and in appropriate cases, knowledge has been held to be a concomitant

of willfulness." (People v. Honig (1996) 48 Cal.App.4th 289, 334 (Honig) [willfully

implies the person knows was he is doing]; see People v. Loeper (1959) 167 Cal.App.2d

29, 33 [to do a thing willfully is to do it knowingly].)

"[T]he term 'willfully' has been interpreted in a number of statutory contexts as

requiring more than mere volition in committing the prohibited act." (Stark v. Superior

Court (2011) 52 Cal.4th 368, 401.) For example, in a case addressing the term "willfully

participates" under section 25550, which prohibits certain acts in the purchase or sale of

securities, the reviewing court stated "the purpose and intent of the willful participation

requirement is to clarify and underscore the high level of scienter required for a violation

of section 25500. The most reasonable interpretation of the phrase 'willfully participates'

is to limit section 25500 liability to situations where there is an intent to defraud through

a knowingly false statement. Only persons who willfully, not merely recklessly, violate

section 25400, subdivision (d)[11] can be liable for damages." (California Amplifier, Inc.

v. RLI Ins. Co. (2001) 94 Cal.App.4th 102, 112.)

In Simon, supra, 9 Cal.4th 493, the California Supreme Court considered the

mental state necessary to establish a violation of section 25401. Section 25401

11 In language similar to section 29536, section 25400, subdivision (d) states that if
"a broker-dealer or other person selling or offering for sale or purchasing or offering to
purchase the security, to make, for the purpose of inducing the purchase or sale of such
security by others, any statement which was, at the time and in the light of the
circumstances under which it was made, false or misleading with respect to any material
fact, or which omitted to state any material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made, not misleading, and
which he knew or had reasonable ground to believe was so false or misleading."
29
"generally provides that it is unlawful to offer or sell a security by means of a

communication which includes an untrue statement of material fact or which omits a

material fact about the security. The criminal penalty for violation of that section is

found in section 25540 of that code. Under its terms, any person who 'willfully violates'

. . . section 25401 is guilty of a felony. This penal provision does not explicitly contain a

requirement that the accused have knowledge of the falsity of the statement." (Honig,

supra, 48 Cal.App.4th at p. 335.) The Simon court held that "knowledge of the falsity or

misleading nature of a statement or of the materiality of an omission, or criminal

negligence in failing to investigate and discover them, are elements of the criminal

offense described in section 25401." (Simon, 9 Cal.4th at p. 522; People v. Salas (2006)

37 Cal.4th 967, 979-981.) The Simon court recognized " 'a "prevailing trend 'away from

the imposition of criminal sanctions in the absence of culpability where the governing

statute, by implication or otherwise, expresses no legislative intent or policy to be served

by imposing strict liability.' " ' " (Honig, at pp. 334-335.)

We agree with the parties' contention section 29536 requires a showing of scienter.

Section 29536 requires the defendant to "willfully make" any misrepresentation

concerning the purchase or sale of a commodity. We hold that "knowledge of the falsity

or misleading nature of a statement or of the materiality of an omission" (Simon, supra, 9

Cal.4th at p. 522) is an element of the criminal offense described in section 29536. The

trial court has a sua sponte duty to instruct the jury on all of the elements of a charged

offense. (People v. Cummings (1993) 4 Cal.4th 1233, 1311.) The failure to do so here

was error.

30
 5. The Instructional Error is Harmless Beyond a Reasonable Doubt

After reviewing the record, we conclude the failure to instruct the jury about

knowledge of the falsity of the statement is harmless beyond a reasonable doubt.

(Chapman, supra, 386 U.S. at p. 24.) The trial court instructed the jury that to find the

defendants guilty of commodities fraud, it must find that the defendants willfully made a

false report, false record, an untrue statement of a material fact, or omitted to correct a

misleading statement. Willfully means that the action was deliberate and implies

knowledge. (Honig, supra, 48 Cal.App.4th at p. 334; People v. Loeper, supra, 167

Cal.App.2d at p. 33.) The prosecution repeatedly told the jury to convict the defendants

of commodities fraud, it had to find they had lied to their clients. In this context, the

common meaning of "to lie" is "to make an untrue statement with intent to deceive."

(Merriam-Webster's Coll. Dict. (11th ed. 2006) at p. 717, col. 2.) Trial counsel for

Romero and Martinez also told the jury that lying was the key to their clients' guilt or

innocence.

The record shows beyond a reasonable doubt that Romero, Martinez and Lee

knowingly made false reports, and omitted to correct misleading statements, to their

victims. The timeline of the victim's losses clearly supports this conclusion. Kara

Mucha, a CFTC investigator, testified that with one small exception,12 all of the

defendants' trading accounts had net losses. The defendants started their forex trading

scheme in early 2004 by recruiting two investors. They had 30 percent returns a month

12 One account showed a $2,859 return on a $100,000 investment.
31
for three to four months before losing most, if not all, of the investors' funds. In June or

July 2004, David Shemtov and his business partner, Djamshid Younessi, (counts two,

three, four and five) gave Lee and Romero $50,000 each. Within days, their investments

lost more than half their value. In September 2004, after meeting with Romero, Martinez

and Lee, William McClelland and his business partner (counts six and seven) invested

$100,000 with defendants. The defendants represented they would receive returns of

eight to 15 percent, and only 20 percent of their investment would be at risk. McClelland

testified they would not have made the investment had the risk been greater than 20

percent. They received several payments of $10,000 but never received any statements.

In early 2005, they liquidated their account and received the balance of $18,500.

Martinez testified he knew at the time the two initial investors lost money. He

telephoned them and told them their money was lost. Martinez said it was "just the two

of them" at that point. One of the investors sued Romero and Martinez. Martinez

testified he understood the risk and volatility of forex trading, and believed there was

some risk involved. By July 2004, Romero knew that the two initial investors, and

Shemtov and Younessi, had suffered significant losses. The record supports the

reasonable inference that Lee, who was responsible for executing the forex trades, was

aware of the victims' losses as they occurred. Thus, by summer 2004, the defendants

knew that forex trading had not been successful and their clients had lost significant sums

of money.

The record shows that Romero, Martinez and Lee met with Brian Smith (counts

nine and eleven) in late 2004. They told him their forex trading venture was profitable,

32
which was not true, and they had clients who were earning seven per cent a month, which

also was not true. None of the defendants disclosed that after initial gains, their clients

had lost significant amounts in investing in their forex trading scheme. The defendants

also represented they could manage risk through stop-loss mechanisms without disclosing

that those mechanisms had not prevented their other clients from losing most, if not all,

of the money they gave to the defendants for forex trading.

Romero and Lee met with Ricky Lutz (count 13) in the spring of 2005. Romero

represented that they had returns of 10 to 14 percent a month. Lee showed Lutz returns

showing that investors had doubled their money in eight months. Lutz discounted

Romero's and Lee's representations about the rate of return, but relied "100 percent" on

their representations about their ability to mitigate risk through stop-loss mechanisms.

Based on what Romero and Lee told him, Lutz believed that a loss of 20 percent of his

investment was the worst case scenario. He would not have invested with Romero and

Lee if the risk were greater than 20 percent. When he first set up his venture, Romero

acknowledged receiving a risk disclosure statement from an FCM, which stated stop-loss

or stop-limit orders intended to limit losses to certain high returns and minimal risk

through stop-loss discipline may not be effective because market conditions may make it

impossible to execute such orders. (Lee, supra, No. D061235, at p. 5.) Romero and Lee

did not inform Lutz that almost all their clients had lost significant amounts of money in

forex trading and that stop-loss mechanisms had not been, and may not be, effective in

limiting losses to 20 percent.

33
 The record clearly shows that the defendants knowingly made material

misrepresentations, and omitted "to state a material fact necessary in order to make the

statements made, in the light of the circumstances under which they were made, not

misleading." (§ 29536, subd. (b).) These statements were made in connection with "the

purchase or sale of, the offer to sell, the offer to purchase, the offer to enter into, or the

entry into, a commodity, commodity contract, or commodity option." (Ibid.) We

conclude beyond a reasonable doubt the instructional error did not affect the jury's

verdict. (Flood, supra, 18 Cal.4th at p. 504.)

B

Unanimity Instruction on Statute of Limitations on Conspiracy Count

"[C]onspiracy is a separate and distinct crime from the offense that is the object of

the conspiracy and is governed by a separate and distinct statute of limitations." (People

v. Milstein (2012) 211 Cal.App.4th 1158, 1168.) Romero contends the trial court erred

by not instructing the jurors they must unanimously agree at least one overt act in

furtherance of the conspiracy occurred within the statute of limitations. He asserts the

prosecution was required to prove that at least one overt act occurred within three years

of his arraignment date, on or before March 27, 2009. Romero states that of the 19 overt

acts alleged in the conspiracy count, only three occurred within the statute of limitations

(overt acts 16, 17 and 19). Romero contends the funds at issue in those three overt acts

were not intended for commodities trading, but were investments in TradeCo, and the

jury could find that those three overt acts were not part of the conspiracy to defraud

another of property.

34
 The People assert Romero has forfeited his argument on appeal for failing to raise

the necessity of an unanimity instruction with respect to the timing of overt acts within

the statute of limitations for conspiracy. Alternatively, if the issue is not forfeited, they

contend Romero was not entitled to an unanimity instruction on the conspiracy count.

The People argue if Romero were entitled to an unanimity instruction, error, if any, is

harmless because the jury returned a unanimous verdict in count ten (corresponding to

overt acts 14, 15, 16, 17 and 18), alleging grand theft from multiple victims. Thus, the

record shows more than merely an "implied finding that at least one of the acts took place

as charged." (People v. Zamora (1976) 18 Cal.3d 538, 550 (Zamora), overruled in part

on other grounds in Cowan v. Superior Court (1996) 14 Cal.4th 367.)

1. Additional Factual Background

The amended complaint alleged the defendants committed 19 overt acts in

furtherance of their conspiracy to defraud. Of these, overt acts 1 and 19 alleged the

defendants engaged in a conspiracy between April 1, 2004 and September 28, 2006, to

defraud others through an elaborate bogus investment scheme involving trading in the

foreign currency exchange market, and took approximately $1,067,000 from the

individual victims named in the other overt acts. The People alleged three of those overt

acts were committed after March 27, 2006 (overt acts 16, 17 and 18).

The trial court instructed the jurors on the four-year statute of limitations for grand

theft and commodities fraud. The trial court also instructed the jury on the elements of

conspiracy. Defense counsel did not object to the instructions or request an instruction

35
requiring the jury to find that at least one overt act in furtherance of the conspiracy must

have occurred within the three-year statute of limitations.

2. Forfeiture

The People contend Romero did not request an unanimity instruction at trial and

has forfeited the issue on appeal. Romero contends the issue is not forfeited because the

trial court was required sua sponte to give an unanimity instruction on the conspiracy

count. Romero further contends that even if the court was not required to give an

unanimity instruction, the error is not forfeited because there is a reasonable probability

he would have obtained a better outcome absent the error. Further, Romero asserts to the

extent the issue is forfeited, he received ineffective assistance of counsel.

In People v. Williams (1999) 21 Cal.4th 335 (Williams), the California Supreme

Court considered whether a defendant could raise the statute of limitations for the first

time on appeal. (Id. at p. 339.) The Court held "when the charging document indicates

on its face that the action is time-barred, a person convicted of a charged offense may

raise the statute of limitations at any time." (Id. at p. 341.) When the charging document

does not indicate on its face the action is time barred, the forfeiture rule applies. (People

v. Thomas (2007) 146 Cal.App.4th 1278, 1289 (Thomas), disapproved on other grounds

by People v. Shockley (2013) 58 Cal.4th 400, 405.)

"It has long been the rule in conspiracy cases that a limitation period begins to run

from the time of the last overt act committed in furtherance of the conspiracy." (Zamora,

supra, 18 Cal.3d at p. 548.) Romero acknowledges three of the 19 overt acts alleged in

the conspiracy count occurred within the statute of limitations. The charging document

36
does not indicate on its face the action is time-barred. (Williams, supra, 21 Cal.4th at p.

341.) Thus, the special rule on nonforfeiture does not apply. (Thomas, supra, 146

Cal.App.4th at p. 1289.)

Even were the issue not forfeited, we would not be persuaded the trial court has a

sua sponte obligation to give an unanimity instruction on the statute of limitations in a

conspiracy. As a general rule, the trial court need only instruct on the statute of

limitations when placed at issue by the defense as a factual matter in the trial. (People v.

Smith (2002) 98 Cal.App.4th 1182, 1192-1193 (Smith).) In asserting this general

principle does not apply here, Romero relies on a footnote in People v. Russo (2001) 25

Cal.4th 1124 (Russo). In Russo, the California Supreme Court held that a conviction for

conspiracy requires proof that at least one of the conspirators committed an overt act in

furtherance of the conspiracy but the jury need not unanimously agree on a specific overt

act as long as it unanimously finds beyond a reasonable doubt that some conspirator

committed an overt act in furtherance of the conspiracy. (Id. at p. 1128.) In a footnote,

Russo states there may be some cases in which "the trial court may have to give some

form of unanimity instruction. For example, if there is a question regarding the statute of

limitations, the court might have to require the jury to agree an overt act was committed

within the limitations period [citation], or if evidence existed that the defendant had

withdrawn from the conspiracy, the court might have to require the jury to agree an overt

act was committed before the withdrawal." (Id. at p. 1136, fn. 2) The Court declined to

address the issue further, stating "[n]o such circumstance exists here, so we do not

consider these questions." (Ibid.)

37
 Thus, Russo suggests only that a court may have to give some form of unanimity

instruction if there is a question regarding the statute of limitations. (Russo, 25 Cal.4th at

p. 1136, fn. 2.) This language is consistent with the general rule the trial court need only

instruct on the statute of limitations when placed at issue by the defense. (Smith, supra,

98 Cal.App.4th at pp. 1192-1193.) It does not suggest the trial court has a sua sponte

duty to instruct the jury on unanimity in the absence of any question about the statute of

limitations. Thus, we are not persuaded Russo constitutes authority to fashion an

exception to the general rule of forfeiture on the statute of limitations. (Smith, pp. 1192-

1193.)

3. Ineffective Assistance of Counsel

Romero contends he received ineffective assistance of counsel because his trial

counsel did not raise the potentially meritorious defense that no overt act was committed

within the state of limitations for conspiracy. He argues the jury did not find Lee guilty

of count ten, which corresponds to overt acts 26, 27 and 28, and this suggests the jury

could not agree beyond a reasonable doubt the actions described in those acts were in

furtherance of the conspiracy. He argues those overt acts involved funding for TradeCo,

which defendants started and operated until the CFTC changed its regulations, and the

jury could find overt acts 26, 27 and 28 were not part of a criminal conspiracy.

" 'An ineffective assistance claim has two components: A [defendant] must show

that counsel's performance was deficient, and that the deficiency prejudiced the defense.'

[Citations.] [¶] . . . [¶] 'To establish deficient performance, a petitioner must

demonstrate that counsel's representation "fell below an objective standard of

38
reasonableness." ' " (In re Welch (2015) 61 Cal.4th 489, 514.) To establish prejudice, a

defendant "must show that there is a reasonable probability that, but for counsel's

unprofessional errors, the result of the proceeding would have been different."

(Strickland v. Washington (1984) 466 U.S. 668, 694.) A defendant he must show "a

probability sufficient to undermine confidence in the outcome." (Ibid.)

Assuming, without deciding, trial counsel's performance was deficient for not

requesting an unanimity instruction on the statute of limitations in the conspiracy count,

Romero cannot show there is "a probability sufficient to undermine confidence in the

outcome." (Strickland v. Washington, supra, 466 U.S. at p. 694.) Romero's conviction

on count ten for grand theft of personal property from Brian Smith, an agent for Curtis

Brown, Paul Cannon (overt act 28), Greg Hughes (overt act 26), Michael Mauch, Greg

Sabal (overt act 27), and Robert Smith, eliminate a reasonable probability the statute of

limitations barred the conspiracy count. We reject the argument the jury could find there

were no overt acts committed within the statute of limitations because the clients' funds

that were solicited for TradeCo were not overt acts committed in furtherance of the

conspiracy. The uncontroverted evidence shows that Romero obtained funds from

Hughes, Sabal and Cannon after March 27, 2006, and diverted some of those funds to his

personal accounts. The fact the jury did not return a verdict on count 10 in Lee's case is

not relevant. (See Russo, supra, 25 Cal.4th at p. 1128 [conviction for conspiracy requires

proof that at least one of the conspirators committed an overt act in furtherance of the

conspiracy].) In addition, the evidence shows the defendants started TradeCo to avoid

paying fees to other FCMs, thereby increasing their own takings, and any solicitation of

39
funds for TradeCo were in furtherance of their conspiracy to defraud. Romero does not

meet his burden to show prejudicial error.

III

Motion for New Trial

1. The Parties' Arguments

Martinez complains the sentencing court erred in refusing to hear his motion for

new trial on his convictions for commodities fraud. Citing People v. Braxton (2004) 34

Cal.4th 798, 818-819 (Braxton), Martinez contends this court has the authority under

section 1260 to remand the matter to the trial court to decide the new trial motion and the

failure to do so "would be tantamount to a federal due process violation under the

Fourteenth Amendment." (Some capitalization omitted.) He acknowledges the

sentencing court is not in a position to rule on a motion for new trial as a 13th juror, and

asks the matter be remanded to the trial court.

Romero contends the trial court, as the 13th juror, would have granted a new trial

had it not dismissed the charges on erroneous grounds. He argues the trial court did not

rule on the matter as a 13th juror and asks this court to remand the matter to the trial court

to rule on the new trial motion. Romero contends he did not forfeit the issue by failing to

join in Martinez's motion on remand. He asserts to the extent the issue is forfeited, he

received ineffective assistance of counsel.13

13 Romero raises this issue in his Petition for Writ of Habeas Corpus.
40
 Lee argues had the trial court not erroneously effected acquittals on various

charges and instead considered the lesser remedy of a retrial, the trial court may have

granted the new trial motion as a 13th juror. He further states to the extent his trial

counsel did not join in Martinez's motion for new trial, he received ineffective assistance

of counsel.

The People assert the sentencing court correctly denied the motion for new trial in

view of the limited remand issued by this court in Lee. Relying on Lucido v. Superior

Court (1990) 51 Cal.3d 335, 341, the People argue Appellants are collaterally estopped

from relitigating issues argued and decided in prior proceedings.

2. Applicable Legal Principles

"The court may reverse, affirm, or modify a judgment or order appealed from, or

reduce the degree of the offense or attempted offense or the punishment imposed, and

may set aside, affirm, or modify any or all of the proceedings subsequent to, or dependent

upon, such judgment or order, and may, if proper, order a new trial and may, if proper,

remand the cause to the trial court for such further proceedings as may be just under the

circumstances." (Pen. Code, § 1260.) "If a judgment against the defendant is reversed,

such reversal shall be deemed an order for a new trial, unless the appellate court shall

otherwise direct." (Pen. Code, § 1262.)

" 'The effect of an unqualified reversal ("the judgment is reversed") is to vacate the

judgment, and to leave the case "at large" for further proceedings as if it had never been

tried, and as if no judgment had ever been rendered. [Citations.]' [Citations.] [¶]

Generally an unqualified reversal has the effect of remanding the case for a new trial on

41
all the issues presented by the pleadings [citation] and the parties have the right to file

amended pleadings before a retrial." (In re Anna S. (2010) 180 Cal.App.4th 1489, 1499-

1500.)

"After the remittitur 'the appellate court has no further jurisdiction of the appeal or

of the proceedings thereon, and all orders necessary to carry the judgment into effect

shall be made by the court to which the certificate is remitted.' (Pen. Code, § 1265,

italics added.) Thus, the trial court is revested with jurisdiction of the case, but only to

carry out the judgment as ordered by the appellate court." (People v. Dutra (2006) 145

Cal.App.4th 1359, 1365-1366 (Dutra).) "[T]he terms of the remittitur define the trial

court's jurisdiction to act." (Snukal v. Flightways Manufacturing, Inc. (2000) 23 Cal.4th

754, 774, fn. 5 (Snukal).) The trial court is bound to follow the remittitur whether it

believes the appellate court's decision is right or wrong, or has been impaired by

subsequent decisions. (Dutra, at p. 1367.)

Here, the People appealed the trial court's orders dismissing some counts and

granting new trials on other counts. This court reversed those orders and remanded the

matter to "the superior court with instructions to reinstate the verdicts rendered by the

jury and sentence the defendants accordingly. The defendants may be retried on the

deadlocked counts." (Lee, supra, No D061235, at p. 60.) Thus, in view of this court's

remittitur, the sentencing court did not err in denying to hear the motion for new trial.

(Snukal, supra, 23 Cal.4th at p. 774, fn. 5; Dutra, supra, 145 Cal.App.4th at p. 1367.)

IV

SENTENCING

42
 A

Restitution

1. The Parties' Contentions

Romero challenges the restitution awards to David Shemtov, Wayne McClelland,

Ricky Lutz and William Capell. Romero claims the court has the authority to impose

restitution only for losses caused by the operative crimes for which he was convicted.

Citing People v. Lai (2006) 138 Cal.App.4th 1227, 1246-1248 (Lai) and People v. Woods

(2008) 161 Cal.App.4th 1045, 1052, Romero argues he was not convicted on counts

alleging grand theft and commodity fraud from Shemtov and McClelland, and conspiracy

is not the operative crime that resulted in the victims' loss. Romero points out the minute

order ($895,282.28) differs from the oral pronouncement ($395,282.28) of restitution to

Lutz. He also contends the sentencing court improperly calculated the amount of

restitution awarded to Lutz and Capell, and the full award to Lutz is not supported by

substantial evidence.14

14 Romero contends the sentencing court was not authorized to include compound
interest in Lutz's restitution order. This issue is raised in the body of his brief and was
not presented under a separate argument heading as required by California Rules of
Court, rule 8.204(a)(1)(B). The People do not respond to this argument. In the interest of
fairness, we do not address this issue here.
The requirement that issues be presented under a separate argument heading,
showing the nature of the question to be presented and the point to be made, are part of
the " '[o]bvious considerations of fairness' " to allow the respondent its opportunity to
answer these arguments. (People v. Roscoe (2008) 169 Cal.App.4th 829, 840, quoting
Neighbours v. Buzz Oates Enterprises (1990) 217 Cal.App.3d 325, 335, fn. 8.) Rule
8.204(a)(1)(B) also " 'lighten[s] the labors of the appellate [courts] by requiring the
litigants to present their cause systematically and so arranged that those upon whom the
duty devolves of ascertaining the rule of law to apply may be advised, as they read, of the
43
 The People contend the sentencing court properly awarded restitution to Shemtov

and McClelland based upon Romero's conviction for conspiracy. Asserting that tort

principles of causation apply to victim restitution claims in criminal cases, they argue in

the absence of a conspiracy to defraud victims, Shemtov and McClelland likely would

not have suffered any losses. Thus, the sentencing court could rationally determine the

defendants' conspiracy directly led to the victims' economic losses.

2. Statement of Law and Standard of Review

As a matter of right under the California Constitution, "all persons who suffer

losses as a result of criminal activity shall have the right to seek and secure restitution

from the persons convicted of the crimes causing the losses they suffer." (Cal. Const.,

art. I, § 28, subd. (b).) Penal Code section 1202.4, subdivision (f) states "in every case in

which a victim has suffered economic loss as a result of the defendant's conduct, the

court shall require that the defendant make restitution to the victim or victims in an

amount established by court order []." "A victim's restitution right is to be broadly and

liberally construed." (Mearns, supra, 97 Cal.App.4th at p. 500; People v. Phu (2009) 179

Cal.App.4th 280, 283.)

Penal Code section 1202.4, subdivision (a)(1), declares "the intent of the

Legislature that a victim of crime who incurs an economic loss as a result of the

commission of a crime shall receive restitution directly from a defendant convicted of

exact question under consideration, instead of being compelled to extricate it from the
mass.' " (People v. Roscoe, at p. 840, quoting Opdyk v. California Horse Racing Bd.
(1995) 34 Cal.App.4th 1826, 1830-1831, fn. 4.)

44
that crime." Restitution "shall be of a dollar amount that is sufficient to fully reimburse

the victim or victims for every determined economic loss incurred as the result of the

defendant's criminal conduct" (§ 1202.4, subd. (f)(3)), and must include, but is not

limited to, such costs as "the value of stolen or damaged property." (Pen. Code, § 1202.4,

subd. (f)(3)(A).) (People v. Jessee (2013) 222 Cal.App.4th 501, 507.)

When a defendant is sentenced to state prison, Penal Code section 1202.4 limits

restitution to "losses caused by the criminal conduct for which the defendant was

convicted." (Lai, 138 Cal.App.4th at p. 1249; Woods, supra, 161 Cal.App.4th at

pp. 1049, 1052 (Woods) [scope of victim restitution is limited to those arising out of the

operative crime that formed the basis of the conviction].) Thus, "[i]n every case in which

a victim has suffered economic loss as a result of the defendant's conduct, the court shall

require that the defendant make restitution to the victim or victims in an amount

established by court order, based on the amount of loss claimed by the victim or victims

or any other showing to the court." (Pen. Code, § 1202.4, subd. (f).) " 'The statute . . .

requires the award be set in an amount which will fully reimburse the victim for his or

her losses unless there are clear and compelling reasons not to do so . . . .' " (Mearns,

supra, 97 Cal.App.4th at p. 499.) "While it is not required to make an order in keeping

with the exact amount of loss, the trial court must use a rational method that could

reasonably be said to make the victim whole, and it may not make an order which is

arbitrary or capricious." (Id. at p. 498.)

We review the trial court's restitution order for abuse of discretion. A restitution

order that is based on a demonstrable error of law constitutes an abuse of the trial court's

45
discretion. (Woods, supra, 161 Cal.App.4th at pp. 1048-1049.) " 'When there is a factual

and rational basis for the amount of restitution ordered by the trial court, no abuse of

discretion will be found by the reviewing court.' " (Mearns, supra, 97 Cal.App.4th at

p. 499.)

3. Forfeiture

We first address the People's claim Romero has forfeited his claim by failing to

assert it in the trial court. An unauthorized sentence " 'constitutes a narrow exception to

the general requirement that only those claims properly raised and preserved by the

parties are reviewable on appeal.' " (People v. Anderson (2010) 50 Cal.4th 19, 26

(Anderson), quoting People v. Scott (1994) 9 Cal.4th 331, 354.) Generally, an

unauthorized sentence is one that " 'could not lawfully be imposed under any

circumstance in the particular case.' " (Ibid.) "An obvious legal error at sentencing that

is 'correctable without referring to factual findings in the record or remanding for further

findings' is not subject to forfeiture." (In re Sheena K. (2007) 40 Cal.4th 875, 887.)

Romero argues the sentencing court exceeded its authority by duplicating Capell's

restitution award in the restitution awarded to Lutz; ordering restitution to Shemtov and

McClelland when he was not convicted of the operative crimes underlying those

restitution orders; and incorrectly calculating the amount of Lutz's restitution award by

not subtracting the full amount of money that was returned to him and by including losses

incurred after Lutz authorized the defendants to continue trading on his account.

The claims the sentencing court ordered a duplicate restitution award and

restitution for crimes for which the defendant was not convicted fall within "the 'narrow

46
exception' for 'a so-called unauthorized sentence or a sentence entered in excess of

jurisdiction.' " (Anderson, supra, 50 Cal.4th 19, 26, quoting In re Sheena K., supra, 40

Cal.4th at pp. 886-887.) However, Romero's claims Lutz incorrectly calculated the

amount of restitution due him by subtracting only $20,000 instead of $24,162, the amount

of principal that was actually returned to him, and by including losses incurred after Lutz

authorized continued trading on his account, are purely factual issues that are susceptible

to waiver. (People v. Zito (1992) 8 Cal.App.4th 736, 742.) Because Romero did not raise

these factual issues at sentencing, he has forfeited them on appeal. (Ibid.)

4. Analysis

a. Lutz and Capell

Romero was convicted of grand theft and commodities fraud from Lutz. The

record shows that in August and September 2005, Lutz recruited William Capell, Cy

Houston, Jason Herter and Susan Baier. Together, they deposited $260,000 in Lee's

trading company. Capell invested $110,000. After incurring large losses, Lutz told Lee

to close his accounts and return the balance of his principal, which was then $105,000, to

him. Several weeks later, Lutz received a payment of $24,162, which he returned to

Baier.

At sentencing, Lutz claimed restitution in the amount of $240,000 plus five

percent interest, compounded, from April 2005 through April 2015 years, totaling

$395,282.28. The sentencing court ordered victim restitution in the amount of

$395,282.26. This amount was recorded in the minute order as $895,282.26, resulting in

47
an error in the total restitution award in the abstract of judgment. The People concede

this amount was erroneously recorded.

On his own behalf, Capell claimed restitution in the amount of $110,000. The

sentencing court ordered Romero to pay $110,000 to Capell.

The People concede the awards to Lutz and Capell are duplicative, and ask this

court to remand to the sentencing court to determine whether to modify Lutz's or Capell's

restitution order. However, the California Supreme Court has held that "[Penal Code]

section 1202.4 and the Victims' Bill of Rights allow each defined victim to seek and

obtain restitution only for that person's or entity's own personally incurred loss. (People

v. Runyan (2012) 54 Cal.4th 849, 860.) In view of this principle, we conclude that

Capell's restitution order should not be modified, and instead remand the matter to the

sentencing court with directions to modify Lutz's restitution award.

b. Shemtov and McClelland

The People charged Romero and Lee with grand theft (count two) and

commodities fraud (count three) against David Shemtov. In count one, overt act 3, the

People alleged that Romero and/or Lee, in furtherance of their conspiracy to defraud,

obtained a $50,000 investment from Shemtov. Within a week to 10 days of Shemtov's

investment, his account had lost more than 50 percent of its value. Shemtov closed his

account and withdrew the remaining funds ($19,463.49). Romero sent an additional

$2,000 to Shemtov to reimburse him for his losses. The jury did not reach verdicts on the

Shemtov counts, indicating it could not agree whether the crimes were committed within

48
the statute of limitations. On remand, Romero and Lee were subject to retrial on those

counts; however, the sentencing court dismissed the charges at the People's request.

Shemtov requested, and the sentencing court ordered, restitution in the amount of

$40,000.

In count one, overt act 5, the People alleged that Romero, in furtherance of the

defendants' conspiracy, obtained a $100,000 investment from William McClelland and

Bill Lahr. The jury found Romero and Lee guilty of conspiracy. The People also alleged

Romero, Lee and Martinez had committed grand theft (count six) and commodities fraud

(count seven) against McClelland and Lahr. The jury returned a guilty verdict against

Romero on count seven and did not reach a verdict on count six. After hearing a motion

for a new trial, the trial court dismissed counts six and seven. The People did not appeal

the order dismissing those counts. On remand, as we have discussed, the sentencing

court erroneously reinstated Romero's conviction on count seven.

McClelland filed a restitution statement showing he invested $100,000 with

Kingdom Advisors in September 2004. He received $10,000 a month in earnings in

November and December 2004, and February 2005. In March 2005, he received

$18,500, his remaining principal. McClelland requested, and the sentencing court

ordered, restitution in the amount of $81,500.

Romero contends he was not convicted of the operative crimes underlying the

restitution orders for Shemtov and McClelland. He argues the restitution orders

constitute an unauthorized sentence under Penal Code section 1202.4, which limits

restitution to "losses caused by the criminal conduct for which the defendant was

49
convicted." (Lai, supra, 138 Cal.App.4th at p. 1249; Woods, supra, 161 Cal.App.4th at

pp. 1049, 1052.) Raising an issue of first impression, Romero argues his conviction for

criminal conspiracy is not sufficient to support a restitution award to Shemtov or

McClelland because it is not the operative crime that resulted in the victims' losses.

The People argue the sentencing court acted within its discretion. They contend

" 'tort principles of causation apply to victim restitution claims in criminal cases.' "

(People v. Holmberg (2011) 195 Cal.App.4th 1310, 1321.) The People argue in the

absence of a conspiracy to defraud, Shemtov and McClelland likely would not have

suffered any losses because the underlying crimes would not have occurred. The People

acknowledge the jury rendered an inconsistent verdict by not convicting Romero of the

underlying offenses of theft or commodities fraud, but argue the trial court could

rationally determine that the defendants' conspiracy led to the victims' economic losses.

Relying on Woods, supra, 161 Cal.App.4th at p. 1052, Romero argues conspiracy

is not the "operative crime" that led to the victims' losses. Woods does not define the

phrase "operative crime." The term "operative" means "[b]eing in or having force or

effect." (Black's Law Dict. (10th ed. 2014.) p. 1265, col. 1.) Penal Code section 1202.4,

subdivision (f) authorizes restitution "in every case in which a victim has suffered

economic loss as a result of the defendant's conduct." Case law limits "the defendant's

conduct" to "criminal conduct for which the defendant was convicted." (Lai, supra, 138

Cal.App.4th at p. 1249.) We conclude that the phrase "operative crime" is equivalent to

the phrase "criminal conduct for which the defendant was convicted."

50
 On this record, we conclude that the sentencing court did not abuse its discretion

by ordering Romero to pay restitution to Shemtov and McClellan. Romero was

convicted of conspiracy to defraud others. He was specifically charged with committing

overt acts to obtain funds from Shemtov and McClelland in furtherance of the conspiracy.

The jury did not acquit Romero of the charges of grand theft and commodities fraud

against Shemtov and McClelland. (See People v. Foalima (2015) 239 Cal.App.4th 1376,

1396 [in nonprobation cases, restitution order is not authorized where the defendant's

only relationship to the victim's loss is by way of a crime for which defendant was

acquitted].) Instead, in Shemtov's case, the jury indicated it could not reach consensus on

whether the offenses were committed within the statute of limitations. In McClelland's

case, the jury convicted Romero of grand theft and commodities fraud. Although the

People did not challenge the trial court's dismissal of those counts on appeal, the jury's

findings of guilt allows the reasonable inference it determined that Romero had in fact

obtained a $100,000 investment from McClelland in furtherance of the conspiracy to

defraud him of his property. Similarly, the record supports the finding that Romero

secured $50,000 from Shemtov in furtherance of his conspiracy to defraud others. In

both cases, this was criminal conduct that led to the victims' economic loss. (Pen. Code,

§ 1202.4, subd. (f).)

The California Constitution states "all persons who suffer losses as a result of

criminal activity shall have the right to seek and secure restitution from the persons

convicted of the crimes causing the losses they suffer." (Cal. Const., art. I, § 28, subd.

(b).) Thus, in view of the constitutional and statutory presumptions in favor of victim's

51
rights, we conclude that the sentencing court did not abuse its discretion in ordering

Romero to pay restitution to the victims of Romero's and Lee's criminal conspiracy.

B

White Collar Crime Enhancement

1. The Parties' Contentions

Romero contends the jury's true finding on the aggravated white collar crime

enhancement is not supported by substantial evidence and must be reversed. Romero

argues he was convicted on three counts of grand theft and the prosecution proved only

the victims' losses totaled $258,100. Martinez joins in Romero's arguments.

The People contend the aggravated white collar crime enhancement is triggered by

either a taking or a loss of property, and the jury properly found that the defendants took

more than $500,000 from the victims.

2. Applicable Statutory Principles and Standard of Review

"The purpose of the aggravated white collar crime enhancement [is] to provide a

mechanism for greater punishment for criminals who engage in a pattern of fraudulent

activity that results in a large amount of accumulated takings." (People v. Williams

(2004) 118 Cal.App.4th 735, 747; Pen. Code, § 186.11, subd. (a).) If the pattern of

related felony conduct involves the taking of, or results in the loss by another person or

entity of, more than five hundred thousand dollars ($500,000), the additional term of

punishment shall be two, three, or five years in the state prison." (Pen. Code, § 186.11,

subd. (a)(2), italics added.)

52
 The relevant amount of a "taking" is the aggregate value of all property of which

the defendant acquired possession through the offenses of which he is convicted, even if

the victim subsequently recovered some or all of it, or received offsetting compensation

or benefits by some other means. (Cf. People v. Frederick (2006) 142 Cal.App.4th 400,

421 (Frederick) [interpreting Penal Code section 12022.6, which provides for an

enhanced penalty for taking, damaging or destroying property in the commission of a

felony].) " '[T]he Legislature did not intend that the application of [Penal Code] section

12022.6 should depend upon the fortuitous circumstances of whether the police were able

to recover stolen property or the victim was able to establish a civil claim for the return of

property or its proceeds . . . .' " (Frederick, at p. 421, quoting People v. Ramirez (1980)

109 Cal.App.3d 529, 539.)

We apply the substantial evidence standard in reviewing a finding of an

aggravated white collar crime enhancement. (People v. Mozes (2011) 192 Cal.App.4th

1124, 1131)

3. Analysis

Romero and Martinez were convicted of defrauding Robert Smith. Subtracting the

amount of money that was paid to Robert Smith, they contend his losses were only

$84,000. We disagree. The record shows that Robert Smith, acting in reliance on the

defendants' fraudulent misrepresentations, invested $100,000 with Kingdom Advisors.

The defendants acquired possession of $100,000 from Robert Smith through the offenses

of which they are convicted. Thus, this amount is the "taking" within the meaning of

53
Penal Code section 186.11, subdivision (a). (Cf. Frederick, supra, 142 Cal.App.4th at p.

421.)

Romero and Martinez were convicted of defrauding Brian Smith. We reject the

argument that the "taking" from Brian Smith was his loss of $258,100. The defendants

received $460,000 from Brian Smith, who was persuaded by the defendants' materially

false statements and omissions to invest his client's money. Thus, this amount is the

"taking" within the meaning of Penal Code section 186.11, subdivision (a). (Cf.

Frederick, supra, 142 Cal.App.4th at p. 421.)

Romero was convicted of defrauding Lutz, who invested a total of $260,000 with

the defendants. Relying on People v. Williams (2013) 218 Cal.App.4th 1038, 1069

(Williams), which holds that a "taking" under Penal Code section 12022.6 excludes a

victim's economic losses (such as lost interest and attorney fees), Romero argues because

Lutz knowingly placed 20 percent of his investment at risk and authorized Romero to

continue trading after suffering large losses, the "taking" was in the amount of

$26,811.25.

Romero's reliance on Williams is legally and factually misplaced. The Williams

court holds that the references to "loss" in Penal Code section 12022.6, subdivisions

(a)(2) and (b) mean the value of the property taken, damaged or destroyed, and does not

include other types of economic losses, such as lost income or profits, suffered by the

victim. (Williams, supra, 218 Cal.App.4th at p. 1069; People v. Evans (2013) 215

Cal.App.4th 242, 253.) Thus, for example, victims cannot recover the amount of

earnings they may have lost as a result of the crime. Williams does not stand for the

54
proposition that because a victim was advised of the possibility of a 20 percent loss, the

amount of the taking or loss is diminished only by that amount. Essentially, Romero

argues because he and Lee misrepresented their risk mitigation strategy and Lutz relied

on their misrepresentation, they are not liable for the entire amount of Lutz's loss.

Penal Code section 186.11, subdivision (a)(2) provides the enhanced penalty for

aggravated white collar crime applies if the pattern of related felony conduct involves the

taking, or results in the loss by another person, of more than $500,000. (Pen. Code,

§ 186.11, subd. (a)(2) (italics added).) The record shows Lutz relied "100 percent" on

Lee and Romero's representations about their rate of return and stop-loss protections in

deciding to invest with them. Lutz, with four other investors, deposited $260,000 in

Lee's trading company. This constitutes a taking within the meaning of Penal Code

section 186.11. The amount of the taking is not mitigated by any misrepresentation that

Lutz' potential losses were limited to 20 percent of his investment, or because he

authorized continued trading in an attempt to recover his losses.

The evidence shows that the jury could reasonably conclude the defendants took at

least $820,000 from their victims. We conclude there is substantial evidence to support

the jury's true finding on the aggravated while collar crime enhancement.

C

Fine

The People contend the sentencing court "appears" to not have imposed a

mandatory fine on Martinez and Romero under Penal Code section 186.11, subdivision

(c). The People acknowledge the court imposed fines of $800 on Martinez and $1400 on

55
Romero, but point out the court did not indicate the statute under which the fines were

imposed.

The People do not affirmatively show error. (Corenevsky v. Superior Court

(1984) 36 Cal.3d 307, 321.) "The general rule is that a trial court is presumed to have

been aware of and followed the applicable law." (People v. Mosley (1997) 53

Cal.App.4th 489, 496-497.) "A judgment or order of the lower court is presumed correct.

All intendments and presumptions are indulged to support it on matters as to which the

record is silent, and error must be affirmatively shown." (Denham v. Superior Court

(1970) 2 Cal.3d 557, 564.) "These general rules concerning the presumption of regularity

of judicial exercises of discretion apply to sentencing issues." (Mosley, supra.) In the

absence of a clear claim of error, we presume the trial court correctly followed the law.

DISPOSITION

The matter is remanded to the superior court with instructions to vacate Romero's

conviction on count seven, and resentence him accordingly. The court shall also

recalculate the restitution award to Lutz. In all other respects, the judgments are

affirmed.

56
 O'ROURKE, J.

WE CONCUR:

McCONNELL, P. J.

NARES, J.

57
Filed 4/6/17
CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

THE PEOPLE, D067052

Plaintiff and Respondent,

v. (Super. Ct. No. SCD219673)

FRANCISCO JOSE MARTINEZ et al.,

Defendants and Appellants.

THE PEOPLE, D067561

Plaintiff and Respondent, (Super. Ct. No. SCD219673)

v. ORDER
MODIFYING OPINION,
MARCELLUS LOPES LEE, DENYING REHEARING,
AND CERTIFYING OPINION
Defendant and Appellant. FOR PUBLICATION

NO CHANGE IN JUDGMENT
THE COURT:

It is ordered that the opinion filed herein on March 9, 2017, be modified as
follows:

1. The following sentence is added to the end of the first paragraph of footnote 14
on page 44:

However, on remand for resentencing to recalculate Romero's restitution award to
Lutz, Romero may raise, and the trial court may decide, the issue of whether the
court is authorized to include compound interest in the award, bearing in mind that
the court may not award postjudgment interest in excess of ten percent simple
 interest per year. (Pen. Code, § 1202.4, subd. (f)(3)(G); Westbrook v. Fairchild
(1992) 7 Cal.App.4th 889, 893.)

The second paragraph of footnote 14 on page 44 is deleted.

2. In the first sentence of the first full paragraph on page 48, the word "years" is
deleted so that the sentence now reads as follows:

At sentencing, Lutz claimed restitution in the amount of $240,000 plus five
percent interest, compounded, from April 2005 through April 2015, totaling
$395,282.28.

3. In the last sentence of the first full paragraph on page 56, the word "while" is
replaced with the word "white" so that the sentence now reads as follows:

We conclude there is substantial evidence to support the jury's true finding on the
aggravated white collar crime enhancement.

4. At the end of the last sentence of the first full paragraph on page 56, footnote 15 is
added as follows:

In his supplemental reply brief filed with this court's permission, Romero argues
the trial court erred by not sua sponte instructing the jury on the legal meanings of
"taking" and "loss" for purposes of Penal Code section 186.11, subdivision (a),
citing People v. Hudson (2006) 38 Cal.4th 1002, 1012 for the principle that a trial
court has a sua sponte duty to define an element of an offense beyond the statutory
language when that language has a technical sense that differs from its nonlegal
meaning. He contends that the general meaning of the words "taking" and "loss"
includes all money received from the victim (taking) or all money never returned
to the victims (loss), whereas the legal meaning of those words in the context of
Penal Code section 186.11 is restricted to a wrongful taking or the amount of loss
caused by wrongful conduct.

We conclude the court had no sua sponte duty to instruct the jury on the meanings
of "taking" and "loss" in Penal Code section 186.11, and that Romero forfeited this
claim of instructional error by not requesting such an instruction below. "A trial
court has no sua sponte duty to revise or improve upon an accurate statement of
law without a request from counsel [citation], and failure to request clarification of
an otherwise correct instruction forfeits the claim of error for purposes of appeal."
(People v. Lee (2011) 51 Cal.4th 620, 638; People v. Hudson, supra, 38 Cal.4th at
p.1012 [" '[A] party may not complain on appeal that an instruction correct in law
and responsive to the evidence was too general or incomplete unless the party has
requested appropriate clarifying or amplifying language.' "].)

2
 The court instructed the jury with CALCRIM No. 3221 that it had to decide
whether the People had proved "the additional allegation that the defendant
engaged in a pattern of related felony conduct that involved the taking of or
resulted in the loss by another person or entity of more than $500,000." (Italics
added.) By tying the "taking" or "loss" to "felony conduct," this instruction
adequately informed the jury that the taking under consideration was wrongful and
the amount of loss involved was caused by wrongful conduct. An additional
instruction merely explaining to the jury that "taking" and "loss" for purposes of
the white collar crime enhancement under Penal Code section 186.11 means a
wrongful taking or the amount of loss caused by wrongful conduct would have
constituted an instruction that merely amplified CALCRIM No. 3221. Therefore,
the trial court had no sua sponte duty to give such an instruction, and Romero
forfeited his claim on appeal that the court erred in failing to give it.

There is no change in the judgment.

Appellant Romero's petition for rehearing is denied.

Appellant Martinez's petition for rehearing is denied.

The opinion in this case filed March 9, 2017, was not certified for publication.

It appearing the opinion meets the standards for publication specified in California
Rules of Court, rule 8.1105(c), the request pursuant to rule 8.1120(a) for publication is
GRANTED.

IT IS HEREBY CERTIFIED that the opinion meets the standards for publication
specified in California Rules of Court, rule 8.1105(c); and ORDERED that the words
"Not to Be Published in the Official Reports" appearing on page 1 of said opinion be
deleted and the opinion herein be published in the Official Reports.

McCONNELL, P. J.

Copies to: All parties

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