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People v. Smith

November 25, 2009

THE PEOPLE, PLAINTIFF AND RESPONDENT,
v.
PHOEBUS VINCENT SMITH, DEFENDANT AND APPELLANT.



APPEAL from a judgment of the Superior Court of Los Angeles County, Curtis B. Rappe, Judge. Affirmed. (Los Angeles County Super. Ct. No. BA318284).

The opinion of the court was delivered by: Manella, J.

CERTIFIED FOR PUBLICATION

Defendant Vincent Smith was charged in a 118-count information with 33 counts of grand theft (Pen. Code, § 487, subd. (a)); 33 counts of sale of unqualified securities (Corp. Code, §§ 25110/25540, subd. (a)); 33 counts of using false statements to sell securities (Corp. Code, §§ 25401/25540, subd. (a)); and one count of using a scheme to defraud in connection with the sale of securities (Corp. Code, § 25541).*fn1 Counts one through 99, the charges of grand theft, sale of unqualified securities and use of false statements in the sale of securities, contained the names of 33 separate victims. At trial, only eight of the named victims testified. After the close of evidence, the court dismissed the counts pertaining to the remaining victims. The court admitted for non-hearsay purposes the approximately 150 agreements executed by the 25 individuals named in the dismissed counts, and permitted the prosecutor to refer in closing argument to those documents and to other similar agreements seized in a search of appellant‟s home and offices.

Appellant, who was convicted on all the counts that survived dismissal, contends that these documents were not properly authenticated and constituted inadmissible hearsay. In addition, appellant contends that the documents should have been excluded under Evidence Code section 352. Appellant further contends that the prosecutor‟s alleged improper comment on appellant‟s failure to testify influenced the jury‟s verdict and seeks our review of Pitchess materials previously reviewed by the trial court.*fn2

We conclude that the documents at issue were authenticated by their content and by circumstantial evidence and that their use did not violate the hearsay rule. With respect to Evidence Code section 352, appellant did not raise an objection to the documents based on that provision and, in any event, the documents were more probative than prejudicial. Moreover, assuming arguendo that the documents were improperly admitted, the evidence supporting the charges was so overwhelming that the use of these documents added little to the prosecution‟s case and any error was harmless. With respect to the alleged prosecutorial misconduct, we conclude it resulted from a misstatement and had no impact on the verdict. Finally, we find no error in the trial court‟s Pitchess review. Accordingly, we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

A. Information

As stated above, the underlying information contained charges of grand theft, sale of unqualified securities, using false statements to sell securities and using a scheme to defraud in connection with the sale of securities. The information further alleged, with respect to certain of the counts, that appellant‟s actions constituted violations of Penal Code section 1203.045, subdivision (a) (theft of amount exceeding $100,000). With respect to the combined offenses, the information alleged that appellant‟s violations fell under Penal Code section 186.11, subdivision (a)(2) (multiple felonies involving fraud or embezzlement resulting in more than $500,000 loss) and Penal Code section 12022.6, subdivision (a)(3) (taking property in commission of felony, loss exceeding $1.3 million).

B. Evidence at Trial

1. Prosecution's Case

a. Documentary Evidence

Eight victims who paid money to invest in appellant‟s operation testified on behalf of the prosecution. Each of the victims signed one or more investment agreements.*fn3 In nearly every case, the agreements were between the victims and an entity identified as "Mr. V&S Investments" or "MV&S."*fn4 At the time of their initial payment, most of the victims also signed "membership enrollment" forms, agreeing to become members of the "Antelope Valley Banking System" or "AVBS."*fn5 The MV&S agreements were one-page form contracts with spaces to fill in the participant‟s name and address, the "investment" amounts (the funds paid by the participant) and the maturation dates (the dates on which the returns were to be paid, generally 60 to 90 days in the future). There were also boxes to check for the "anticipated gross" or return on the "investment[s]," labeled "100%," "50%," and "25%." The agreements stated: "MV&S cannot guarantee an investment return. Therefore, to accommodate the risk factor of this high-yield return, Investor may request refund of initial investment amount within ten (10) days after payment date or may re-invest for a term equal to the original agreement in the event of 0% return." The agreements further stated they were valid only if "personally signed" by "Mr. Vince" (a name used by appellant ), "Sandie" (an apparent reference to appellant‟s wife, Saundra Smith ) or an "authorized agent."

One victim, Horace Duplechein, also executed two agreements with an entity identified as "GWV/Investment International." These agreements were signed by appellant and contained terms nearly identical to the MV&S agreements. Two other victims -- Irit Lavie and Darren Scott -- executed "Home Buyers/Monthly Bill Payment Agreements," a different form with distinct terms. The home buyers agreements, also between the victims and MV&S, stated that a specified investment "will net" a certain amount and did not contain a proviso disclaiming profit.

b. Witnesses' Testimony

John Henderson testified that he heard about appellant‟s operation in July 2003 from a flier which stated that "A.V. Banking System" was offering returns of 25 to 100 percent. He attended a meeting at a restaurant in Lancaster at which appellant spoke. Approximately 30 other people attended. Appellant claimed to be involved in a housing development in Lancaster and to have made additional investments in Las Vegas and other parts of the world. He stated he would pay investors a 50 percent return in 60 days and that under no circumstances would investors lose their original investment.*fn6 At the meeting, Henderson was referred to Karen Caston, who represented herself as an agent of AVBS. Working directly with Caston, Henderson "invested" a total of $5,000 with MV&S in August and September and paid a $200 "membership" fee. He was promised a 50 percent return. In October, Henderson attended a meeting in Quartz Hill presided over by appellant. There were approximately 50 other people present. Appellant stated that the Lancaster development was experiencing delays, but assured the attendees that their investments were safe. Henderson observed many people confront appellant seeking return of their funds.*fn7 Henderson was persuaded to renew his "investment" and roll over his funds. In January 2004, Henderson went to MV&S‟s offices in Palmdale and was persuaded to execute another rollover agreement. Henderson returned to the same location in May 2004, but no one connected with MV&S or AVBS was at the location and the telephone had been disconnected. Henderson never received either the promised return or his original funds back.

Randy Townsend was introduced to appellant by his former pastor at a church in Palmdale in late 2001 or early 2002. Appellant described himself as a wealthy individual who had a "unique system" for investing and wished to help fellow Christians "prosper financially." Appellant said that those who invested with him would likely make a generous profit and would, at a minimum, get their money back. He told people they would have to pay to join his corporation in order to take advantage of the investment opportunities he offered. At this meeting, other people spoke, claiming to be investors who had been fully paid by appellant. Townsend later attended a meeting at appellant‟s offices in Palmdale, a meeting attended by approximately 20 others, and was introduced to appellant‟s wife, Saundra Smith. Mrs. Smith reiterated much of what had been said by appellant, including the promise that original investments were guaranteed. At that meeting, appellant claimed to be associated with large developers known for building homes in the Antelope Valley. He claimed to have a 95 percent success rate in returning profit to his investors. In May 2003, Townsend executed an agreement, paid $5,000 as an "enrollment fee" and paid $25,000 as an "investment."*fn8 He was promised a 50 percent return within five months. In July or August, appellant appeared at Townsend‟s church where Townsend and numerous others asked to get their money back. Appellant stated that the funds were secure, but claimed to be having personal problems and problems with his wife. Appellant promised to meet Townsend and the others seeking refunds the next day at his Palmdale office, but did not appear. Townsend saw appellant from time to time thereafter and asked about his funds. Appellant continued to promise to repay Townsend, but never returned Townsend‟s funds.

Lynn Joshua invested money with appellant in 2003. She heard appellant speak at her church (the same church attended by Townsend). Appellant stated that money invested with him or his companies would double or triple in a very short time. He said the original investment funds were guaranteed. Other people spoke at the meeting and confirmed that investing with appellant had worked out for them. The church‟s bishop said he had doubled his money in 30 days. Acting on appellant‟s instructions to those who wished to participate, Joshua went to a Palmdale office and met with Mrs. Smith or Vince Bias. In March 2003, Joshua was persuaded to pay a $5,000 membership fee, $20,000 to become an agent and an additional $12,500 as an investment. She was promised a 100 percent return in 60 days. Joshua subsequently paid $3,000 on behalf of her parents, in exchange for a promise of monthly payments of $1,000. In mid-2003, when the contracts became due, Joshua returned to the Palmdale office to obtain payment and was repeatedly put off by Mrs. Smith. Once, appellant met with Joshua and gave her $500; those were the only funds returned or paid to her by appellant.

De‟Nean Coleman-Carew also learned about appellant‟s operation through her church. She attended a meeting at a restaurant, where appellant stated that any principal invested with him would be safe and that returns would be in the neighborhood of 25 to 50 percent. Appellant said that funds would be invested in real estate and cars. Appellant played a video from a pastor known to Coleman-Carew. The pastor stated that appellant‟s investment program worked. In May 2003, Coleman-Carew met with an agent, Craig Henry, paid an enrollment fee, and "invested" $2,500 dollars. She was promised a return of $1,000 by July. In July, she was persuaded by appellant to "reinvest" or roll over the funds. In September, Coleman-Carew took out a $50,000 loan on her home and gave that sum to Henry. She also paid funds on behalf of her father, daughter, cousin and aunt. When Coleman-Carew attempted to obtain the promised payments, Henry repeatedly stated that money would be forthcoming soon. At one point, Coleman-Carew received a letter from appellant documenting the total amount she had "invested" with his organization. At another point, appellant promised Coleman-Carew that all the amounts owed her would be paid by January 2004. Coleman-Carew attended a meeting where she and others asked appellant for refunds. Coleman-Carew never received any payments from appellant.

Riccardo Ainslie became involved in appellant‟s operation in 2002. He attended a presentation by appellant in Palmdale, where appellant claimed to be generating returns by investing in real estate and by buying and re-selling expensive cars. Appellant said those who invested with him could expect a return of 50 percent or more, and that the investments were "not risky at all." Other people present at the meeting confirmed that appellant had paid them promised returns. Appellant invited interested investors to meet with his agents, who were present at the meeting. At the end of 2002, Ainslie met with Angel Avila, one of those identified as an agent, executed an agreement and paid $2,500. He was promised a 100 percent return in 60 days. In January and March 2003, Ainslie made three additional $2,500 "investments" and was promised similar returns. Ainslie persuaded others to give money, including his wife and stepdaughter. Avila repeatedly persuaded Ainslie to rollover the investments rather than obtain actual payment of any returns. During this period, Ainslie attended regular meetings presided over by appellant, where appellant purported to describe the investments he was making with the participants‟ funds. The meetings were initially attended by 20 to 25 people, but the numbers steadily grew. One of the later meetings was attended by approximately 200 people. Sometime after July 2003, the location where the meetings had been held was shut down and the telephone numbers Ainslie had called to find out the time and date of the meetings was disconnected. Ainslie received no repayment of any of his funds.

Darren Scott made his first "investment" -- $5,000 -- in April 2003, after hearing about AVBS from a friend and prior to meeting appellant. The agreement was signed by and the funds were paid to Vince Bias, who represented to Scott that he was an agent for appellant or AVBS. The agreement promised a 100 percent return by July. Subsequently, Scott attended a meeting of ten to fifteen people in someone‟s home where appellant gave a presentation purporting to describe the investments AVBS was making with the participants‟ funds. Appellant promised a high rate of return and said that invested funds were guaranteed. Appellant confirmed that Bias was his agent and that Bias had transferred Scott‟s money to appellant‟s organization. In August 2003, Scott entered into a second agreement for $17,000 ($10,000 in new money and $7,000 rolled over) and was promised payments of $4,000 per month for 15 months.*fn9 Later, Scott gave appellant $3,000 directly. When Scott and others pressed appellant for payment, appellant blamed Bias for not paying people amounts he was supposed to have paid. Scott received one payment of $5,000 from appellant.

Horace Duplechein learned about appellant‟s operation when he began working as appellant‟s bodyguard in 2003. Appellant informed Duplechein that he was a developer of homes. Duplechein attended a meeting where appellant offered to sell individual plots of land to attendees. Appellant represented that the investments were safe and could expect returns of 25 to 100 percent. In July 2003, Duplechein was persuaded by appellant to sign an investment agreement, to pay a "membership" fee and to pay $2,500 as an investment in specific lots. In October, Duplechein signed additional agreements and paid appellant an additional $40,000. When Duplechein sought the payments promised by the contracts, appellant told him the project was experiencing delays. On one occasion, appellant paid Duplechein $5,000. Other than that, Duplechein received no payments from appellant.

Irit Lavie was introduced to appellant by Duplechein in 2003. Lavie attended a meeting at appellant‟s offices in Palmdale or Quartz Hill. Between 50 and 100 other people were present. Appellant spoke about the development project and promised 30 to 50 percent returns for those who invested with him. In October 2003, Lavie was persuaded to pay $32,500 to appellant. Appellant stated that the sums paid represented both investments for which Lavie would be paid significant sums per month and down payments on two homes. Lavie later paid an additional $50,000 to appellant expecting it to be invested. Appellant represented that the investments were very safe. Lavie never received anything in return for her payments.

Detective David Lingscheit, a fraud investigator for the Los Angeles County Sheriff‟s Department, explained the basics of a Ponzi scheme: funds are solicited from victims, who are told that the funds will be used for specific investments and pay very high returns within a short period of time. In fact, however, any money paid back to victims comes from funds received from other victims. Part of the scheme involves making payments as promised to early victims, so that they will be induced to bring others into the scheme. The scheme eventually collapses because the amount scheduled to go out is too great and the money runs out. To prevent the scheme from collapsing too soon, victims are encouraged to roll over funds when payments become due.

Detective Lingscheit also testified to serving search warrants seeking records for ten bank accounts associated with appellant, MV&S and AVBS, identified by interviewing alleged victims and reviewing their documents. By the time he served the warrants, the accounts had been closed and the balances were at zero. Detective Lingscheit also seized documents pursuant to search warrants at AVBS‟s offices in Quartz Hill and at appellant‟s residence. AVBS‟s files contained over 4,000 executed contracts similar to those signed by the witnesses, all promising returns of 50 to 100 percent.*fn10 Among the documents seized were the agreements executed by the victims who testified at trial. Detective Lingscheit calculated that the investment amounts on the contracts totaled $8.8 million. Also seized were promotional materials bearing appellant‟s picture and ...


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