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People v. Schmidt

California Court of Appeals, Third District

November 8, 2019

The PEOPLE, Plaintiff and Respondent,
Lonnie Glenn SCHMIDT, Defendant and Appellant.

         [Certified for Partial Publication.] [*]

         [254 Cal.Rptr.3d 695] APPEAL from a judgment of the Superior Court of Sacramento County, Donald J. Currier, Judge. Affirmed in part and reversed in part. (Super. Ct. No. 13F07578)

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         Laura Schaefer, San Diego, under appointment by the Court of Appeal, for Defendant and Appellant.

         Xavier Becerra, Attorney General, Gerald A. Engler, Chief Assistant Attorney General, Michael P. Farrell, Assistant Attorney General, Julie A. Hokans, Galen N. Farris, Deputy Attorney General, for Plaintiff and Respondent.


         RENNER, J.

         Following a lengthy jury trial in which he represented himself, defendant Lonnie Glenn Schmidt was convicted of four counts of prohibited practices by a foreclosure consultant (counts 1-2, 29-30— Civ. Code, § 2945.4, subds. (a) and (e)), ten counts of filing false instruments (counts 3, 4, 6, 8, 10, 12, 13, 15, 18, 26— Pen. Code, § 115, subd. (a)),[1] six counts of identity theft (counts 5, 7, 9, 11, 14, 16— § 530.5, subd. (a)), one count of second degree burglary (count 17— § 459), one count of perjury (count 19— § 118, subd. (a)), three counts of grand theft (counts 20, 27-28— § 487, subd. (a)), and five counts of attempted grand theft (counts 21-25—

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§ § 664, 487, subd. (a)). The trial court sentenced defendant to a total of 28 years in state prison plus one year consecutive in the county jail.

         On appeal, defendant argues, and the People concede, that: (1) insufficient evidence supports the convictions for violations of Civil Code section 2945.4, subdivisions (a) and (e) in counts 29 and 30, and (2) the grand theft convictions on counts 20 or 21, on the one hand, and 27 or 28 on the other, are barred by the multiple takings doctrine set forth in People v. Bailey (1961) 55 Cal.2d 514, 518-519, 11 Cal.Rptr. 543, 360 P.2d 39 (Bailey ). We accept the People’s concessions and shall reverse the convictions on counts 20, 28, 29, and 30.

         Defendant also argues that the evidence does not support the convictions for violations of section 115, subdivision (a) in counts 3 and 26. We agree and shall reverse the convictions on counts 3 and 26 as well.

          Defendant also argues the trial court should have stayed his sentence on counts 17, 20 to 25, and 27 to 28. The People concede that the sentence should have been stayed on count 21. We accept the concession and remand for resentencing on count 21. We reject defendant’s contention that the sentence should have been stayed on the other enumerated counts.

          Defendant also argues, and the People also concede, that the trial court erred in reducing the conviction for second degree burglary in count 17 to misdemeanor shoplifting under Proposition 47, and sentencing [254 Cal.Rptr.3d 696] him to one year consecutive, rather than eight months. We accept the People’s concession and remand for resentencing on count 17.

          We reject defendant’s remaining contentions.

          I. BACKGROUND

          Defendant managed a home foreclosure rescue operation, doing business as Second Opinion Services and Financial Services Bureau Limited. He hired and supervised Alan, who testified for the prosecution under a grant of immunity. Neither defendant nor Alan was a licensed real estate broker, real estate agent, or attorney, and neither had registered with the State as a foreclosure consultant.

          A. Defendant’s "Mortgage Rescission" Program

          According to Alan, defendant developed a "mortgage rescission" program that allowed financially distressed homeowners to avoid foreclosure and receive "fee simple title control" of their properties, free and clear of their

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mortgages. Under the program, homeowners paid an enrollment fee, and then signed quitclaim deeds transferring their properties to trusts created by defendant, with defendant as trustee. At defendant’s instruction, homeowners would then stop paying their mortgages (if they had not done so already) and instead make monthly lease payments to defendant. Defendant told homeowners that the monthly lease payments would continue for a period of five years, after which, he claimed, they would own their homes free and clear.

          During the trial, the jury heard from multiple prosecution witnesses that defendant’s mortgage rescission program failed to work as advertised. The jury heard evidence about a number of transactions, involving a number of properties. We describe two such transactions in detail and provide a more general overview of the others.

          1. The Walnut Avenue Property (Counts 1-3, 18, 20, and 21)

          Hector owned a home on Walnut Avenue in Orangevale. Hector fell behind on his mortgage payments and went into default in October 2010. He heard about defendant’s program from a friend and reached out for help. Defendant told Hector that he knew a way to save the house and gain title free and clear of the mortgage, but "it was going to cost [him]."

          Defendant explained that Hector would pay an enrollment fee of $6,500, transfer the property to "an entity," and "lease the house back from the entity for $891 monthly" for a period of five years. He would then make a balloon payment of $75,000, which, defendant said, he could easily pay by refinancing, as he would now own the house free and clear.

          Hector paid the $6,500 enrollment fee and signed a quitclaim deed in February or March 2011 transferring the house to a trust known as the H&H Barbershop Trust. Although defendant told Hector that he would have control over the property through the H&H Barbershop Trust (which was named for Hector’s business), the abstract of trust, which defendant did not show Hector, identified defendant and Alan as trustees and gave them "absolute and exclusive power and control over the management and conduct of the business and affairs of the trust." Hector would not have signed the quitclaim deed had he known that he would be ceding control of the property to defendant.

          Hector made monthly lease payments for several months, beginning in April and ending in September 2011. He stopped making payments to defendant on the advice of an attorney and instead resumed [254 Cal.Rptr.3d 697] making monthly payments to his mortgage lender. Eventually, he managed to obtain a loan modification which allowed him to keep his house. Defendant was not involved in the process of securing the loan modification.

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          Sometime later, a man appeared at Hector’s house. The man identified himself as an associate of defendant, and claimed that Hector’s house belonged to him. A short time later, in July 2013, Hector received a letter from defendant, asserting that defendant was now the owner of the house and claiming that Hector owed him more than $20,000 in back rent.

          Later still, Hector learned that the quitclaim deed he had signed in 2011 had been recorded on July 16, 2013. Hector also learned that a document entitled "assumption agreement," in which the H&H Barbershop Trust purported to assume Hector’s loan obligations, had been recorded the next day. Hector was forced to hire an attorney to clear title to the house. During the trial, the jury heard evidence that defendant had attempted to sell the Walnut Avenue property to Don, a real estate speculator who was willing to find investors for the property, going so far as to open an escrow for the property with Orange Coast Title Company in Sacramento.

          2. The School Street Property (Counts 26-30)

          Janet and Robert owned a home on School Street in Elk Grove. They ran into some financial difficulty in 2011 and contacted defendant. They were not living in their home at the time; rather, they had rented the property, and were traveling the country in their retirement in a fifth wheel trailer.

          They were current on their mortgage, but the house was underwater and they wanted to reduce their mortgage payments. Defendant told Janet and Robert that there was something wrong with their loan agreement, which would allow him to cancel their mortgage. He explained that his program would require them to transfer their property to a trust, but they would continue to own the property and could continue to lease it. Defendant told Janet and Robert that they would no longer make monthly mortgage payments to their lender, but would instead pay a reduced amount to another entity over a period of five years, followed by a balloon payment, which would be paid by refinancing. Janet and Robert were impressed by defendant’s presentation and eager to improve their financial situation. They signed a contract to join defendant’s program that very day. The contract called for a $6,500 enrollment fee, monthly payments of $951, and a balloon payment of $85,000.

          Janet and Robert paid the enrollment fee and signed a quitclaim deed conveying their interest in the School Street property to a trust known as the "Forever Blessed Trust." They stopped making their mortgage payments, signed a lease agreement with the Forever Blessed Trust, and instructed their tenants to send monthly rental payments to defendant. When all was said and done, Janet and Robert paid defendant more than $18,000. Janet and Robert

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were not aware that the Forever Blessed Trust was governed by an abstract of trust created by defendant, naming defendant as trustee and granting defendant "absolute and exclusive control" over the management and disposition of the property. They would not have signed the quitclaim deed had they ...

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