(HC) Koenig v. Koenig

— 1 — — 2 — — 3 — — 4 — — 5 — — 6 — — 7 — — 8 — 9 IN THE UNITED STATES DISTRICT COURT 10 FOR THE EASTERN DISTRICT OF CALIFORNIA — 11 — 12 JAMES STANLEY KOENIG, No. 2:21-CV-1145-DAD-DMC-P 13 Petitioner, FINDINGS AND RECOMMENDATIONS 14 v. 15 C. KOENIG, 16 Respondent. — 17 — 18 Petitioner, a state prisoner proceeding pro se, brings this petition for a writ of 19 habeas corpus under 28 U.S.C. § 2254 . Pending before the Court are Petitioner’s amended 20 petition for a writ of habeas corpus, ECF No. 27, Respondent’s answer, ECF No. 31, and 21 Petitioner’s traverse, ECF Nos. 43 and 44. Respondent has lodged the state court record. See 22 ECF No. 30. 23 Because this action was filed after April 26, 1996, the provisions of the 24 Antiterrorism and Effective Death Penalty Act of 1996 (“AEDPA”) are presumptively applicable. 25 See Lindh v. Murphy, 521 U.S. 320, 336 (1997); Calderon v. United States Dist. Ct. (Beeler), 128 26 F.3d 1283, 1287 (9th Cir. 1997), cert. denied, 522 U.S. 1099 (1998). Under AEDPA, federal 27 habeas relief under 28 U.S.C. § 2254 (d) is not available for any claim decided on the merits in 28 / / / 1 state court proceedings unless the state court’s adjudication of the claim: 2 (1) resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the 3 Supreme Court of the United States; or 4 (2) resulted in a decision that was based on an unreasonable determination of the facts in light of the evidence presented in the State court proceeding. — 5 — 6 Under § 2254(d)(1), federal habeas relief is available only where the state court’s 7 decision is “contrary to” or represents an “unreasonable application of” clearly established law. 8 Under both standards, “clearly established law” means those holdings of the United States 9 Supreme Court as of the time of the relevant state court decision. See Carey v. Musladin, 549 10 U.S. 70, 74 (2006) (citing Williams, 529 U.S. at 412). “What matters are the holdings of the 11 Supreme Court, not the holdings of lower federal courts.” Plumlee v. Masto, 512 F.3d 1204 (9th 12 Cir. 2008) (en banc). For federal law to be clearly established, the Supreme Court must provide a 13 “categorical answer” to the question before the state court. See id.; see also Carey, 549 U.S. at 14 76-77 (holding that a state court’s decision that a defendant was not prejudiced by spectators’ 15 conduct at trial was not contrary to, or an unreasonable application of, the Supreme Court’s test 16 for determining prejudice created by state conduct at trial because the Court had never applied the 17 test to spectators’ conduct). Circuit court precedent may not be used to fill open questions in the 18 Supreme Court’s holdings. See Carey, 549 U.S. at 74. 19 In Williams v. Taylor, 529 U.S. 362 (2000) (O’Connor, J., concurring, garnering a 20 majority of the Court), the United States Supreme Court explained these different standards. A 21 state court decision is “contrary to” Supreme Court precedent if it is opposite to that reached by 22 the Supreme Court on the same question of law, or if the state court decides the case differently 23 than the Supreme Court has on a set of materially indistinguishable facts. See id. at 405 . A state 24 court decision is also “contrary to” established law if it applies a rule which contradicts the 25 governing law set forth in Supreme Court cases. See id. In sum, the petitioner must demonstrate 26 that Supreme Court precedent requires a contrary outcome because the state court applied the 27 wrong legal rules. Thus, a state court decision applying the correct legal rule from Supreme Court 28 cases to the facts of a particular case is not reviewed under the “contrary to” standard. See id. at 1 406. If a state court decision is “contrary to” clearly established law, it is reviewed to determine 2 first whether it resulted in constitutional error. See Benn v. Lambert, 283 F.3d 1040 , 1052 n.6 3 (9th Cir. 2002). If so, the next question is whether such error was structural, in which case federal 4 habeas relief is warranted. See id. If the error was not structural, the final question is whether the 5 error had a substantial and injurious effect on the verdict or was harmless. See id. 6 State court decisions are reviewed under the far more deferential “unreasonable 7 application of” standard where it identifies the correct legal rule from Supreme Court cases, but 8 unreasonably applies the rule to the facts of a particular case. See Wiggins v. Smith, 539 U.S. 9 510, 520 (2003). While declining to rule on the issue, the Supreme Court in Williams, suggested 10 that federal habeas relief may be available under this standard where the state court either 11 unreasonably extends a legal principle to a new context where it should not apply, or 12 unreasonably refuses to extend that principle to a new context where it should apply. See 13 Williams, 529 U.S. at 408-09. The Supreme Court has, however, made it clear that a state court 14 decision is not an “unreasonable application of” controlling law simply because it is an erroneous 15 or incorrect application of federal law. See id. at 410 ; see also Lockyer v. Andrade, 538 U.S. 63 , 16 75-76 (2003). An “unreasonable application of” controlling law cannot necessarily be found even 17 where the federal habeas court concludes that the state court decision is clearly erroneous. See 18 Lockyer, 538 U.S. at 75-76 . This is because “[t]he gloss of clear error fails to give proper 19 deference to state courts by conflating error (even clear error) with unreasonableness.” Id. at 75 . 20 As with state court decisions which are “contrary to” established federal law, where a state court 21 decision is an “unreasonable application of” controlling law, federal habeas relief is nonetheless 22 unavailable if the error was non-structural and harmless. See Benn, 283 F.3d at 1052 n.6. 23 The “unreasonable application of” standard also applies where the state court 24 denies a claim without providing any reasoning whatsoever. See Himes v. Thompson, 336 F.3d 25 848, 853 (9th Cir. 2003); Delgado v. Lewis, 223 F.3d 976, 982 (9th Cir. 2000). Such decisions 26 are considered adjudications on the merits and are, therefore, entitled to deference under the 27 AEDPA. See Green v. Lambert, 288 F.3d 1081 1089 (9th Cir. 2002); Delgado, 223 F.3d at 982 . 28 The federal habeas court assumes that state court applied the correct law and analyzes whether the 1 state court’s summary denial was based on an objectively unreasonable application of that law. 2 See Himes, 336 F.3d at 853 ; Delgado, 223 F.3d at 982 . — 3 — 4 I. BACKGROUND 5 The California Court of Appeal, in ruling on Petitioner’s direct appeal, recited the 6 facts of the case, and Petitioner has not offered any clear and convincing evidence to rebut the 7 presumption that these facts are correct.1 See ECF No. 30-52, pgs. 2-22. As the parties are 8 familiar with the facts, they are not repeated here. The relevant facts are discussed below in the 9 context of each of Petitioner's specific claims. 10 The California Court of Appeal outlined the following procedural history through 11 direct appeal: 12 A jury found defendant James Stanley Koenig guilty of 33 counts of securities fraud and enhancements – mostly involving Corporations 13 Code section 25401 [footnote omitted] – and two counts of residential burglary. . . . — 14 — * * * — 15 — Prior to jury deliberation, the trial court dismissed counts 5, 19, 24, 16 30, and 39. The jury ultimately found defendant not guilty on Count 8 but guilty on every remaining count: Counts 1-4, 6, 7, 9-18, 20-23, 25-29, 3117 38 and 41-42. The jury also found the enhancement allegations true. [footnote omitted]. 18 The trial court sentenced defendant to an aggregate term of 42 years eight months. [footnote omitted]. — 19 — ECF No. 30-52, pg. 2, 22. — 20 — 21 The Court of Appeal affirmed Petitioner’s conviction and sentence on December 22 15, 2020. See ECF No. 30-52. The California Supreme Court denied direct review on March 10, 23 2021. See ECF No. 30-53. Petitioner then filed a series of post-conviction actions in state court, 24 all of which were denied or withdrawn. See ECF Nos. 30-54 through 30-62. 25 1 Pursuant to 28 U.S.C. § 2254 (e)(1), “. . . a determination of a factual issue made by a State court shall be presumed to be correct.” Findings of fact in the last reasoned state court 26 decision are entitled to a presumption of correctness, rebuttable only by clear and convincing evidence. See Runningeagle v. Ryan, 686 F.3d 759 n.1 (9th Cir. 2012). Petitioner bears the 27 burden of rebutting this presumption by clear and convincing evidence. See id. The facts are, therefore, drawn from the state court’s opinion(s), lodged in this court. Petitioner may also be 28 referred to as “defendant.” 1 II. DISCUSSION 2 In the first amended petition, Petitioner asserts seven grounds for relief. See ECF 3 No. 27, pgs. 27-28. The ground asserted are as follows: 4 Ground I The trial court erred in allowing the jury to convict Petitioner of violations of § 25401 as a conspirator on a 5 finding of criminal negligence, a theory that does not exist under state law. See ECF No. 27, pgs. 29-31. — 6 — Ground II The trial court erred in allowing the jury to convict 7 Petitioner of violations of § 25401 as an aider and abettor on a finding of criminal negligence, a theory that does not 8 exist under state law. See id. at 32-34. 9 Ground III Because the trial court permitted the jury to find liability under § 25401 on theories of criminal negligence, the trial 10 court erred in allowing the jury to convict Petitioner of burglary with intent to commit violations of § 25401 11 without a finding of specific intent to commit a felony. See id. at 35-37. — 12 — Ground IV The appellate court erred in concluding that any error with 13 respect to the trial court's refusal to instruct the jury as to the definition of “indirect” was harmless because the state 14 did not raise that defense. See id. at 38-4. 15 Ground V The trial court erred in refusing to instruct the jury on a mistake-of-law defense. See id. at 41-44. — 16 — Ground VI The trial court erred in failing to instruct the jury that it 17 must unanimously agree on the overt act committed in furtherance of the conspiracy. See id. at 45-47. — 18 — Ground VII Cumulative error. See id. at 48-49. — 19 — 20 Respondent argues in the answer that Petitioner’s disagreement with the state 21 court’s holding on matters of state law and application of the harmless error doctrine is “not 22 helpful.” ECF No. 31, pgs. 20-23. Respondent also asserts that the state court acted reasonably 23 in the determination that Petitioner was not prejudiced by the lack of a defense instruction. See 24 id. at 23-32. Next, Respondent argues that the state court’s rejection of an instruction on 25 unanimity was also reasonable. See id. at 32-33. Finally, Respondent argues that the state court 26 was reasonable in it’s rejection of Petitioner’s cumulative error claim. See id. at 33. 27 / / / 28 / / / 1 A. Jury Instruction Claims 2 In the amended petition, Petitioner raises the six claims related to jury instructions 3 in his criminal trial. Ground I challenges the trial court's instructions relating to conspiracy 4 liability. Ground II challenges the trial court's instructions relating to aiding-and-abetting 5 liability. Ground III challenges the trial court's instructions relating to burglary. Ground IV 6 challenges the appellate court's application of the harmless error standard to the trial court's 7 refusal to instruct the jury on the definition of “indirect.” Ground V challenges the failure of the 8 trial court to instruct on a mistake-of-law defense. Ground VI challenges the trial court's failure 9 to provide a unanimity instruction as to the overt act committed in furtherance of a conspiracy. 10 A writ of habeas corpus is available under 28 U.S.C. § 2254 only on the basis of a 11 transgression of federal law binding on the state courts. See Middleton v. Cupp, 768 F.2d 1083 , 12 1085 (9th Cir. 1985); Gutierrez v. Griggs, 695 F.2d 1195, 1197 (9th Cir. 1983). It is not available 13 for alleged error in the interpretation or application of state law. See Middleton, 768 F.2d at 14 1085; see also Lincoln v. Sunn, 807 F.2d 805, 814 (9th Cir. 1987); Givens v. Housewright, 786 15 F.2d 1378 , 1381 (9th Cir. 1986). Habeas corpus cannot be utilized to try state issues de novo. 16 See Milton v. Wainwright, 407 U.S. 371, 377 (1972). Thus, a challenge to jury instructions does 17 not generally give rise to a federal constitutional claim. See Middleton, 768 F.2d at 1085 ) (citing 18 Engle v. Isaac, 456 U.S. 107, 119 (1982)). 19 However, a “claim of error based upon a right not specifically guaranteed by the 20 Constitution may nonetheless form a ground for federal habeas corpus relief where its impact so 21 infects the entire trial that the resulting conviction violates the defendant’s right to due process.” 22 Hines v. Enomoto, 658 F.2d 667, 673 (9th Cir. 1981) (citing Quigg v. Crist, 616 F.2d 1107 (9th 23 Cir. 1980)); see also Lisenba v. California, 314 U.S. 219, 236 (1941). In order to raise such a 24 claim in a federal habeas corpus petition, the “error alleged must have resulted in a complete 25 miscarriage of justice.” Hill v. United States, 368 U.S. 424, 428 (1962); Crisafi v. Oliver, 396 26 F.2d 293, 294-95 (9th Cir. 1968); Chavez v. Dickson, 280 F.2d 727, 736 (9th Cir. 1960). 27 / / / 28 / / / 1 In general, to warrant federal habeas relief, a challenged jury instruction “cannot 2 be merely ‘undesirable, erroneous, or even “universally condemned,”’ but must violate some due 3 process right guaranteed by the fourteenth amendment.” Prantil v. California, 843 F.2d 314 , 317 4 (9th Cir. 1988) (quoting Cupp v. Naughten, 414 U.S. 141, 146 (1973)). To prevail, petitioner 5 must demonstrate that an erroneous instruction “‘so infected the entire trial that the resulting 6 conviction violates due process.’” Estelle v. McGuire, 502 U.S. 62, 72 (1991) (quoting Cupp, — 7 — 414 U.S. at 147 ). In making its determination, this court must evaluate an allegedly ambiguous 8 jury instruction “‘in the context of the overall charge to the jury as a component of the entire trial 9 process.’” Prantil, 843 F.2d at 817 (quoting Bashor v. Risley, 730 F.2d 1228, 1239 (9th Cir. 10 1984)). Further, in reviewing an allegedly ambiguous instruction, the court “must inquire 11 ‘whether there is a reasonable likelihood that the jury has applied the challenged instruction in a 12 way’ that violates the Constitution.” Estelle, 502 U.S. at 72 (quoting Boyde v. California, 494 13 U.S. 370, 380 (1990)). Petitioner’s burden is “especially heavy” when the court fails to give an 14 instruction. Henderson v. Kibbe, 431 U.S. 145, 155 (1977). Where an instruction is missing a 15 necessary element completely, the “reasonable likelihood” standard does not apply and the court 16 may not “. . . assume that the jurors inferred the missing element from their general experience or 17 from other instructions. . . .” See Wade v. Calderon, 29 F.3d 1312, 1321 (9th Cir. 1994). In the 18 case of an instruction which omits a necessary element, constitutional error has occurred. See id. 19 Even if there is constitutional error, non-structural errors may be harmless. See 20 Hedgpeth v. Pulido, 129 S.Ct. 530, 532 (2008) (per curiam) (citing Chapman v. California, 386 21 U.S. 18 (1967)). In the context of jury instructions, an error is non-structural so long as the error 22 does not “vitiat[e] all the jury’s findings.” Sullivan v. Louisiana, 508 U.S. 275, 2781 (1993) 23 (holding that an erroneous reasonable doubt instruction resulted in structural error not subject to 24 harmless error analysis). An instructional error which resulted in omission of an element of the 25 offense was a non-structural trial error subject to harmless error review. See Hedgpeth, 129 S.Ct. 26 at 532 (citing Neder v. United States, 527 U.S. 1 (1999)). An erroneous aider and abettor 27 instruction is also non-structural. See id. (citing California v. Roy, 519 U.S. 2 (1996) (per 28 curiam)). A jury instruction which misstates an element of an offense is also non-structural. 1 See id. (citing Pope v. Illinois, 481 U.S. 497 (1987)). An erroneous burden-shifting instruction is 2 also not structural. See id. (citing Rose v. Clark, 478 U.S. 570 (1986)). Finally, an instruction on 3 multiple theories of guilt where one of the theories is improper does not result in a structural error 4 requiring automatic reversal but is a non-structural error subject to harmless error analysis. 5 See id. 6 In Chapman, a case before the Supreme Court on direct review, the Court held that 7 “before a [non-structural] constitutional error can be held harmless, the court must be able to 8 declare a belief that it was harmless beyond a reasonable doubt.” 386 U.S. at 24. A different 9 harmless error standard applies to cases on collateral review. In Brecht v. Abrahamson, the Court 10 stated that applying the Chapman standard on collateral review “undermines the States’ interest in 11 finality and infringes upon their sovereignty over criminal matters.” 507 U.S. 619, 637 . The 12 Court also noted that the Chapman standard is at odds with the historic meaning of habeas corpus 13 – which is meant to afford relief only to those who have been grievously wronged – because it 14 would require relief where there is only a reasonable possibility that a constitutional error 15 contributed to the verdict. See id. Therefore, in habeas cases, the standard applied in Kotteakos 16 v. United States, 328 U.S. 750 (1946), governs harmless error analysis for non-structural 17 constitutional errors. See Brecht, 507 U.S. at 637 . Under this standard, relief is available where 18 non-structural error occurs only where such error “had a substantial and injurious effect or 19 influence in determining the jury’s verdict.” Kotteakos, 328 U.S. at 776 . 20 Below, the Court evaluates the state court's determination of each of Petitioner's 21 jury instruction claims consistent with the foregoing principles and the standard of review under 22 AEDPA. 23 / / / 24 / / / 25 / / / 26 / / / 27 / / / 28 / / / 1 1. Conspiracy 2 Petitioner argues that the trial court allowed the jury to convict on a theory of 3 culpability that did not exist under state law. 2 See ECF No. 27, pg. 5. In Attachment C to the 4 amended petition, Petitioner adds: 5 The trial court committed prejudicial error in allowing the jury to convict petitioner of the § 25401 charges by finding that he was 6 “criminal[ly] negligent in failing to investigate and discovery the falsity and materiality of the [untrue] statement or acted with criminal negligence 7 in failing to investigate and discovery the materiality of the omission,” a theory of culpability which does not exist under California state law. 8 Specifically, the lower court ignored basic principles of statutory construction and thus interpreted § 25401 in a way that the California 9 State Legislature never intended and violated defendant’s federal constitutional rights to a jury trial and due process caused by permitting 10 jurors to convict on a theory of culpability that did not exist under state law. — 11 — ECF No. 27, pg. 29. — 12 — 13 Regarding conspiracy liability, the Court of Appeal first outlined the jury 14 instructions given by the trial court: 15 . . .As instructed by the trial court, the People must prove: “1. The defendant willfully offered for sale or sold a security in California; [¶] [¶] 16 AND [¶] 4. At the time the communication was made, Mr. Koenig either: a. Knew that the communication included an untrue statement of material 17 fact or knew the materiality of the omitted fact, OR b. Acted with criminal negligence in failing to investigate and discover the falsity and materiality 18 of the statement or acted with criminal negligence in failing to investigate and discover the materiality of the omission.” (Italics added.) The court 19 also defined “Willfully” as meaning to do something “willingly or on purpose”; and “Criminal negligence” as meaning a negligent act “which is 20 aggravated, reckless or flagrant and which is a gross departure from what would be the conduct of an ordinary prudent, careful person under the 21 same circumstances.” 22 2 Petitioner's claim was somewhat different when presented to the California Court of Appeal, which described the claim as follows: — 23 — Defendant first contends the trial court erred in instructing the jury 24 that it could convict him of section 25401 on either a conspiracy or aiding and abetting theory. He reasons that section 25401 is a crime of 25 negligence and is therefore incompatible with those theories of liability. 26 ECF No. 30-52, pg. 23. 27 In the current action, Petitioner contends that § 25401 is not a crime based on criminal negligence and that the trial court instructed the jury in such a way that the jury was permitted to convict on 28 that theory. 1 As for conspiracy, in pertinent part, the court instructed that to prove a conspiracy to violate section 25401, the People must prove: “1. 2 The defendant intended to agree and did agree with Gary Armitage to commit the crime of sale of securities by means of false statement of a 3 material fact or material omission in violation of Corporations Code section 25401/25540; [footnote omitted]. [¶] 2. At the time of the 4 agreement, the defendant and one or more of the other alleged members of the conspiracy intended that one or more of them would commit the crime 5 of sale of securities by means of false statement of a material fact or material omission in violation of Corporations Code section 6 25401/25540.” 7 ECF No. 30-52, pgs. 23-24. 8 The Court of Appeal then provided the following analysis: 9 Whether a jury instruction correctly states the law is reviewed de novo. (People v. Posey (2004) 32 Cal.4th 193, 218 .) 10 A conspiracy is an agreement by two or more persons to commit any crime, and its proof requires four elements: “ ‘(1) an agreement 11 between two or more people, (2) who have the specific intent to agree . . . to commit an offense, (3) the specific intent to commit that offense, and (4) 12 an overt act committed by one or more of the parties to the agreement for the purpose of carrying out the object of the conspiracy. [Citations.]’ ” 13 (People v. Martin (2018) 26 Cal.App.5th 825, 831 , italics added; (§ 182, subd. (a)(1)).) 14 Citing LaFave, defendant points out that one cannot conspire to commit a crime of negligence. (2 LaFave, Substantive Criminal Law (2d 15 ed. 2003) Intent to Achieve Objective, § 12.2(c)(2) at p. 278 [“there is no such thing as a conspiracy to commit a crime which is defined in terms of 16 recklessly or negligently causing a result.”], italics added.) [footnote omitted]. We do not disagree with this proposition. A person cannot agree 17 and specifically intend to accomplish an unintended result. But section 25401 does not proscribe a negligent act, nor does it proscribe a resulting 18 harm. As such it is not incompatible with conspiracy liability. The actus reus of section 25401 involves a willful act, not a 19 negligent act. Section 25401 provides: “It is unlawful for any person to offer or sell a security in this state, or buy or offer to buy a security in this 20 state by means of any written or oral communication which includes an untrue statement of a material fact or omits to state a material fact 21 necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.” Section 22 25540, which provides the criminal penalties for section 25401, includes a requirement that the conduct be willful. (People v. Simon (1995) 9 Cal.4th 23 493, 522 (Simon).) Accordingly, section 25401’s actus reus — offering or selling a security by means of a communication that includes an untrue 24 material fact or omits a material fact — must be done willfully. [footnote omitted]. 25 Consistent with this, our high court has characterized section 25401 as a general intent crime. [footnote omitted]. (People v. Salas 26 (2006) 37 Cal.4th 967, 976 (Salas), citing Simon, supra, 9 Cal.4th at p 507 [“section 25401 is a general intent crime, not one of strict liability”].) Still, 27 “[a] general intent crime ordinarily requires scienter, i.e., guilty knowledge of the facts which make the act a crime.” (People v. Laster 28 (1997) 52 Cal.App.4th 1450, 1468 .) For section 25401, our high court has 1 defined the scienter element as “either (1) knowledge of the false or misleading nature of a representation or of the materiality of an omission, 2 or (2) criminal negligence in failing to acquire such knowledge.” (Simon, at p. 497.) 3 Critically, criminal negligence in this context refers to an alternative way of proving the knowledge element. It does not describe 4 how the actus reus must be committed — and thus it does not convert section 25401 into a crime of criminal negligence. 5 We know of no California cases highlighting the distinction between a crime proscribing a negligent act and a crime with a scienter 6 element requiring either criminal negligence in failing to discover a material fact or actual knowledge. But United States v. Sdoulam (8th Cir. 7 2005) 398 F.3d 981 , provides an example under federal law. There, the defendant was charged with “conspiracy to distribute pseudoephedrine, 8 then having reasonable cause to believe that such chemical would be used to manufacture methamphetamine.” (Id. at p. 987, italics added.) The 9 defendant argued the phrase “ ‘reasonable cause to believe’ ” created a negligence standard. (Ibid.) While agreeing that one cannot conspire to 10 commit a negligent or unintentional act, the circuit court concluded that conspiracy was appropriately charged because the distribution statute 11 prohibited the commission of an intentional act: “ ‘[a]ny person who knowingly or intentionally . . . possesses or distributes a listed chemical 12 knowing, or having reasonable cause to believe, that the listed chemical will be used to manufacture a controlled substance.’ ” (Ibid.) The Sdoulam 13 court thus concluded the defendant’s argument that the “reasonable cause to believe” language converts the conspiracy to a conspiracy to commit a 14 negligent act was “disingenuous.” (Ibid.) The People cited and relied upon Sdoulam in their briefing on appeal, but defendant did not address it in his 15 reply although he continued to maintain that section 25401 is a crime of negligence. 16 Instead, defendant principally relies on cases discussing implied malice murder. (People v. Cortez (1998) 18 Cal.4th 1223 (Cortez); People 17 v. Swain (1996) 12 Cal.4th 593 (Swain).) He argues “a person cannot conspire (or intend) to commit a killing which lacks an intent to kill, since 18 the very act of conspiring to kill would constitute an intent to kill.” But this was not the reasoning underlying our high court’s rejection of the 19 crime of conspiracy to commit an implied malice murder. The court’s focus was on the inchoate nature of conspiracy, which does not require the 20 completed commission of the target crime, and the nature of implied malice murder which punishes a resulting death that was not intended. Our 21 high court explained when a “killing is the direct result” of an intentional act, the natural and probable consequences of which are dangerous to 22 human life, malice aforethought is implied. (Cortez, at p. 1229, citing Swain, at pp. 602-603.) “ ‘Hence, under an implied malice theory of 23 second degree murder, the requisite mental state for murder—malice aforethought—is by definition “implied,” as a matter of law, from the 24 specific intent to do some act dangerous to human life together with the circumstance that a killing has resulted from the doing of such act.’ ‘It is 25 precisely due to this nature of implied malice murder that it would be illogical to conclude one can be found guilty of conspiring to commit 26 murder where the requisite element of malice is implied. Such a construction would be at odds with the very nature of the crime of 27 conspiracy—an “inchoate” crime that “fixes the point of legal intervention at [the time of] agreement to commit a crime” . . . [citation]—precisely 28 because commission of the crime could never be established, or deemed 1 complete, unless and until a killing actually occurred.’ ” (Cortez, at pp. 1229-1230, quoting Swain, at pp. 602-603, first italics in original, second 2 italics added.) [footnote omitted]. Accordingly, conspiracy is incompatible with an unintended result 3 crime, such as implied malice murder. But no such limitation applies to conspiracy to commit a prohibited act crime, such as section 25401. 4 [footnote omitted]. Indeed, one of the sister state cases defendant relies upon discusses 5 conspiracy relative to target crimes that proscribe conduct and crimes that proscribe a result. In Donohue, supra, 150 N.H. 180 , the court, quoting 6 commentary from the Model Penal Code concerning conspiracy, wrote: “[I]n relation to those elements of substantive crimes that consist of 7 proscribed conduct or undesirable results of conduct, the Code requires purposeful behavior for guilt of conspiracy, regardless of the state of mind 8 required by the definition of the substantive crime. If the crime is defined in terms of prohibited conduct, such as the sale of narcotics, the actor’s 9 purpose must be to promote or facilitate the engaging in of such conduct by himself or another. If it is defined in terms of a result of conduct, such 10 as homicide, his purpose must be to promote or facilitate the production of that result.” (Id. at p. 183, italics added.) As the Donohue court observed, 11 this portion of the Model Penal Code commentary “recognizes that one cannot conspire to commit a crime where mere recklessness or negligence 12 with respect to a result element suffices for the actor’s culpability.” (Id. at p. 184.) 13 But section 25401 prohibits conduct. It does not require a resulting harm such as a death, injury or even monetary loss. Similar to the sale of 14 narcotics, the prohibited act here involves the willful act of offering or selling something — a security. The sale must be by means of a 15 communication that includes an untrue statement of material fact or omits a material fact, and as we have explained, the negligence theory in this 16 context is merely one way to establish scienter. Accordingly, section 25401 requires neither a negligent act nor a resulting harm, the very 17 elements that make crimes of negligence incompatible with conspiracy. We therefore conclude defendant was properly charged with conspiracy to 18 violate section 25401. 19 ECF No. 30-52, pgs. 24-29. 20 As explained above, federal habeas relief is generally not warranted on claims 21 asserting errors with jury instructions. Petitioner has the burden of demonstrating that the trial 22 court’s instruction violated his due process rights by infecting the entire trial such that the 23 resulting conviction is unfair. Petitioner cannot do so in this case. In addressing this claim, the 24 California Court of Appeal concluded that, contrary to petitioner’s argument that the trial court’s 25 instruction allowed the jury to convict based on negligent conduct – a theory not contemplated 26 under state law for violation of California Corporations Code § 25401 – the trial court’s 27 instruction described how the knowledge element could be proved, not how the crime was 28 committed. The state court concluded that the jury instruction accurately described this 1 distinction and did not impermissibly allow the jury to convict on a theory of negligence not 2 contemplated under state law. The state court specifically noted that the jury instruction given 3 correctly reflected the willfulness requirement of the intent element needed to establish a 4 violation of § 25401. Given that the jury instruction accurately reflected the elements of § 25401, 5 this Court cannot say that the instruction so infected the trial as to render the verdict unfair in 6 violation of Petitioner’s due process rights. The Court thus concludes that the state court’s 7 rejection of this claim was neither contrary to nor based on an unreasonable application of clearly 8 established law. 9 2. Aiding and Abetting 10 As with Ground I, in Ground II Petitioner argues that the trial court's jury 11 instructions improperly allowed the jury to convict based on a theory of criminal negligence.3 In 12 Attachment C to the amended petition, Petitioner adds: 13 In this case the trial court departed from the established law and instructed jurors they could convict of the § 25401 charges as an aider and 14 abettor or conspirator even if defendant had not actually known about or intended any of the false statements or omissions, but simply if they found 15 criminal negligence in the failure to discover a false statement or material omissions. (22CT 6448 [emphasis added]). The trial court committed 16 prejudicial error in allowing petitioner to be convicted of conspiracy to commit a crime, or aiding and abetting a crime without any proof of a 17 specific intent to commit that crime. . . . 18 ECF No. 27, pg. 32. 19 As to the trial court's aider-and-abettor instructions, the Court of Appeal first 20 outlined the instructions given by the trial court: 21 The trial court instructed the jury that it could find defendant guilty of section 25401 under an aider and abettor theory: “To prove that 22 the defendant is guilty of a crime based on aiding and abetting that crime, the People must prove that: 1. The perpetrator committed the crime; [¶] 2. 23 The defendant knew that the perpetrator intended to commit the crime; [¶] 3. Before or during the commission of the crime, the defendant 24 intended to aid and abet the perpetrator in committing the crime; AND [¶] 4. The defendant’s words or conduct did in fact aid and abet the 25 perpetrator’s commission of the crime. [¶] Someone aids and abets a crime if he or she knows of the perpetrator’s unlawful purpose and he or 26 she specifically intends to, and does in fact, aid, facilitate, promote, 27 3 Petitioner's claim was somewhat different in the state court, which characterized Petitioner's claim as improperly allowing an aider-and-abettor theory for a crime which Petitioner 28 argued is a crime of criminal negligence. 1 encourage, or instigate the perpetrator’s commission of that crime.” 2 ECF No. 30-52, pgs. 29-30. 3 The appellate court then offered the following analysis: 4 Defendant argues “aiding and abetting liability requires the defendant to ‘share the specific intent of the principal,’ ” and one cannot 5 specifically intend to commit an unintentional crime. Again, defendant’s arguments are based on the premise that section 25401 is something it is 6 not. Section 25401 is neither a specific intent crime nor a crime of negligence — it is a general intent crime, requiring that a defendant act 7 willfully. (See Salas, supra, 37 Cal.4th at p. 976 ; Simon, supra, 9 Cal.4th at p 507.) And since there is no specific intent required of the direct 8 perpetrator, there is no specific intent an aider and abettor must share. “Under California law, a person who aids and abets the 9 commission of a crime is a ‘principal’ in the crime, and thus shares the guilt of the actual perpetrator.” (People v. Prettyman (1996) 14 Cal.4th 10 248, 259 .) Generally, to be convicted under an aiding and abetting theory, a defendant must “act with knowledge of the criminal purpose of the 11 perpetrator and with an intent or purpose either of committing, or of encouraging or facilitating commission of, the offense.” (People v. 12 Beeman (1984) 35 Cal.3d 547, 560 .) If the offense charged is a specific intent crime, the aider and abettor must share the direct perpetrator’s 13 specific intent. (People v. McCoy (2001) 25 Cal.4th 1111, 1117 (McCoy); People v. White (2014) 230 Cal.App.4th 305, 317 (White).) 14 But “if the charged offense is a general intent crime, the aider and abettor need only knowingly and intentionally facilitate the direct 15 perpetrator’s commission of the crime, without intending some additional result or consequence not required for the crime” and “the fact that an 16 aider and abettor must harbor a specific intent to aid the direct perpetrator of general intent crime ‘does not transform the underlying offense into a 17 specific intent crime.’ ” (White, supra, 230 Cal.App.4th at p. 317 , quoting People v. Keovilayphone (2005) 132 Cal.App.4th 491, 497 ; see also 18 People v. Torres (1990) 224 Cal.App.3d 763, 770 [rejecting the contention that aiding and abetting the sale of heroin requires a specific intent; the 19 sale of heroin is a general intent crime].) [footnote omitted]. Accordingly, here, the jurors were properly instructed that the 20 prosecution must prove defendant intended to aid and abet the perpetrator in committing the crime, and he had to know of the perpetrator’s unlawful 21 purpose and specifically intend to aid, facilitate, promote, encourage, or instigate the perpetrator’s commission of the crime. And because section 22 25401 is a general intent crime requiring willful commission of the act of offering or selling certain securities, we reject defendant’s contention that 23 the jury was instructed on aiding and abetting an unintended crime. [footnote omitted]. — 24 — ECF No. 30-52, pgs. 30-31. — 25 — 26 / / / 27 / / / 28 / / / 1 Again, to warrant federal habeas relief, Petitioner must show that the trial court’s 2 aider-and-abettor instruction so infected the entire trial as to render the verdict unfair. Again, the 3 Court finds that Petitioner cannot do so here. As the state appellate court observed: 4 “[D]efendant’s arguments are based on the premise that section 25401 is something it is not.” 5 ECF No. 30-52, pg. 30. Contrary to Petitioner’s assertion that § 25401 is a specific intent crime, 6 the California Court of Appeal made it abundantly clear that § 25401 is a general intent crime, 7 that aiding and abetting requires specific intent, but that the specific intent requirement for aiding 8 and abetting does not convert the underlying crime into a specific intent crime. Nothing in the 9 trial court’s jury instruction allowed the jury to convict Petitioner of aiding and abetting on a 10 theory not contemplated by the statute. This Court thus concludes that Petitioner cannot show 11 that the instruction rendered the verdict fundamentally unfair in violation of due process. The 12 Court finds that the state court’s rejection of this claim was neither contrary to nor based on an 13 unreasonable application of clearly established law. 14 3. Burglary 15 In Ground III, Petitioner argues that the trial court's jury instructions improperly 16 permitted the jury to convict him of burglary based on a finding of criminal negligence. 17 Petitioner further explains as follows in Attachment C to the amended petition: 18 The trial court departed from the established law and was prejudicial when it permitted petitioner to convicted of burglary based on 19 finding of criminal negligence. . . . Specifically, to obtain a conviction for burglary the state must prove not only that defendant entered a protected 20 premise, but that at the time defendant entered he specifically intended to commit a felony. Logically speaking, a defendant cannot enter a house 21 with the specific intent to commit a crime of negligence, nor can a defendant aid and abet someone in entering a house to commit a crime of 22 negligence. . . . 23 ECF No. 27, pg. 35. 24 As to this claim, the Court of Appeal held as follows: 25 Defendant contends his burglary convictions cannot be based on intent to commit a section 25401 violation. He reasons that because 26 burglary requires entry with specific intent to commit a felony, and a section 25401 violation is a crime of negligence, one cannot enter with 27 intent to commit an unintentional crime. He is mistaken. 28 / / / 1 As discussed in part I of the Discussion, ante, [regarding conspiracy jury instructions] securities fraud is a general intent crime, not 2 a crime of criminal negligence. The specific intent in burglary and the knowledge element in securities fraud do not conflict, and defendant was 3 properly convicted of burglary. 4 ECF No. 30-52, pgs. 57-58. 5 Like Ground I and Ground II, Petitioner’s argument in Ground III is premised on 6 his mistaken belief that the trial court erroneously instructed the jury that § 25401 defines a 7 specific intent crime. The state appellate court made clear that it is not; § 25401 requires only 8 general intent and allows the knowledge element to be proved by evidence of criminal 9 negligence. Because Petitioner’s argument relies on a misinterpretation of California law, this 10 Court cannot conclude that the trial court’s instruction resulted in an unfair verdict or that the 11 state appellate court’s rejection of this claim was either contrary to or based on an unreasonable 12 application of clearly established federal law. 13 4. Scheme to Defraud 14 In Ground IV, Petitioner contends that the California Court of Appeal erred in 15 considering any error with respect to the trial court's refusal to instruct the jury on the definition 16 of “indirect” harmless because the state did not raise that argument on appeal. The gravamen of 17 Petitioner’s claim before this Court is that the Court of Appeal was not permitted to sua sponte 18 consider harmless error. See ECF No. 27, pg. 38. According to Petitioner, doing so violated the 19 concepts of separation of powers and party presentation because the court did something on its 20 own that neither of the parties asked it to do 21 In addressing the trial court's refusal to instruct the jury on the definition of 22 “indirect,” the Court of Appeal agreed with Petitioner that the trial court erred, but concluded any 23 error was harmless. See ECF No. 30-52, pgs. 58-60. Specifically, as to harmless error, the Court 24 of Appeal stated as follows: 25 On appeal, defendant argues the trial court was obligated to instruct sua sponte on the definition of “indirect.” He maintains reversal is 26 required because, although one can be vicariously liable for a section 25541 violation, the “open ended instruction” failed to convey the 27 requisite elements of accomplice liability. 28 / / / 1 The People maintain that no such obligation existed because “indirect” is commonly understood by those familiar with the English 2 language and is not used in a technical legal sense. On this point, we agree with defendant. 3 While a trial court has “[N]o duty to clarify, amplify, or otherwise instruct on commonly understood words or terms used in statutes or jury 4 instructions,” it must define technical terms that have meanings peculiar to the law. (People v. Griffin (2004) 33 Cal.4th 1015, 1022 .) Words or 5 phrases have a technical, legal meaning requiring clarification if they have a definition that differs from their nonlegal meaning. (Ibid.) 6 This is the case here. In a nonlegal sense, a task can be accomplished indirectly in a myriad of ways. But in the legal context, how 7 one may commit a crime indirectly is more circumscribed. Indirect theories such as aiding and abetting, and conspiracy require proof of 8 certain elements. Without defining “indirect,” the jury was free to chart its own path in determining whether section 25541 was committed 9 “indirectly.” Accordingly, it was incumbent upon the trial court to define “indirect” and the failure to do so was error. (People v. Breverman (1998) — 10 — 19 Cal.4th 142, 154 [the trial court must instruct on the general principles of law relevant to the issues raised by the evidence].) The trial court 11 should have instructed that “indirect” — as it relates to employing a device, scheme, or artifice to defraud and/or engaging in any act, practice, 12 or course of business which operates or would operate as a fraud or deceit — means to do so by aiding and abetting or as a coconspirator. 13 The error was nevertheless harmless given the nature of the other counts to which guilty verdicts were returned. If defendant, as charged in 14 count 2, “employed a device, scheme, or artifice to defraud,” or if he engaged in an “act, practice, or course of business” that operated as a 15 fraud, it was through the offer and sale of AREI securities to investor victims. Thus, the essence of count 2 was the same as that underlying the 16 25401 counts. Indeed, punishment on count 2, along with count 1, was stayed under Penal Code section 654, with the trial court finding “they 17 were the means by which each of the 25401 sales of securities in fraudulent manner and the two burglaries were committed or they were the 18 purpose of the burglary.” And again, as to the section 25401 counts (counts 3, 11, 12, 13, 17, 19 18, 20, 21, 22, 25, 26, 29, 31, 36, 37, and 41) the jury was instructed on conspiracy, including natural and probable consequences, and aiding and 20 abetting. And because the jury was properly instructed on the section 25401 counts and returned guilty verdicts on all but one of them, we find 21 beyond a reasonable doubt that had the jury been instructed on the meaning of indirect as to count 2, it would not have altered the jury’s 22 verdict. 23 ECF No. 30-52, pgs. 59-60. 24 Respondent argues that Petitioner’s claim in Ground IV was not presented to the 25 state supreme court and, thus, is not exhausted. See ECF No. 31, pg. 22. The Court does not 26 agree. 27 / / / 28 / / / 1 Under 28 U.S.C. § 2254 (b), the exhaustion of available state remedies is required. 2 See Rose v. Lundy, 455 U.S. 509 (1982); see also Kelly v. Small, 315 F.3d 1063, 1066 (9th Cir. 3 2003); Hunt v. Pliler, 336 F.3d 839 (9th Cir. 2003).4 The exhaustion doctrine is based on a policy 4 of federal and state comity, designed to give state courts the initial opportunity to correct alleged 5 constitutional deprivations. See Picard v. Connor, 404 U.S. 270, 275 (1971); see also Rose, 455 6 U.S. at 518. “A petitioner may satisfy the exhaustion requirement in two ways: (1) by providing 7 the highest state court with an opportunity to rule on the merits of the claim . . .; or (2) by 8 showing that at the time the petitioner filed the habeas petition in federal court no state remedies 9 are available to the petitioner and the petitioner has not deliberately by-passed the state 10 remedies.” Batchelor v. Cupp, 693 F.2d 859, 862 (9th Cir. 1982) (citations omitted). Exhaustion 11 is not a jurisdictional requirement, and the court may raise the issue sua sponte. See Simmons v. 12 Blodgett, 110 F.3d 39, 41 (9th Cir. 1997). Regardless of whether the claim was raised on direct 13 appeal or in a post-conviction proceeding, the exhaustion doctrine requires that each claim be 14 fairly presented to the state’s highest court. See Castille v. Peoples, 489 U.S. 346 (1989). 15 In this case, Petitioner’s opening brief to the California Court of Appeal reflects 16 that he argued that the trial court erred in refusing to instruct the jury on the definition of 17 “indirect.” See ECF No. 30-49. The Court of Appeal addressed this argument on the merits and 18 rejected it on direct appeal, finding that, while the trial court erred, the error was harmless. See 19 ECF No. 30-52. In his petition for review to the California Supreme Court, Petitioner very 20 clearly argued that the California Court of Appeal violated Petitioner’s constitutional rights by 21 finding the trial court error harmless even though harmless error had not been asserted by the 22 parties. See ECF No. 30-53. Thus, the claim presented in this federal habeas case was presented 23 to the California Supreme Court and is exhausted. 24 / / / 25 / / / 26 / / / — 27 — 4 Claims may be denied on the merits notwithstanding lack of exhaustion. See 28 28 U.S.C. § 2254 (b)(2). 1 Though the Court does not agree with Respondent that Petitioner’s Ground VI is 2 unexhausted, the claim is meritless. A review of Respondent’s brief on direct appeal reflects that, 3 as to Petitioner’s claim relating to an instruction on the definition of “indirect,” Respondent 4 argued harmless error. See ECF No. 30-50, pg. 128. Specifically, Respondent argued: “But even 5 it [the trial court erred], in light of the beyond overwhelming evidence of appellant’s guilt 6 addressed in Argument I, it is not reasonably probably a result more favorable to him would have 7 occurred absent the error. [citations omitted].” Id. In his reply brief on direct appeal, Petitioner 8 acknowledges and responds to Respondent’s harmless error argument. See ECF No .30-51, pg. 9 56. Petitioner is simply incorrect in asserting that the California Court of Appeal addressed the 10 issue of harmless error sua sponte. To the contrary, the record reflects that both parties raised the 11 issue. Thus, the Court of Appeal’s decision did not violate concepts of separation of powers and 12 party presentation and this Court cannot conclude that the state court’s rejection of this claim was 13 either contrary to or the result of an unreasonable application of clearly established law. 14 5. Mistake-of-Law 15 Petitioner contends that the trial court erred in refusing to give the jury a mistake16 of-law instruction and that the California Court of Appeal erred by applying the incorrect 17 harmless error standard. See ECF No. 27, pg. 41. Regarding the trial court's refusal to instruct 18 the jury regarding a mistake-of-law defense, the Court of Appeal found any errors harmless. The 19 state court began by reciting the following additional background: 20 The defense requested the following instruction on mistake of law: “The defendant is not guilty of a violation of Corporations Code section 21 25401/25540 if he did not have the specific intent or mental state required to commit the crime because he held in good faith a mistaken belief about 22 the law. [¶] If the defendant’s conduct would have been lawful under the law as he in good faith believed the law to be, he did not commit a 23 violation of Corporations Code section 25401/25540. [¶] If you find that the defendant in good faith relied on the advice of his counsel he did not 24 have the specific intent or mental state required for a violation of Corporations Code section 25401/25540. [¶] If you have a reasonable 25 doubt about whether the defendant had the specific intent or mental state required for a violation of Corporations Code section 25401/25540 you 26 must find him not guilty of that crime.” At the instruction conference, the trial court denied the request as 27 unsupported by the law, explaining, “we have the circumstance here where it’s still an alternative criminal negligence allegation. And if the defendant 28 mistakenly believed the law to be supporting non-disclosure . . . but the 1 People persuade jurors that to believe that was very unreasonable and therefore, it amounted to criminal negligence, then it’s not a defense.” 2 Trial counsel responded that advice of counsel goes directly to criminal negligence: “Is somebody criminally negligent not discovering 3 something that they’re paying thirty-five thousand dollars to an expert to give them advice in and their advice is, hey, it’s unclear.” 4 The court replied, “that’s not our case . . . . It’s not a case where the accused went to a lawyer, paid the lawyer good money, the lawyer 5 said, you have no duty to disclose this and then the accused, therefore, did not. [¶] This is a case where lawyers told the defendant, among other 6 things, at various times, it’s unclear. Some said you should disclose it, err on the side of disclosing. Somebody else says you don’t have to. And so, 7 whether it’s criminally negligent in the face of that kind of advice — and it varies, according to the time. It is for the jury to decide, not me.” “I 8 cannot tell [the jury] . . . if the defendant misbelieved the law, even if he was wrong but he had a basis for misbelieving it, he’s home free. I just 9 don’t think that’s the law.” The court went on to state: If “a jury in a given case concludes . . . 10 the defendant not only actually believed, but in good faith believed that the law said he could do or not do what he’s accused of doing or not 11 doing, then there’s ample instructions in the criminal negligence instructions for jurors to see that it’s not criminally negligent. You can 12 argue it’s not even negligent under the ordinary negligence standard, but it’s not criminally negligent to rely in good faith on such advice. [¶] So, I 13 think that’s the safeguard for the defendant. But for me to instruct the way you have this mistake of law is really taking that issue away from them if 14 they accepted that that’s really what the defendant believed.” (Italics added.) 15 Later, the court stated: “There may be some facts that you have in mind . . . that could be suggestive of what [defendant] believed with 16 regards to legal opinion. And I’m certainly going to let you argue that. Whether I give this instruction is another issue.” 17 Trial counsel sought to confirm, “what I’m hearing is, this is an argument to show reasonable doubt as to the elements, but it’s not an 18 affirmative defense within itself. Is that . . . what the Court’s saying?” [¶] “Right,” the court responded. “And as to the criminal negligence count, 19 25401, because there is the potential that jurors will believe that . . . to have such a belief was in itself criminally negligent. And, in fact, not in 20 good faith. That the belief was so contrary to . . . legal advice . . . that it could not have been held in good faith.” Counsel replied, “As long as we 21 can argue it, reasonable doubt, the elements, I understand what the Court’s saying.” The court assured him: “[Y]ou can — both sides can argue about 22 what legal advice. That’s clearly been involved in the case.” 23 ECF No .30-52, pgs. 36-38. 24 The state court then outlined the applicable state law regarding the mistake-of-law 25 defense and the evidence supporting a mistake-of-law instruction. See id. at 38-45 . The Court 26 of Appeal concluded that the facts warranted a mistake-of-law defense instruction as to 27 Petitioner's prior convictions, but not as to any other omission made by Petitioner. See id. at 45 . 28 / / / 1 The court stated: 2 Still, a defendant is entitled to a mistake of law instruction only “if the evidence supports a reasonable inference that any such claimed belief 3 was held in good faith.” (Vineberg, supra, 125 Cal.App.3d at p. 137.) The instruction is properly refused if circumstances “ ‘indicate that although 4 defendant may have “believed” he acted lawfully, he was aware of contrary facts which rendered such a belief wholly unreasonable, and 5 hence in bad faith.’ ” (Ibid.) Nevertheless, all that is required to warrant the instruction is “evidence from which it can be inferred that 6 defendant[’s] alleged belief in the lawfulness of [his] conduct was in good faith . . . .” (Id. at p. 138.) 7 To that point, defendant argues the advice from the four attorneys sufficed to obligate a mistake of law instruction. As to the failure to 8 disclose his convictions, defendant notes the first attorney, Webster, testified to determining, “[a]fter careful analysis,” that defendant’s prior 9 convictions need not be disclosed. The second attorney, Attia, advised defendant to disclose the convictions and crafted disclosure language, 10 which was included in three subsequent offerings. The third attorney, Tate, believed disclosure of the convictions would benefit AREI and 11 protect against civil liability, but noted arguments against disclosing existed. [footnote omitted]. And as to Dravis, the fourth attorney, 12 defendant argues that by the time Dravis drafted disclosures for Corporate Note II in 2007, defendant had given up the reins at AREI. 13 As to omissions of prior defaults and oversubscriptions of AREI investments, defendant argues Tate determined that disclosing the defaults 14 and oversubscriptions in the tenant in common offers was unnecessary because the defaults had been cured through Corporate Note I and could 15 only affect AREI. And, according to Tate, “ ‘[AREI’s obligations] were not so relevant that they warranted discussion at that point in the tenant in 16 common syndications.’ " [footnote omitted]. Defendant also asserts that the fourth attorney, “Dravis testified that he knew at the time [Corporate 17 Note II was] syndicated that some investor payments had been missed, and the evidence showed that he nevertheless signed off on these PPMs." 18 [footnote omitted]. Finally, as to unpaid property taxes on AREI properties, defendant 19 asserts that a former AREI CFO testified he was told by the then-president not to pay taxes on an AREI property because taxes did not need to be 20 paid for seven years. We agree a mistake of law instruction was warranted insofar as 21 evidence gave rise to a good faith belief that the prior convictions need not be disclosed. Several attorneys testified to advising defendant that 22 disclosure was not required, with Webster explaining that, under the public offering “gold standard,” the conviction was too remote. Tate, 23 similarly advised, “that the law was not as clear as we would have liked” and “there were arguments that . . . weighed in favor of them not being 24 required to disclose it.” While Attia made a “strong recommendation” to disclose the convictions (and disclosure language drafted by his firm was 25 included in subsequent offerings), Attia also said “there is no ‘bright line test’ for disclosure issues such as this” and “this is a gray area . . . .” 26 Dravis, the fourth attorney, provided no testimony regarding that disclosure, but by then defendant had been told by two attorneys that 27 disclosure was not necessary. [footnote omitted]. 28 / / / 1 We conclude this evidence sufficed to warrant an instruction on mistake of law as to disclosing the convictions. We cannot say the same 2 for the other material omissions, however. As to the defaults, there was no evidence defendant was advised 3 that there was a legal ground for not disclosing them. Instead, there was evidence indicating the contrary. Attia, the second attorney testified: “[if] I 4 had information that that issuer had defaulted on a prior similar transaction or an important transaction, that could have affected the financial strength 5 of the issuer and/or demonstrated an issue or problem with that — with respect to the issuer’s ability to perform on similar instruments, it would 6 absolutely be material.” To be sure, the third attorney, Tate testified there was “an analysis 7 made and a decision made” to not disclose the defaults, and he explained, “[a]fter the corporate note . . . had been completed none of those notes was 8 in default. And because none of the noteholders had ever taken any action or indicated that they had any issue with the fact that their payments were 9 delayed … [or] wasn’t repaid in full on time, suggested it wasn’t a problem enough — wasn’t enough of an issue to warrant mention in the 10 tenant in common syndications. And also because they were obligations of . . . AREI and not of the issuer and really were unrelated to the issuer — 11 the tenant in common syndications.” But that explanation misses a few things. 12 For one, that Corporate Note I — which defendant described as his “get out of jail free card” — had cured the defaults and obviated the need 13 to disclose them, is called into question by the fact that a tenant in common offering prepared before Corporate Note I also failed to disclose 14 the defaults. [footnote omitted]. For another, the notion that multiple recent-past defaults of similar or important transactions — even if 15 somehow cured — would not be information “ ‘ “a reasonable investor would consider [] important in reaching an investment decision” ’ ” is 16 simply unreasonable. (See People v. Butler (2012) 212 Cal.App.4th 404, 421 [facts concerning defendant’s history and the financial precariousness 17 of the businesses in which defendant was offering investments was material and failure to disclose was sufficient to satisfy section 25401].) 18 Finally, while Tate emphasized that AREI’s obligations were unrelated to the tenant in common syndications, his assertion rings hollow 19 given that the disclosure documents for those tenant in common investments emphasized the number and value of AREI developments, 20 with one stating: “Since 2001, AREI and its Affiliates have acquired and/or developed 19 projects in seven states, and its annual property 21 revenues now exceed $55 million. Additionally, AREI has raised over $160 million in private offerings of debt and equity over the past three 22 years.” A good faith mistake of law as to the oversubscriptions is similarly 23 unsupported. Again, nowhere does the record show defendant was advised that nondisclosure of the oversubscriptions was acceptable. Indeed, while 24 Tate purportedly had reasons for the nondisclosure of the defaults and AREI’s “obligations,” the evidence does not establish he ever advised 25 defendant that nondisclosure of the oversubscriptions was permissible. Rather, defendant received advice to the contrary. When Attia learned of 26 the oversubscriptions, he advised that they be disclosed, and drafted disclosure language. Attia’s firm also recommended that investors in an 27 open offering be offered rescission due to the past oversubscriptions. The same recommendation was made for a previous investment in 2001 28 prepared by Webster. Though that rescission offer went forward, Webster 1 recommended against it after defendant told him that the investment had filled before the oversubscription issue arose — an assurance undermined 2 by a 2000 letter regarding the oversubscriptions, to which defendant was copied. (See fn. 12, ante.) From this, there is a reasonable inference that 3 defendant was not only aware of the oversubscriptions, but he knew they were material enough to mislead one of his attorneys about them. 4 Finally, as to disclosing unpaid property taxes, defendant relies on testimony of an AREI CFO, claiming the AREI president told the CFO 5 taxes need not be paid for seven years. Defendant misleads. The CFO’s testimony was actually that “defendant and [the president] both advised 6 me of what their understanding of California law was, that we had time to pay back taxes before the properties would be sold. [footnote omitted]. 7 (Italic added) And in any event, the record is insufficient to conclude that defendant held a good faith mistake in law regarding disclosing unpaid 8 property taxes, even if the properties were not subject to sale for the delinquencies at the time the disclosures should have been made. 9 In sum, the record supports an instruction on mistake of law as to defendant’s prior convictions, but no other omission. — 10 — ECF No. 30-52, pgs. 38-45. — 11 — 12 The Court of Appeal concluded that any error in failing to give the jury a mistake13 of-law instruction was harmless: 14 The error in failing to instruct on mistake of law, however, was harmless because even if the jury concluded defendant had a good faith 15 mistake of law as to the need to disclose his past convictions, no count rested solely on that omission. 16 Of the 31 [footnote omitted] counts alleging a violation of section 25401, 16 were alleged to include misstatements by Gary Armitage 17 (counts 3, 11, 12, 13, 17, 18, 20, 21, 22, 25, 26, 29, 31, 36, 37, 41). [footnote omitted]. And it is not argued on appeal that Armitage’s 18 misstatements were susceptible to a mistake of law challenge, or challenged in any other way. Thus, the instructional error is harmless as to 19 those counts. Of the remaining 15 counts, two counts (counts 16, 35) involved 20 the sale of Corporate Note II, which was first sold in June 2007, and which among other things, failed to disclose that other AREI investors were not 21 receiving payments, and that AREI had a $45 Million debt obligation arising out of Corporate Note I. Accordingly, any instructional error would 22 again be harmless as to those counts. Of the remaining 13 counts, five counts (counts 4, 6, 7, 15, 28) 23 involved either the investment Valdry Court or Oakdale Heights Fresno. Both investments had offering documents that failed to disclose that two 24 previous AREI investments were oversubscribed. Thus, the error as to those counts are also harmless. 25 Of the remaining eight counts, six counts (counts 9, 10, 23, 32, 38, and 42) involved the sale investments (Mountain House Golf Course, 26 Northridge, La Mesa, Oakdale Heights Charlotte, Oakdale Heights Greensboro, and Virginia Beach) that used disclosure documents that 27 either failed to disclose the defaults of prior AREI investments or the unpaid property taxes. — 28 — 1 Finally, the remaining two counts (counts 27 and 34) involved, inter alia, investments in Corporate Note I in April and May 2007, and 2 both failed to disclose that some investors were not then receiving returns on the note. They also failed to disclose that eight AREI properties then 3 had negative cash flow. [footnote omitted]. There were other investments and omissions on which the 31 4 section 25401 counts could also have rested. Suffice it to say, no count turned solely on the failure to disclose defendant’s conviction. 5 Accordingly, the failure to instruct the jury on mistake of law was harmless. — 6 — ECF No. 30-52, pgs. 46-48. — 7 — 8 The Court of Appeal also found that any error in failing to give a mistake-of-law 9 instruction as to Counts 1 and 2 was harmless: 10 Defendant raises a similar contention that the trial court erred in failing to instruct on mistake of law as to counts 1 and 2. But because his 11 trial counsel did not request the instruction, he argues the court had a sua sponte duty to instruct on mistake of law as to those counts. 12 As discussed above, we agree the trial court was obligated to instruct sua sponte. But as counts 1 and 2 arise from the same acts of 13 selling securities through material misstatements or omissions, for the same reasons discussed above, the error was harmless as to counts 1 and 2. — 14 — ECF No. 30-52, pg. 49. — 15 — 16 In his amended petition, Petitioner asserts that the California Court of Appeal erred 17 by not applying the Chapman harmless error test. See ECF No. 27, pg. 41. The Court does not 18 agree with the premise of Petitioner’s argument – that the state appellate court applied the wrong 19 test. Under Chapman, which is applicable in cases on direct review as Petitioner’s case was when 20 it was before the California Court of Appeal, non-structural constitutional errors can be 21 considered harmless when the court can declare a belief that the error was harmless beyond a 22 reasonable doubt. See 386 U.S. at 24. Here, the California Court of Appeal made such a 23 declaration in determining that the error was harmless given the overwhelming evidence accepted 24 by the jury establishing Petitioner’s guilt beyond a reasonable doubt. 25 / / / 26 / / / 27 / / / 28 / / / 1 6. Unanimity 2 Ground VI challenges the trial court's failure to provide a unanimity instruction as 3 to the overt act committed in furtherance of a conspiracy. As to this claim, the Court of Appeal 4 stated: 5 As to count 1, defendant challenges the trial court’s failure to instruct the jury that it must unanimously agree on an overt act committed 6 in furtherance of the conspiracy. He asserts that because the prosecutor alleged 20 separate overt acts in support of the conspiracy, the trial court 7 should have sua sponte instructed the jury that it must unanimously agree as to which overt acts were committed. Defendant acknowledges that our 8 high court rejected this argument in People v. Russo (2001) 25 Cal.4th 1124 (Russo), but he contends the Russo court did not specifically address 9 his argument that the failure to give a unanimity instruction violates his Sixth Amendment rights, citing Apprendi v. New Jersey (2000) 530 U.S. 10 466, 490 [147 L.Ed.3d 435]; Jones v. United States (1999) 526 U.S. 227, 243, fn. 6 [ 143 L.Ed.2d 311 ]; and Mullaney v. Wilbur (1975) 421 U.S. 11 684, 697-698 [ 44 L.Ed.2d 508 ]. We find no error. A unanimity instruction is required if there is evidence that more 12 than one crime occurred, each of which could provide the basis for conviction under a single count. (People v. Diedrich (1982) 31 Cal.3d 263 , 13 281.) In Russo, a conspiracy case, our Supreme Court held that “the jury need not agree on a specific overt act as long as it unanimously finds 14 beyond a reasonable doubt that some conspirator committed an overt act in furtherance of the conspiracy.” (Russo, supra, 25 Cal.4th at p. 1128 .) It 15 explained: “[t]he key to deciding whether to give the unanimity instruction lies in considering its purpose. The jury must agree on a ‘particular crime’ 16 [citation]; it would be unacceptable if some jurors believed the defendant guilty of one crime and other jurors believed [the defendant] guilty of 17 another. But unanimity as to exactly how the crime was committed is not required. Thus, the unanimity instruction is appropriate ‘when conviction 18 on a single count could be based on two or more discrete criminal events,’ but not ‘where multiple theories or acts may form the basis of a guilty 19 verdict on one discrete criminal event.’ [Citation.] In deciding whether to give the instruction, the trial court must ask whether (1) there is a risk the 20 jury may divide on two discrete crimes and not agree on any particular crime, or (2) the evidence merely presents the possibility the jury may 21 divide, or be uncertain, as to the exact way the defendant is guilty of a single discrete crime. In the first situation, but not the second, it should 22 give the unanimity instruction.” (Id. at pp. 1134-1135, italics added.) Defendant’s attempts to distinguish Russo were rejected in People 23 v. Grimes (2016) 1 Cal.5th 698 . There, our high court applied Russo and specifically rejected the defendant’s Sixth Amendment argument from the 24 federal line of cases, where the prosecutor alleged five different overt acts in furtherance of the conspiracy. (Id. at p. 725.) It held that none of the 25 federal cases cited by the defendant “calls into question our prior conclusion that the jurors need not agree unanimously on which overt act 26 of a conspiracy was proved.” (Id. at p. 726.) The court also cited a consistent holding by the United States Supreme Court, in Schad v. 27 Arizona (1991) 501 U.S. 624, 629-645 [ 115 L.Ed.2d 555 ], which held that when a defendant’s alleged conduct constitutes a single discrete offense 28 that may be committed in different ways, the federal Constitution does not 1 require unanimity as to how the crime was committed. (Grimes, at p. 726.) Our high court having rejected defendant’s argument, so too must 2 we. (Auto Equity Sales, supra, 57 Cal.2d at p. 455.) 3 ECF No. 30-52, pgs. 61-63. 4 Here, as the state court observed, the crime at issue – conspiracy to commit 5 securities fraud – is a single criminal event that requires some overt act. The overt act can be one 6 of any number of discrete acts. As a matter of clearly established federal law announced by the 7 United States Supreme Court, the jury is not required to unanimously agree on the underling overt 8 act which supports a conviction for a discreet criminal event such as conspiracy to commit 9 securities fraud. See Schad, 501 U.S. 624 . 10 B. Cumulative Error Claim 11 In Ground VII, Petitioner contends that he is entitled to relief due to cumulative 12 error. The Court of Appeal addressed this claim as follows: 13 Defendant finally contends the cumulative effect of the various alleged instructional errors warrants reversal. With the exceptions of 14 contentions 4, 5, and 11 we have found no error. We conclude those errors had no effect on the other contentions raised or the trial as a whole. We 15 therefore find no cumulative error. 16 ECF No. 30-52, pg. 65. 17 As discussed above, this Court finds no basis for federal habeas relief on 18 Petitioner’s various claims and also finds no errors to cumulate. Moreover, there is no clearly 19 established Supreme Court precedent which holds that cumulative error is a valid basis for federal 20 habeas relief. See Lorraine v. Coyle, 291 F.3d 416, 447 (6th Cir. 2002) (“The Supreme Court has 21 not held that distinct constitutional claims can be cumulated to grant habeas relief”); Henderson v. 22 Norris, 118 F.3d 1283, 1288 (8th Cir. 1997); Scott v. Jones, 915 F.2d 1188, 1191 (8th Cir. 1990) 23 (“cumulative error does not call for habeas relief, as each habeas claim must stand or fall on its 24 own”); Bush v. Carpenter, 926 F.3d 644 , 686 n.16 (10th Cir. 2019) (“Although we are bound by 25 Tenth Circuit precent on this issue, we note, in passing, that the Supreme Court has never 26 recognized the concept of cumulative error”). Absent errors to cumulate and clearly established 27 Supreme Court precedent establish cumulative error as a cognizable federal habeas claim, the 28 Court must reject Petitioner’s Ground VII. 1 IH. CONCLUSION 2 Based on the foregoing, the undersigned recommends that Petitioner’s amended 3 || petition for a writ of habeas corpus, ECF No. 27, be DENIED. 4 These findings and recommendations are submitted to the United States District 5 || Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636 (b)(1). Within 14 days 6 || after being served with these findings and recommendations, any party may file written objections 7 || with the court. Responses to objections shall be filed within 14 days after service of objections. 8 | Failure to file objections within the specified time may waive the right to appeal. See Martinez v. 9 || Ylst, 951 F.2d 1153 (9th Cir. 1991). — 10 — 11 | Dated: March 30, 2025 Ss..c0_, DENNIS M. COTA 13 UNITED STATES MAGISTRATE JUDGE — 14 — — 15 — — 16 — — 17 — — 18 — — 19 — — 20 — — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — — 28 — — 27 —