People v. Toppin

California Court of Appeal Oct 11, 1951 No. Crim. No. 4673Published

Before: Moore

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Holding. The court held that the evidence supported the trial court's finding that the defendant violated the Corporate Securities Act by using his corporation as an alter ego to fraudulently issue and sell stock without a permit.

Issues

Whether the evidence was sufficient to support the conviction for violating the Corporate Securities Act.
Whether the defendant's issuance of stock constituted a sale on behalf of the corporation or a personal sale of his own property.
Whether the corporation was an alter ego of the defendant used to evade statutory permit requirements.

Disposition. affirmed

Quotations verified verbatim against the opinion

“since he was sole owner of the corporation which was fraudulently conducted to evade the law, the corporation may be deemed to be the alter ego of appellant and for the purpose of maintaining a compliance with the statute, he may be considered as issuer of the stock.”

MOORE, P. J. Appellant was convicted by the court without a jury on two counts of violating the Corporate Securities Act on September 1 and 2, 1950. One judgment was entered that he “be punished by imprisonment in the County Jail of the County of Los Angeles for the term of one year. Sentences ... to run concurrently.” Appellant demands a reversal of the judgment and the order deny[757]ing Ms motion for a new trial on the ground that the evidence does not support the judgment.

In the summer of 1950 appellant visited Dorothy Pells, "a retired graduate nurse, the prosecutrix, at her home where she loaned him $300 for which he gave her his promissory note for $350, payable in 10 days. On September 1, 1950, he telephoned her that “he had a surprise for me and that he wanted me to come down.” She met him at a popular street intersection of Los Angeles where he showed her a paper “that he had invested my money . . . the $300 I had loaned him, instead of paying it back to me he had invested it in this . . . National Service Corporation ... he hadn’t asked me if I wanted to invest it in stocks or anything, but he had simply invested it ... He said I was going to get in on the ground floor with all the other investors that had invested thousands of dollars in this corporation ... he wanted me to put in more money ... He said other members of the corporation wanted me to invest—make it $500 if I was going to get in on the ground floor where they were ... he had a paper he showed me there in the restaurant that I was going to get wonderful returns for my money . . . when we got out home he wanted me to get $200 more and put it up ... I gave him the $200. He gave me a note but I didn’t see it ... he put them in an envelope and sealed it up and told me to put it in a vault box . . . He wasn’t satisfied. He knew I got my check from my Old Age Pension . . . and then he wanted that. And he never gave up until he got it ... in the amount of $75 which I endorsed over to him.”

After he left she opened the envelope. It had a promissory note for $500 dated Las Vegas, Nevada, and a stock certificate of National Service Corporation for 1,500 shares. On finding no security for the $75 she telephoned him and he told her to come down. She called at his office in the Story Building on Broadway. On her arrival he escorted her to a cafeteria for breakfast where he told her “that he had the man that was in his office make me out a security for my $75.” When they returned to his office, appellant had his assistant make out a certificate for 100 shares in favor of Mrs. Pells, in the National Service Corporation for the $75 pension check taken the night before.

People v. Toppin

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