Schock

In this appeal we consider the novel issue whether a fractional interest in a promissory note and related deed of trust constitutes a nonexempt “security” within the meaning of the Corporate Securities Law of 1968, as amended. (Corp. Code, § 25000 et seq.)

Statement of the Case

Defendants were charged with a number of violations of section 25110 (unlawful sale of unqualified security) and section 25401 (false statement in a security transaction) df the Corporate Securities Law arising out of their operation of a mortgage loan brokerage company. Following a preliminary hearing submitted on the basis of stipulated facts and documentary exhibits, the magistrate dismissed all but seven of the forty-nine counts of the felony complaint on the grounds that defendants’ activities did not involve securi *383 ties within the meaning of the Corporate Securities Law. The People now appeal the denial of their motion to compel reinstatement of the complaint. (Pen. Code, § 871.5.)

Facts

The facts as stipulated on appeal reflect the following:

Golden State Home Loans (hereafter GSHL), a California corporation, is a mortgage brokerage company partly owned by defendant Schock, its…

I concur in the majority’s opinion, but hesitantly, and with reluctance.

I have had occasion previously to express misgivings about the propriety of predicating criminal charges carrying severe sanctions—felony conviction and state prison—on conduct which, not in itself wrong in any sense, is deemed criminal irrespective of the intent or knowledge with which it is done. (Cf. my dis. opn. in Gonda v. Sullivan (1982) 138 Cal.App.3d 774 , 781 [ 188 Cal.Rptr. 295 ].)

I agree that the interests at issue here are probably securities—in part because, after careful assessment, we have said so. But what deeply concerns me is that, if we ourselves have such difficulty recognizing the character of these interests as securities, is it fair to bring criminal charges against those who failed or were unable to do so?

Convicting such persons of crimes on a “strict liability” basis seems to me not merely dubious, but wrong. Regrettably, our Supreme Court has not chosen to address this issue.

The petition of respondents Van Blaricom and Malone for a hearing by the Supreme Court was denied April 26, 1984. Mosk, J., was of the opinion that the petition should be granted.

In this appeal we consider the novel issue whether a fractional interest in a promissory note and related deed of trust constitutes a nonexempt "security" within the meaning of the Corporate Securities Law of 1968, as amended. (Corp. Code, § 25000 et seq.) [1]

Defendants were charged with a number of violations of section 25110 (unlawful sale of unqualified security) and section 25401 (false statement in a security transaction) of the Corporate Securities Law arising out of their operation of a mortgage loan brokerage company. Following a preliminary hearing submitted on the basis of stipulated facts and documentary exhibits, the magistrate dismissed all but seven of the forty-nine counts of the felony complaint on the grounds that defendants' activities did not involve securities within the meaning of the Corporate Securities Law. The People now appeal the denial of their motion to compel reinstatement of the complaint. (Pen. Code, § 871.5.)

The facts as stipulated on appeal reflect the following:

Golden State Home Loans (hereafter GSHL), a California corporation, is a mortgage brokerage company partly owned by defendant Schock, its president, and…