Coster

By felony complaint defendant was charged with nine counts of grand theft (Pen. Code, § 487, subd. 1), nine counts of unlawful sales of unqualified securities (Corp. Code, §§ 25110, 25540), and nine counts of unlawful sales of securities through misrepresentation (Corp. Code, §§ 25401, 25540). The securities allegedly consisted of installment notes bearing interest and providing for payment of a percentage of the gross income generated by defendant’s business. The magistrate dismissed the 18 counts charging unlawful sales of securities on the ground that the notes are not securities. The People appeal from an order denying their motion to reinstate those counts. (Pen. Code, § 871.5.)

At the preliminary hearing Meryl Wamhoff, one of the complaining witnesses, testified: He read an advertisement in a newspaper indicating that “20 percent interest and one percent of the gross” would be paid for a $20,000 investment. He called the telephone number given in the advertisement and reached Coster Manufacturing Company, located in Palmdale. The individual with whom he spoke identified himself as David Coster (defendant). Defendant told Wamhoff that the company manufactured steel…