People v. Smith

Here we hold that the definition of a security in California does not depend upon whether or not it is exempt from qualification under the California Corporate Securities Act.

Jerry Donald Smith was convicted of two counts of violating Penal Code section 487, subdivision 1 (grand theft) and two counts of violating Corporations Code section 25401 (securities fraud). We affirm.

On the People’s cross-appeal, we aifirm dismissal of two counts alleging securities fraud. Smith may not be held criminally liable for failing to inform potential investors about a prior misdemeanor conviction which was expunged and dismissed pursuant to Penal Code section 1203.4.

Facts

Jerry Donald Smith was president of National Pacific, a general partnership which managed real estate limited partnerships organized by Smith.

Count I (grand theft): In October 1982 Smith offered investors a limited partnership in the Hilltop Ranch, a 2,700-acre farm in Idaho. The purchase price of $1,135,000 included rights to sufficient water to farm the portion of the ranch already under cultivation, and future water rights to farm the rest.

Smith and National Pacific, as general partners in Hilltop, offered…