People v. Martinez
10 Cal. App. 5th 686
| Cal. Ct. App. | 2017Background
- Romero, Martinez, and Lee ran forex trading operations (Kingdom Advisors, TradeCo); solicited millions from investors promising high returns and stop-loss protections; trading suffered large losses and funds were commingled and diverted to defendants.
- A jury convicted the three of commodities fraud (Corp. Code § 29536); Romero and Lee also convicted of conspiracy and grand theft; various counts later were granted new trial or dismissed by the trial court, the People appealed, and this court reversed and reinstated the verdicts on remand.
- On remand the sentencing court reinstated verdicts and sentenced Romero (7 years), Lee (5 years), Martinez (1 year jail + probation); restitution and white-collar enhancement findings were imposed; People and defendants raised multiple issues on appeal and in habeas petitions.
- Defendants challenged (1) statutory scope of "commodity/commodity contract" (arguing discretionary money‑management accounts fall outside §29536), (2) insufficiency of evidence (esp. for Martinez), (3) failure to instruct on scienter as element of commodities fraud, (4) conspiracy statute‑of‑limitations/unanimity and trial court’s handling of new‑trial motions, and (5) restitution and aggravated white‑collar enhancement calculations.
- The Court held: §29536’s definitions are broad and encompass money‑management accounts used to purchase/sell foreign currency; there was substantial evidence against Martinez; scienter is an element but omitted instruction was harmless beyond a reasonable doubt; remand required to vacate one conviction and to recalculate Lutz restitution; otherwise affirm.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of §29536 (what is a "commodity contract") | People: §29505/29536 are broadly written; covers any account/agreement used to buy/sell commodities (including forex), regardless of label | Defs: Money‑management/discretionary accounts are not "contracts to purchase commodities"; federal CFTC case (White Pine) supports narrow view | Held: Legislature intended broad scope; §29505 expressly covers "any account, agreement, or contract" and includes foreign currency; defendants’ characterization not dispositive — conviction stands |
| Sufficiency of evidence for Martinez | People: Martinez participated in solicitations, developed website, echoed representations, received/benefited from funds | Martinez: he was only an office manager/clerk; lacked role in sales/trading; insufficient proof he made/caused material misrepresentations relied on | Held: Substantial evidence Martinez made/echoed material misstatements and omitted facts (commingling, diversions); convictions upheld |
| Jury instruction on scienter for commodities fraud | People: scienter is required but omission harmless because record overwhelmingly shows guilty knowledge and prosecutor argued it | Defs: Simon requires knowledge element; trial court should have instructed sua sponte and its omission is prejudicial | Held: Scienter (knowledge of falsity or criminal negligence) is an element; failure to instruct was error but harmless beyond a reasonable doubt given the evidence and arguments |
| Restitution and white‑collar enhancement calculations | People: restitution permitted where victims’ losses resulted from defendants’ criminal conduct/conspiracy; aggregate takings trigger §186.11 enhancement | Romero/Martinez: some restitution awards exceed crimes of conviction or duplicate victims; enhancement not supported by taking/loss amounts asserted | Held: Court remanded to fix duplicative/clerical restitution (Lutz amount) and vacated one conviction (count 7 for Romero); generally restitution to conspiracy victims permissible and substantial evidence supports aggravated white‑collar enhancement (takings exceed $500,000) |
Key Cases Cited
- People v. Simon, 9 Cal.4th 493 (Cal. 1995) (knowledge of falsity or criminal negligence is element of securities fraud; informs scienter requirement)
- CFTC v. White Pine Trust Corp., 574 F.3d 1219 (9th Cir.) (interpreting federal Act; discretionary trading accounts treated narrowly under CFTC jurisdiction)
- People v. Russo, 25 Cal.4th 1124 (Cal. 2001) (conspiracy requires at least one overt act; unanimity principles and when jury must agree on overt acts)
- People v. Williams, 21 Cal.4th 335 (Cal. 1999) (statute of limitations and raising time‑bar issues on appeal)
- Chapman v. California, 386 U.S. 18 (U.S. 1967) (harmless‑beyond‑a‑reasonable‑doubt standard for constitutional/instructional error)