P. v. Innovative Financial Services

Filed 3/15/06 P. v. Innovative Financial Services CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

THE COURT:

It is ordered that the opinion filed herein on February 17, 2006, be modified

as follows:

1. On page 3, line 7 of footnote 4, the number "25510" is changed to "25110" so

the line reads:

2. The securities were not qualified as required by [section] 25110;

2. On page 9, line 4 of the first sentence of the first full paragraph, the number

"24501" is changed to "[25401]" so the sentence reads:

"Palmieri was prosecuted criminally by the District Attorney's Office and pled guilty to 144 counts of criminal fraud and made factual admissions he made material misrepresentations in the offer and sale of securities, in violation of Corporations Code section[s] [25401] and 25535.

3. On page 10, the fifth paragraph, line 1, the phrase "As to Bobby" is changed to

"[As to Bobby]" and line 2 of that paragraph, the number "25120" is changed to

"[25210]" so that the paragraph reads:

". . . [As to Bobby], the record is clear that he bears responsibility for his acts violative of Corporations Code [sections] 25110, [25210] and 25401, yet his involvement is somewhat mitigated by the fact that he was in essence acting as an employee of his father and his role lacks the global significance of his father, who was an indispensable party in the scheme.

4. On page 11, line 2, the number "25120" is changed to "[25210]" so that the

sentence, which begins on the last line of page 10, reads:

What is clear is that Bobby was involved in connection with five investors

. . . whose testimony established that Bobby committed five violations of Corporations Code[] section[s] 25110, [25210] and 25401.

5. On page 12, line 6 of the third paragraph, the phrase "Risk Factor" is changed

to " 'Risk Capital' " so that the second sentence of the paragraph reads:

Life Partners was decided under SEC v. Howey Co. (1946) 328 U.S. 293, 298-299 (Howey), but as we explain below, California applies both the Howey test and the "Risk Capital" test, and both were met in this case.

6. On page 14, the first line of the first full sentence, the phrase "Risk Factor" is

changed to " 'Risk Capital' " so that the sentence reads:

The second test is the "Risk Capital" test articulated in Silver Hills Country Club v. Sobieski (1961) 55 Cal.2d 811.

7. On page 15, the first line of the first sentence of the first paragraph, the phrase

"Risk Factor" is changed to " 'Risk Capital' "; line 4 of the first sentence, the word

"investors" is changed to "investors' "; and the citation at the end of line 4 of the first

sentence is changed from "(Id at p. 815.)" to "(Silver Hills Country Club v. Sobieski,

supra, 55 Cal.2d at p. 815.)" so that the sentence reads:

The "Risk Capital" test finds a security whenever (1) capital is raised for a business venture or enterprise; (2) the transaction is offered indiscriminately to the public at large; (3) investors are substantially powerless to affect the success of the enterprise; and (4) investors' money is substantially at risk because it is inadequately secured. (Silver Hills Country Club v. Sobieski, supra, 55 Cal.2d at p. 815.)

There is no change in the judgment.

BENKE, Acting P. J.

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