Tuesday, September 9, 2014
C.A. Orders Resentencing for Man Convicted of Cheating Investors
Panel Upholds Convictions on Most Charges, but Says Some May Have Been Filed Too Late
By KENNETH OFGANG, Staff Writer
The Sixth District Court of Appeal yesterday upheld a Northern California man’s convictions on 18 counts of theft, fraud and other crimes resulting from a scheme to deceive investors, but ordered that his convictions on two other counts be reconsidered, along with his 13-year prison sentence.
Presiding Justice Conrad Rushing, in an opinion for the panel, rejected the bulk of Kenneth Doolittle’s claims that charges were filed too late or were unsupported by substantial evidence. But the panel agreed with defense arguments that the record was inadequate to determine the timeliness of two of the counts, and that the amount of money involved may have been overstated for purposes of a sentencing enhancement.
Santa Cruz Superior Court Judge Paul Marigonda, sitting without a jury, found Doolittle guilty on three counts of theft by false pretenses, six counts of theft from an elder or dependent adult, nine counts of false statements or omissions in the sale of securities, one count of selling unregistered securities, and one count of securities fraud.
Doolittle, from the Aptos area, was arrested in 2007 while attending an eviction hearing in Orange County. Prosecutors claimed that he duped investors into giving him funds for a venture involving the financing of mobile home purchasers, misrepresenting the safety of the venture and the potential return—which investors were told would be either 13 and 15 percent—and not using all of the money for the stated purposes.
Nearly $15 million went into the venture’s bank accounts, although Rushing said it was impossible to tell how much of that came directly from investors and how much through reinvestment of earlier proceeds.
In an interview with the Santa Cruz Sentinel and in testimony, Doolittle said he started out in the securities business and branched out into real estate before a friend told him he could buy mobile homes from banks, make repairs with investors’ money and sell them to new buyers. Doolittle and several of the investors testified that payments were made for a while, and then stopped.
“I wanted to make a reasonable living and help people find affordable housing,” Doolittle told the newspaper. His portfolio expanded as he bought up mobile home parks throughout California and Nevada and bought and sold more than 700 mobile homes until the venture came crashing down in 2002.
He blamed the crash on falling interest rates that made traditional homes such an attractive alternative to mobile home living that many mobile home owners simply walked away from their loan obligations.
Doolittle also ran afoul of regulators who said he was violating the law because his companies were licensed to broker securities as well as real estate, as well as to give investment advice, but never registered the investments as securities transactions. He claimed he didn’t know he had to, but the regulators and prosecutors said he was sophisticated enough to know the relevant law.
By 2006, he was facing investor suits and was under criminal investigation. By then he had moved his family to Idaho.
He was arrested in 2008 and tried in 2009. Sentencing was delayed almost two years, in part because of the illness of his trial attorney, who was eventually replaced.
He had court-appointed counsel on appeal.
Marigonda told the defendant—an Air Force veteran— that he was “one of the smartest people I’ve ever met,” and a “great American” with “a stellar record” but added:
“[Y]ou can’t wrap yourself around in a flag as you have and expect people to not see through it. And for whatever reason it was every time you open your mouth, every time you say something, I don’t believe a word of it. I didn’t believe it two years ago. I didn’t believe it yesterday. I don’t believe it today.”
Rushing, writing for the Court of Appeal, explained that for limitations purposes, prosecution commenced on Oct. 9, 2008, when Doolittle was arraigned on the complaint. The limitations period on the disputed counts was four years, but was tolled for two years, 342 days after Doolittle moved out of the state, so prosecution on each of those counts was timely unless the crime was, or should have been, “discovered” before Nov. 1, 2001.
As to eight of the counts, the presiding justice said, investors were paid, or given reassurance of payment, after that date. That there were earlier failures of promised payment, or other “red flags,” did not place the victims on notice that they were being defrauded, Rushing declared.
As to the other two counts, he said, there was no evidence of such late activity, and it was unclear from the record what evidence the trial judge relied on in finding the prosecution timely. If, on remand, the judge does not find those charges to have been prosecuted in a timely manner, the amount of the taking will have to be recalculated for sentencing purposes, the presiding justice explained, so there could be a two-year reduction in the aggregate sentence.
The case is People v. Doolittle, 14 S.O.S. 3980.
Copyright 2014, Metropolitan News Company