Full opinion text
FOURT, J. An indictment was returned on December 16, 1957, by the Grand Jury of Los Angeles County. The indictment consisted of some 19 counts. Appellants (who are husband and wife) and one Clyde D. Moslander, Jr., were charged in Count I with conspiring together and with several other persons to cheat and defraud by criminal means, to obtain money and property by false pretenses and false promises; to commit grand theft; and to violate the corporate securities law, commencing on or about October, 1948, and continuing up to the finding of the indictment. In connection with Count I, some 18 overt acts were alleged.4 In Count II it was alleged that appellants and Clyde D. Moslander, Jr., violated the Corporate Securities Law in that appellants sold a security, to wit, shares of stock in Amerieol Petroleum, Inc., M.G.M. Petroleum, Inc., and Modco, Inc., to Frank B. Teter for $2,370 on or about April 20, 1955, without first having applied for and secured from the Commissioner of Corporations of the State of California a permit to do so. In Count III it was alleged that appellants, and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Americol, M.G.M., and Modco to William Kirkland for $2,370 on or about April 20, 1955, without a permit. In Count IV it was alleged that appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Americol, M.G.M., and Modco to Ervin E. Yoder, Jr., for $3,950 on or about April 21, 1955, without a permit. In Count V it was alleged that appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Americol, M.G.M., and Modco to Edgar H. Mueller for $3,950 on or about April 21, 1955, without a permit. In Count VI it was alleged that appellants and Moslander, committed grand theft by taking the sum of $5,000 from Willis E. McKnight on or about' June 11, 1955. In Count VII it was alleged that appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Americol, M.G.M., and Modco to Edwin A. Mayer for $2,686 on or about April 20, 1955, without a permit. In Count VIII it was alleged that appellants and Moslander, .in violation of the Corporate Securities Law, sold shares of stock in Americol, M.G.M., and Modco to John B. Marlin for $1,343 on or about April 20, 1955, without a permit. In Count IX it was alleged that appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Modco to C. P. Shemely for $680 on or about April 20, 1955, without a permit. In Count X it was alleged that appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Americol, M.G.M., and Modco to Edgar H. Mueller for $2,657 on or about May 31, 1955, without a permit. In Count XI it was alleged that appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Americol, M.G.M., and Modco to Ervin E. Yoder, Jr., for $2,657 on or about June 1, 1955, without a permit. In Count XII it was alleged that Appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Americol and M.G.M. to Dr. Robert O. Pearman for $2,970 on or about March 17, 1955, without a permit. In Count XIII it was alleged that appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Modco to Angus C. McBain, Trustee, for $15,000 on or about January 3, 1955, without a permit. In Count XIV it was alleged that appellants and Moslander, committed grand theft by taking the sum of $15,000 from Angus C. McBain, Trustee, on or about March 18, 1955. In Count XV it was alleged that Appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Americol, M.G.M., and Modeo to Angus C. McBain, Trustee, for $38,950 on or about March 1, 1955, without a permit. In Count XVI it was alleged that appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Americol, M.G.M., and Modeo to Angus C. McBain, Trustee, for $27,300 on or about March 8, 1955, without a permit. Counts XVII and XVIII were dismissed on motion of the People. In Count XIX, it was alleged that appellants and Moslander, in violation of the Corporate Securities Law, sold shares of stock in Americol, M.G.M., and Modeo to Clarence I. Tubbs for $1,343 on or about April 21, 1955, without a permit. As to appellant Monte G. Mason it was alleged that he had been convicted in the Superior Court of the State of California, in and for the County of Los Angeles, of the crime of grand theft and violation of the Corporate Securities Act, a felony, and that judgment had been pronounced on or about November 7, 1947. Appellants’ motion for severance of trial from that of the alleged coconspirator, Moslander, was granted. Appellants’ motion under Penal Code, section 995, was denied and each appellant pleaded not guilty. Appellant, Monte G. Mason, first denied the prior conviction alleged, then subsequently admitted it. Appellants were tried before a jury which found them guilty as charged in Counts I, V, VII, VIII, IX, XI, XIV, XV, and XVI. As to Counts II and III, appellants were found not guilty. As to Counts IV, VI, X, XII, XIII, and XIX, the jury was unable to arrive at a verdict and the trial judge declared a mistrial as to such counts. Upon return of the jury’s verdicts of guilty on the aforementioned nine counts of the indictment, a motion for a new trial and for arrest of judgment under the provisions of section 1185 of the Penal Code was made. Appellants’ motions for new trial were denied. As to appellant Monte Mason, the court found the prior conviction true and he was sentenced to imprisonment for the term prescribed by law on the counts of which he was found guilty. As to appellant Jeanne Mason, the court sentenced her to imprisonment in the California Institution for Women for the term prescribed by law. Each appellant appealed from the judgment of conviction, order denying motion for new trial, and order denying motion in arrest of judgment. The purported appeal from the order denying the motion in arrest of judgment is dismissed. This is not an appealable order. (People v. Mills, 148 Cal.App. 2d 392, 409 [306 P.2d 1005] ; People v. Tidwell, 108 Cal.App.2d 60, 62 [238 P.2d 21]; 3 Cal.Jur.2d, § 91, p. 542.) The trial of this matter lasted some seven weeks, with a resultant reporter’s transcript consisting of 12 volumes and containing some 3,251 pages. The briefs consist of 275 pages. The appellants were not found guilty as to all of the substantive counts on which they were tried, however, some of the testimony pertaining thereto is set forth because of its bearing with reference to the conspiracy count. A résumé of some of the facts is as follows: Appellant, Monte Mason, was instrumental in organizing Cane Creek Petroleum, Inc., whose articles of incorporation were filed in Utah on October 29, 1948; Americol Petroleum, Inc., whose articles were filed in Colorado on April 28, 1950; M.G.M. Petroleum, Inc., whose articles were filed in Nevada on May 22, 1952; and Modeo, Inc., whose articles were filed in Nevada on March 31, 1954. It was appellant Monte Mason who requested the United States Corporation Company to organize the latter two corporations, with dummy incorporators being used. Robert M. Hale, a special investigator for the Division of Corporations, State of California, testified that the files of the Division of Corporations disclosed that no permit to issue or sell stock in the State of California had been issued to appellants, Americol Petroleum, Inc., M.G.M. Petroleum, Inc., or Modeo, Inc.; nor had there been a request for a permit filed on the part of any of these individuals or companies. For purposes of clarity, the various transactions will be set forth under separate headings as follows: A. The October, 1952, Meeting at Appellants’ Home: A meeting was held at appellants’ home in North Hollywood, California, in October, 1952, at which time Monte Mason talked about oil wells and an oil field in the area of Moab, Utah. He produced a fruit jar that contained some oil and demonstrated how it burned. He told the group of people present that he was experienced in oil matters and that he had drilled many wells. He represented that his companies had a well in Utah which was producing oil at the rate of 9,800 barrels per day and that the oil sold at the well for $4.10 per barrel; that they were realizing about $40,000 a day from the output of this well and that they expected to “spud in” a second well within a few days. Mason stated that wells were being drilled on leases obtained by himself and his wife; that they had formed Americol Petroleum, Inc.; that the other corporation involved was M.G.M.; that M.G.M. stood for his initials. He related further that he and his wife had assigned the leases to Americol in consideration of receiving 2,800,000 shares of stock which represented over half the stock of the company, and that they had some stock for sale; that anyone who bought stock in M.G.M. would have an option on Americol stock. Monte Mason ran a film which showed a producing well, stating that it was an old well which had come in before the war and had been capped. During the course of the meeting Slate asked whose stock was being sold. Mason said that it would be from his wife; he said further that he had no stock in his own name because of the possibility of lawsuits in drilling operations. Slate asked the mechanics of purchase, and Mason said, “Well, we can’t do it the easy way, I have got to get around the Corporate Securities Act.” (Emphasis added.) Mason said that another individual had put some money in and that they had taken him to Las Vegas, Nevada. He suggested the appointment of an agent in Las Vegas to whom the stock could be transferred. He referred to a Rulin Earlin as an attorney representing Mm in Las Vegas. He said too that he had turned down more than $60,000 in the past few days because he did not like the looks of the people. During the evening, there were three telephone calls which supposedly were from the well area. Mason could be heard talking. from the telephone, saying, ‘1 Great, great, that is tremendous.” He reported back to the group that progress was wonderful up there and that it looked better all the time. He also said to one of the persons present that if the latter wanted to get in on the deal he would need to have his money in by the following Saturday because things were going very rapidly. B. The Willis E. McKnight Transactions: Willis E. McKnight, a resident of Glendora, California, first met Monte Mason on March 11, 1955, having been introduced to him by Wesley Durston at a well site in Moab, Utah. On his arrival at the site, it appeared that the well had just come in (that is, McKnight was so advised by Mason). Me-Knight assumed it had come in from seeing a quantity of oil on the ground around the derrick and on the platform. McKnight, Durston, and Mason talked about the gravity of the oil, the approximate quantity, and the number of barrels per day the well would produce. Mason stated that the well had good possibilities from a test that had been made and that it looked as if it ought to go at four or five hundred barrels a day or more. Mason stated that the well belonged to Modco, that it was being drilled by himself and that he was the operator. Prior to this occasion, McKnight had discussed the operations and oil wells with Durston. He had loaned Durston $2,000. After his meeting with Monte Mason, McKnight asked Mason if the loan which he had made to Durston could be used to buy stock in Modco, and Mason replied that it could. In April, 1955, during a conversation between McKnight and Mason, Mason inquired as to whether McKnight had any friends who desired to buy stock in the company; that funds were needed to get the operation going because of some trouble. Mason stated that the stock to be sold would be treasury stock and that he needed the money for the payroll and for the various subcontractors. At Mason’s request, McKnight invited several people to his home in April. McKnight recalled two such meetings at his house, and particularly the occasion of April 19th. At that meeting, Mason told the persons present about the old M.G.M. well, stating that water had entered the well and congealed the oil; that they had talked with the Dow Chemical Company in an effort to work out a solution; and that the new Modco well was producing about 40 gravity oil which was very good. Mason then ran a film showing the area in question. He said they were selling stock because they needed more funds; that they had to purchase casing and meet payrolls ; that they were having trouble losing tools with respect to the Modco well. Mason also stated that Modco stock could be bought but that one also had to buy shares in Americol and M.G.M. At Mason’s request, McKnight agreed to act as trustee for his (MeKnight’s) friends. When Mason was asked whose stock it was which was up for sale he said there were plenty of shares left in each corporation and that they also had an option on several thousand shares which were going to be donated back to the company if they were sold. After one of the meetings at his home, in April, MeKnight telegraphed $6,500 to Modco, Inc., at Moab, Utah, at Mason’s instructions in connection with the purchase of some stock. MeKnight made three checks payable to the order of Modco, including People’s Exhibit 41, which was a check for $2,000 dated May 4, 1955, made so payable on Mason’s instructions. In delivering the checks to Mason, MeKnight stipulated that they would be for corporate uses. MeKnight indicated that he did not want stock for all of the checks; he wanted the money back. He did get stock for part of the money. The stock certificates were mailed or delivered to him. MeKnight received money from a number of different people for the purpose of purchasing stock in the corporations. This money was sent at Mason’s direction by Western Union or mailed to Modco at Moab, Utah, or to Glenn and Parent, Trustee, Grand Junction, Colorado. On or about June 11, 1955, MeKnight again saw Mason. The latter indicated that he needed some additional money for withholding taxes against Modco. On this occasion, MeKnight gave Mason a check for $5,000 as a loan. Mason had requested either a loan or the purchase of more stock. The money was loaned on the assurance it would be repaid within ten days. MeKnight recalled that a Mr. Hudson and possibly a Mr. Cunningham accompanied Mason on this occasion. MeKnight was solicited at his office. MeKnight recalled an occasion at Moab, Utah, when Mason was present and he met a Darrell Reardon. He understood Reardon was an employee of the corporations. He also met a Clyde Moslander at Grand Junction, Colorado, in the office of Glenn and Parent. Appellant Jeanne Mason was also present on this occasion. McKnight observed Monte Mason sign stock certificates for the corporations. He recognized the signatures of M. G. Mason on stock certificates as being those of appellant Monte Mason. Moslander may have signed some certificates. On one occasion McKnight was introduced by Mason to a James Cunningham. Mason said that Cunningham, was his business manager and further stated that any information that McKnight desired, including matters concerning Modco or M.G.M. could be obtained from Cunningham. C. The Frank E. Teter Transaction: About April, 1955, Teter, a rancher, was invited to the home of his neighbor, McKnight, in Glendora, California. There he met Mason and was shown some moving pictures of an oil project in the area of Moab, Utah, by Mason. During the picture showing Mason explained that the oil was emulsified and that money was needed to seal off the well and pay the help. Mason further stated that the property was on the Modco lease that they had optional • stock to sell; that for each share of Modco stock one had to buy so many shares of Americol and of M.G.M. in $5,000 blocks. Subsequently, Teter discussed the purchase with some of the other persons present. He made out a check dated April 20, 1955, for $2,500 to the order of one William Kirkland. He and Kirkland were taking a block of $5,000 and McKnight was to act as trustee to hold the stock. Later, Teter received some shares of stock through the mail. D. The William Kirkland Transaction: William Kirkland, a contractor, had known Teter for many years and had a conversation with him some time in April, 1955, concerning the purchase of stock in M.G.M., Americol, and Modco. He received a cheek from Teter and also gave a check of his own to McKnight. Subsequently, he received stock certificates from McKnight. This all occurred in Los Angeles County. E. The Edwin A. Mayer Transaction: Mayer, a contractor, also attended a meeting at McKnight’s home in April, 1955. He also observed the moving pictures and heard Mason’s explanations. Mason stated that money was needed to clean up the well and get operations going again and also to pay social security and unemployment taxes which were in arrears. Mason referred to Modco, M.G.M., and Americol Companies. He stated that the oil was the best oil ever produced this side of Pennsylvania; that when the first well came in and the money resulting therefrom would be available, they would use part of it to bring in another well, part would go to some of the other companies, and the balance would go to the investors. Mason further stated that it was necessary to buy stock in $5,000 blocks but that if one did not want to buy that much one could purchase half of it with McKnight acting as trustee for the stock. Thereafter, Mayer gave McKnight a check for $2,686 dated April 20, 1955, and subsequently received in the mail his certificates for the shares of stock. E. The John Marlin Transaction: John Marlin, a contractor, met appellant Monte Mason at McKnight’s house in March, 1955. Mason ran some film for the group there. He explained an area on a map indicated for Modco. He stated that oil had been overflowing from the tanks; that some oil had been hauled to Salt Lake City; that the first well had been drilled in 1921 but had to be capped because it overflowed into the river; that they had to clean out the present well; that it was necessary to bring in an outfit from New Mexico to cement the bottom of it, and that they had to issue some more stock because they needed more money to cement the well. Mason further explained that they were selling stock in Modco and he indicated a connection with M.G.M. and Americol which had adjacent leases. Mason stated that his wife (appellant Jeanne R. Mason) had the lease on the property in question. Marlin said that he had previously bought stock in Americol and M.G.M. and he was therefore interested in purchasing Modco stock. Mason stated in effect that it was possible to purchase Modco shares in proportion to shares previously purchased in M.G.M. and Americol; that at least 5,000 shares of Modco should be purchased and that the stock would be held in trust by McKnight. At Mason’s direction, Marlin made a check dated March 25, 1955, in the sum of $1,003 payable to the order of the Robert Parent Company; he made another check in the amount of $340 payable to the same order. Mason stated that the Robert Parent Company was handling the issuance of the stock. Marlin also wrote another check for $1,343 dated April 20, 1955, with which, together with the other two aforementioned cheeks, he purchased stock in Modco, Americol, and M.G.M. At various times Marlin received stock certificates. (340 shares of M.G.M., and 680 shares of Americol had been delivered to him by McKnight prior to the time Marlin met Mason.) The other certificates were received by Marlin through the mail from the Glenn Parent Company. Q. The E. E. Yoder, Jr., Transactions: Yoder, Jr., a contractor, attended a meeting on April 19th or 20th, 1955, at McKnight’s residence where he saw appellant Monte Mason. Yoder was accompanied by a business partner, Edgar Mueller, among others. At the meeting, Mason spoke and narrated a film. Mason told of bringing in a well that gushed some 300 to 400 feet over the derrick. He said that there was some trouble with magnesium chloride water getting into the oil; that the oil was of a high paraffin base and that money was needed to continue operations, to meet current obligations, and to clean out the well and finish the easing. In stating that money was needed for corporate obligations, Mason referred especially to Modco. Mason said that he would sell some of his personal stock to raise the money; that there were three companies in which he was the principal stockholder; that Modco had a producing well; that in order to purchase stock in Modco, it was necessary to also buy stock in Americol and M.G.M., the other companies; that Modco stock could be purchased in blocks of 15,000 or more, and inasmuch as the persons present were not anticipating purchasing that quantity, Mason would put the stock in trust for them. At Mason’s suggestion, it was agreed that McKnight would act as the trustee. Mason also said that they should make out cashier’s checks payable to Glenn L. Parent Company which would issue the stock to them; that such company was the auditor for the corporations. Thereafter, Yoder decided to purchase stock. He purchased a cashier’s check with a personal check in the sum of $3,950 dated April 21, 1955. The cashier’s check was made payable to Robert L. Parent, Trustee. Yoder gave the check to McKnight. Shortly thereafter, Yoder received various stock certificates. In June, 1955, Mason came to Yoder’s office in Downey, California, at which time Yoder’s business partner, Edgar Mueller, was present. Mason said that they had been shipping some Modco oil to Salt Lake City; that the well had been swabbed out, but that the swab had been lost and he had sent to New Mexico for a fishing tool to recover the swab; that he had put a charge loaded with shot down in the bottom of the casing to perforate the casing; that additional funds were needed for this operation and that he was willing to sell some of his stock. Mason explained that he would sell it on the same ratio as before (¿e., so many shares of Amerieol, of M.G.M., and of Modco). Yoder indicated a preference for more of Modco and less of the other two and Mason agreed. Mason was in a hurry, stating that he had to fly back that night and needed the money immediately; that he would take Yoder’s and Mueller’s cheek made out1 to Robert L. Parent as trustee. Mason also stated that the firm of Glenn and Parent would issue the stock. Yoder gave a check to Mason dated June 1, 1955, for $2,657. Thereafter, in the mail, Yoder received a certificate for 400 shares of M.G.M. stock. H. The Edgar Mueller Transactions: Mueller, a contractor, first met appellant Monte Mason on April 19, 1955, at McKnight’s home in Glendora. Mueller had gone there by invitation with his business associate, Yoder. A film was run and Mason explained the setup and stock structure as before. There were a number of questions between the persons present at the meeting. Mason stated that he would sell some stock and that it was his own stock. He said that the Modco stock was the most attractive but that he would not sell it unless the parties purchased proportionate shares of stock in the other two companies. It was agreed that the checks for the stock would be given to McKnight who would send them in with his own. In accordance with Mason’s instructions, Mueller purchased a cashier’s check in the sum of $3,950.25 made payable to Robert L. Parent, Trustee. This cheek was transmitted to MeKnight. The record discloses that it was endorsed by Robert L. Parent, Trustee, and C. D. Moslander, Jr., the latter having signed many of the stock certificates as assistant secretary. Subsequently, Mueller received by mail various certificates of stock. Some time after the meeting at MeKnight’s house, Mueller saw Mason at his (Mueller’s) office in Downey, California. Yoder was present. Mason explained that they were having some difficulties and needed a few more thousand dollars to put the well in production. Mueller had his wife make out a check for $2,657. It was also made payable to Robert L. Parent at Mason’s direction. Mason stated that he would not have time to wait for a cashier’s check inasmuch as he had to catch a plane that evening to go back to the well. Mason stated that Robert L. Parent was an accounting firm in Grand Junction, Colorado. Subsequently, Mueller received a stock certificate in the mail. Later, Mueller spoke with Mason by telephone and inquired as to whether Mason could legally sell his stock; Mason replied that he could. I. The Clarence Tubbs Transaction: Some time shortly before March 22, 1955, Tubbs, a contractor, went to MeKnight’s house at the request of the latter where he met appellant Monte Mason. Mason showed a short film, stating that they had a well which they thought was a producer and that money was needed to finish it. Mason explained that he could raise the money by selling stocks in M.G.M., Americol, and Modco in a certain ratio. He also said that they had borrowed equipment from Modco to put the well in and they only had so many days to use the material. On or about March 22, 1955, Tubbs flew to Moab, Utah, with MeKnight and Mr. Wood. Durston met them at the airport. They all went to the well site with Monte Mason. At the well site they had a discussion with Mason and he referred back to the film. He showed where oil had supposedly been flowing and indicated that certain material had been mixing with and impeding the flow, stating that money was needed to drill through and rectify the condition. Mason explained the ratio in which they would have to purchase stock. Thereafter, Tubbs did purchase some stock. He made a check dated March 25 to the Robert Parent Company for $1,003. This check was drawn pursuant to McKnight’s instructions and was transmitted to McKnight for the purpose of buying stock in M.G.M., and Amerieol. Subsequently, Tubbs received the certificates. On a later occasion, Tubbs purchased a cashier’s check made payable to the order of Robert L. Parent, Trustee, dated April 21, 1955, for $340, and gave it to McKnight for the purpose of purchasing Modco stock. J. The Charles Shemely Transaction: Shemely, a subdivider, attended a meeting at McKnight’s house about April 19, 1955. Appellant Mason showed a motion picture which depicted a flowing well and some tanks. He told about the approximate flow of the oil, and how they had to haul the oil to Salt Lake City; the difficulty with the well because of the foreign matter coming into it; how they needed money to meet payrolls and to clean out the well and that this was the reason that stock was being sold. Mason said that Shemely could purchase stock in two of the different companies, one of them being M.G.M., as Shemely recalled. He said that Shemely would have to buy $5,000 worth to participate in a third company, Modco. Also, Mason stated that Shemely could not buy stock in Modco in his own name, but only through McKnight as trustee. Shemely wrote a check dated April 20, 1955, in the sum of $680 to the order of McKnight and gave it to the latter. He never received any certificate in Modco. At some time prior to the aforementioned meeting, Shemely had spoken with McKnight about the purchasing of stock in the various corporations. He had given a check dated March 23, 1955, in the sum of $2,000 to McKnight. Shemely then received certificates from McKnight. K. The Angus C. McBain Transactions: McBain, an attorney in Los Angeles, was acquainted with appellants. On or about September, 1954, he went to appellants’ home in Studio City, California, at the invitation of R. A. Meader, Prescott Metcalf, and James P. Cunningham, all of whom were present at appellants’ home. Appellant Jeanne Mason was in and out of the room. Upon one occasion at this meeting, Monte Mason said that his wife was the owner of sufficient stock to have control of Amerieol Petroleum, Inc., and M.G.M. Petroleum, Inc., and that these corporations held leases on government property on the Colorado River near Moab, Utah. Appellant Monte Mason related that around 1925 or 1926 some wildcat outfit had drilled into oil on what had been the Amerieol Petroleum property; that there had been a gusher but that it was uncontrollable and at that time an old-fashioned cable outfit was the means used to dig the well. Mason further stated that he had acquired some of the leases; that he had drilled on the property and had brought a considerable amount of oil to the surface but an emulsification problem had developed. He mentioned another well where oil had been found, but which had to be plugged because of inadequate equipment. Mason said that he had some difficulty with one group of stockholders; that there were between two and three million shares issued in each of these corporations, and that his wife owned the stock and that she was willing to sell some at which he felt was a fair price or sacrifice. He then showed some pictures of the wells and the property. Mason stated that the reason the stock was being sold was that money was needed to put the wells on production. Meader and Metcalf stated that they had been to the property and had seen evidence of oil. McBain informed Mason that he was interested, and that he had a friend whom he would like to bring to the house. Mason invited McBain to return. McBain next saw appellant Monte Mason about a week later at the latter’s house. Jeanne Mason may have been present. Also present were a Dr. Grunigan and another doctor. Monte Mason gave the group a brief description of the property, stating that they had been whipstoeking and doing other work, and were short of funds. He explained that his wife proposed to sell some of her stock and that the money would be used for producing the wells. He mentioned that he had an independent source of income from some Louisiana interests and that no officer of the corporation would draw any money. One of the group present said that they would consider the matter and be in touch with Mason later. About a week after the above meeting, there was another meeting with Mason at the latter’s home. Jeanne Mason may have been present. McBain was accompanied by Charles Scharf. Scharf was a businessman who had speculated in oil before. Mason repeated the history of the field. Subsequently, that same month, McBain and Dr. Grunigan again saw Mason at the latter’s home. The doctor referred to a telephone conversation with Mason in which the doctor said that they did not want to go into the venture but that Mason had an idea which would take the risk out of it. The doctor asked Mason to explain his idea. Mason said that they had to raise money; that his (Mason’s) home was worth between sixty and seventy thousand dollars; that there was only a trust deed against it of $12,000; that he would give a second trust deed on his home for whatever amount they cared to raise and he would pay interest on it; and as an inducement he would give them shares of stock in Americol or M.G-.M. Since there was more than one investor in this particular group, Mason suggested that the shares of stock issued on the trust deed should be put in the name of one person so that when they were producing oil the corporations could be dissolved and per cents issued, and that 27% per cent depletion allowance for tax purposes could be carried home to the individual investors. It was suggested that the shares be placed in McBain’s name, and arrangements were made for a trust deed on the Mason property. After a meeting at the escrow company where the transaction was consummated, McBain and Dr. Grunigan flew to Moab, in November, and saw appellant Monte Mason there. Subsequently, some time in December, another meeting took place at the Mason home at which appellants, Dr. Grunigan, James Cunningham, and McBain were present. Mason said that the expense of whipstocking was killing them financially and that they had run out of funds; that he (Mason) had arranged with M.G.M. to farm out 80 acres of their lease to a corporation which had just been organized by the name of Modco, Inc.; that the purpose of the farming out was to attract more capital; that the corporation was issuing six or seven hundred thousand shares of stock to Jeanne Mason; that the stock was issued to Mrs. Mason with the understanding that she would use it to raise the money necessary to drill a well on the Modco property. Mason explained the price of the stock and the amount of money needed for drilling. McBain told Mason that they were not interested in a direct stock investment. Mason replied, “Well, suppose I secure this one, also, and I will give you some stock as an inducement.” Then he said he would give them a chattel mortgage on the oil field equipment in Utah, which was in his wife’s name; also that he would give them a note for carrying, bearing six or eight per cent interest and added; “If you fellows put up $15,000 of this, I will give you 20,000 shares of Modco • stock. ” Cunningham produced an inventory of equipment in the field, and Mason indicated that it was clear, stating that the proposed security was worth several times. $15,000. As a further inducement to the making of the loan, Mason said that he would give them an option exercisable 10 or 15 days after the Modco well had been placed on production to purchase 15,000 shares of Modco stock at a dollar a share and if they exercised the option, all they would have to do would be to give the satisfaction on the note and chattel mortgage. Mason further stated that he had to get the money immediately and to guarantee that they had proper title on the chattels he would pledge to them 400,000 shares of Mrs. Mason’s stock in Modco. Mrs. Mason may have been present at that particular time. McBain said that the deal would be considered. Several days later, McBain called Mason and told him that on his certification that the equipment was clear, they would put up $15,000 on a chattel mortgage. McBain had a meeting between Christmas and New Years, 1955, at his house with appellant Monte Mason and Cunningham on which occasion Mason said that he had to go over to the property in Utah and that Cunningham would take care of the details in receiving the $15,000 and would deliver the chattel mortgage and promissory note. At this time, also, Mason said that he was hard pressed for money. McBain stated that he would advance Mason a thousand dollars on account of the $15,000, and he gave him a check for that amount. On January 4, 1955, Cunningham came to McBain’s office in Los Angeles at which time Cunningham produced a chattel mortgage dated January 3, 1955. The name Jeanne R. Mason already appeared on it. McBain told Cunningham that he (MeBain) could not release any funds until a promissory note was signed by Mrs. Mason. At Cunningham’s request, McBain prepared a note and Cunningham left the office stating that he would get Mrs. Mason’s signature. He returned the same day with the signed note. He also gave MeBain a letter of agreement. The record discloses that it bore the signature of Jeanne R. Mason, with J. P. Cunningham as a witness, and that it referred to 20,000 shares of Modco stock as being part of the consideration for the loan; that 400,000 shares of Modco stock was being given as security to guarantee that the property covered by the chattel mortgage was clear; and provided the right to exercise the option of purchasing 15,000 shares of Modco for a period of 15 days after notice that the well was on production. Cunningham related that he had with him some checks which he had picked up in connection with the transaction. MeBain gave Cunningham some additional checks. A total of $15,000 was turned over to Cunningham in the form of checks, including the check for $1,000 which MeBain had previously given Monte Mason. Cunningham indicated that Glenn and Parent of Grand Junction, Colorado, the transfer agents, would mail the stock certificate for 20,000 shares of Modco to MeBain as trustee. Subsequently, the same month, the aforementioned stock certificate was received. Thereafter, up until March, 1955, MeBain had several conversations with Cunningham about drilling the well and what had been taking place in Utah. On one occasion, Cunningham told him that they soon expected to be entering the production zone. On March 5,1955, Cunningham came to MeBain’s home and presented a document of that date on the letterhead of J. P. Cunningham, Business Management, which stated that the well was on production. This document referred to the option portion of the letter of agreement and it bore the signature of J. P. Cunningham for Jeanne B. Mason. At Cunningham’s suggestion, he, MeBain and Mr. Scharf flew to Moab, Utah, where they met appellant Monte Mason at the office of M.G.M., Amerieol, and Modco. A Mr. Gray and some other people were present. Someone stated that the well was really “blowing.” They then proceeded to the site, where they met a John Heatherington, the superintendent. Mason told Heatherington to turn on the well. Oil began to come out of the well. They then proceeded to a storage tank and observed oil gushing through the pipe which looped over the top of the tank. On returning from the site to the office in Moab, they had some further conversation with Mason. He said that now that this well was in production he thought they should proceed rapidly and start drilling; that he had options on M.G.M. and Amerieol stock which he was willing to sell in “units” consisting of one share of M.G.M. and one of Amerieol for not more than $2.10 per unit on condition they would give him an option to buy back every sixth share. Mason stated he did not want to sell the stock, but needed funds. Mason also discussed with MeBain whether the latter would exercise the aforementioned option of cancelling the $15,000 chattel mortgage, and MeBain said that he would take it up with the persons interested upon his return to Los Angeles. Upon his return to Los Angeles, MeBain had a conversation with Cunningham, then he (MeBain) executed a form of satisfaction of chattel mortgage to release the indebtedness of $15,000. According to McBain’s testimony, the reason he executed the form of satisfaction to release the indebtedness was “in reliance on a statement made to me that the well was on production.” McBain either mailed the satisfaction to Mason’s house or transmitted it to Cunningham. In exchange for exercising the option and eliminating the debt, McBain received a certificate for 15,000 shares of stock of Modeo, Inc. He received it in his office some time in March, 1955, either through the mail or from Cunningham personally. On March 8, 1955, McBain purchased two cashier’s checks, each in the sum of $19,475, payable to Glenn and Parent. On the same day, a third check (personal check) in the amount of $27,300, along with the two cashier’s checks, was turned over to Cunningham in order to purchase “units” of stock of Amerieol and M.G.M. in accordance with Mason’s offer earlier that week in Moab. Subsequently, McBain, as trustee, received certain certificates. With respect to the $15,000 loan which McBain cancelled when he exercised the option, he never got back any part of the sum originally loaned. As to whether or not there was ever a Modeo well in production, the reporter’s transcript discloses: 1 ‘ Q. Now, you were asked on cross examination, sir, by Mr. Strong, whether you had learned whether anything that Mr. Mason had said was untrue. You answered ‘No.’ Let me ask you, Mr. McBain, did you ever learn as a matter of fact whether or not there was a Modeo well ever in production ? ec “The Witness: Yes. It was my information there wasn’t ...” L. The Robert O. Pearman Transaction: Dr. Pearman was residing at San Luis Obispo, California. Tie met Mason at his (Pearman’s) office early in February, 1955. Cunningham was also present and he, along with Mason, represented that the former was Mason’s secretary and more or less in control of the financial end of the venture which Mason was proposing. Mason stated that he had a lease on some property near Moab, Utah; that some years before an oil well had been drilled there; that the oil had flowed into the Colorado River; that the farmers had objected and that the well had been cemented; that subsequently he secured a lease from the Cane Creek Company and had drilled another well. He showed motion pictures of the well and oil coming out of the ground and running into a trough. He said that he needed more money to bring the well in; that if Dr. Pearman would invest some money he would receive a tax advantage because his cheeks would come from the refinery; that he (Mason) could obtain capital in the Bast, but that he desired to maintain control of the property within a small group and that there was some stock which Dr. Pearman would receive as representing his share of the venture. Dr. Pearman gave a $5,000 check made payable to Cunningham at Mason’s direction in that Cunningham was Mason’s representative. Subsequently, Dr. Pearman received some shares of Modco stock. In early March, 1955, Dr. Pearman met appellant Monte Mason and Cunningham at a hotel located in Los Angeles. They had a discussion about the well and the stock. Mason said that if Dr. Pearman was interested he could buy some additional shares in the venture, the stock now being in Americol and M.G.M. in a certain ratio. After further discussion, Dr. Pearman sent a cheek for approximately $2,970 to Glenn and Parent in Grand Junction, Colorado, as directed. Presently, he received, through the mail, a certificate for 1,000 shares of M.G.M. and a certificate for 2,000 shares of Americol. M. The Meeting at the McKenna Residence: On the afternoon of May 9, 1956, Monte Mason came to the residence of McKenna in Santa Monica, California. Prior to Mason’s arrival, other persons arrived, including Mr. Hodge of the Better Business Bureau and Mr. Brownson of the district attorney’s office. Brownson installed some concealed microphones in the house, along with a tape recording apparatus. McKenna had given his consent, but all of this was unknown to Mason. Hodge was introduced to Mason as a friend of McKenna, who might be interested in Mason's venture. Mason, who had previously discussed an oil venture with McKenna, showed a film relative to a well in the Moab area which was flowing oil, and a conversation ensued within the range of the hidden microphones. The recording apparatus was operated by Brownson. The tape recording which was played to the jury reflected, among other things, that Mason stated that Moab was booming; told of the area near the Colorado River; told of a well having been drilled in 1925; that said well had flowed considerably; that the oil was of better grade than that produced in Pennsylvania, Ohio, et cetera; that the property was in litigation. While showing the films, Mason discussed the history of the field and related that he started certain operations in 1950 when he paid Cane Creek for an option. He described the difficulty caused by the magnesium chloride water getting into a well and how the well had to be cemented. He then described other operations. He said the well which his group operated had flowed 9,856 barrels of oil through a ten sixty-fourth choke hole, and 3,226,000 cubic feet of gas; that the well had to be “killed” because there was no way to get easing into the ground, and that the well had produced 30,000 barrels of oil a day. He described the trouble they were having with a subsequent well sanding up, stating that the well flowed hard but that it needed to be cleaned out, and that they were using the Halliburton Company testing services. He indicated that the Modco well, on which they were not concentrating, was none the less flowing commercial oil, stating at one time, “This is a good commercial well at this minute, ’ ’ and at another that he “could definitely say that it is on commercial production right now.” Further, Mason described the companies that he and his wife controlled, saying that they all were domesticated to do business in Utah. In this connection he told of Modco, Amerieol, and M.G.M., and also mentioned Standard Consolidated, indicating that he was offering shares in these companies. He pointed out their holdings on a map. He referred to the terms of government leases, and referred to Cane Creek Oil Company as the original lease, with his wife as the operator, and with the operating agreement covering various leases. He said that the leases were in his wife’s name and that assignments were made to the different corporations; that he was offering the persons present stock in the corporations ■ that he was offering a “package deal” as to the purchase of stock in the companies. N. Becords of the Department of the Interior: I. Records of the Land Office, Utah. Ernest L. House, Manager of the United States Land Office for the State of Utah, Department of the Interior, had access to the gas leasing records for that state. He ascertained that prior to June, 1956, with respect to the leases known as Salt Lake 064948, 064040, 064950, and Utah 0496, there was no record of any interest therein in the name of either of the appellants, M.G.M. Petroleum, Inc., Modco, Inc., Amerieol Petroleum, Inc., or Standard Consolidated Petroleum, Inc. No interest in oil or gas leases, nor any operating agreements on the part of Modeo, were reflected in the records. House identified People’s Exhibits 101 and 102, indicating respectively, lease Number 064948 dated January 1, 1948, issued to one John L. Shafer from the United States Government, and an assignment thereof dated October 19,1951 to the Cane Creek Oil Company. He identified People’s Exhibit 103, indicating lease Number Utah 0496 dated January 1, 1950, issued to one Frank Shafer from the United States Government. People’s Exhibit 104 reflected an assignment of the last mentioned lease to the Cane Creek Oil Company dated October 19, 1951. People’s Exhibit 105 reflected an operating agreement between Jeanne R. Mason, as operator, and Cane Creek Oil Company, as nonoperator, dated October 31,1951. People’s Exhibit 106 reflected an operating agreement similar to that denoted in People’s Exhibit 105. People’s Exhibit 107 reflected an assignment of an operating agreement from Jeanne R. Mason to Americol Petroleum dated November 19, 1951. People’s Exhibit 108 reflected an assignment of an operating agreement from Jeanne R. Mason to Americol Petroleum dated October 31, 1951. People’s Exhibit 109 reflected an assignment of an operating agreement from Jeanne R. Mason to M.G.M. Petroleum dated September 23,1952. People’s Exhibit 110 reflected a partial assignment of an operating agreement from Jeanne R. Mason to Modeo, Inc., dated November 18, 1954. This latter attempted assignment was not received in House’s office until January 11,1955, and was denied approval as reflected in a decision denoted People’s Exhibit 111 dated August 4, 1955. The land described in the assignments denoted Exhibits 108 through 110 was embraced in the leases denoted Exhibits 101 and 103. The land constituted portions of the entire land described in Exhibits 102 and 103. The land described in Exhibit 107 was likewise all included within the leases, as was the land described in Exhibits 105 and 106. II. Records of the Geological Survey Branch. Harold C. Scoville, a petroleum engineer attached to the United States Geological Survey Branch of the Department of the Interior, had access to certain documents. His office maintained records on all wells drilled under federal leases in the State of Utah. Royalties on produced oil with respect to government leases, were paid to the United States through Scoville’s office. Scoville testified that he had searched the records to ascertain if any royalty had been paid on any oil produced on a federal lease by an operator known as Monte G. Mason, and he found that no royalties were paid in the Cane Creek Field on any leases; that he had checked the leases and they were Utah 0496, Salt Lake City 064948, Salt Lake City 064949, Salt Lake City 064950 and Salt Lake City 026375. The witness further testified that their records did not show any producing well was ever completed on any of the described leases in the Cane Creek Field. O. Aspects of the Leases and Operating Agreements: The record indicates that the leases denoted People’s Exhibits 101 and 103 required in effect that the lessees do certain work, pay certain royalties, and pay a nominal yearly rental per acre (i.e., between 50 cents and a dollar) ; that there was a recital in the operating agreement denoted People’s Exhibit Number 105 (which together with Exhibit 106 related to land described in Exhibits 101 and 103) to the effect that no cash consideration was paid by appellant Jeanne Mason for the agreement, but rather that the obligation to perform the drilling requirements and pay the rentals constituted the consideration ; and that the same applied as to the operating agreement denoted People’s Exhibit 106. There was defense testimony that as to one of the assignments of operating agreement Jeanne Mason received 2,800,000 shares of stock valued at one dollar per share by M.G.M. The record further discloses that People’s Exhibit 110 included a partial reassignment by M.G.M. to appellant Jeanne Mason of drilling rights originally assigned to this company, reciting a consideration of $10. There was also defense testimony reflecting that the transfers of shares of stock received by the various prosecution witnesses were charged against shares of Jeanne Mason’s stock; and that the consideration she had given for the stock certificates which were issued to her in the different companies was “the oil leases on the property” (i.e., assignments of operating agreements for which agreements, no cash consideration was paid). The record also indicates that a number of the certificates bore no dates for her endorsements. P. Bank Records: Harry T. Steffens, Assistant Vice-President of the United States Bank of Grand Junction, Colorado, had with him documents pertaining to the Robert L. Parent, Trustee accounts at his bank. He identified People’s Exhibits 63 and 64 (i.e., involved in the McBain transactions) as being cheeks which had been cashed at his bank. People’s Exhibit 65 (also so involved) was another check which had cleared through his bank and had been deposited. People’s Exhibit Number 72 constituted a record of the Robert L. Parent, Trustee account from the period January 3, 1955 through November 21, 1955. Another exhibit reflected signature cards for that account. People’s Exhibit Number 74 constituted a deposit slip for the check denoted People’s Exhibit 65 (in the amount of $27,300, drawn by McBain and dated March 8,1955) said check having been deposited March 11,1955. It was indicated that People’s Exhibits 63 and 64 were cashed on March 10. People’s Exhibit 75 constituted a money order drawn on Steffens’ bank which was deposited in the First National Bank' of Grand Junction, Colorado. It was made to Glenn and Parent, C. D. Moslander, Trustee. Steffens identified a group of other money orders issued by his bank, these being People’s Exhibits 76 through 88. He noted that one of them was endorsed for deposit only to the account of Modco, Inc. People’s Exhibits 81 through 88 comprised money orders issued by his bank, made to a certain payee and negotiated for payment generally through the First National Bank of Moab, Utah. People’s Exhibits 89 through 91 comprised deposit slips showing deposits made at Steffens’ bank. It was stipulated that the money orders denoted People’s Exhibits 76 through 78; 80 through 84; and 87, bore the signature of Monte Mason, that is, M. G. Mason, on the reverse side of each one. A handwriting expert who had made a comparison of the signature of C. D. Moslander, Jr. on People’s Exhibit Number 73 (signature card) was of the opinion that it was signed by the same person who wrote that name as an endorsement on the reverse side of People’s Exhibit 75 (money order). In the expert’s opinion, the name Robert L. Parent, written on People’s Exhibit 73, was written by the same person who wrote the same name as an endorsement on the reverse side of People’s Exhibit 75. The record discloses that a considerable amount of money from the Parent Trustee account (some of it about the time stock certificates were purchased, and particularly about the time the cheeks denoted People’s Exhibits 63 through 65 were received), was endorsed over to Modco, Inc., through the use of the money orders, in some instances Jeanne Mason’s endorsement or that of appellant Monte Mason appearing thereon. Q. Evidence as to Handwriting: It was stipulated that Monte Mason’s signature appeared on the following documents: People’s Exhibits 6 and 7 (stock certificates for Mr. Teter); People’s Exhibits 8 and 9 (stock certificates for Mr. Kirkland); People’s Exhibits 11 and 12 (stock certificates for Mr. Mayer) ; People’s Exhibits 16 through 21 (stock certificates for Mr. Marlin); People’s Exhibits 24 through 26, and 28 (stock certificates for Mr. Yoder); People’s Exhibits 31 through 33, and 35 (stock certificates for Mr. Mueller) ; People’s Exhibits 37 and 38 (stock certificates for Mr. Tubbs); People’s Exhibits 42 through 44 (stock certificates for Mr. McKnight); People’s Exhibit 46 (a cheek from Mr. McKnight); and People’s Exhibit 2-A (Minutes of Americol Corporation meeting of board of directors) . A handwriting expert compared exemplars of the appellants’ writing with writing appearing on a number of documents. It was his opinion that Jeanne Mason’s signature appeared on the following documents: People’s Exhibit 110 (assignment of operating agreement from appellant Jeanne Mason to Modeo, Inc.) ; People’s Exhibit 109 (assignment of operating agreement from Jeanne Mason to M.G.M.); and on People’s Exhibit 108 (assignment of operating agreement from Jeanne Mason to Americol). Monte Mason’s signature also appeared on Exhibits 108 and 109. Jeanne Mason’s signature appeared on People’s Exhibit 107 (assignment of operating agreement from Jeanne Mason to Americol), and on People’s Exhibits 105 and 106 (operating agreements between Jeanne Mason and Cane Creek Oil Company) ; Monte Mason’s signature also appeared on People’s Exhibits 107 and 98 and 99 (stock certificates for Dr. Pearman), and on Exhibits 94 and 95 (stock certificates for Mr. Shemely); that Jeanne Mason’s signature may have been the one appearing as first endorser on the reverse side of People’s Exhibit 88 (a money order issued by the United States Bank of Grand Junction, as were People’s Exhibits 76 through 87) ; that Monte Mason’s signature appeared as first endorser on the reverse side of People’s Exhibit 86; that his signature appeared as first endorser on the reverse sides of People’s Exhibits 81 through 84 • and on the reverse side of People’s Exhibits 80, and 76 through 78; that his signature appeared on the lower right-hand corners of People’s Exhibits 60, 62, and 66 through 69 (stock eertificates for McBain); that Jeanne Mason’s signature appeared on People’s Exhibits 57 (mortgage of chattels to McBain), 58 (promissory note for McBain), and 59 (letter of agreement as to McBain). B. Aspects of the Defense: Neither Monte Mason nor Jeanne Mason testified. Duane Randall testified, among other things, that he was a consulting geologist and was familiar with the Cane Creek structure; that he was vice-president of Modco, Inc., and that he was not a paid employee but had an arrangement whereby he would gain stock in Modco, M.G.M. and Americol. He identified various documents pertaining to tests of wells and records of M.G.M.; he testified that the Halliburton Company which made the tests was an independent service company and that the chart indicated excellent formation pressures; that a drill stem test on M.G.M. well No. 2, taken by Halliburton in March, 1955, disclosed that the test tool was open for 73 hours and that oil flowed through it for about 71 hours. He related that he had examined logs of wells within 15 miles of the area and at further distances; that he had compared the showings made on the logs with the showings of M.G.M. No. 2 and found that the logs correlated; and that various limes in the system were extensive. He related further that he arrived in Moab shortly after Thanksgiving, 1955, and saw the three wells; that oil came out of the Americol well and he bailed some out; that at about the same time he saw oil coming out of the M.G.M. No. 1 well and obtained a sample; that at times it flowed as such as half a cellarfull; that he saw the Modco well and that it was more or less “on production” ever since he was there. By this he meant that one could produce oil from it, that is, that on occasion he had opened the valve and let the well flow itself. He testified to his having found that magnesium chloride water had entered some of the wells and stopped the porosity; that M.G.M. had hired the Dow Chemical Company to solve the problem, and that Dow had added some chemicals to the zone; that this problem faced the Modco well but that it was solved by placing the casing to a depth of 6,600 feet. Also, he testified that he had examined a number of reports and records and that in his opinion there was a minimum of 4,000 acres of underground porus pay zone on the crest and down the flanks of the Cane Creek Anticline; that the M.G.M., Americol, and Modco wells were approximately in the center thereof; and that in all probability there were about 200,000,-000 barrels of oil recoverable by primary recovery, although this was a guess. He acknowledged on cross-examination that no producing well had ever been reported on the leased lands; that none of the wells under consideration had been put on commercial production (i.e., selling day by day over a period of time). He testified that according to his terminology “production” meant any oil that came from a formation. Another defense witness, James Hudson, testified, among other things, that he had been a pilot for the appellants; that about the spring of 1955 he saw McKnight give some cheeks to Monte Mason and heard him say that he would consider them a loan to the company, and that Mason should do his job up there and pay it back whenever he had the money; that he did not know if the money was ever repaid; and, finally, that he had seen oil flowing from the wells in Utah. William O. Gray, who among other things was an officer in Amerieol (i.e., president), M.G.M. (i.e., vice-president), and Modco (secretary and treasurer), related that he had examined numerous exhibits, and he indicated that the transfers of stock received by different prosecution witnesses were charged against shares of Jeanne Mason’s stock; also, that the consideration she had given for her stock was “the oil leases on the property.” Severin Sorensen testified that he was an officer of M.G.M. ; that he had been vice-president and was now secretary; that 2,800,000 shares of M.G.M. had been issued to Jeanne Mason for an operating agreement and that the agreement had been valued by the corporation at $2,800,000. He related that he met one Houston Slate in a meeting at the residence of Monte Mason approximately in the fall of 1952 when Ralph Hunt and Dr. Ross Huntley were present; that a film was shown by Monte Mason; that Mason had maps of the Moab well site areas and also had some oil; that Mason did not say there were 9,800 barrels of oil coming out of the well each day; tha