People v. Honig (48 Cal. App. 4th 289, 1996)

Opinion

SPARKS, J.

Defendant Louis (Bill) Honig III appeals from an order of probation entered after a jury found him guilty of four counts of making official contracts in which he had a financial interest in violation of Government Code sections 1090 and 1097. Defendant contends on appeal that the trial court erred in instructing the jury, in excluding certain evidence and in ordering restitution as a condition of probation. He further contends the transactions were grants rather than contracts and thus were beyond the scope of the charged crimes. Finally, he argues that the Attorney General lacked authority to prosecute this action. We conclude that the sentencing court erroneously believed that restitution was mandatory and consequently did not exercise its discretion in determining whether to impose such a condition. We shall set aside the restitution condition and remand the cause to the court for the purpose of exercising its discretion. In all other respects, we reject defendant’s contentions and shall affirm the conviction and order of probation.

Factual Background

In the General Election of November 1982, defendant was elected to the state constitutional office of Superintendent of Public Instruction. (Cal. Const., art. IX, § 2.) He assumed office in January 1983. Defendant was elected to a second term in the General Election of 1986 and took office for his second term in January 1987. The charges involved in this litigation concern contracts defendant caused to be made and performed by the Department of Education (DOE) in the years 1986 through 1989. However, the charges are rooted in defendant’s relationship with a nonprofit corporation known as the Quality Education Project, or QEP, which was established in 1982. The factual basis for the charges can best be understood by a chronological account of the significant events.

QEP was incorporated in December 1982 as a nonprofit corporation. Defendant told Larry Tramutola, who was QEP’s first significantly paid employee, that he and his wife, Nancy Honig, started QEP before his election. Throughout the time period involved here QEP’s corporate address was at the Honig residence. Nancy filed the periodic legal statements and reports required of a charitable corporation. (See, e.g., Gov. Code, § 12586; Corp. Code, §§ 6210, 6324, subd. (a).) The QEP report for 1982 reflected no income, no expenses, and did not set forth a general purpose for the corporation. Mitra Jazayeri, who lived at the Honig residence and volunteered her services as bookkeeper, testified that at the time there was no office or other facilities for the corporation.

In mid-1983 Tramutola, who made his living as an organizer for unions and similar entities, met with defendant and Nancy. He attended subsequent organizational meetings with the Honigs and others and ultimately was hired by Nancy to work for QEP. Tramutola testified that at that time QEP was “[a]n organization looking for a mission to help improve schools.” QEP did not yet have a product or a program and Tramutola’s job was to go around the state meeting with people such as teachers, principals, parents, community activists, and occasional superintendents, to look at school improvement from an organizer’s perspective.

In the course of his job Tramutola met Linda Page, who was then principal of an elementary school in Fremont. Initially Tramutola engaged Page in a discussion about school improvement generally, but their discussion soon focused on parental involvement. Parental involvement was a subject of particular interest to Page as she had been attempting to establish a program of parental involvement in her school. Following their initial meeting, Tramutola contacted Page frequently for her advice with respect to school improvement with particular emphasis on parental involvement.

For the 1983 calendar year QEP’s annual report reflected income of $60,100 and expenses of $37,278. QEP identified its program services as involving a public awareness program, public involvement in the education system, and business community participation. It appears, however, that by the end of 1983 Tramutola, at least, was beginning to focus on parental involvement as QEP’s mission.

In early 1984 Tramutola began attempting to implement an experimental program of parental involvement in the Oakland school system. He described the program as experimental “in the sense that we were trying to learn how to do it, to learn to try to boil down a lot of—a lot of possibilities and things that were tangible that the average teacher and the average parent could do without changing their lives.” While performing his job for QEP, Tramutola called Page for advice with increasing frequency and eventually, in the fall of 1984, Page asked to be compensated for her assistance. Tramutola relayed that request to Nancy. Thereafter defendant directed his staff to arrange a short-term consultant contract for the DOE to pay Page to work in the Oakland school system. The contract was in the amount of $8,500, which was the maximum permitted under state law for short-term contracts. The contract was arranged by defendant’s executive office assistant and she believed that it was funded out of defendant’s executive office account.

In its annual report for calendar year 1984, QEP reported income of $83,031 and expenses of $88,781. The report identified QEP’s purposes as consisting of a public awareness program, speeches, public involvement in education systems, and business community involvement.

In mid-1985 Tramutola asked Page to work for QEP full time. She agreed and in order to do so she took a leave of absence from her duties in the Fremont Unified School District for the 1985-1986 school year. Tramutola and Page agreed that during the 1985-1986 school year Page would work for QEP exclusively. Tramutola testified that during the 1985-1986 school year the QEP program was still experimental but was getting close to becoming a formal or developed program. Page testified that QEP was at a conceptual or developmental stage without a set program, but that they were working toward that goal.

During the 1985-1986 school year Page worked primarily in Oakland, although she did not report to and was not supervised by anyone in the Oakland school system. She did no work in the Fremont Unified School District and did not report to anyone from that district. She had no contact with, nor reported to, anyone from the DOE. Tramutola testified that during that year Page reported to him and may have reported to Nancy with respect to some things. Page testified that she was directed by Tramutola and may have received some instructions from Nancy only at the very end of the school year.

Tramutola did not know how Page was compensated during the 1985-1986 school year. Page did not participate in arranging her compensation and did not know what arrangements were made for her compensation. She knew, however, that her paycheck came from the Fremont Unified School District and that she was compensated at the same salary and benefit levels as she would have received as a principal in the Fremont Unified School District. In fact, defendant directed James Smith, the DOE deputy superintendent in charge of the curriculum and instructional leadership branch, to arrange a grant for the Fremont school district to pay Page’s salary and benefits while she was on leave of absence during the 1985-1986 school year. Smith set up a grant from DOE to the Fremont district in the amount of $62,190 for the continuation of Page’s salary and benefits.

QEP’s annual report for the 1985 calendar year showed revenue of $221,330 and expenditures of $123,528. In that year Nancy was paid a salary of $25,000 by QEP.

By 1986 Page had become what Tramutola described as an important part of QEP. QEP began to develop a written protocol in the form of a resource manual and Tramutola said that Page played a major role in that endeavor. Tramutola said that a written resource manual was important to QEP on two levels: first, it would provide tangible things that people could do to try to improve schools; and second, it would assist in fundraising by providing something tangible to be shown to foundations and other prospective donors. Page agreed that a resource manual was important in that it would provide a product that could be shown to schools as the QEP program. In August 1986 Page and others engaged in a collaborative effort to put together a draft of a resource manual for the QEP program. The first draft was very rough or primitive and the development of the QEP resource manual remained a continuous endeavor for some time.

Tramutola left QEP’s employ sometime in 1986. At that time Page was named director and began running the day-to-day operations of the QEP program. In the 1986-1987 school year QEP began hiring additional employees and this was one of Page’s responsibilities. She placed advertisements in trade magazines advising interested parties to contact her as director of QEP. She conducted recruitment and interview activities and made decisions about who should be hired, subject to final approval by Nancy. The employees hired to perform field work for QEP during this time testified that they were hired by Page and regarded her as the boss.

During the first half of 1986 Page was paid by the Fremont Unified School District pursuant to the grant which had been arranged for the 1985-1986 school year. For the 1986-1987 school year Page took another leave of absence from her duties with the Fremont Unified School District and continued to work full time for QEP. She continued to receive a salary through the Fremont Unified School District at the salary and benefit levels she would have received as a principal. For the 1986-1987 school year defendant told Smith to make an arrangement with the Fremont Unified School District pursuant to which Page would continue to receive her Fremont compensation while working for QEP. At defendant’s direction the DOE entered into contract No. 4127 with the Fremont Unified School District. Pursuant to the contract the DOE agreed to pay the Fremont district the sum of $69,882, which was the sum necessary for continuation of Page’s salary and benefits. Although Page was named as “manager” in a cover letter, neither she nor QEP was identified in the contract itself. The written contract identified the Fremont Unified School District as the contractor. Pursuant to the contract the Fremont district agreed to perform development work in school improvement, and the contract work sheet stated that the contract was to be performed in the Fremont Unified School District. But the only thing the Fremont district was expected to do was to pass along the contract funds to Page by continuing to pay her salary and benefits. The Fremont district exercised no control over Page and neither Page nor any QEP employee did any work within the Fremont district. As before, the DOE did not exercise supervision or control over Page. In addition to her salary and benefits from the Fremont district, in the 1986-1987 school year Page began to receive supplemental payments from QEP. In the last half of 1986 these supplemental payments were in the amount of $500 per month.

QEP’s annual report for the calendar year 1986 reported revenues of $277,438 and expenditures of $208,786. In that year Nancy was paid a salary of $48,000.

At the beginning of 1987 Page was given the title of executive director of QEP. During that year Page’s supplemental payments from QEP were increased and QEP began paying rent to her for the use of her residence in QEP’s business. During the first half of 1987 Page was paid by the Fremont Unified School District under contract No. 4127. In early 1987 defendant directed his staff to extend contract No. 4127 for the 1987-1988 school year. The DOE and the Fremont Unified School District then entered into two amendments to contract No. 4127. The first amendment extended the term of the contract for an additional year, and the second amendment increased the contract sum by $3,232 to reflect salary increases that would be due Page as a principal in the Fremont district.

Daniel Rodriguez, an educator from Oregon who was hired by Page to work for QEP in 1987, testified that during that year the QEP program was still developmental and that the resource manual was “a living document” that they were adding to all the time. Page testified that by the 1987-1988 school year the key components of the QEP program had been clearly defined and they were in the process of refining the program. She said that the resource manual was being field tested and cleaned up in an effort “to get the bugs out of it.” Eventually QEP copyrighted the resource manual.

During 1987 Page hired additional employees for QEP. Two of these employees are noteworthy here. Erical LaDawn Law was a principal in the Pasadena Unified School District who was hired by Page to work for QEP during the 1987-1988 school year. In order to work for QEP she took a leave of absence from the Pasadena Unified School District. During that year Law was compensated by QEP. Larry Perondi was an assistant principal in the Sweetwater Union High School District. Page asked Perondi to work for QEP and he initially declined but eventually agreed to work part time and was compensated by QEP on an hourly basis.

QEP’s annual report for 1987 reflects revenue of $867,124 and expenses of $537,649. During that year Nancy received a salary of $63,000. Also during that year QEP began to pay rent for the offices in the Honig residence.

In 1988 QEP changed to a fiscal year reporting basis. The QEP report for the first six months of 1988 reflected revenue of $723,305 and expenses of $448,416. During that six-month period Nancy was paid a salary in the amount of $41,200. QEP continued to pay rent on the office space in the Honig residence at the rate of $1,000 per month. It also appears that during this period QEP began holding what would become annual retreats at the Honig winery, for which it paid $1,500 in rent.

Page continued to work for QEP in the 1988-1989 school year. However, she had encountered trouble getting the Fremont Unified School District to allow her to take a third consecutive leave of absence in the 1987-1988 school year and did not believe she would be allowed to take a fourth leave of absence, so she resigned from her duties in the Fremont Unified School District. Thereafter Page was compensated by QEP directly.

QEP was expanding in the 1988-1989 school year and Page hired new employees, subject to Nancy’s final approval. The new employees included Perondi from the Sweetwater Union High School District, who took a leave of absence to work for QEP full time, and Antoinette Dunbar, who took a leave of absence from her duties as principal in the Pasadena Unified School District to work for QEP. Law took another leave of absence from the Pasadena Unified School District to continue working for QEP.

During the time that Perondi, Law and Dunbar were being hired for the 1988-1989 school year, Nancy told Page that if the state would pay for them it would save QEP a lot of money. Nancy later told Page that the state would pay for those employees and directed her to call Gaye Smoot at the DOE to make the arrangements. Smoot was an executive assistant to Deputy Superintendent Smith at the time. Defendant told Smith, who in turn told Smoot, to make arrangements for the DOE to pay the Sweetwater Union High School District and the Pasadena Unified School District for the continuation of the salaries and benefits of Perondi, Law and Dunbar for the 1988-1989 school year. The DOE entered into contract No. 5349 with the Sweetwater Union High School District pursuant to which the DOE paid the school district $62,755 for the payment of salary and benefits to Perondi while he worked with QEP. The DOE entered into contract No. 5356 with the Pasadena Unified School District pursuant to which the DOE agreed to pay $65,879 to the school district for the payment of salary and benefits to Law while she worked with QEP. Contract No. 5356 was subsequently amended to provide for the payment of an additional $65,879 for the payment of salary and benefits to Dunbar while she worked for QEP.

As had been the case with Page, neither the local school districts nor the DOE exercised any supervision over Perondi, Law or Dunbar during the 1988-1989 school year. It was made clear to these employees that they worked for QEP and they executed employee agreements with QEP. During the 1988-1989 school year Perondi did some work for QEP in the Sweetwater Union High School District and also worked in the South Bay and National School Districts, which he described as elementary districts that feed into the Sweetwater Union High School District. Law worked in Pomona and in the Archdiocese of Los Angeles, and Dunbar worked in Pomona and other districts. They did not work in the Pasadena Unified School District.

QEP’s annual report for the 1988-1989 fiscal year reflected revenue of $1,011,074, and expenses of $1,209,454. During that year Nancy received a salary of $87,200 and benefits of $11,840, and the Honigs received office rental in the amount of $12,000.

Page left QEP’s employment near the end of the 1988-1989 school year. In the 1989-1990 school year Perondi, Law and Dunbar remained in QEP’s employ and were compensated by QEP rather than by DOE through their districts. In that fiscal year QEP reported revenues of $2,031,794 and expenses of $1,884,156. Nancy received a salary of $108,500 and benefits of $10,666, and the Honigs received office rental in the amount of $18,000.

Based upon these facts defendant was charged by indictment with four counts of violating Government Code sections 1090 and 1097, by participating in making state contracts in which he had a financial interest. Count one was based upon contract No. 4127, by which the DOE paid the Fremont Unified School District for the continuation of Page’s salary and benefits while she worked for QEP during the 1986-1987 school year. Count two was based on the extension of contract No. 4127 for the payment of Page’s salary and benefits while she worked for QEP during the 1987-1988 school year. Count three was based upon contract No. 5349, by which the DOE paid the Sweetwater Union High School District for the continuation of Perondi’s salary and benefits while he worked for QEP during the 1988-1989 school year. Count four was based on contract No. 5356, by which the DOE paid the Pasadena Unified School District for the continuation of salaries and benefits to Law and Dunbar while they worked for QEP during the 1988-1989 school year.

In addition to the history of QEP and the contracts in question, the prosecution also established that the contracts at issue arose in an unusual manner. Rather than commencing by application or request and then proceeding through channels up DOE hierarchical levels for ultimate approval, these contracts arose at the highest level of authority. Defendant, as the Superintendent of Public Instruction and Director of Education, instructed his staff to put the contracts in place. It does not appear that the contracts were initiated by any formal or written application or request; rather, they originated through defendant’s oral directives to his DOE staff.

When the DOE makes grant money available, it is customary that school districts and other providers be notified by advertising or other means of the availability of the grant so that they may apply and compete for the funds. But there was no advertising or other notification associated with the contracts at issue here. In general when the DOE seeks to contract with an individual or private entity it is required to submit the proposed contract to public bidding or to obtain a sole-source exemption from the Department of General Services. Since the contracts in question were made, at least nominally, between the DOE and local school districts they were exempt from these requirements and they were not accompanied by public bidding or a substitute process. However, although local school districts were named as contractors under the contracts, they were not expected to do anything other than to pay the contract funds, as salary and benefits, to individuals who would be working for QEP.

During the period in question there was within the DOE a budgeted parenting unit with responsibility over parental involvement activities. The DOE parenting unit did not participate in the contracts at issue. The proposed contracts were not submitted to that unit for its recommendation or approval, they were not prepared or executed by that unit, and that unit did not supervise or monitor the performance of the contracts. The contracts identified Smith, the deputy superintendent, as contract monitor, which was an unusual arrangement. Neither Smith nor anyone else from DOE actually supervised or monitored the performance of the contracts.

During the period at issue here there were a number of organizations besides QEP which were involved in implementing parental involvement programs in schools. None of these organizations received grants, contracts, or other forms of assistance like those provided to QEP. Defendant offered the explanation that QEP was donating resources while the other organizations were not. The record does not show how other organizations operated, but it does establish that QEP did not charge school districts for its services. QEP’s revenues were derived from donations, grants, and private funding as a result of what was termed a massive fundraising effort with Nancy as chief fund-raiser.

Although defendant was not officially involved in QEP, the record is replete with evidence of his informal involvement. He told Tramutola that he and Nancy had started QEP. Tramutola was compensated for participation in early organizational meetings by defendant’s campaign committee, the quality education committee. Defendant participated in the early organizational meetings. As the enterprise developed, QEP’s corporate headquarters were in defendant’s residence and his wife was chief corporate officer. Defendant would, on occasion, attend QEP meetings. Defendant participated in Nancy’s fundraising efforts. And he touted QEP’s program to educators from other states.

Based upon this evidence defendant was found guilty of the four counts charged in the indictment. He appeals from the subsequent order granting him probation. (Pen. Code, § 1237, subd. (a).)

Discussion

We begin with the statutory definitions of the charged crimes. Government Code section 1090 provides: “Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. Nor shall state, county, district, judicial district, and city officers or employees be purchasers at any sale or vendors at any purchase made by them in their official capacity. [^Q As used in this article, ‘district’ means any agency of the state formed pursuant to general law or special act, for the local performance of governmental proprietary functions within limited boundaries.” (Unless otherwise specified, further section references are to the Government Code.)

Section 1097 provides: “Every officer or person prohibited by the laws of this state from making or being interested in contracts, or from becoming a vendor or purchaser at sales, or from purchasing scrip, or other evidences of indebtedness, including any member of the governing board of a school district, who willfully violates any of the provisions of such laws, is punishable by a fine of not more than one thousand dollars ($1,000), or by imprisonment in the state prison, and is forever disqualified from holding any office in this state.”

Before we turn to defendant’s contentions on appeal, we recount the purpose, scope and application of these conflict-of-interest statutes. We caution at the outset, however, that many of the cited cases are civil rather than criminal. Moreover, some of these cases preceded the 1963 addition of the term “financially” to section 1090 and the 1955 addition of the term “willfully” to section 1097. Consequently these cases are not controlling on the scienter or mental state at issue here or on interests which are not financial in nature. Nevertheless, they are instructive on the construction and interpretation of other elements of these statutes.

The conflict-of-interest statutes are based upon “[t]he truism that a person cannot serve two masters simultaneously” (Thomson v. Call (1985) 38 Cal.3d 633, 637 [214 Cal.Rptr. 139, 699 P.2d 316]), which is regarded as a “self-evident truth, as trite and impregnable as the law of gravitation . . . .” (Stockton P. & S. Co. v. Wheeler (1924) 68 Cal.App. 592, 601 [229 P. 1020].)

The duties of public office demand the absolute loyalty and undivided, uncompromised allegiance of the individual that holds the office. (Thomson v. Call, supra, 38 Cal.3d at p. 648; Stigall v. City of Taft (1962) 58 Cal.2d 565, 569 [25 Cal.Rptr. 441, 375 P.2d 289].) Yet it is recognized “ ‘that an impairment of impartial judgment can occur in even the most well-meaning men when their personal economic interests are affected by the business they transact on behalf of the Government.’ ” (Stigall v. City of Taft, supra, 58 Cal.2d at p. 570, quoting United States v. Mississippi Valley Generating Co. (1961) 364 U.S. 520, 549-550 [5 L.Ed.2d 268, 288, 81 S.Ct. 294].) Consequently, our conflict-of-interest statutes are concerned with what might have happened rather than merely what actually happened. (Ibid.) They are aimed at eliminating temptation, avoiding the appearance of impropriety, and assuring the government of the officer’s undivided and uncompromised allegiance. (Thomson v. Call, supra, 38 Cal.3d at p. 648.) Their objective “is to remove or limit the possibility of any personal influence, either directly or indirectly which might bear on an official’s decision . . . (Stigall v. City of Taft, supra, 58 Cal.2d at p. 569, italics in original; see also People v. Vallerga (1977) 67 Cal.App.3d 847, 865 [136 Cal.Rptr. 429]; People v. Watson (1971) 15 Cal.App.3d 28, 39 [92 Cal.Rptr. 860].)

In view of the purposes of our conflict-of-interest statutes, it is well established that their scope is not limited to instances of actual fraud, dishonesty, unfairness or loss to the governmental entity, and criminal responsibility is assessed without regard to whether the contract in question is fair or oppressive. (People v. Darby (1952) 114 Cal.App.2d 412, 426-427 [250 P.2d 743].) Thus, it has been repeatedly held that such matters are irrelevant under section 1090. (Thomson v. Call, supra, 38 Cal.3d at pp. 648-649; People v. Vallerga, supra, 67 Cal.App.3d at p. 865; People v. Watson, supra, 15 Cal.App.3d at p. 39.)

In enacting the conflict-of-interest provisions the Legislature was not concerned with the technical terms and rules applicable to the making of contracts, but instead sought to establish rules governing the conduct of governmental officials. (Stigall v. City of Taft, supra, 58 Cal.2d at p. 569.) Accordingly, those provisions cannot be given a narrow and technical interpretation that would limit their scope and defeat the legislative purpose. (Id. at pp. 569, 571; Millbrae Assn. for Residential Survival v. City of Millbrae (1968) 262 Cal.App.2d 222, 237 [69 Cal.Rptr. 251].) Thus, in Stigall v. City of Taft, supra, where a member of the city council participated in preliminary matters leading to the adoption of a contract but resigned before the formal award of the contract, the court refused to construe the word “made” in a narrow and technical sense and instead held that it encompassed the planning, preliminary discussion, compromises, drawing of plans and specifications and solicitation of bids that led up to the formal making of the contract. (58 Cal.2d at p. 571; see also Thomson v. Call, supra, 38 Cal.3d at pp. 644-645 [successive contracts were considered part of a single multiparty agreement for purposes of section 1090].)

In a similar vein, the term “financially interested” in section 1090 cannot be interpreted in a restricted and technical manner. The law does not require that a public officer acquire a transferable interest in the forbidden contract before he may be amenable to the inhibition of the statute, nor does it require that the officer share directly in the profits to be realized from a contract in order to have a prohibited interest in it. (People v. Vallerga, supra, 67 Cal.App.3d at p. 865; People v. Darby, supra, 114 Cal.App.2d at p. 425.) Rather, “[t]he instant statutes are concerned with any interest, other than perhaps a remote or minimal interest, which would prevent the officials involved from exercising absolute loyalty and undivided allegiance to the best interests of the [state].” (Stigall v. City of Taft, supra, 58 Cal.2d at p. 569.) The fact that the officer’s interest “might be small or indirect is immaterial so long as it is such as deprives the [state] of his overriding fidelity to it and places him in the compromising situation where, in the exercise of his official judgment or discretion, he may be influenced by personal considerations rather than the public good.” (Terry v. Bender (1956) 143 Cal.App.2d 198, 207-208 [300 P.2d 119].) And, “[w]e must disregard the technical relationship of the parties and look behind the veil which enshrouds their activities in order to discern the vital facts. [Citation.] However devious and winding the trail may be which connects the officer with the forbidden contract, if it can be followed and the connection made, a conflict of interest is established.” (People v. Watson, supra, 15 Cal.App.3d at p. 37.)

Moreover, prohibited financial interests are not limited to express agreements for benefit and need not be proven by direct evidence. Rather, forbidden interests extend to expectations of benefit by express or implied agreement and may be inferred from the circumstances. (Thomson v. Call, supra, 38 Cal.3d at p. 645; People v. Deysher (1934) 2 Cal.2d 141, 150 [40 P.2d 259]; People v. Vallerga, supra, 67 Cal.App.3d at p. 867; People v. Darby, supra, 114 Cal.App.2d at p. 430.)

The types of financial interests prohibited by section 1090 are many and varied. We cite only a few representative samples. In Nielsen v. Richards (1925) 75 Cal.App. 680 [243 P. 697], the county superintendent of schools entered into a contract appointing his wife as supervising teacher of rural schools with a salary and expenses. The Court of Appeal concluded that, in view of the mutual obligations of support inherent in a marriage, the superintendent had an interest in the contract even though he had previously agreed that any money earned by his wife under the contract would be her separate property. (Id. at pp. 687, 691.)

In Moody v. Shuffleton (1928) 203 Cal. 100 [262 P. 1095], a county supervisor sold his printing and publishing business to his son and took a promissory note secured by a chattel mortgage in payment. The son then obtained county printing contracts. The Supreme Court held that since the printing contracts could serve to enhance the value of the business, and hence the security of the chattel mortgage, the supervisor had a conflict of interest with respect to the printing contracts. (Id. at p. 105.)

In People v. Darby, supra, 114 Cal.App.2d 412, the defendant member of a local board of education leased his commercial property at a generous rental to an individual who, it could be inferred, acted as an agent for a partnership engaged in the ice cream business. The defendant then participated in official actions that resulted in the partnership’s securing a portion of the district’s ice cream business. The defendant’s interest as landlord in the partnership’s permanency as a tenant of his property was held to be a prohibited interest under our conflict-of-interest laws. (Id. at pp. 429-430.)

In People v. Watson, supra, 15 Cal.App.3d 28, the defendant member of the board of harbor commissioners loaned money to an individual for the purchase of a liquor license which the individual planned to use in connection with a floating restaurant operated by his solely owned corporation. The defendant then participated in the decision to grant the corporation a lease for a harbor berth. The court concluded that the lease would enhance the security for the defendant’s loan and facilitate its prompt repayment, and was thus a prohibited financial interest under section 1090. (15 Cal.App.3d at p. 37.)

In People v. Vallerga, supra, 67 Cal.App.3d 847, the defendant county assessor participated with the former county assessor in demonstrations and meetings by which an assessor from another state was convinced to purchase the county’s computer appraisal program from the county. The former county assessor was paid $6,000 as a consultation fee upon execution of the purchase and he paid $3,000 to the county assessor for his participation. Although the out-of-state assessor had agreed to pay only the former assessor, and the former assessor testified that he had just decided to split the payment and that there had been no understanding whatsoever to pay the county assessor, the court held that the evidence was sufficient to permit the jury to infer a promise to split the fee and that this was a prohibited financial interest under section 1090. (67 Cal.App.3d at p. 867.)

In Fraser-Yamor Agency, Inc. v. County of Del Norte (1977) 68 Cal.App.3d 201 [137 Cal.Rptr. 118], a member of the county board of supervisors was a partner and, upon incorporation, a shareholder in an insurance agency that acted as agent in the procurement of insurance for the county. Although the county supervisor did not share in the commissions from the county’s business and those commissions were not used to defray the agency’s overhead, the court concluded that he had a financial interest within the meaning of section 1090 because he “has and has had an investment in the agency represented by his partnership and shareholder interests. His interest in the agency and in any contracts from which it derives a pecuniary benefit is clearly a financial one because the financial success of the agency inures to his personal benefit. Such success, in turn, enhances the value of [his] interest in the agency.” (68 Cal.App.3d at p. 215.)

In addition to the judicial authorities interpreting section 1090, a significant indication of legislative intent with respect to the scope of section 1090 can be derived by reference to sections 1091 and 1091.5. Section 1090, it has been said, is an embodiment of the common law with respect to conflicts of interest. (Stockton P. & S. Co. v. Wheeler, supra, 68 Cal.App. at p. 597.) The courts construed that provision broadly to include any interest, “other than perhaps a remote or minimal interest,” which might influence official duty. (Stigall v. City of Taft, supra, 58 Cal.2d at p. 569.) In sections 1091 and 1091.5, the Legislature has provided for remote and minimal interests which will not be deemed to be interests within the prohibitive scope of section 1090.

Section 1091 applies to an officer who is a member of a body or board that authorizes, approves or ratifies a contract. Such an officer will not be deemed to be interested in a contract if his or her interest is one of the remote interests set forth in the section, the officer makes full disclosure of the interest, the officer abstains from voting, the officer does not influence or attempt to influence any other member, and the body or board authorizes, approves or ratifies the contract in good faith by a vote of its membership sufficient for that purpose without counting the vote of the officer with the remote interest. Section 1091 is not arguably applicable here since, among other things, defendant did not disclose his interest in the contracts at issue and personally made the decision to create the contracts.

Section 1091.5 provides a list of interests which, based upon the quantity and quality of the interest and the officer’s relationship to the contracting party, are not to be deemed to be prohibited interests within the meaning of section 1090. The list of such interests, which may be termed minimal interests, includes the relationship of landlord and tenant only in limited circumstances which are not applicable here. (§ 1091.5, subd. (a)(4).) The list includes the interest of an officer in a spouse’s employment only where the spouse is an officer or employee of a public agency and has held that position for at least one year prior to the officer’s election or appointment. (§ 1091.5, subd. (a)(6).) The list also provides that under certain circumstances, and provided full disclosure is made, an officer’s interest as a nonsalaried member of a nonprofit corporation or as a noncompensated officer of certain nonprofit, tax-exempt corporations will not be deemed an interest under section 1090. (§ 1091.5, subd. (a)(7) & (8).) Neither these nor any of the other minimal interests set forth in section 1091.5 are arguably applicable in this case.

While the provisions of sections 1090 and 1097 have remained relatively static with few amendments over the years, the Legislature has not been idle. The Legislature has, where it deemed appropriate, altered the scope of section 1090 by amending sections 1091 and 1091.5. For example, in response to the determination that a parent is interested in the earnings of a minor child for personal services (5 Ops.Cal.Atty.Gen. 6 (1945)), the Legislature added subdivision (b)(4) to section 1091, to classify that interest as a remote interest which will not violate section 1090 if the interested officer complies with the disclosure and abstention requirements of section 1091. After the decision in Fraser-Yamor Agency, Inc. v. County of Del Norte, supra, 68 Cal.App.3d 201, the Legislature amended section 1091 to classify as a remote interest the interest of an owner, officer, employee or agent of a firm which provides stockbroker, insurance or real estate services, provided the individual has not and will not receive remuneration, consideration, or a commission as the result of the contract. (§ 1091, subd. (b)(6).) Among other things, the Legislature has classified the interest of an officer or employee of a nonprofit corporation and the interest of a landlord or tenant of the contracting party as remote interests. (§ 1091, subd. (b)(1) & (5).) And, as we have noted, the Legislature has classified as minimal interests under section 1091.5, an interest in a spouse’s employment if the employment is with a public agency and has existed at least one year prior to the officer’s election or appointment, the interest of a nonsalaried member of a nonprofit corporation, and the interest of a noncompensated officer of certain nonprofit, tax-exempt corporations. (§ 1091.5, subd. (a)(6), (7) & (8).)

In light of the scope of section 1090, we find the evidence in support of defendant’s convictions to be ample, even compelling. As we shall explain, he was clearly financially interested in Nancy’s employment and remuneration by QEP, as well as in the rental payments from QEP to the Honigs jointly. As we have noted, it has long been held that a person’s interest in a spouse’s employment and income is an interest within the meaning of section 1090. Although the Legislature has acted to exclude an interest in a spouse’s employment from the scope of section 1090 in certain limited circumstances, those circumstances are not arguably applicable here. (§ 1091.5, subd. (a)(6).) It makes no difference that QEP was a nonprofit corporation, since a position as a member or officer of a nonprofit corporation is excluded from section 1090 only when the position is nonsalaried or noncompensated and may be treated as a remote interest only if the disclosure and abstention requirements of section 1091.5 are met. (§§ 1091, subd. (b)(1), 1091.5, subd. (a)(7) & (8).) And an interest as a landlord may be treated as remote only with disclosure and abstention. (§ 1091, subd. (b)(5).)

Defendant’s interest was clearly substantial. QEP began as a mere shell corporation shortly after defendant’s election and, during his incumbency, grew into a substantial nonprofit organization with millions of dollars of revenue. Nancy was the chief administrative officer of QEP and, as QEP grew, Nancy began to receive substantial and annually escalating compensation in the form of salary and benefits and the Honigs jointly received substantial and escalating rental payments for the corporate offices in their residence. In addition, it would be reasonably likely that QEP’s growing success during the periods in which defendant was providing assistance through DOE contracts would not only inure to his immediate benefit but could provide a source of substantial family income into the indefinite future.

The fact that various school districts were the nominal parties contracting with the DOE does not diminish the force of the evidence. Before the contracts at issue were made by the DOE, the individuals involved, Page, Perondi, Dunbar and Law, were hired by QEP to work for QEP. They executed employment agreements with QEP, reported solely to QEP, and performed only QEP’s work. All of the indicia of employment, save only the source of funding for their compensation, point to QEP as their employer. In considering conflicts of interest we cannot focus upon an isolated “contract” and ignore the transaction as a whole. (Thomson v. Call, supra, 38 Cal.3d at pp. 644-645.) It appears clear that the payment of DOE funds to the school districts, the districts’ payment of those funds to QEP employees in the form of continued salaries and benefits, and the employees’ work for QEP, were in performance of single multiparty agreements. (Id. at p. 644.) In short, defendant simply used the school district contractors as conduits to funnel DOE funds to individuals as compensation for working for his wife’s corporate employer. The use of a third party as a contractual conduit does not avoid the inherent conflict of interest in such a transaction. (Id. at p. 646.)

The fact that QEP did not charge a fee to the districts in which it operated does not exonerate defendant. As we have recounted, in considering alleged conflicts of interest we will look behind the veil which enshrouds the activities of the parties and will find a conflict if the officer is connected to a forbidden transaction, however devious and winding the trail may be. (People v. Watson, supra, 15 Cal.App.3d at p. 37.) Actually, the trail here is not all that devious and winding. QEP did not derive its revenue from school districts, but instead engaged in what was called a massive fundraising effort with Nancy as the primary fund-raiser and with the significant participation of defendant. Without a purpose or a program and without workers in the field attempting to implement the program, QEP’s fundraising efforts would have been severely inhibited and could even have become unlawful. (See § 12580 et seq.; Corp. Code, §§ 6321-6324, 6812.) Thus QEP had to have some workers involved in the field implementing some program in order to maintain its very existence. As QEP established itself and grew, both in terms of its purpose and program and in terms of its assets and revenue through fundraising, Nancy received substantial and continuously escalating salary and benefit payments and the Honigs jointly received substantial and escalating rental payments. During this same period defendant directed his staff to arrange contracts by which DOE funds would be used to pay QEP employees to work for QEP, thus saving QEP the expense. The conflict of interest inherent in that situation is not particularly difficult to perceive. By relieving QEP of the burden of paying its own employees, more funds were available to pay the salary of defendant’s wife and the rent for the use of defendant’s home. The violations of sections 1090 and 1097 are established by the fact of defendant’s financial interest in QEP at the time he made official contracts that directly benefited QEP and indirectly benefited himself and his wife. No plausible explanation or excuse has been advanced to avoid the impact of those facts.

In view of the applicable law and the evidentiary facts established, we must disagree with defendant’s assessment of the case against him. In his opening brief defendant asserts that the benefits derived by QEP and the Honigs from the contracts at issue were remote, unmeasured, incidental and speculative. Defendant refers to the charges as unique and unprecedented and suggests that the evidence was barely, if at all, sufficient. To the contrary, we find the evidence to be relatively straightforward and overwhelming. In the light of the law governing the conflict-of-interest statutes we have just recounted at some length, we turn to defendant’s specific contentions on appeal.

I. Jury Instructions

Defendant launches a series of appellate attacks on the jury instructions. He first contends that reversal is required because the trial court failed to instruct the jury as to one element of the charged offense and totally misinstructed the jury as to a second element. In his view, the prohibited financial interest must have a foreseeable material effect on the public officer’s source of income and thus the court erred in failing to instruct on the element of materiality. Defendant further contends the court’s instruction that the phrase “financially interested” included “the contingent possibility of monetary or proprietary benefit,” and “actual or potential pecuniary benefits directly or indirectly to the state officer,” erroneously lowered the standard from a probability to a mere possibility that the contracts in question would have any financial effect on defendant. Neither contention is meritorious.

A. The Measure of Financial Interest

In instructing the jury the court defined the charged offenses in accordance with sections 1090 and 1097 as follows: “Any state Officer who, acting in his official capacity, who willfully makes or causes to be made a contract in which he has a financial interest is guilty of a violation of Government Code sections 1090 and 1097. [5D In order to prove such a crime, each of the following elements must be proved: [5D (1) that the person is a state officer; [50 (2) that the person acted in his official capacity; [50 (3) that the person knowingly; and [50 (4) willfully made or caused to be made a contract in which he had a financial interest.” The court further instructed on the definitions of knowingly and willfully in accordance with the standard CALJIC instructions and gave a special instruction defining a contract. The court also instructed the jury that the prosecution did not have to prove fraud, dishonesty or loss, or that the contracts were unfair, unjust or inequitable, and that it was not a defense that there was no actual fraud, dishonesty or loss or that the contract was just, fair and equitable.

With respect to prohibited financial interests the court instructed: “The phrase ‘financially interested’ as used in Government Code section 1090 means any financial interest which might interfere with a state officer’s unqualified devotion to his public duty. The interest may be direct or indirect. It includes any monetary or proprietary benefit, or gain of any sort or the contingent possibility of monetary or proprietary benefits. The interest is direct when the state officer, in his official capacity, does business with himself in his private capacity. The interest is indirect when the state officer, or agency he directs, enters into a contract in his or its official capacity with an individual or entity, which individual or entity, by reason of the state officer’s relationship to the individual or entity at the time the contract—at the time the contract is entered into, is in a position to render actual or potential pecuniary benefits directly or indirectly to the state officer based on the contract the individual or entity has received.” This instruction has been judicially approved for use in prosecutions for violations of sections 1090 and 1097. (People v. Darby, supra, 114 Cal.App.2d at pp. 433-436, especially fn. 4; see also People v. Vallerga, supra, 67 Cal.App.3d at p. 867; People v. Watson, supra, 15 Cal.App.3d at pp. 37-38.)

The court also instructed: “An official has a financial interest in a contract within the meaning of Government Code section 1090 if it is reasonably foreseeable that the contract may have a financial affect [sic], distinguishable from its affect [sic] on the public generally, on any source of income of the official.” This instruction was based upon a special instruction initially requested by defendant with which the court disagreed. The instruction as originally requested provided: “An official has a financial interest in a contract within the meaning of Government Code section 1090 if it is reasonably foreseeable that the contract will have a material financial effect, distinguishable from its effect on the public generally, on any source of income of the official.” When the trial court indicated that it would not give the instruction as requested, defendant modified it to the form in which it was given.

Defendant contends that the compelled modification of his requested instruction was erroneous in that it substituted “may have” for “will have" and omitted the qualifying word “material.” In defendant’s view, to be financially interested in a contract within the meaning of section 1090 it must be reasonably foreseeable that the contract will have a financial effect on a source of income of the official and the effect must be material, meaning “a financial effect of real importance or great consequence,” or “a significant effect on a source of income.”

We reject defendant’s suggested interpretation of section 1090. This section has long been interpreted as prohibiting an official from having any financial interest in a contract, whether direct or indirect. (See Stigall v. City of Taft, supra, 58 Cal.2d at p. 569.) Although the Legislature amended the statute in 1963 to clarify that it was concerned with financial interests, the Legislature has never seen fit to qualify the proscribed financial interests with modifiers such as “material,” “substantial,” “significant,” or “direct,” “certain,” “probable,” and the like. (See People v. Watson, supra, 15 Cal.App.3d at p. 34, fn. 1.)

The adoption of defendant’s suggested interpretation of section 1090 would go a long way toward evisceration of the statute’s prophylactic purpose. In United States v. Mississippi Valley Generating Co., supra, 364 U.S. 520 [5 L.Ed.2d 268], in a decision our state courts have often relied upon, the United States Supreme Court considered a federal conflict-of-interest statute similar to section 1090. There the high court noted that the federal statute was preventative in nature and was aimed at what might have happened rather than what actually happened. (364 U.S. at p. 549-550 [5 L.Ed.2d at p. 288].) Its purpose was to eliminate temptation and to this end spoke in broad, absolute terms, thus establishing “an absolute standard of conduct.” (Id. at pp. 550, 559 [5 L.Ed.2d at pp. 288-289, 294].) The court rejected a contention that the agent in that case was not “interested” in the government contract at issue because his firm had no more than a mere hope that it would receive future financing work as a result of the government contract. By the “logic of circumstances” the agent’s firm might be offered financing work if the government contract were made and these circumstances placed the agent “in the ambivalent position at which the statute is aimed.” Since the contract sponsors were in a position to affect the fortunes of the agent and his firm, he would be at least subconsciously tempted to ingratiate himself by acceding to their demands, and by placing himself in this “ambiguous situation,” the agent failed to honor the objective standard of conduct required by the statute. (Id. at p. 557 [5 L.Ed.2d at pp. 292-293]. See also Thomson v. Call, supra, 38 Cal.3d at pp. 644-645.)

Section 1090, like the federal statute at issue in United States v. Mississippi Generating Co., supra, establishes an objective and absolute standard of conduct for public officials. In this context the California Supreme Court long ago noted: “ ‘For even if the honesty of the agent is unquestioned, and if his impartiality between his own interest and his principal’s might be relied upon, yet the principal has in fact bargained for the exercise of all the skill, ability, and industry of the agent, and he is entitled to demand the exertion of all this in his own favor.’ ” (San Diego v. S. D. & L. A. R. R. Co. (1872) 44 Cal. 106, 113.) For over a hundred years our courts have consistently held that our conflict-of-interest statute, now embodied in section 1090, is intended to enforce the government’s right to the absolute, undivided, uncompromised allegiance of public officials by proscribing any personal interest. (See Thomson v. Call, supra, 38 Cal.3d at p. 648; Stigall v. City of Taft, supra, 58 Cal.2d at p. 569.) To this preventative end, section 1090 establishes a broad, objective proscription which is violated when an official places himself in an “ambivalent position” or an “ambiguous situation,” by having any financial interest in an official contract, and which does not depend upon the actuality of a personal influence on his decisions.

What is material to some persons may be regarded as immaterial by others and some public officials may be tempted by relatively trivial sums while others may be incorruptibly resistant to the promise of even significant gain. But section 1090 is not directed at the actuality of significant personal influence; it is instead directed at the mere possibility of any such influence. (Stigall v. City of Taft, supra, 58 Cal.2d at p. 569.) To engraft onto the statute by judicial fiat relative terms such as material, substantial, significant and the like, would make the standard less than absolute, would inject questions of actuality of improper influence into its application, and would open the door to official contracting from the “ambivalent position[s]” and “ambiguous situation[s]” which the statute seeks to prevent. Such a result would be contrary to the terms of the statute and to the long-standing judicial interpretation of those terms and we perceive no reason to undertake such a fundamental reconstruction of the statute.

We also reject defendant’s assertion that the court erred in requiring him to modify his instruction to require that it be reasonably foreseeable that the contract “may have” rather than “will have” a financial effect on a source of income. The government’s right to the absolute, undivided allegiance of a public officer is diminished as effectively where the officer acts with a hope of personal financial gain as where he acts with certainty. (People v. Watson, supra, 15 Cal.App.3d at p. 38; People v. Darby, supra, 114 Cal.App.2d at p. 435.) Accordingly, our courts have long rejected assertions that the scope of section 1090 is limited to direct or certain profits. (Thomson v. Call, supra, 38 Cal.3d at p. 644; People v. Vallerga, supra, 67 Cal.App.3d at p. 865; People v. Darby, supra, 114 Cal.App.2d at pp. 425, 435.) The trial court properly instructed the jury that a financial interest within the meaning of section 1090 may be direct or indirect and includes the contingent possibility of monetary or proprietary benefits. (People v. Vallerga, supra, 67 Cal.App.3d at p. 865; People v. Watson, supra, 15 Cal.App.3d at p. 37; People v. Darby, supra, 114 Cal.App.2d at p. 435.) The court was not required to contradict this instruction by interjecting questions of directness and certainty that find no place in the statute or decisional authorities.

Defendant asserts that his requested instruction, in its original form, was adapted from section 87103, a part of the Political Reform Act of 1974 (§ 81000 et seq., hereafter referred to as the PRA), and inferentially claims that the PRA definition must be regarded as having superseded prior judicial constructions of section 1090. Indeed, his whole argument that the prohibited interest in the charged crimes must have a material financial effect on the income of the official or his family rests on the claim that the PRA statutes are in pari materia with the charged conflict-of-interest statutes. From this premise, defendant reasons that the phrase “financially interested” in section 1090 must be given the same definition as “financial interest” in section 87103 of the PRA, which requires a foreseeably “material financial effect” on the official or his family. Consequently, so his argument goes, section 1090 must be construed to mean the contract in question must “have a foreseeable material effect on a public official’s source of income before the official is deemed to be financially interested in the contract.” (Italics omitted.) The claim cannot withstand scrutiny.

The phrase “in pari materia” means “ ‘[o]f the same manner; on the same subject’ ” (Altaville Drug Store, Inc. v. Employment Development Department (1988) 44 Cal.3d 231, 236, fn. 4 [242 Cal.Rptr. 732, 746 P.2d 871]), and the rule of statutory construction governing statutes in pari materia describes a process of interpretation by reference to related statutes. “Other statutes dealing with the same subject as the one being construed— commonly referred to as statutes in pari materia—comprise another form of extrinsic aid useful in deciding questions of interpretation. However, in line with the basic rule on the use of extrinsic aids, other statutes may not be resorted to if the statute is clear and unambiguous.” (2B Sutherland, Statutory Construction (5th ed. 1992) § 51.01, p. 117.)

“ ‘Statutes are considered to be in pari materia when they relate to the same person or thing, to the same class of persons [or] things, or have the same purpose or object. Characterization of the object or purpose is more important than characterization of subject matter in determining whether different statutes are closely enough related to justify interpreting one in light of the other.’ ’’ (Walker v. Superior Court (1988) 47 Cal.3d 112, 124, fn. 4 [253 Cal.Rptr. 1, 763 P.2d 852], quoting 2A Sutherland, Statutory Construction (4th ed. 1984) §51.03, p. 467.) Section 1090 and section 87100 of the PRA are two of the most important statutes in California addressing the problem of conflict of interest by public officials and employees. They both deal with a relatively small class of people, public officers and employees, and share the same purpose or objective, the prevention of conflicts of interests, and hence can fairly be said to be in pari materia. (See 65 Ops.Cal.Atty.Gen. 41, 57 (1982).)

When statutes are in pari materia, they should be construed together as one statute. (City of Huntington Beach v. Board of Administration (1992) 4 Cal.4th 462, 468 [14 Cal.Rptr.2d 514, 841 P.2d 1034].) So interpreted, “. . . all parts of a statute should be read together and construed in a manner that gives effect to each, yet does not lead to disharmony with the others.” (Ibid.)

But this rule of statutory construction does not mean, however, that one statutory definition may be ignored and replaced by a different one. It means only that “. . . code sections in pari materia must harmonized with each other to the extent possible . . . (Pacific Southwest Realty Co. v. County of Los Angeles (1991) 1 Cal.4