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P. v. Ghazey

P. v. Ghazey

P. v. Ghazey

Filed 12/2/09 P. v. Ghazey CA1/3


California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.





Plaintiff and Respondent,



Defendant and Appellant.


(Alameda County

Super. Ct. No. H29343A & B)

William Ghazey appeals following his conviction by a jury of four counts of making false statements to the State Compensation Insurance Fund (State Fund). He argues that if the conviction is not reversed entirely, it should be reversed in part. He contends: (1) Insurance Code[1] section 11880, that was the statutory basis for all four counts, could not apply to two of the counts because the acts alleged were not within the scope of conduct prohibited by section 11880 as it was then in effect; (2) there were errors in the jury instructions; (3) Ghazey was wrongly prohibited from introducing evidence of the previous testimony and acquittal of his business associate on the same charges; (4) a workers compensation investigator was improperly permitted to present hearsay evidence consisting of facts he discovered from third party sources during the investigation of this case; (5) the court improperly intruded into the presentation of the evidence when it questioned several witnesses; and (6) even if no single error warrants reversal, their cumulative effect compels it. We conclude there was no error, and affirm.


Ghazey was the president of Fastemps/Fastek, a temporary employee staffing service he founded in 1985.[2] Ghazey hired Frank Rojas as a technical recruiter in 1987, and Rojas later became the companys Southern California branch manager. In 1991, the workers compensation coverage for Fastemps/Fastek was cancelled, and the company was not issued another workers compensation policy until 1998. In 1991, Rojas also obtained a workers compensation policy with State Fund in the name of CP Services, a new company that he established at Ghazeys direction, after Ghazey had trouble obtaining workers compensation insurance for Fastemps/Fastek.

State Fund is sometimes referred to as the compensation insurer of last resort because it is set up under state law to provide workers compensation insurance to those businesses that cannot obtain it elsewhere. Rojas went to State Fund for insurance because Ghazey knew of the Funds duty to insure and he told Rojas it would be the best source of insurance for a new business.

As part of its rate-setting process, State Fund annually audits its insureds businesses to determine their actual loss or claim experience. The calculation of a businesss workers compensation premium is based on a three-part formula. The premium formula factors include a monetary insurance rate for specific job categories that reflects the frequency of injury that historically arises in each specified category, an employers total payroll for all workers in each such job category, and an experience modifier that takes into account the insured companys safety record. The experience modifier may be calculated for a new company on the basis of its predecessors claims history when the new company is formed as a result of a merger or consolidation, or where the old and new company share common ownership. The experience modifier is determined as a result of an annual audit, and an insureds workers compensation premium may be affected by the results.

In 1995 and 1996, State Fund conducted an audit of CP Services to determine the rate for the 1994-1995 workers compensation policy period. State Fund Investigator Don Knutsen requested information from Frank Rojas about the nature of CP Servicess employees job responsibilities, and the relationship between CP Services and Fastemps/Fastek. Rojas provided the information in a series of four letters. The letters generally asserted that CP Services was a separate and independent company from Fastemps/Fastek and wholly owned by Rojas. He said the vast majority of [CP Services] employees have been sitting at computer terminals with a keyboard, a mouse, and sometimes a telephone. Other information developed in Knutsens investigation suggested that CP Services and Fastek may have been the same company, and that a significant number of the employees covered by the policy were engaged in job duties that were different than Rojas reported and carried a higher risk of injury. If this information were true, CP Services should have been charged a higher workers compensation premium.

Ghazey and Rojas were charged with unemployment and workers compensation insurance fraud. They were tried together. Rojas was acquitted on all counts. Ghazey was acquitted on one count, but the jury was unable to reach a verdict on the remaining charges. Charges were refiled against Ghazey, and he was retried on four counts of making a false or fraudulent statement in order to obtain insurance from the State Fund at less than the proper rate. Each count was based on one of the four letters sent by Rojas to State Fund during the audit of the CP Services policy.

The prosecution argued that the letters misrepresented the job classifications of CP Services employees and CP Servicess status as their employer, both factors that affected the calculation of the premium for the 1994-1995 workers compensation policy.[3]

Although the prosecution presented numerous witnesses from State Fund, Fastemps/Fastek, and the companys other workers compensation insurers, Rojas was the principal witness who provided the details of Ghazeys scheme. Rojas described CP Services as a paper company, and said that Fastemps/Fastek and CP Services were really not separate entities. While Rojas knew CP Services was formed for a financial reason, he was not certain that it was for the purpose of paying reduced workers compensation premiums. Rojas applied to State Fund for workers compensation for CP Services as Ghazey directed, and he listed his home address and phone number as the business location on the application just as Ghazey instructed him. The two chose the name CP Services because the name would reflect hiring computer programming related personnel, and such personnel would be less costly to insure for workers compensation.

State Fund audited the workers compensation policies issued to CP Services for 1992, 1993, and 1994. Rojas would typically respond to requests for information during the State Fund audits after calling Ghazey or another employee of Fastemps/Fastek to relay the information request. They would send Rojas the responsive information, and he would provide it to State Fund. The four letters that were the basis for the charges against Ghazey were sent by Rojas in response to requests made by State Fund during the audits.

Three of the letters were written by Ghazey. Rojas received the text and the enclosures, transferred the text onto CP Services letterhead and delivered the letters to State Fund. The remaining letter was prepared by Rojas based upon information provided to him by Ghazey, and was sent to Ghazey for his review before Rojas sent it to State Fund. Each of the letters contained false statements about the job duties of CP Servicess employees, and the separate identity of CP Services from Fastemps/Fastek.

Ghazey testified in his own defense.[4] He described CP Services as the payroll company and the employer of record for Fastemps/Fastek employees, and claimed to have no managerial involvement with CP Services. It was Frank [Rojas]s company. Ghazey claimed that CP Services was created because of financial pressures experienced by Fastek/Fastemps, and that firms difficulty in obtaining workers compensation insurance. The plan was that CP Services would be a contingency against possible closure of Fastemps/Fastek or its Southern California office. CP Services would have taken over Fastemps/Fasteks employees and marketed them as its own. But the need to employ this strategy never arose, so Ghazey considered CP Services the payroll company for Fastemps/Fastek after August 1991. Ghazey also testified that payroll checks were issued by Fastemps/Fastek after 1991, when CP Servicess checks were returned for insufficient funds. Even though employees were paid by Fastemps/Fastek, CP Services continued to make payments to State Fund in its own name because [w]e werent concerned about those checks bouncing.

Ghazey claimed that he reviewed the letters Rojas sent to State Fund at Rojass request. He did not believe any statements in the letters would affect the cost of workers compensation insurance. According to Ghazey, the relationship between CP Services and Fastemps/Fastek could not have anything to do with rates or premium for workers compensation insurance, because CP Services stood on its own. It was a separate company. On cross-examination, although Ghazey acknowledged there was a very small savings in the short run when Fastemps/Fastek employees were covered by CP Servicess workers compensation policy, any savings would have been repaid in later years because [i]ts a self-regulating system, based on your loss ratio, and [i]t comes out in the wash . . . .

The jury convicted Ghazey on all four counts of making false statements to State Fund in violation of section 11880. His motion for a new trial was denied. The court suspended imposition of sentence and placed Ghazey on probation with conditions, including service of a 180-day county jail sentence, and payment of $239,710 in victim restitution. Ghazey timely appealed.


A. Application of Section 11880 as Enacted in 1991 to Counts One and Two

Two of the letters on which Ghazeys conviction is based were written in 1995. The version of section 11880 in effect at that time provided: Any person who willfully misrepresents any fact in order to obtain insurance from the fund at less than the proper rate for that insurance shall be punished by imprisonment in county jail for one year, or in the state prison, for two, three, or five years, or by a fine not exceeding fifty thousand dollars ($50,000), or double the value of the fraud, whichever is greater, or by both imprisonment and fine. ( 11880, subd. (a), as amended in 1991.) (Stats. 1991, ch. 116, 21, p. 695; Stats. 1991, ch. 934, 12, p. 4228.)

Ghazey says that because this version of the statute proscribed only false statements made in order to obtain insurance at less than the proper rate, his conduct did not violate the law. The scope of the statute, he argues, did not reach statements made in response to an audit of an issued policy, such as those contained in the letters that formed the bases for counts one and two. He says that the statute punishes misrepresentations made to procure insurance, not those made when a policy has already issued. The trial court rejected Ghazeys argument, and so do we.

Ghazey argues that the changes to section 11880 enacted in 1995 make his point. He says they were enacted for the very purpose of criminalizing statements like those charged against him in counts one and two. Before the 1995 amendments became effective on January 1, 1996, Ghazey argues, the statute did not reach statements . . . made by an employer after his insurance policy had been obtained. The 1995 amendment rewrote section 11880, subdivision (a) to provide in relevant part: It is unlawful to make or cause to be made any knowingly false or fraudulent statement, whether made orally or in writing, of any fact material to the determination of the premium, rate, or cost of any policy of workers compensation insurance issued or administered by the State Compensation Insurance Fund for the purpose of reducing the premium, rate, or cost of the insurance. (Stats. 1995, ch. 885,  5, p. 6753.) But the limited legislative history Ghazey relies upon provides no significant support for his argument. Our review confirms the trial courts observation that even if the statute could be construed as ambiguous, resorting to the legislative history for clarification is of no assistance here. (See J.A. Jones Construction Co. v. Superior Court (1994) 27 Cal.App.4th 1568, 1578 [the wisest course is to rely on legislative history only when that history itself is unambiguous].)

Ghazey cites the California Assembly Floor Analysis of the Senate bill proposing the 1995 amendment, which states: Proponents argue the bill is necessary in order to make premium fraud language more specific and to close potential loopholes in existing law that would permit some fraud perpetrators to escape prosecution. This bill would authorize the prosecution of employers who misrepresent their payrolls to insurers after they have obtained coverage. (Third Reading Analysis of Sen. Bill No. 1053 (1995-1996 Reg. Sess.) pp. 2-3.) But the Floor Analysis does not suggest that misrepresentations affecting premium calculation made during an audit were outside the scope of the pre-1995 version of section 11880. We do not read the floor report as a legislative declaration that the statute does not reach the acts charged here or that any such loopholes in fact existed. Rather, the floor report leads us to conclude that the amendment to section 11880 was intended to clarify that misrepresentations affecting the premiums charged for workers compensation insurance are illegal. The circumstances surrounding a bills enactment may indicate the Legislatures intent to clarify the true meaning of a statute rather than to effect a material change. (See People v. Robertson (2003) 113 Cal.App.4th 389, 393 [citing Martin v. California Mut. B. & L. Assn. (1941) 18 Cal.2d 478, 484].) Such is the case here.

Ghazeys reply brief also argues that his position is supported by the following statement from the Legislative Counsels Digest referring to the 1995 amendments: Under existing law, it is a crime for any person to willfully misrepresent any fact in order to obtain workers compensation insurance at less than the proper rate. [] This bill would instead provide that it is unlawful to make or cause to be made any knowingly false or fraudulent statement of any fact material to the determination of the premium, rate, or cost of any policy of workers compensation insurance for the purpose of reducing the premium, rate, or cost of the insurance. By changing the definition of a crime, the bill would impose a state-mandated local program. (Legis. Counsels Dig., Sen. Bill No. 1053 (1995-1996 Reg. Sess.) 5 Stats. 1995, Summary Dig., pp. 382-383.)[5] But the Legislative Counsels reference to changing the definition of a crime is made in its discussion of the fiscal impact of the bill, and does not state whether any particular changes were designed to reach misrepresentations made following issuance of a policy, or that such misrepresentations were not within the scope of the pre-1995 statute.

Ghazey also says his statutory interpretation is supported by the scheme of the original Workmens Compensation Act promulgated in 1913. The act imposed misdemeanor punishment for [a]ny person who wilfully misrepresents any fact in order to obtain insurance at less than the proper rate for such insurance, or in order to obtain any payments out of such fund, but it provided only civil penalties in the case of [a]ny employer who shall wilfully misrepresent the amount of the pay roll upon which his premium under this act is to be based . . . . (Stats. 1913, ch. 176,   49-50, p. 305.) Ghazey argues the penalty in the original act is significant because it expressly exempted from criminal liability employers who made misrepresentations to avoid the proper insurance rate. But here Ghazey misrepresented the classification of his employees and the history of the company that employed them, not the amount of his companys payroll. The civil penalty provision in the original act is irrelevant because it would not apply to Ghazeys conduct.

Finally, to argue that section 11880 as it existed in 1995 should not apply to his conduct, Ghazey relies upon the rule of lenity whereby a court is to resolve doubts about a statutes meaning in favor of the defendant. But  [t]he rule [of lenity] applies only if the court can do no more than guess what the legislative body intended; there must be an egregious ambiguity and uncertainty to justify invoking the rule.  (People v. Avery (2002) 27 Cal.4th 49, 58). There is no such egregious ambiguity here that would justify application of the rule.[6]

Ghazeys interpretation of section 11880 emphasizes the procurement of workers compensation insurance rather than its cost. The trial court correctly observed that [Ghazeys] interpretation of the plain meaning of the statutewhich would limit prosecution to statements made only at the time of initial application or before the policy is issuedwould result in an unreasonable and absurd result in light of the manner in which workers compensation rates are calculated. Our duty is to  select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences. (People v. Rubalcava (2000) 23 Cal.4th 322, 328.) It also seems unlikely to us that the Legislature would proscribe as criminal only those misrepresentations that are made to procure workers compensation coverage when the State Fund is duty bound to provide it. The plain language of section 11880 as it existed before the 1995 amendments proscribes misrepresentations of fact affecting the cost of workers compensation insurance whenever such misrepresentations are made by an insured to the State Fund.

B.Jury Instructions

Ghazey argues the trial court committed prejudicial error when it instructed the jury. He claims the court should have provided specific instructions on materiality and unanimity. He also says the court erred when it declined to give a pinpoint instruction that he requested on the effect of a defendants good faith belief in his actions, and instead addressed the issue by giving a CALJIC instruction. There was no error in the instructions.

In reviewing any claim of instructional error, we must consider the jury instructions as a whole, and not judge a single jury instruction in artificial isolation out of the context of the charge and the entire trial record. [Citations.] When a claim is made that instructions are deficient, we must determine whether their meaning was objectionable as communicated to the jury. If the meaning of instructions as communicated to the jury was unobjectionable, the instructions cannot be deemed erroneous. [Citations.] The meaning of instructions is no longer determined under a strict test of whether a reasonable juror could have understood the charge as the defendant asserts, but rather under the more tolerant test of whether there is a reasonable likelihood that the jury misconstrued or misapplied the law in light of the instructions given, the entire record of trial, and the arguments of counsel. (People v. Dieguez (2001) 89 Cal.App.4th 266, 276.)

A defendant has a constitutional right to have the jury determine every material issue presented by the evidence. [Citations.] Even in the absence of a request, a trial court must instruct on the general principles of law relevant to the issues raised by the evidence; that is, those principles that are closely and openly connected with the facts before the court, and which are necessary for the jurys understanding of the case. [Citations.] On the other hand, a trial court may refuse to give an entirely accurate instruction if it is duplicative or there is no evidence to support it, and may modify any proposed instruction so long as the modifications are themselves correct and pertinent to the issues. [Citations.] [] There is no error in a trial courts failing or refusing to instruct on one matter, unless the remaining instructions, considered as a whole, fail to cover the material issues raised at trial. . . . (People v.Dieguez, supra, 89 Cal.App.4th at p. 278.)

1. Materiality

Ghazeys claim that the court was required to instruct the jury on materiality relates only to the instructions given on counts three and four. Both counts were premised upon section 11880, subdivision (a) as it was amended in 1995. As amended, the statute criminalizes misrepresentations material to the determination of premium, rate or cost of a policy. . . . Because the statute proscribes material misrepresentations, Ghazey says the court was required to instruct on the meaning of materiality.

The jury instructions on counts three and four followed the precise language of section 11880, subdivision (a).[7] (See People v.Dieguez, supra, 89 Cal.App.4th at p. 278.) The court listed the elements that must be proved beyond a reasonable doubt to show a violation of the statute, including that the fact [falsely stated by the defendant was] material to the determination of premium, rate, or cost of any policy of workers compensation insurance issued or administered by State Compensation Insurance Fund. The cases Ghazey relies upon to argue the trial court was required to give a separate materiality instruction impose no such requirement under the circumstances presented here.

In People v. Kobrin (1995) 11 Cal.4th 416, our Supreme Court concluded that materiality was an element of the crime of perjury to be submitted to the jury, and the trial court had erred when it determined the materiality of the defendants statements as a matter of law. (Id. at pp. 426-428, 430.) Here, on the other hand, whether Ghazeys statements were material was determined by the jury as the trial court instructed, and there was no violation of the principles enunciated in Kobrin.

People v. Feinberg (1997) 51 Cal.App.4th 1566, is another perjury case. There the jury was initially instructed a person is guilty of perjury  who declares under penalty of perjury and willfully states as true any material matter which is false, and which such person knows to be false . . . .,  but the elements of perjury the jury was required to find proven did not include that the statement be material, and the jury instruction did not define materiality. (Id. at pp. 1573, 1576.) The Feinberg court noted the term  material  has a specialized meaning within the context of a perjury charge, and the test for materiality in that context has been stated as whether the statement or testimony might have been used to affect [the proceeding in or for which it was made]  [citation] or whether the statement could probably have influenced the outcome of the proceedings.  (Id. at p. 1575.) Where the terms used in an instruction have a   technical meaning peculiar to the law[,]   the trial court has a sua sponte duty to give instructions defining the terms. (Id. at pp. 1575-1576.)[8]

The Feinberg court concluded the perjury instruction given in that case was inadequate, but found the error harmless, because although the jury was not given a legal definition of the term material[, a]pplying a common definition of the term, the jurors would have had to conclude that the statement had real importance or great consequences, a definition quite similar to the legal one.[9](People v. Feinberg, supra, 51 Cal.App.4th at p. 1576; see also People v. Rubio (2004) 121 Cal.App.4th 927, 932-933 [The relevant definition of material [in a perjury case] is important, essential, or pertinent (to the matter under discussion) ].)

Here, the jury was instructed that it was required to find, beyond a reasonable doubt, that Ghazey made false statements of fact that were material to the determination of premium, rate, or cost of a policy of workers compensation insurance . . . . This instruction guided the jurys consideration of materiality in a far more particular way than the perjury instruction considered in Feinberg, because the jury had to conclude the false statements of fact were material not simply in some abstract sense, but material to the determination of premium, rate, or cost. Applying a common definition of the term, the jurors would have had to conclude that the statement had real importance or great consequences [to the determination of premium, rate or cost]. (People v.Feinberg, supra, 51 Cal.App.4th at p. 1576; see also People v. Gillard (1997) 57 Cal.App.4th 136, 152 [materiality of false statements to obtain insurance benefits is met if the statements convey information on subjects which are germane or reasonably relevant to the insurers investigation and which could bear directly and importantly on the investigation].)

As the court noted when it denied Ghazeys new trial motion, [t]he lack of materiality, at least defendants belief in that regard, was argued to the jury, and it rejected the defense. The jury was adequately instructed on the elements of insurance premium fraud, including materiality, and there is no reasonable likelihood that it misunderstood or misapplied the instructions. Because we find no error in the jury instruction, we need not consider whether the alleged error was also harmless.

2. Unanimity

Ghazey also argues the trial court was required to instruct the jury, sua sponte, on unanimity, because the prosecutor presented evidence that each of the letters supporting a single count contained multiple false statements.[10] He says that he offered different defenses to different claims of misrepresentation. The representations in the letters regarding composition of the CP Services workforce, he argued, were either true or immaterial, and the claims about CP Servicess status were either true or made at Rojass request. Because he had different defenses to different claims, Ghazey says the jury was required to determine which claims of misrepresentation were proven by unanimous verdict. Thus, Ghazey asserts [t]he failure to elect which statement constituted the actus reus in each count triggered the trial courts sua sponte duty to issue a specific unanimity instruction. We disagree.

[W]hen the evidence suggests more than one discrete crime, either the prosecution must elect among the crimes or the court must require the jury to agree on the same criminal act. (People v. Russo (2001) 25 Cal.4th 1124, 1132.) On the other hand, no unanimity instruction is required when the acts alleged are so closely connected as to form part of one continuing transaction or course of criminal conduct. (People v. Dieguez, supra, 89 Cal.App.4th at p. 275; see also People v. Russo, supra, 25 Cal.4th at p. 1135 [unanimity as to exactly how the crime was committed is not required].)

Dieguez rejected an argument that the trial court was required to instruct the jury sua sponte that in order to find [the defendant] guilty of making a false workers compensation claim . . ., all the jurors must agree as to the statement or representation upon which they relied to base that conviction. (People v.Dieguez, supra, 89 Cal.App.4th at p. 274.) In Dieguez, the prosecutor argued the defendant could be found guilty if any of a series of statements he made to a doctor during a single medical appointment regarding his medical history and physical condition was in fact false, while the defendant argued that each false statement was the result of an innocent mistake in communication. (Id. at p. 275.) The court applied the continuous transaction or course of criminal conduct rule to conclude that: Each of the false statements alleged and relied upon by the prosecution were so closely connected as to form part of one continuing transaction. All the statements were made at the same appointment . . .; they were successive, compounding, and interrelated one to another; they were all aimed at the single objective of obtaining workers compensation benefits; and they were barred from multiple punishment by Penal Code section 654. (Ibid.)

Here, the trial court correctly concluded that the continuous course of conduct rule applied. Each count was based on a single letter that contained multiple statements that were successive, compounding, and interrelated to each other concerning the nature of the workforce and the relationship between CP Services and Fastemps/Fastek.

The defenses that Ghazey raised to the prosecutors arguments that each letter contained misrepresentations or omissions about the ownership of CP Services and its relationship to Fastek, on the one hand, and the nature of the companies workforce, on the other were not as distinct as Ghazey claims. Moreover, Ghazey did not argue the truth of all statements in the letters. The statements regarding the composition of the workforce, for example, were defended at least in part on the basis that they were not material. There was also substantial overlap between Ghazeys attempted explanations,[11] and the trial court properly concluded the statements made in the letters were successive, compounding, and interrelated to each other. The prosecutor argued, for example, that both types of misrepresentations were made with the intent . . . to influence the premium, because . . . the premium is based in part [on] what the workers do, and it is based in part [on] who the company is and the companys history. Ghazey also testified collectively regarding his beliefs that the relationship between CP Services and Fastek and any inadvertent misclassification of workers were not material to the determination of the premiums. Nor does Ghazey dispute the Attorney Generals assertion that the two types of misrepresentations worked hand in glove. [12] The trial court was not required to give a sua sponte unanimity instruction under these circumstances.[13] (See People v.Dieguez, supra, 89 Cal.App.4th at pp. 274-276.)

3. Pinpoint Instruction on Defendants Good Faith Belief

Ghazey requested the following pinpoint instruction: The Defendant merely making a statement which is found to be false and by which he intended to gain benefits is not unlawful. The prosecution must prove beyond a reasonable doubt that the Defendant did not have a good faith belief that the statement was true. It does not matter that Defendants good faith belief may have been unreasonable. The court declined to give Ghazeys requested instruction and instead gave CALJIC No. 4.35 regarding ignorance or mistake of fact.[14] The court correctly advised defense counsel that under CALJIC No. 4.35 he could argue that Ghazeys good faith belief in his representations to State Fund was a defense even if his belief was unreasonable.

When it denied Ghazeys new trial motion, the trial court further explained its determination that CALJIC No. 4.35 was a more accurate statement of the law and fairly put before the jury the defendants claim that his actions and conduct were not motivated by any intent to improperly influence the proper calculation of the cost of insurance.

Ghazey contends he was entitled to the requested pinpoint instruction under the authority of People v. Sears (1970) 2 Cal.3d 180 and its progeny because the instruction fit the evidence that would point to a doubt about Ghazeys guilt. But the court can  properly refuse [a pinpoint] instruction offered by the defendant if it incorrectly states the law, is argumentative, duplicative, or potentially confusing [citation], or if it is not supported by substantial evidence.  (People v. Hovarter (2008) 44 Cal.4th 983, 1021.)

Just before the court gave CALJIC No. 4.35, the jury was instructed that the prosecution was required to prove, beyond a reasonable doubt, that Ghazey knowingly made a false or fraudulent statement of fact, and that he acted with the specific intent to reduce the premium. Under the instructions, if the jury had believed Ghazeys testimony, his mistaken good faith belief in the truth of his statements, even if unreasonable, would have provided him a defense. [15]

In light of the trial courts decision to give CALJIC No. 4.35 and the standard instruction on the prosecutions burden to prove Ghazeys guilt beyond a reasonable doubt, his requested pinpoint instruction was unnecessarily duplicative. [B]ecause the pattern instructions given to the jury adequately covered the same ground as defendants special instruction, we cannot conclude defendant was denied the right to have the jury consider his defense theory. (People v.Hovarter, supra, 44 Cal.4th at p. 1022.)

C. Exclusion of Evidence Regarding Rojass Credibility

Ghazey wanted to confront Rojas with evidence that Rojas was acquitted in the first trial, and to examine Rojas about the effect the acquittal may have had on his motivation to lie. Ghazey also wanted to explore with Rojas certain statements made to Rojas by one of his former attorneys, and suggested that the statements would have shown Rojas was coached to provide testimony that was damaging to Ghazey. The trial court excluded from evidence the fact of Rojass acquittal in the first trial, and did not allow Ghazey to examine Rojas on the content of statements made to him by one of his attorneys. Ghazey claims that he was unconstitutionally denied the ability to present a complete defense because of these trial court rulings that unduly restricted his cross-examination. We will first address the exclusion of the fact that Rojas was acquitted in the first trial.

1. Rojass Acquittal

Ghazey argues that it was critical he be allowed to confront Rojas with the fact of his earlier acquittal. He says Rojas was freed by his acquittal to make more damaging statements, true or false, about what he did in concert with Ghazey because he had no fear that the jury hearing those statements would use them to convict Rojas himself, as could have occurred at his joint trial with Ghazey. But the trial court recognized both Ghazeys need and his right to challenge Rojass credibility, and in a pretrial ruling permitted Ghazey to confront Rojas with his prior testimony, the fact that it was provided under oath when Rojas was facing criminal charges, and that Rojas could be prosecuted for perjury if he should change his testimony. The court did not allow counsel to refer specifically to the prior trial out of concern that doing so would permit the jury to speculate as to what happened, who was at the trial, what the outcome of the trial [was]. The court also made clear that counsel could renew the motion during trial if circumstances warranted. It does not appear that Ghazeys counsel ever asked the court to reconsider its ruling.

But it does appear that counsel used the fact of Rojass earlier testimony to challenge his credibility. During opening statements, defense counsel stated that Rojas changed his story regarding the legitimacy of CP Services after he spoke with the prosecution and when he was in fear of the possibility of imminent imprisonment. On cross-examination, Rojas was confronted with his earlier testimony and acknowledged that when he previously testified under penalty of perjury, he was afraid of possibly going to prison as a result of his testimony. He also realized that he could be charged with perjury if he testified differently in this trial than he had before. On redirect examination, the prosecution sought to rehabilitate Rojas. He testified he had no deal with the prosecution in exchange for his testimony. When asked why he was telling the truth in this trial, and did not before, Rojas said, I left Fastek so that I would no longer be held accountable to [Ghazey] and I could be held accountable to myself and come to court and take an oath to God and just be honest.

In closing argument, defense counsel said Rojas was a liar, and that [u]p until very recently [Rojas] said he was the owner of CP Services, then he gets up on this witness stand and says oh, none of that is true. It was all made up. He said that he testified under oath previously with the fear of prison and recanted all of this and saying he was just following Mr. Ghazeys orders now. Under the fear of imprisonment. Defense counsel questioned Rojass motivation, saying Hes up here now in his testimony, oh, you know, he had this epiphany, I just want to be a better person now, and I swore to God.

Ghazey now argues [t]he jury heard an account of a change of heart prompted by spiritual considerations, and never learned how profound was Rojass self-interest in his testimony, in that his own freedom was directly on the line when he first tendered it when he took the stand in his own defense. But Ghazeys counsel brought out the fact that Rojas was facing time in prison when he previously testified under oath, and that he was afraid of going to prison when he testified in Ghazeys trial.

Ghazey acknowledges that often, the fact of a witnesss acquittal may not be relevant, but here he says, the acquittal became extremely relevant when Rojas expanded his allegations against Ghazey, and incriminated Rojas himself in a manner more explicit than he had at the first trial. Whether Rojass testimony was more expansive in the second trial is beside the point. Ghazey was allowed to cross-examine him on its differences. In light of the evidence of Rojass potential bias that the jury was allowed to consider, Ghazey has not shown that Rojass acquittal in the first trial was a critical fact bearing on his credibility.(See People v. Carpenter (1999) 21 Cal.4th 1016, 1051 [for a Sixth Amendment violation, defendant must show  that the prohibited cross-examination would have produced a significantly different impression of [the witnesses] credibility  ]; cf. Olden v. Kentucky (1988) 488 U.S. 227, 230-231 [right of confrontation denied when defense counsel was prevented from cross-examining victim about her extramarital relationship with the only witness who corroborated her story]; Davis v. Alaska (1974) 415 U.S. 308, 317-318 [denial of effective cross-examination when defense counsel prevented from developing bias of prosecution witnesss due to his vulnerable status as a probationer . . . [and] possible concern that he might be a suspect in the investigation].)

2. Statements Made to Rojas by His Attorney

Ghazeys claim that he should have been allowed to cross-examine Rojas about certain things he was told by one of his prior attorneys, Garrick Lew, is also without merit. During cross-examination, defense counsel asked Rojas about certain letters he wrote to Lew that he also shared with Ghazey. Defense counsel also asked whether Rojas had played for Ghazey recordings of any conversations he had with Lew. The trial court sustained an objection by Rojass counsel, subject to an offer of proof. Later, defense counsel asked Rojas whether Lew advised him to make certain statements to the district attorneys office, and Rojas responded, thats a conversation that I had between my attorney and I, and I prefer not to discuss those matters. That was a relationship I was able to keep separate from Bill Ghazey. Id like to keep those confidential.

Outside the presence of the jury, the court advised defense counsel he could explore through specific questions whether Rojas made inconsistent statements in his letters to Lew and in his statements to the district attorney, but if counsel wanted to explore what Lew told Rojas, he should first make an offer of proof. The court also told counsel that Rojas would be subject to recall if you lay a foundation if he is impeachable by some statements that were made by him on these tapes, by him on these tapes, not by Mr. Lew, but by him on the tapes, then perhaps they will come in. Its very possible. But so far I havent heard it.

During redirect examination, the prosecutor asked Rojas why he made certain statements to Lew and another attorney that were different from Rojass testimony at trial. Rojas explained that when he made the earlier statements, he was trying to remain consistent with the story he and Ghazey had developed for their defense. When the court denied Ghazeys motion for a new trial, it elaborated on the reasons for restricting Rojass cross-examination, saying that, assuming the communications between Rojas and his attorney were privileged, the court was unable to determine whether disclosure was required to assure Ghazey a fair trial because defense counsel never made the requested offer of proof.

The courts invitation to Ghazey to make an offer of proof was an appropriate response to Ghazeys attempt to elicit from Rojas what was said to him by his lawyer. A criminal defendant may in certain circumstances have the right to use confidential attorney client communication. (People v. Godlewski (1993) 17 Cal.App.4th 940, 948-949.) In order to determine whether to permit a breach of the attorney client privilege, the trial court must determine whether disclosure of the confidential information is necessary to ensure the defendant receives a constitutionally fair trial. (Id. at pp. 948-949.) The probative value and importance of the evidence to an effective cross examination is balanced against the need to protect a witnesss right to communicate confidentially with his or her lawyer. (Ibid.) While this balancing analysis is often performed in the context of an in camera review, we see no reason to fault the trial court for requiring Ghazey to make an offer of proof in order to permit its assessment of whether to violate the privilege.

To the extent that Ghazey contends Lews statements to Rojas, purportedly urging Rojas to change his story to implicate Ghazey, were neither privileged nor inadmissible hearsay, he did not raise these arguments in the trial court. Moreover, Rojas testified that his conversation with his attorney was confidential and he wanted to keep it that way. We reject Ghazeys suggestion that Rojas waived his attorney-client privilege with Lew for all purposes, simply because he shared certain letters with Ghazey, without some showing that the statements sought to be introduced were related to those that were shared. Ghazey never made the invited offer of proof, and the trial court had no context within which to assess Ghazeys attempt to elicit the privileged information.

Ghazey has not shown that exclusion of either the fact of Rojass acquittal in the first trial, or of Lews statements to Rojas, violated his constitutional right to a fair trial.

D.Admission of Hearsay Statements in Knutsens Testimony

Ghazey also contends his right to confront the witnesses against him was impaired because the trial court allowed State Fund Investigator Knutsen to testify about information he learned from third party sources during the course of his investigation. Ghazey objected on the basis such information was inadmissible hearsay.[16]But the trial court admitted the evidence for the non-hearsay purpose of establishing Knutsens state of mind and to explain his conduct of the investigation. Moreover, the court instructed the jury to consider the evidence only for those purposes, not for its truth. Ghazey now contends that Knutsens state of mind was not relevant, but his trial counsel questioned Knutsens motivation and argued he was overzealous and unfairly determined to make a case for fraud. Knutsens state of mind was directly relevant to this claim of his possible bias or prejudice.

Ghazey tries to demonstrate the irrelevance of Knutsens state of mind by citing to a statement by the court during the discussion of Ghazeys motion for judgment of acquittal that whats in Mr. Knutsens mind is not relevant. Ghazey takes the courts observation out of context. The remark was made with regard to whether the testimony was sufficient to establish the charged misrepresentations were intended to affect the cost of the workers compensation policy, and was directly followed by the trial courts explanation: Its whats in the mind of the person making the alleged misrepresentations because whether or not the misrepresentations did or did not impact the rate of premium or the cost of insurance or the rate doesnt matter.[17]The courts comment in such a significantly different context does not mandate[] exclusion of the hearsay information introduced to explain or justify [Knutsens] actions and conclusions when his credibility was under attack by the defense.Ghazey has not shown the court erred when it admitted evidence Knutsen acquired from third parties to show Knutsens state of mind, and so instructed the jury.

E.Trial Courts Conduct of the Proceedings

Although Ghazey recognizes that a trial court has the authority to question witnesses, he contends the trial courts intervention in this case led to improper questioning of several witnesses and evidentiary errors which denied him his right to a fair trial. Even assuming this issue was not waived by Ghazeys failure to raise it in the trial court, he has not shown the court abused its discretion in the manner it conducted the proceedings.

Ghazey first takes issue with the courts questioning of a former Fastemps/Fastek office manager regarding why Ghazey said he established CP Services. But Ghazey raised no objection to the trial courts question, and the record shows the court intervened for the appropriate purpose of clarifying the witnesss testimony. [18] (See People v. Harris (2005) 37 Cal.4th 310, 350.) Ghazey also claims the court improperly sustained relevancy objections when defense counsel later asked Ghazey why that same office manager left Fastemps/Fastek a few months after CP Services was created, and where he later worked. Ghazey now suggests the questions were an attempt to elicit possible reasons the office manager was prejudiced against Ghazey. Ghazey made no such suggestion in the trial court, and he has not shown the trial court abused its discretion when it sustained the prosecutors relevancy objection.

Next, Ghazey contends he was erroneously precluded from impeaching Knutsens credibility by asking him whether State Fund would receive a financial benefit if Ghazey was convicted. When defense counsel asked Knutsen, [A]s an underwriter, do you know if [State Fund] will receive any money depending on the outcome of this case?, the court sustained the prosecutors relevance objection and instructed the jury to disregard the question. Ghazey made no comment in the trial court as to the purpose for the question, and absent any showing that Knutsen had a personal financial interest in the outcome of the case, he has not shown the court abused its discretion when it sustained the relevance objection. The federal and out-of-state cases cited by Ghazey do not compel a different conclusion. (See United States v. Canales (5th Cir. 1984) 744 F.2d 413, 425 [fact that witness was employed by close relative of trial counsel for a party to the case was relevant to bias]; Croley v. Matson Navigation Company (5th Cir. 1970) 434 F.2d 73,77 [summary judgment improper where a companys contractual obligation to indemnify defendant for any judgment plaintiffs might recover may have some bearing on the credibility of the testimony of a high-ranking employee]; Ingalls Shipbuilding Corporation v. Trehern (5th Cir. 1946) 155 F.2d 202, 203-204 [no duty to declare mistrial after existence of defendants liability insurance was disclosed during cross-examination of witness employed by defendants insurer]; Saslow v. Rexford (Alaska 1964) 395 P.2d 36, 39-40 [no abuse of discretion to exclude from evidence fact of plaintiffs separate lawsuit for injuries after witness testified his employer was also being sued by the plaintiff]; Central of Georgia Ry. Co. v. Bernstein (Ga. 1901) 38 S.E. 394, 396 [Relationship or employment may give rise to such an interest in the case as would bias a witness].)

Ghazey also contends the court admitted irrelevant and unduly prejudicial expert opinion testimony when it allowed a tax auditor employed by the California Employment Development Department to testify that CP Services didnt meet the requirements of [the definition of] an employer per [the] California Unemployment Insurance Code. The auditor also testified that the employer of the persons reported under the CP Services name was Fastek, but admitted during cross-examination that she was not qualified to state what an employer is for purposes of the Insurance Code or State Fund. Ghazey has not shown the court abused its discretion when it ruled this evidence was more probative than prejudicial under Evidence Code section 352, on the grounds it was relevant to whether CP Services was, in fact, a fiction and not a separate independent entity as claimed by [Ghazey], and whether CP Services was an employer. Nor did the trial court improperly question the auditor when it clarified the records the auditor relied upon in reaching her opinion.

Ghazey also contends the trial court improperly questioned an insurance broker who testified for the defense regarding the possibility that fraud could be committed through the use of a shell company attempting to obtain workers compensation insurance by misrepresenting that it had employees. Again, Ghazey did not object to the courts sequence of questions, and he does not dispute the Attorney Generals contention that other questions the court asked the broker were helpful to the defense.

Ghazey also argues the court asked an improper question of a district attorney inspector who admitted during cross-examination that he signed the returns for all the search warrants executed during the investigation under penalty of perjury, although he personally participated in only the searches that took place in Southern California and otherwise simply took possession of the materials that were recovered.[19] Yet again, Ghazey did not object, but now contends the courts question was a clear message to the jury that the court, at least, found the false swearing of a district attorney investigator to be an inconsequential matter with which the jury need not concern itself. Ghazeys interpretation is speculative as the courts question does not imply trivialization of an oath, but instead provided the jury with the context of the circumstances surrounding the inspectors return of the warrant. The same is true of Ghazeys claim regarding two questions the court asked the inspector to clarify on the basis of his belief that Fastemps/Fastek and CP Services were connected, to which, again, the defense offered no objection.[20] The record indicates these questions were asked in response to a request from the jury, after an off-the-record discussion at the bench, and apparently in response to the defense theory that investigators prejudged the defendants guilt. Moreover, defense counsel declined the courts invitation to further explore the issue with the inspector.

Ghazeys final contention is that the court repeatedly intervened in the attorneys questioning of the witnesses to emphasize testimony that tended to show his guilt, and interrupted his own testimony in a manner likely to cause the jury to draw adverse inferences. Our review of the record shows that Ghazey raised no such objection in the trial court, and taken in context, the questions that Ghazey now complains of generally reflect the courts attempts to clarify the witnessess testimony to ensure it was understandable for the jury. (See People v. Monterroso (2004) 34 Cal.4th 743, 782 [The trial court was authorized to question witnesses by Evidence Code section 775, and the questions here were for purposes of clarification, not advocacy]; see also People v. Cash (2002) 28 Cal.4th 703, 730 [[t]o preserve the issue [of improper judicial comment] for review, a defendant must make a timely objection].) To the extent the courts participation in the examination of the witnesses could be considered unusually vigorous, Ghazey has not shown the court took on an advocacy role that violated his right to a fair trial. For example, while the record shows the court more than once reminded defendant to simply answer the question posed and then wait for the next question, at other times the court overruled the prosecutors objections and invited defendant to complete his testimony. The court similarly intervened repeatedly in Rojass direct testimony to remind him to confine his answers to the questions asked, and allowed defense counsel to cross-examine Rojas in areas the prosecution considered objectionable. Our review of the record shows no violation of Ghazeys right to a fair trial.

F.Cumulative Error Claim

Ghazey contends the cumulative effect of the alleged errors denied him a fair trial. Because we have concluded none of his claims have merit, we reject his argument that his trial was riddled with cumulative error.


The judgment is affirmed.


Siggins, J.

We concur:


McGuiness, P. J.


Pollak, J.

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[1] All further statutory references are to the Insurance Code unless otherwise indicated.

[2] The company started out as Fastek, and later incorporated as Fastemps, Inc. The company also had several divisions at times, including Fastek Technical Services and Fastemps Temporary Services. We will refer to the company as Fastemps/Fastek.

[3] The letters were sent between June 1995 and June 1996, and were admitted in evidence as Exhibits 36, 39, 42, and 70.

[4] Ghazey also presented the testimony of a Fastemps/Fastek manager and an independent insurance broker who Ghazey previously consulted when he was having difficulty obtaining workers compensation insurance.

[5] The Legislative Counsels Digest goes on to state: The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state . . . . [] This bill would provide that no reimbursement is required by this act for a specified reason. (Legis. Counsels Dig., Sen. Bill No. 1053, supra, at p. 383.) The reason specified is section 6 of Article XIII B of the California Constitution that excludes certain laws defining crimes or infractions from the reimbursement obligation. (See Stats. 1995, ch. 885, 7, p. 6754.)

Description William Ghazey appeals following his conviction by a jury of four counts of making false statements to the State Compensation Insurance Fund (State Fund). He argues that if the conviction is not reversed entirely, it should be reversed in part. He contends: (1) Insurance Code[1] section 11880, that was the statutory basis for all four counts, could not apply to two of the counts because the acts alleged were not within the scope of conduct prohibited by section 11880 as it was then in effect; (2) there were errors in the jury instructions; (3) Ghazey was wrongly prohibited from introducing evidence of the previous testimony and acquittal of his business associate on the same charges; (4) a workers compensation investigator was improperly permitted to present hearsay evidence consisting of facts he discovered from third party sources during the investigation of this case; (5) the court improperly intruded into the presentation of the evidence when it questioned several witnesses; and (6) even if no single error warrants reversal, their cumulative effect compels it. Court conclude there was no error, and affirm.

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