People v. Frederick

When can a judge restrict an expert witness as to the type of testimony to be given, and what is the standard for an "investment contract" under California law?


The court held that an expert need not be given an unlimited scope on which they may testify and that an investment contract is the investment of money in an enterprise with the expectation of return, but without the ability to exercise control over the operation of the enterprise. Frederick and others were convicted of operating an illegal endless chain scheme involving the purchase of calling cards and cell phones. Frederick wanted to introduce expert witness testimony on the law of endless chains and whether the scheme she was accused of was in fact an endless chain under California law. The trial court restricted the expert's testimony because he would be opining directly on questions that the jury was to decide. The Appeals Court upheld this ruling, reasoning that experts may opine on topics that touch on the ultimate issues to be decided by the jury, but if the opinion invades the province of the jury to decide the case, it was impermissible. Frederick also claimed that because the investors in the program were styled as co-owners and were required to seek out additional participants, it could not be held to be an investment contract. The Court of Appeals rejected this contention based on the testimony of multiple victims stating that they had no expectation of actively managing the business and other evidence demonstrating they held no managerial control of the scheme's operations.

Case and case summary are also available online at:

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

Reference Info:State, 9th Circuit, California | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Babener & Associates | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »


Welcome to MLM Legal - a valuable resource to the Multi-Level Marketing and Direct Sales Industry. ... View Profile »

Follow Babener & Associates:

Reporters on Deadline

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.