Articles & Court of Appeals


Published Court of Appeals Opinion

Reiswig v. Department of Corporations (2006) Pdf

144 Cal. App. 4th 327
50 Cal. Rptr. 3d 386
2006 Cal. App. LEXIS 1688
2006 Daily Journal DAR 14365

Summary:  The trial court issued a writ of administrative mandamus ordering the California Corporations Commissioner to set aside a desist and refrain order against a corporation and several individuals. The corporation, which was not licensed to sell securities, compiled regular lists of banks that offered high-yielding certificates of deposit (CD's) and advertised that it would give investors a higher yield. If an investor purchased a CD from a bank on the list, the corporation paid the investor a bonus after the investor met with a sales agent from an affiliated corporation that sold annuities. The corporation had no business relationship with the banks and earned nothing from the CD purchases; the bonus payments were intended only to induce prospective investors to consider buying the annuities. The trial court ruled that the corporation was not selling securities. (Superior Court of Orange County, No. 04CC11740, Ronald L. Bauer, Judge.)

The Court of Appeal affirmed the judgment, noting that the revenues used to pay the bonuses were generated from the sale of annuities, so payment was in a sense dependent on the viability of the enterprise. The same could be said of any unsecured creditor relationship, however. A federally insured CD was not a security because the investor was not subject to financial loss. The CD-plus-bonus package could not be characterized as an investment contract under Corp. Code, § 25019, under either the risk capital test or the federal test. (Opinion by Fybel, J., with Rylaarsdam, Acting P. J., and Aronson, J., concurring.)

Published Articles

Baker, "Financing in Mexico," Baja Traveler (2001) Pdf

Mexico is changing its attitudes towards business. It now looks for opportunities now instead of shunning them. As business booms, readily available financing will become more and more necessary. Up to now, bank loans have not been used frequently by businesses in Mexico. The reason is simple. Loan rates from Mexican banks hover around 30%, the application process is very lengthy and detailed, and most U.S. banks are simply afraid to lend into Mexico. It is hard for U.S. businesses and lenders to believe that Mexican companies are being run and industrial parks are being built without the help of any bank loans. They are completely self-financed. All of this is beginning to change.

Baker, "Business Loans in Mexico," Baja Traveler (2002) Pdf

Mexico has taken tremendous strides to improve its economy in the past few years. Now it is working equally hard to make its laws more friendly to investment in Mexico. In the Spring of 2000, Mexico passed two laws that are sure to entice lenders to make more business loans into Mexico. One of these laws allows the broader use of personal property as collateral for loans, and the other speeds up the bankruptcy process.

Baker, "What Me Worry?: Increasing Profits With a Legal Review," The Preventive Law Reporter (1996) Pdf

Can you imagine a parent waiting until a child is critically ill before seeing a doctor? Too many entrepreneurs do this with their business—the "child" that they nurtured for so long. All too often entrepreneurs ignore their legal problems until they are overwhelming. Finally, they go see a lawyer. By that time, the problems may have deteriorated to such a point that any resolution would be very costly and very time-consuming.

A more efficient and economical approach is to have a built-in procedure for recognizing and addressing legal problems at an early stage. Such an approach is like having quality assurance on the assembly line. Providing legal quality assurance can be done by giving the business a legal check-up on a regular basis.

Published Newspaper Article Featuring John Baker

Norman, "Lawyer: Don't wait to be sued: Business owners can save money by forestalling disputes."
The Orange County Register (Business Section, page 1, February 10, 2003) Pdf

Some phrases become cliché because they're so true.

That thought came to mind regarding "penny-wise and pound-foolish" when Laguna Hills [now Irvine] lawyer John Baker talked about the typical small-business owner's unwillingness to practice preventive law.

Baker specializes in business law such as liens and trust deeds. Often he feels like a member of the bucket brigade trying to douse raging fires. Legal conflagrations are expensive to resolve and rarely benefit a business.

Wouldn't it be great to stamp out the blazes when they're merely sparks? he thought.