Opinion
No. 0007/152824/15.
10-17-2017
The PEOPLE of the State of New York, Respondent, v. ALLIANCE WARBURG CAPITAL MANAGEMENT, Steven Canady Ruby N. Canady Summers, Defendants.
New York County District Attorney Cyrus R. Vance, Jr. (Adam Maltz and Michael Ohm of counsel) for the People. David Krauss, for Defendant Steven Canady (with respect to pre-trial proceedings, trial and post-trial motions) and Alliance Warburg Capital Management (for all proceedings). Daniel DeMaria, for Defendant Steven Canady (with respect to proceedings on the date of sentencing). Ruby N. Canady–Summers, pro-se, (Eugene Conway, legal advisor).
New York County District Attorney Cyrus R. Vance, Jr. (Adam Maltz and Michael Ohm of counsel) for the People.
David Krauss, for Defendant Steven Canady (with respect to pre-trial proceedings, trial and post-trial motions) and Alliance Warburg Capital Management (for all proceedings).
Daniel DeMaria, for Defendant Steven Canady (with respect to proceedings on the date of sentencing).
Ruby N. Canady–Summers, pro-se, (Eugene Conway, legal advisor).
DANIEL P. CONVISER, J.
The Defendants in this case were convicted after a seven week trial presided over by this Court of multiple counts of grand larceny, criminal possession of stolen property, a scheme to defraud and forgery. In this Court's view, Defendant Steven Canady made a concerted effort in this case to delay and obstruct the conduct of any trial or sentencing. This, in turn, resulted in numerous rulings by this Court in response to those actions. Given the scope of those actions and rulings, the Court believed it was important to outline the record and the Court's rationale for some of the decisions it made.
This time period included jury selection and deliberations.
The instant decision also provides findings and conclusions relevant to the Court's rulings on some of Defendant's counsel's motion to vacate the judgment pursuant to CPL 330.30. Those rulings are addressed in a separate Decision and Order also issued today (the " CPL 330.30 decision & order"). Specifically, the instant decision provides findings and conclusions relevant to Defendant's counsel's claim that the Court violated Mr. Canady's right to the free exercise of religion and his associated right to counsel and did not take appropriate action with respect to Mr. Canady's claim that he heard the jury foreperson telling other jurors during closing arguments that Mr. Canady was guilty. Finally, Mr. Canady submitted a multiple pro-se motions to vacate the judgment against him based primarily on non-record assertions. Those motions were denied by the Court in bench rulings and in the CPL 330.30 decision and order, but are also briefly discussed here.
STATEMENT OF FACTS
The Conduct Resulting in Mr. Canady's Criminal Convictions
The fraudulent scheme the Defendant was convicted of in this case was conceptually simple. It resulted in the theft of more than $4 million. But it was supported by a web of artifice of extraordinary scope. The Defendant created a company, Defendant Alliance Warburg Capital Management ("AWCM") and a number of subsidiary companies which were almost wholly fictitious. He used the companies to induce seven larceny victims to provide him with funds which in each case equaled between $25,000 and $1 million as "up-front" "pre-paid interest" "capital contribution" or "due diligence" payments in return for commercial loans which he represented would vary in size from $2 to $250 milllion. An additional scheme to defraud victim was promised a loan of $250 million in return for a $2 million payment. The up-front payments were provided by the victims pursuant to professionally prepared written contracts which generally explicitly provided that if the commercial loans were not provided the "up-front" payments would be promptly returned. In each case, the loans were not made and the victim's payments were either wholly or in large part retained by Canady.
The Defendant entered into an Alford plea to a felony theft crime in Georgia for engaging in a similar scheme in 2010. In that case, he stole over $630,000 from three victims, including a church. The People also allege he engaged in five additional similar schemes between 2007 and 2013 which were not charged in the indictment. In still additional instances, the Defendant agreed to provide commercial loans, did not provide them, but then returned the "up-front" fees to victims. The People presented evidence during the trial which demonstrated that in a number of these cases, the returned funds were provided with new up-front payments from new victims as part of a Ponzi scheme. Mr. Canady preyed on victims who could not obtain financing from commercial banks and were in urgent need of money—a talented New York fashion designer who needed an infusion of capital to realize his dream of taking his business to the next level; an owner of a multi-faceted group of financial companies who had a significant portion of his business in his native country of Venezuela but was facing a potential financial collapse because of political instability in his home country; a company which planned to develop desperately needed housing for oilfield workers in North Dakota.
The Defendant used his stolen funds to support a opulent lifestyle which included rental payments of $25,000 per month for an apartment on the 73rd floor of New York's five star, Mandarin Oriental Hotel on Columbus Circle, lavish meals and even the payment of $22,000 for pornography. He chose the name of his fictitious company by combining key words from two legitimate global financial firms: "Alliance" and "Warburg" and represented to one victim that he was affiliated with these companies. He created a website and promotional materials which claimed his company had offices in New York, Atlanta, London, Zurich, Madrid, Hong Kong and Dubai.
The Court precluded the introduction of evidence during the trial that the Defendant used the funds he stole, in part, to purchase pornography, holding this evidence was more prejudicial than probative.
He met victims at a midtown Manhattan address which was a "virtual office" in which the Defendant retained a shared receptionist and rented conference rooms by the hour. When questioned by one of his victims about where the company's space in the building was, he said it was on additional floors which were being renovated. His foreign locations were also "virtual offices" rented in the United States. Even with respect to the rental of these "virtual offices", however, Mr. Canady defaulted on the payment of multiple virtual office bills. One of Mr. Canady's business cards, instead of countries, listed regions of the world including Africa and Australia. As the People noted in their summation, the only continent where AWCM was not apparently active was Antarctica.
Mr. Canady created multiple fictitious named employees, created email addresses for them and had them correspond with victims. He also created fictitious corporate departments for his companies including "accounting", "development", "legal", "underwriting" "risk management" and "client relations" branches which were then copied or used as the authors of emails to victims. In one case he created a fictitious board of directors, fictitious named "strategic partners" and fictitious "advisory boards" for one of his companies. He represented himself with an ever-changing array of corporate officer titles, like president, chief executive officer, vice president of structured finance or managing director and a changing roster of seemingly affiliated company names.
In addition to using the name "Steven Canady" the Defendant also called himself "Steven Candy", "Steven O'Neal Canady" (apparently his correct full name), "Steven Cannon Canady" or, in one transaction with a virtual office firm, "Steven Cannon".
In one case, he appropriated the name and biography of a real, respected investment banker who at one time had worked with former federal reserve chair Paul Volcker. He created forged communications from the investment banker to potential victims, using the banker's real biography, and described him as an employee of one of Mr. Canady's companies. He appropriated the identity of the director of I.T. technology, architecture and engineering at Citigroup, created email accounts indicating this person was the director of technology at one of Mr. Canady's companies and then used that forged email address in communications with multiple victims. He used the name and background of a third financial professional with no affiliation with Mr. Canady's companies to forge emails to and from this financial professional to multiple victims identifying him as a "managing director" of one of Mr. Canady's fraudulent firms and in one case used this forged identity to sign a due dilgence agreement with a victim.
Mr. Canady falsely represented to banks, in opening bank accounts, that AWCM had 18 or 22 employees. In reality the evidence demonstrated that the only person who was employed by or affiliated with Mr. Canady's companies was Mr. Canady. When the People executed a search warrant on Mr. Canady and seized much of the digital evidence which inculpated him they took a picture of the location. It was a small, rented, windowless room, with a single desk, a file cabinet, bare walls and a laptop—the world headquarters of Alliance Warburg Capital Management.
Co-defendant Ruby N. Canady–Summers, Mr. Canady's sister, participated in Mr. Canady's frauds with respect to some victims by representing that she would be able to provide loans through a different fund once it became clear to the victims that Mr. Canady would not do so. Ms. Canady–Summers' fraudulent investment vehicle had the ironic title: "The Merciful Fund". Ms. Canady–Summers insisted throughout the trial that she had access to a $1 billion credit line which had been advanced by the Organization of Petroleum Exporting Countries (OPEC). She produced a fraudulent email purportedly from the OPEC "Ministers Fund" from a "yahoo.com" account indicating that this $1 billion credit line had been advanced through an agent of the government of Nigeria.
Mr. Canady, in multiple cases, strung victims along for extended periods after he received their money, asserting, for example, that funds he had hoped to get from one bank would be provided by another; that he had encountered a regulatory problem holding up a loan and even that loans would be provided imminently or were actually in the process of being physically wired to victims. In one case, he provided forged documents on Citibank and Barclay's bank letterhead which indicated he had $500 million or $1 billion of cash in accounts he controlled. Some victims signed agreements prohibiting them from attempting to obtain other financing while under contract with Canady's fictitious firms thus preventing the victims from attempting to obtain funds from alternative sources. When all else failed, Canady further delayed a reckoning by providing and in some cases executing release agreements, providing that the up-front payments would be promptly returned. In each case, no loan proceeds were provided and no or in a few cases only a portion of the victims' payments were ever returned.
For a number of the victims the results of the fraud were devastating, often not primarily because of the stolen funds but because the victims had staked their financial plans on the promised receipt of loans which were never provided. Years later, the havoc wreaked on some of the victims is still apparent. One victim, Gary Towne, testified that he had made hundreds of phone calls to Mr. Canady over years (as well as written communications) in an attempt to recover his money.
The Court has provided this summary not to illustrate that Mr. Canady's conduct was egregious or that the evidence supporting his convictions was overwhelming, although both those points are true. It is provided to illustrate that in assessing the veracity of Mr. Canady's claims to the Court in this case, the Court did not begin with a blank slate. Mr. Canady's entire stock-in-trade has been deception.
Mr. Canady's General Conduct During Court Proceedings
This Court often presides over criminal cases in which defendants are mentally ill, have serious substance abuse dependencies, are homeless or have a propensity for violence. Mr. Canady is none of those things. He appears to be educated. He asserts he has both a medical degree and a Ph.D. from England. A pre-sentencing memorandum submitted on his behalf indicated that he reports graduating with these degrees from "Grace University", a part of Cambridge University: "According to Mr. Canady, Grace University is no longer operational and he cannot locate his degrees due to time and his lengthy incarceration".
August 7, 2017 pre-sentence memorandum, p. 4
At sentencing, however, the People reported that they had investigated Mr. Canady's academic background, that Mr. Canady did not have even an undergraduate degree and that "Grace University" had never existed as a part of Cambridge University. Mr. Canady appears to be intelligent. He is articulate. These qualities were essential to his frauds. His victims described him with terms like "very professional", "very reassuring" and "soft spoken". He manifested these same qualities in the courtroom. The trial in this case commenced more than two years after the first of the two indictments, which was issued in January of 2015. Mr. Canady's attempts to defraud the court mirrored the actions he took to defraud his victims. As outlined infra, he attempted to obstruct the legal proceedings in this case through numerous means.
Mr. Canady was represented by attorneys throughout this case and did not address the jury during the trial, except during his brief aborted testimony discussed infra. The Court did allow Mr. Canady on numerous occasions, however, to address the Court directly outside the presence of the jury, often reminding him to consult with his attorney before doing so. Sometimes this was because Mr. Canady was addressing issues on which he had a right to be heard. Sometimes it concerned what he said were urgent claims of misconduct. At still other times the Court allowed Mr. Canady to address the Court directly because not doing so would have made these contentious and difficult proceedings even more laborious.
Mr. Canady was in custody throughout the trial. Except with respect to his aborted testimony and a couple of occasions on which he made barely audible comments, Mr. Canady did not seek to disrupt the conduct of testimony or argument before the jury, nor was he at any time physically disruptive or profane. Except as otherwise noted, all of the statements made by Mr. Canady recounted here were made outside the presence of the jury. None of those comments were introduced as evidence during his trial. Mr. Canady's trial attorney, David Krauss, made numerous motions, applications, arguments and objections during the trial. These are generally not outlined here.
The conduct of this trial was additionally complicated for two reasons. First, while Mr. Canady and the corporate defendant were represented during the trial, Ms. Canady–Summers elected to proceed pro se, with the assistance of a legal advisor. Second, while Mr. Canady's case was decided by a jury, Ms. Canady–Summers elected to be tried by the Court in a bench trial.
Mr. Krauss, Mr. Canady's trial attorney, also represented the corporate defendant, AWCM.
Mr. Canady's Ineffective Assistance of Counsel Claims
This case was originally presided over by Justice Konviser, of this Court. It was transferred to this Court in the fall of 2016 for this Court to initially rule on a Molineaux application and then promptly schedule a trial. But the long delayed case was delayed again from the outset. Prior to the first scheduled date on which this case appeared on this Court's calendar, September 27, 2016, Mr. Canady filed a motion to replace his third lawyer on the case, Toni Messina. Ms. Messina was appointed pursuant to the assigned counsel plan; Mr. Canady's two previous lawyers were retained. In a letter to this Court dated August 11, 2016, Mr. Canady asked that Ms. Messina be relieved because of her "lack of experience and lack self confidence." [SIC]. He said Ms. Messina had violated his civil rights.
There is no familial relation between Justice Konviser (spelled with a "K") and this Court (spelled with a "C").
In an extended "Statement of Facts" written by Mr. Canady on June 17, 2016 concerning Ms. Messina, among other claims, he asserted that she had told "deliberate untruths ... on no less than 20 occasions"; was colluding with Justice Konviser; that 12 or more of Ms. Messina's clients had reported to Mr. Canady that "her [Ms. Messina's] objectives are to protect Judge Konviser and the prosecution" and that Mr. Messina was generally unprepared and disinterested in representing him.
In his first appearance before this Court on October 11, 2016, Mr. Canady said that he wanted an attorney with more experience in the particular type of financial charges he was facing. When the Court told Mr. Canady that if Ms. Messina was replaced, it would be with another attorney from the assigned counsel plan who would not necessarily have more experience in defending financial frauds, Mr. Canady said that his relationship with Ms. Messina was not working and that he did not have a "warm or pleasant feeling" about her. Ms. Messina concurred in the desire to be removed from the case. She noted that Mr. Canady had alleged that she had "some special relationship with Judge Konviser" and that there had been "innuendo stated blatantly about things that are just not true".
October 11, 2016 transcript, p. 4
Id., p. 7
This Court has presided over two trials and multiple other proceedings in which Ms. Messina has represented criminal defendants. The Court knows Ms. Messina to be an excellent, ethical and very experienced criminal defense lawyer and an attorney who has always appeared to have an excellent rapport with her clients. On October 11, 2016, this Court relieved Ms. Messina and appointed David Krauss as Mr. Canady's fourth lawyer.
It did not take long, however, for Mr. Canady to begin complaining about Mr. Krauss and asking for a fifth attorney. On January 10, 2017, Mr. Krauss indicated to the Court that Mr. Canady "is not at this point willing to work with me on his defense and he is only interested in the bail issue". Mr. Krauss said that Mr. Canady had walked out of the last interview Mr. Krauss had with Mr. Canady. Mr. Krauss asked the Court to be relieved. Mr. Canady also asked that Mr. Krauss be relieved and that a fifth attorney provided to represent Mr. Canady. Mr. Canady said he did not believe Mr. Krauss had made appropriate arguments regarding Mr. Canady's bail. The Court denied the application to replace Mr. Krauss observing "it's my perception, based on the knowledge of this case, that there is no lawyer [who Mr. Canady would deem effective], and if I left it up to you, you would be here indefinitely while you cycle through lawyers".
January 10, 2017 transcript, p. 5
Id., pp. 11–12
Towards the end of a pre-trial conference with the parties on April 18, 2017, one week before the scheduled commencement of the trial, Mr. Canady abruptly announced: "I'm actually in the process of finalizing retainment of a private firm and they could not be here today because of Passover". When the Court asked whether Mr. Canady planned to bring a newly retained lawyer into the case and have that new lawyer begin the trial in one week, Mr. Canady replied: "That's my constitutional right". The Court informed Mr. Canady that it did not intend to delay the commencement of the trial. No retained attorney ever subsequently appeared during the trial and the issue was never raised again.
April 18, 2017 transcript, p. 42
Id., p. 44
In the third week of the trial, the Court received a seven page motion from Mr. Canady, asking again that Mr. Krauss be relieved, alleging he had been ineffective and unethical. Mr. Canady swore the affirmation supporting his motion on April 5, 2017 (three weeks before the trial began) but the Court did not receive it until May 22, 2017 (four weeks after the trial started).
Mr. Canady's Assertion That Any Plea He Would Take Would be Compromised
The Court engaged in plea discussions with Mr. Canady in the weeks preceding the trial. The People recommended an indeterminate 4–12 year sentence on a plea while the Court made a lower offer of an indeterminate 3–9 year sentence. After considering the Court's plea offer over multiple days, Mr. Canady said the following:
You know, your Honor, considering a plea would not even be an option in this matter if we had sufficient time for preparation for trial, and that issue has been brought up multiple times. The fact that we are in this state, and the unwillingness of the Court to provide adequate time for preparation is the only reason why any consideration is given to any plea. You now, again, due process is, I think it's severely in question in this matter. Even legal counsel's representation in this matter has been severely questioned....
And the lack of efforts in providing adequate strategies for a defense in this matter. The lack of providing—for filing motions that the Court actually granted us the ability to do, in regards to the dismissal of the indictment, has led to us being the state of proceeding to trial now when no one is prepared. I had a conversation with Mr. Krauss yesterday, and the only thing that we discussed was a plea when we should have been discussing strategies for the trial. The other issue is my health, which you supposedly noted on my card for medical attention and to date I have yet to receive any medical attention. I was only scheduled yesterday for a GI consult, which should have been done in May of last year and I had to reschedule that because of the video conference with Mr. Krauss. So in that regard, I just want to make sure that any consideration of this situation of a plea is based on those factors.
April 25, 2017 transcript, pp. 8–10
At the time of these assertions, the first indictment against Mr. Canady had been pending for 2 years and 3 months. The second indictment had been pending for 1 year and 7 months. Mr. Krauss (Mr. Canady's fourth lawyer) had represented Mr. Canady for over 7 months. Mr. Krauss had made multiple written and oral motions on Mr. Canady's behalf. The conduct alleged in the indictments dated back to 2010. The Court informed Mr. Canady after this statement that the Court would not accept any plea which Mr. Canady said was coerced but continued to engage in plea discussions with him. Mr. Canady ultimately elected to proceed to trial and asserted: "Counsel has been inadequate.... This counsel has been asked to be removed in January of 2017".
Id., p. 11
The Proceedings Concerning Mr. Canady's Bail
Mr. Canady's bail status was the subject of proceedings more extended than any this Court has ever been aware of, most of which occurred before Justice Konviser. They included two habeas corpus petitions and the appeal of the denial of one of those writs. The bail dispute centered on the fact that after the second indictment in this case, Justice Konviser imposed a new $250,000 bail condition on Mr. Canady with a surety requirement. This Court later reduced that amount to $150,000 on Mr. Canady's motion after the People dismissed a number of the lesser counts in the second indictment which had resulted in the new $250,000 bail. Mr. Canady was ultimately unable to meet any of those bond requirements and remained in custody after the new $250,000 bail condition was imposed.
Mr. Canady sought to obtain a bond using properties owned by his parents as collateral. The properties, however, were apparently bought through tax foreclosure sales which raised questions about whether his parents had full ownership of them. Mr. Canady claimed that his parents, who were in their 70's, were unable to travel to New York from out-of-state for any surety hearing and asked that a surety hearing be held by teleconference. That application was denied by Justice Konviser. Despite requests from this Court, Mr. Canady has never produced any medical documentation which indicated that his parents would be unable to come to New York for a surety hearing.
Justice Konviser noted that part of her concern was that the allegations in the case had "to do with ponzi schemes and the moving of money and the alleged thefts". Defendant's counsel said that Mr. Canady would not default on his bond leaving his parents "homeless and destitute". The People reported that in recorded phone calls from jail, however, the Defendant had been "actually harassing his mother to encourage her to put up the house, which she has been beyond reticent to do." They described the Defendant's actions as "coercion". They also noted that Mr. Canady had involved his sister, co-defendant Ruby N. Canady Summers, in the case. The People later reported to this Court that in a recorded phone conversation, Mr. Canady was heard telling his parents that if Mr. Canady did not comply with the terms of his bond, his parents would not lose a house they put up as collateral. In a letter to this Court on March 31, 2017, Mr. Canady asserted that his bail bondsman, Ira Judelson, referencing the People's conduct in the case with respect to bail, had told Mr. Canady "that he [Mr. Judelson] has never seen such irregularities by any prosecutor in the over twenty (20) years that he has been a bail bondsman". The Court is not aware that Mr. Judelson himself has ever corroborated that statement.
September 25, 2015 transcript, p. 6
Id.
Id., p. 10
Id., p. 12
February 9, 2017 transcript, pp. 5–7
On the day before his first scheduled appearance before this Court, Mr. Canady penned an extended letter concerning his bail, arguing that it was punitive and negatively impacting his health. He said there had been a "surreptitious manipulation of the judicial process" regarding his bail and urged this Court to provide a "coup de grace to stagnate the vituperative guild formed by the prosecutor and the court".
September 26, 2016 letter from Steven Canady to this Court.
Mr. Canady's Refusal to Identify His Attorney/Client Communications
Another source of obstruction concerned the People's extended efforts to have Mr. Canady indicate which of the email communications between him and other parties seized from his computer were with attorneys for whom Mr. Canady was asserting an attorney/client privilege. The People sought this information in order to exclude such communications both from the assistant district attorneys handling the case and from discovery to Mr. Canady's co-defendant, Ms. Canady–Summers.
The People assigned assistants who had no involvement in the prosecution to review the emails seized from Mr. Canady, remove privileged communications from that seizure and then provide the remainder to Ms. Canady–Summers and the assistant district attorneys prosecuting this case.
The People's efforts began in November of 2016 in court appearances and continued for months including four letters sent from the People to Mr. Canady's counsel. Mr. Canady repeatedly refused to indicate which of his seized communications were with attorneys even after this Court ordered him in multiple court appearances to do so. This Court finally told Mr. Canady that if he did not write down the names of his attorneys in court immediately to allow the People to segregate those communications from those they were required to provide to Ms. Canady–Summers, all of his seized communications would be provided to Ms. Canady–Summers and the assistant district attorneys handling the case on the spot. Mr. Canady then hand wrote a list of his attorneys in court, while the Court sat on the bench and waited for him to finish it.
See, e.g., Letters from the People to David Krauss, December 6, 2017; December 28, 2016; February 7, 2017; March 9, 2017; transcript of court proceedings on February 28, 2017; April 4, 2017.
Mr. Canady's Claims of Racial Bias
The People indicated that Mr. Canady has also alleged that his prosecution was based on racial animus arising from the fact that he is African–American. During jury selection, the People raised a Batson challenge after Mr. Canady used 8 of his first 10 peremptory challenges to exclude caucasian jurors. Despite the fact that this numerical evidence, standing alone, supported a finding that the People had established a prima facie case of discrimination against caucasian jurors, the Court found no prima facie case had been established based on other facts.
In a pre-trial appearance on April 18, 2017 Mr. Canady said: "I do find it disturbing, however, in this country that someone calls me a nigger and then the following day they run to the Prosecutor's office to start this case, to open this case against me." Subsequent on-the-record discussion revealed that this assertion concerned a prosecution witness who was not identified. The Court advised Mr. Canady and Mr. Krauss that Mr. Krauss would be free to cross-examine that witness regarding any statement indicating racial animus towards Mr. Canady. No such cross-examination ever occurred and the issue was never raised again. Mr. Canady asserted that "this entire case is political. It is politically motivated" and also asked: "why were are even entertaining this process when it appears that we've already been found guilty because of the lack of due process and the unwillingness for the Court to accommodate the different variables in this matter, to ensure that the best defense strategy be posed, okay." As Mr. Canady summarized his position in an appearance before this Court on November 15, 2016: "[t]his has been a malicious prosecution from day one".
April 18, 2017 transcript, p. 55
Id., p. 56
Id., p. 48
November 15, 2016 transcript, p. 56
Mr. Canady's Assertion That He Could Not Work on Fridays
The instant decision and order provides findings and conclusions relevant to the Court's denial of the Defendant's CPL 330.30 motion concerning this issue.
The Court discussed scheduling with the parties for months prior to the beginning of the trial. On April 18, 2017, the Court conducted a detailed discussion with the parties regarding particular days and times when the trial would be in session. Mr. Canady actively participated in the on-the-record discussions on that day. He did not mention any impediment to his ability to be present on any trial day. Jury selection began on April 26, 2017. Given the length of the trial which was anticipated to extend (following jury selection) for about six weeks, it was difficult to find jurors who were willing to serve. After the first full day of jury selection the Court was able to select four jurors. After having them swear their oaths the Court informed them of the trial schedule, which anticipated working on Fridays.
April 18, 2017 transcript, pp. 46–47
Following the selection of the first four jurors at approximately 4:30 P.M., Mr. Canady first asserted that he would not be able to work on any Friday to honor his religious observances. He explained that he was an adherent of Kabbalah Judaism and that the tenets of that faith required an observance with respect to "sundown in Israel, not just sundown here in the U.S., so we cover that time lapse and we tend not to do any business or legal or conduct legal matters on Friday in observance of the Sabbath". The Court and the People initially indicated they wanted to consider Mr. Canady's position and deferred a further discussion about it until the following day. On the following day (April 27) the People said that with respect to Mr. Canady's assertions, they were "not taking a position on whether it is sincere or not sincere, but we have no objection to taking off in an abundance of caution."
April 26, 2017 transcript, p. 3. The Court takes judicial notice that the time in Jerusalem is seven hours later than the time in New York. Thus, were the sun to set in Jerusalem, for example, at 7:30 P.M. on a Friday, the equivalent time in New York on that Friday would be 12:30 P.M.
April 27 transcript, p. 3
The Court initially indicated that, given the People's willingness to abide by the Defendant's request, it was not inclined to work on Fridays. On the next court date, however, (May 2, 2017) the Court ruled that it would not adjourn the case on Fridays because it did not believe Mr. Canady's assertions regarding his need for a religious observance on Fridays were sincere. The reasons for the Court's decision were placed on the record on that date and are also outlined infra.
The Defendant then said he was unable to work both when the sun set in Israel and when the sun set in New York City and that he would offer written "contracts" which indicated Mr. Canady was unable to work on Fridays (or Saturdays) in observance of "two Sabbaths":
MR. CANADAY: So according to the Ari Rabbi, Issac Luria, we are to observe the Sabbath sundown in Israel and sundown wherever we are in the world. So if I'm in Singapore, when the sun goes down in Singapore as well I observe the Sabbath at sundown there. So if I'm in New York, I also observe the Sabbath when the sun goes down here in New York. So it is an observance of sundown in Israel, as well as wherever I am, no matter where that is in the world.
THE COURT: So there are two Sabbaths?
MR. CANDAY: That's correct.
THE COURT: So, in other words, you couldn't work on a Friday or a, theoretically if we were here in court, on Saturday, you couldn't work on Saturday; right?
MR. CANADY: That is correct.
THE COURT: So there would be two days?
MR. CANADY: As I stated before, it is written in our contracts as well.
THE COURT: In your contracts as well?
MR. CANADY: With our agreements with our respective clients so that it is documented.
THE COURT: With your respective clients?
MR. KRAUSS: In the case at bar.
THE COURT: In the case at bar?
MR. KRAUSS: There are contracts that indicate further that based upon his religious beliefs that he's saying that no work or or deals or transactions should occur during that time frame.
May 2, 2017, pp. 16–17
Mr. Canady submitted an example of one such "contract" to the Court the following day, which the Court made a court exhibit. The document was not signed or otherwise executed. It is a draft loan agreement. The document does not list Mr. Canady as one of its parties or a signatory. It is a draft agreement between a proposed borrower and one of Mr. Canady's fraudulent companies, "Alliance Ventures LLC". It was apparently drafted to perpetrate one of Mr. Canady's frauds.
Court exhibit "A"
The document says nothing about Mr. Canady (or anyone else) not being able to work on Fridays (or Saturdays). It rather provides that prepayments of principal on the proposed loan could not be made on Fridays. It also provides, however, that numerous other kinds of payments under the loan could be made on Fridays. Thus, it provides that "[i]nterest payments shall be paid quarterly in arrears on the fourth (4th) New York business day of each fiscal quarter" (which might include Fridays); that a borrower could make interest payments "at any time" (which would presumably include Fridays) and that for same day credit for a payment to be made, the payment must be received prior to 1:00 P.M. EST (including, presumably, on Fridays).
Mr. Canady's Prior Work on Fridays
Justice Konviser has informed this Court that neither she nor her court attorney ever recalls Mr. Canady indicating he could not work on Fridays during the years she presided over this case. Mr. Canady appeared in court on two Fridays in this case prior to his assertion to this Court that he could not work on Fridays: August 21, 2015 and September 25, 2015. The September 25 appearance was a substantive proceeding in which the Court and counsels had an extended discussion about Mr. Canady's bail. The record reflects that on this Friday, Mr. Canady interrupted the proceedings to personally object to statements the prosecutor was making and was admonished by Justice Konviser for speaking personally rather than through his attorney. Mr. Canady and his counsel have acknowledged that he appeared in court on these Fridays and actively participated in proceedings. According to Mr. Canady and his current counsel, Mr. Canady informed his then attorney, David Touger, about the fact that he could not participate in these Friday appearances, but his attorney failed to inform the court or make any record concerning Mr. Canady's religious observance. Mr. Canady himself, despite his speaking at the September 25, 2015 appearance, also did not inform the Court of his need for a religious observance on that day. The Court finds these uncorroborated assertions patently incredible.
September 25, 2015 transcript, p. 12
Mr. Canady also actively worked to perpetrate his frauds in this case on numerous Fridays. The Court has not reviewed the thousands of pages of documents which were introduced into evidence to record every one of these instances. But several examples are illustrative. One of the victims Mr. Canady defrauded was an investment firm called Global Capital Advisors ("Global Capital"), along with the fund's principal and a related investment company. Mr. Canady stole $225,000 from Global Capital which eventually resulted in a judgment of $396,000. After years of litigation, Canady returned $50,000 of the stolen funds. Mr. Canady (and fictitious persons who were, in fact, Steven Canady) frequently conducted their fraudulent business with Global Capital on Fridays. On Friday, August 5, 2011, fictitious persons whom the evidence demonstrated were Steven Canady sent three e-mails in support of the Global Capital fraud. In a couple of those e-mails Steven Canady himself was listed as a recipient. A fictitious employee who was Steven Canady also signed a memorandum of understanding on that day. A fictitious person who was Steven Canaday sent an e-mail on Friday, September 9, 2011. Steven Canady, in his own name, sent two e-mails in support of the Global Capital fraud on Friday, June 21, 2013. Steven Canady, in his own name, sent another e-mail in support of the fraud on Friday, June 28, 2013.
Mr. Canady sent multiple e-mails in his name on Friday, July 8, 2011, in support of the fraud. In one he urged that the funds he was stealing from Global Capital be "sent today [Friday] if possible". In attempting to fraudulently claim he was trying to resolve the dispute with Global Capital years later, on July 10, 2013, a person who was Canady said a resolution of the dispute was expected "by Friday" [of that week]. Canady signed an agreement in June of 2013 which promised that payments would be made by him no later than the close of business on the 20th day of each month. September 20, 2013 and December 20, 2013 were both Fridays. Canady drafted and signed multiple memoranda of understanding to perpetrate the Global Capital theft which defined as a "banking day" "any day on which banks are open for business in New York which is neither a Saturday, Sunday nor a legal holiday or a day on which banks are required to be closed". A funding agreement used to perpetrate a $2 million fraud from an individual named Gary Towne and a company called Resources of North Dakota in 2009 contained the same provision.
All of the above referenced documents related to the Global Capital theft are contained in People's exhibit # 28.
People's exhibit # 33
Victim Robert J. Willis testified that he documented a call he had with Mr. Canady on Friday, May 18, 2012 to discuss the transaction which resulted in Mr. Canady's theft of $100,000 from Mr. Willis's company, Southern Cactus Star LLC. Mr. Canady authored e-mails in his own name to support the fraud against Gary Towne and the company "Resources of North Dakota" on Friday, October 9, 2009, Friday, April 30, 2010 and Friday November 15, 2013 . The trial record contains numerous similar examples.
Trial transcript of May 16, 2017
People's exhibit # 33
Mr. Canady began wearing a yarmulke on the first day jurors were brought into the courtroom. He did not wear a yarmulke during any of his prior court appearances. Victim Hernan Lander volunteered, when he was asked to identify Mr. Canady at the trial, that Mr. Lander had never seen Mr. Canady wearing a yarmulke before.
Friday Proceedings During the Trial
The Court ended up not working on most of the Fridays during the trial for reasons unrelated to Mr. Canady's religious observance claims. The People's review of the record indicates the Court worked on only one Friday during the trial. Mr. Canady was present during the morning session on that day but absented himself from the afternoon session. The brief afternoon session consisted entirely of the testimony of two business records custodians, who authenticated documents.
People's Affirmation in Opposition to Defendant's Motion to Vacate Judgment, September 5, 2017, ¶ 26.
Mr. Canady's Use of Religion to Perpetrate Financial Frauds
Mr. Canady has repeatedly used religion as a vehicle to perpetrate financial frauds. As noted supra, his previous Alford plea in Georgia arose from his theft of $630,000 from three victims, one of which was a church. There was evidence during the trial that Mr. Canady did study Kabbalah. That came during the testimony of victim Hernan Lander, who said that he became aware of Mr. Canady in 2013 through a friend who recommended Mr. Canady and said Mr. Canady was active with the Kabbalah Center where Mr. Lander also took classes. Mr. Lander testified that his friend led him to believe that Mr. Canady was "somebody very important" and "knew a lot of people" at the Kabbalah Center. Mr. Canady's involvement in the Center was apparently one of the important factors which led Mr. Lander to provide funds to Mr. Canady.
May 8, 2017 trial transcript pp. 116–117; 212–213
The most striking evidence of Mr. Canady's use of religion to perpetrate frauds, however, came from the testimony of victim David Fresne. He testified that Mr. Canady convinced him at one point in 2013 to provide Mr. Canady with a $250,000 payment by literally swearing on a stack of Bibles that the payments would yield a legitimate return. Mr. Fresne testified that at a meeting with Mr. Canady at the Time Warner building (where Canady rented his $25,000 per month apartment), Canady brought multiple thick bibles and told Mr. Fresne "that once in a while you have to take a leap of faith. And he [Steven Canady] put his hand on the Bible and basically swore to me that this [a loan Canady was promising], you know, is a done deal. So I agreed to forward the money [the $250,000]". Mr. Fresne testified that he never got the loan—or a return of the $250,000.
May 22, 2017 trial transcript, pp. 1791–1792
Mr. Canady's Aborted Testimony
Jury selection in this case took two weeks. Presentation of evidence extended over four weeks and two days. Throughout the trial, the Court repeatedly discussed on the record with the jury and the parties that the People's evidence would likely be completed by Friday, May 26 or perhaps a day or two later and that any evidence the defense wished to present would have to be presented beginning the following week (beginning on Tuesday, May 30, following the Memorial Day holiday). The People rested on Tuesday, May 30. Ms. Canady–Summers indicated she wanted to testify and her testimony was scheduled without objection for Wednesday, May 31. The defense did not present any witnesses other than Ms. Canady–Summers and Mr. Canady.
On Tuesday, May 30, Mr. Canady said he was planning to testify. Since Ms. Canady–Summers had said her testimony would likely not be long, the Court initially sought to schedule Mr. Canady's testimony to follow Ms. Canady–Summers, on Wednesday, May 31. Mr. Canady's attorney, Mr. Krauss, moved to have Ms. Canady–Summers's testimony heard outside the presence of the jury. (As noted supra, Ms. Canady–Summers, who proceeded pro se, opted for a bench trial). After an extended colloquy, the Court granted that application. Mr. Canady, however, then asserted a contrary position and said he wanted Ms. Canady–Summers' testimony to be presented to the jury. Mr. Canady said this was "[c]onsistent with my position that counsel has been ineffective in making adequate decisions on my behalf".
May 31, 2017 trial transcript, p. 2607
Mr. Canady also asserted that he was unable to testify on Wednesday, May 31, because that was the Jewish holiday of Shavout. When the Court asked whether it was true that Shavout extended over two days, Mr. Canady said he only observed the first day of the holiday. Mr. Krauss asked if Mr. Canady's testimony could occur on Thursday, June 1. The Court said that it did not credit Mr. Canady's assertion that he could not testify on Wednesday because of a religious observance. However, the Court granted the request for a delay until Thursday, June 1, observing: "Mr. Canady actually does have the ability to delay his own testimony because if he said I'm not testifying tomorrow and we came back on Thursday and he said I want to testify now essentially in terms of the case law he [is] sort of [in] control of that time anyway." The Court then outlined the proposed schedule for Ms. Canady–Summers to testify outside the presence of the jury on Wednesday and for Mr. Canady to testify before the jury beginning at 10:30 A.M. on Thursday. The Court said: "Mr. Canady, you are going to start testifying 10:30 on Thursday morning, okay? You're okay with that?" Mr. Canady replied: "I am". The Court then instructed the jury that they were not to report the following day (Wednesday) but should report on Thursday.
May 30, 2017 trial transcript, p. 2589
Id., p. 2591. (the bracketed words here do not appear in the transcript, but are what the Court believes it said).
Id., p. 2595.
On Wednesday, May 31, however, Mr. Canady asserted that the People had failed to provide him with a "very pivotal piece of information that is required to prove our position" a "Livescribe" recording. Mr. Krauss reported that Mr. Canady was talking about a "pen that records". The People said they were not aware of any recordings which had been made with respect to the case. After searching their list of Rosario disclosures, however, the People acknowledged that an item entitled "Livescribe" was on their Rosario list. It was a paper notebook, recovered in the execution of a search warrant on Mr. Canady's office. "Livescribe" was the brand name of the paper notebook. Mr. Canady did not raise the issue again.
May 31, 2017 transcript, p. 2754
Id. p. 2759
On May 31, Mr. Canady also indicated that he did not want to testify as scheduled on the following day, June 1, because he wanted more time to prepare his testimony. On Thursday, June 1, Mr. Canady said he was not ready to testify. He asserted that he had been trying to gather "a voluminous amount of information within a short period of time" and asked that his testimony be delayed again, for four more days (including the weekend) until Monday of the following week. The Court said it was scheduling Mr. Canady's testimony for the current day, in accordance with Mr. Canady's prior agreement, and that Mr. Canady could either testify or the Court would inform the jury that the defense would not be presenting evidence. As the jury waited in the hall, the Court asked Mr. Canady repeatedly whether he wanted to testify and took multiple breaks to allow time for Mr. Canady to make a decision. The Court also offered to begin Mr. Canady's testimony on the current day but break early and not conclude Mr. Canady's direct testimony until the following day (Friday).
When the Court reminded Mr. Canady that he had agreed to testify on the current day, Mr. Canady said: "We also said on the record yesterday that we wanted additional time, before today". Mr. Canady then said: "Your honor, for two years I have been sitting in jail without access to an attorney, without access to my files, without access to witnesses". He then acknowledged that, among other communications with his attorney, Mr. Krauss had visited Mr. Canady at Rikers Island four times. Mr. Canady finally said he wanted to testify. He was then escorted to the witness stand outside the presence of the jury and the jury was brought in. The Court informed the jury that Mr. Canady's testimony would likely extend over a couple of days. After a couple of preliminary questions, Mr. Krauss asked Mr. Canady what his company was called and "[W]hat were the goals of this company? What did this company do". The following colloquy then ensued:
June 1, 2017 transcript, p. 2773
Id.
Id., p. 2774
MR. CANADY: Well, Mr. Krauss, you know, at the end of the day, we have been here for four weeks with the jury, and I think the members of the jury has heard a considerable amount of information from me.
ADA MALTZ: Objection
THE COURT: Well, I think this is a preface to his answer so—
MR. CANADY: It is, it is.
THE COURT:—I'm going to delay a ruling on your objection. Go ahead.
MR. CANADY: And in order for an accurate depiction of what the company was proposing to do over that period of time, I think that the jury really needs to hear an adequate testimony here and we are not prepared for that today.
The Court then sustained the objection, excused the jury and admonished Mr. Canady outside the jury's presence. The Court then repeatedly asked Mr. Canady whether he wanted to continue his testimony. Mr. Canady said he was not "prepared to testify today", "not prepared to testify" and "not prepared to testify now". The Court then informed the parties that it would instruct the jury that the defense had no evidence to present and scheduled a date for the jury to return to hear summations. Remarking on the fact that the defense had not presented any witnesses other than the Defendants, Mr. Canady said: "Ineffective assistance of counsel ... [w]hich has been brought up to you on multiple occasions".
Id., p. 2786
Id., p. 2790
Commenting on June 6, however, Mr. Canady provided a different explanation for why he terminated his testimony. He apologized "if my comment made during my testimony was inappropriate, but I feared that Mr. Krauss was attempting to derail my testimony because I repeatedly requested that we began discussing the history of the company starting from 2009 to encompass the twenty billion dollar commitment with the initial one billion tranche which he refused to do. Unfortunately, this caused the abortion of the testimony". He again attacked Mr. Krauss, outlined what he said had been a four year investigation of him by the Secret Service and a seven year investigation of him by the SEC without charges and said "the People have maliciously manipulated documents and e-mails and have made representations they know not to be true".
Transcript of testimony, June 6, 2017, p. 2984
Id.
Mr. Krauss asked that closing arguments be delayed, for four days, until Monday of the following week so he would have adequate time to prepare his summation. The People consented to the delay and the Court granted Mr. Krauss' request. Mr. Canady, however, said that a four day delay between the close of the evidence and the beginning of closing arguments did not provide enough time. He asked for five day delay, until Tuesday, June 6. The Court then brought the jury back to the courtroom and said the following:
Id., pp. 2883–2884
Okay. Mr. Canady has now informed me that he does not want to testify so all of the testimony that he provided is stricken, and you can disregard it. The defense has no evidence to present, no additional evidence to present. And that's their choice, obviously, that's perfectly fine. It's perfectly fine, because as I told you, the burden of proof is on the People, and the defense doesn't have any obligation to present any evidence, and they are not presenting any evidence.
Regarding the four day break, the Court told the jury that: "there is a lot of material in this case and lawyers need some time to get it all together and to get a coherent argument for you" and said: "I'm sorry you had to come in here today for essentially turned out to be not us doing any work today actually, but sorry about that". The Court then denied Mr. Krauss' mistrial motion.
Id., pp. 2792–2793
Mr. Canady's Fraudulent and Frivolous Claims During Summations and Jury Instructions
On the following Monday, June 5, the court convened for the beginning of closing arguments. The Court was aware, of course, that had Mr. Canady said on that day that he wanted to testify, he would have the right to do so. Indeed, as noted supra, the Court had relayed its view that Mr. Canady had the ability to control the timing of his testimony to a significant extent in its on-the-record comments on May 30. Mr. Canady did not again indicate he wanted to testify, however, and the closing arguments proceeded on Monday, June 5 and Tuesday, June 6 without any additional objection to proceeding with closing arguments on those days.
The Court's lengthy instructions took place on June 6 and June 7. During a brief break in the Court's charge on June 6, Mr. Canady first asked the Court to instruct the jury on "jury nullification". When the Court denied that request, he asked the Court to instruct the jury pursuant to CPL 310.85, which provides a defense where a defendant is not criminally responsible because of infancy. (During his aborted testimony Mr. Canady told the jury he was 45 years old).
On the jury's first day of deliberations, June 7, 2017, Mr. Canady asserted that on the previous day, he had seen the jury foreperson, Ms. Diaz, "turning around and telling the other jurors as I saw her that I was guilty" during a sidebar discussion the Court held with counsels. When the Court quizzed Mr. Canady further about this and asked him twice whether Mr. Canady "heard this", Mr. Canady responded twice: "That's correct".
The Court asked all of the personnel in the Court whether they had heard anything to that effect. When the attorneys and staff in the courtroom said they had not and the Court outlined the reasons it did not find this claim credible, Mr. Canady said: "It wasn't audible, she was saying it with her lips without an audible sound". ADA Maltz then questioned how Mr. Canady could have seen Ms. Diaz's lips if she had in fact turned around. The Court learned later that day that Mr. Canady's wife had written a letter to former Chief Judge Jonathan Lippman (apparently believing he continued to be New York's chief judge) complaining that this Court had forced Mr. Canady to testify during the previous week although Mr. Canady had not been prepared to do so.
June 7 trial transcript, pp. 3266–3271
On the second day of jury deliberations, June 8, 2017, the Court was told that Mr. Canady had informed a correction officer that it was "imperative" he speak with the judge. The Court then convened the parties and Mr. Canady for an on-the-record discussion. Mr. Canady reported that he had learned overnight from Mr. Canady's sister, Karen Barnes, that a former lawyer for Mr. Canady, whose name was Rachel Izower, had been "threatened" by the Manhattan district attorney's office and had decided not to testify on Mr. Canady's behalf because of those threats. When the Court asked Mr. Canady who from the Manhattan district attorney's office had contacted Mr. Izower, Mr. Canady said he did not know. When asked by the Court what, specifically, the Manhattan district attorney's office had allegedly said to Ms. Izower, Mr. Canady said he did not know. Mr. Canady made no offer to have Ms. Izower testify and provided no corroborating evidence. The district attorney's office denied any knowledge of any communications with Ms. Izower. The Court did not credit Mr. Canady's claims.
June 8, 2017 trial transcript
After deliberating for about a day and a half, requesting voluminous written exhibits and asking the Court a legal question, the jury returned a verdict on Thursday, June 8. They found Mr. Canady guilty on all of the 17 counts in the indictment and the corporate co-defendant guilty on all of the 11 counts applicable to it. This Court found co-defendant Ruby N. Canady–Summers guilty on the four counts of the indictment which were applicable to her.
Mr. Canady's Post–Verdict Submissions and Conduct to Date
Mr. Canady's sentencing was scheduled for September 12, 2017. On that morning, the Court received a new submission from Mr. Canady of several thousand pages, which had not been served on the People. The Court was then informed that Mr. Canady had refused to appear in court. Later in the morning, however, after additional proceedings, the Court was informed that Mr. Canady had changed his mind, and had decided he would appear in court later in the day. Given the Court's schedule of other matters, however, the Court was unable to hear Mr. Canady's case in the afternoon and it was adjourned to October 17, 2017.
Accompanying Mr. Canady's submission was a 30 page single spaced memorandum he authored. The memorandum primarily makes assertions not contained in the trial record to support arguments that Mr. Canady did not commit any crimes and also provides information about Mr. Canady and his good works. Among other claims, the memorandum asserts that Mr. Canady, through a previous company, had accomplished "multiple medical breakthroughs" including the development of "one of the first and most sophisticated artificial pancreas" [SIC] and a "cocaine like agent" to induce the production of dopamine in the brains of patients with Parkinson's disease. The company also produced "artificial intelligence drug delivery systems focused on monitoring the biochemical indices of physiological fluids". When abnormal fluid indices were detected, the system would automatically administer drugs through subcutaneous devices implemented in the abdominal region. The memo asserted that "[t]he company's artificial intelligence diagnostic systems contained one of the word's largest medical databases that made treatment recommendations based on the patients' genotype and phenotype after deriving a differential medical diagnosis through non-invasive means". Mr. Canady said a second of his companies had "secured a $20 Billion USD Commitment" from an asset management fund ; that an additional one of his companies had "secured preliminary commitments" to acquire a company worth $52 billion and that this company had also been in the process of selling one of the companies in its portfolio for $25 billion at the time of his indictment.
Defendant Steven Canady's Affirmation in Opposition to the People's Memorandum in Support of Sentencing Recommendations, September 11, 2017, p. 3.
Id.
Id.
Id., p. 4
Id.
The memorandum reported that the People had "threatened and coerced witnesses", "altered documents and emails" and threatened clients that if they repaid Mr. Canady's company, the clients would be indicted. "[T]he People have maliciously attempted to tear down the walls to the cathedral of social justice". Mr. Canady asserted that "the Company and I have been committed to alleviating global poverty, improving global health, increasing opportunities for women and children, reducing preventable diseases, and creating economic opportunities and growth for those in underserved and underfunded communities". He said he is in the process of translating the old and new testaments of the Bible into Hebrew with a Kabbalistic interpretation "in collaboration with several Christian and Jewish leaders around the world".
Id., pp. 29–30
Id., p. 5
Id.
Mr. Canady subsequently retained a new attorney to represent him at sentencing (his fifth counsel) and made additional submissions to the Court, outlining in detail his assertion that he did not, in fact, refuse to come to Court on September 12, 2017 but was rather not produced by the Department of Correction. Mr. Canady also submitted additional documents including a letter written by him to the United States Securities and Exchange Commission in 2006 in which he asserted he was the "Trustee" of an organization called the "Humanitarian & Scientific World Foundation, Ltd.". The letter references assets alleged to equal more than $1 billion Euros and wrongful conduct by a second company against this organization.
On October 13, 2017, the Court received a phone call from Mr. Canady's new attorney, Daniel DeMaria, saying that Mr. Canady had come upon new evidence in the case and was asking for a two week adjournment of the scheduled sentencing. The Court informed Mr. DeMaria that he should plan to appear on the previously scheduled sentencing date.
On the new sentencing date, October 17, 2017, Mr. Canady made another submission consisting of a 69 page single spaced memorandum (30 pages of which were typed and 39 pages of which were written in longhand) and over one thousand pages of supporting exhibits. The new submission argued again that the Court should dismiss the indictment. It was not served on the People. Mr. Canady asserted, through his new counsel, that he had mailed the new submission to the Court in August, but that it had been returned and then destroyed by the New York City Department of Correction requiring him to recreate the memorandum and submit it on October 17. The Court delayed the sentencing so it could review this new submission and then denied Mr. Canady's new motion from the bench.
Mr. Canady then said that he had recently learned at a religious service for inmates that an inmate who had physically attacked him while Mr. Canady was confined at Rikers Island on December 20, 2016, Melvin Cotton, had done so at the behest of the Manhattan district attorney's office. Mr. Canady provided an affidavit allegedly written by Mr. Cotton. In this purported affidavit, Mr. Cotton says that he was approached in 2016 by a person who identified himself as being from the Manhattan district attorney's office, but cannot recall that person's name. Although the affidavit is far from clear, it appears to assert that this unnamed person told Mr. Cotton that the Manhattan district attorney's office would intercede in a prosecution against Mr. Cotton in Brooklyn, if Mr. Cotton assaulted Mr. Canady. The affidavit includes an incident report from the New York City Department of Correction which apparently documents an assault Mr. Cotton committed against Mr. Canady on December 20, 2016. The affidavit does not identify the case Mr. Cotton references by indictment, docket number, charge, date or defense counsel.
The affidavit indicates that the Manhattan district attorney's representative said his office would "recommend instead of the 10 flat that you agreed to, we will recommend 6 flat with 3 post" [apparently referring to 3 years of post-release supervision] if Mr. Cotton assaulted Mr. Canady. This Court would note that "10 flat", that is, apparently, a determinate sentence of ten years without post-release supervision, is not a lawful sentence for any crime. It is not clear how the Manhattan district attorney's office would be able to convince the Brooklyn district attorney's office to offer Mr. Cotton a lower sentence than Mr. Cotton had already agreed to serve. It is not clear how the Manhattan district attorney's office could possibly benefit by having Mr. Canady assaulted. Finally, even if Mr. Cotton's affidavit were not a forgery and even if his assertions were credited, without a name, it would impossible to determine who the person who allegedly contacted Mr. Cotton was or who he represented.
Mr. Canady asked for a two week adjournment so he could further investigate the allegations. The Court, after reviewing the purported affidavit and conducting an on-the-record colloquy with Mr. Canady, said it found the allegations patently incredible and denied Mr. Canady's application for another adjournment.
In his statement at sentencing, Mr. Canady proclaimed his innocence and outlined why he believed he had been subject to a malicious prosecution. The People recommended that Mr. Canady be sentenced to an aggregate indeterminate sentence on the 17 counts on which he was convicted of 7–20 years. The Court imposed an aggregate indeterminate sentence of 6–18 years.
The Court had informed the People that its original recommendation for an indeterminate sentence of 7–21 years would, were it to be imposed, result in a sentence of 7–20 years by virtue of the "sentencing cap" provisions of the Penal Law. Penal Law § 70.30.
CONCLUSIONS OF LAW
Mr. Canady's Religious Observance Claims Were Not Sincere
It is improper for a court to analyze the "worthiness" of a defendant's assertion that he cannot appear in court by virtue of his need for a religious observance. People v. Johnson, 143 A.D.2d 847, 533 N.Y.S.2d 345 (2d Dept 1988), appeal denied, 73 N.Y.2d 856, 537 N.Y.S.2d 502, 534 N.E.2d 341. Nor is it appropriate for a court to refuse to honor a sincerely expressed assertion by a defendant that he cannot appear in court for religious reasons when honoring such a request would require a simple schedule adjustment which does not abrogate a compelling state interest. People v. Gilliam, 215 A.D.2d 401, 626 N.Y.S.2d 245 (2d Dept 1995). Where a court correctly finds a defendant's assertion that he cannot appear in court by virtue of a religious observance is not sincere, however, the Court should properly reject such an assertion and conduct a scheduled court proceeding. People v. Johnson, supra ., People v. Cooke, 292 A.D.2d 167, 738 N.Y.S.2d 207 (1st Dept 2002), lv denied, 98 N.Y.2d 636, 744 N.Y.S.2d 765, 771 N.E.2d 838. In this case, this Court determined the Defendant's assertion that he could not appear in court for religious reasons on Fridays was not sincere.
The Court credits the Defendant's claim that he has studied Kaballah. That was corroborated by evidence other than the Defendant's self-serving statements. The Court also has no view on whether Mr. Canady is Jewish. What was apparent to the Court, however, was that his assertion that he could not work on Fridays was not sincere. The Court reached that conclusion because: (i) Mr. Canady's professional life in the years preceding the instant trial were based on an elaborate web of deception; (ii) he attempted throughout this case to delay the trial and defraud the court; (iii) he has repeatedly and over a period of years worked to perpetuate frauds on Fridays, and appeared in court during this case on Fridays, belying his claims that he could not do so by virtue of his religious tenets; (iv) the evidence he presented to the Court in support of his religious claims (the so-called "contract" indicating that he could not work on Fridays) proved nothing of the kind; (v) he has repeatedly used religion in other contexts as a vehicle for fraud; and (vi) he failed to inform that Court about his need to not work on Fridays during court proceedings which extended for more than two years and raised his religious observance claims for the first time only after the first jurors in the case had been sworn and informed about their upcoming schedules (which included working on Fridays).
What made crediting Mr. Canady's religious observance claims a difficult question for the Court had nothing to do with the claims themselves. It had to do with the People's position. In ten years as a judge, this Court has never before rejected a defendant's professed expression of the need to take days off for a religious observance. What made the instant decision difficult was that, while the People never indicated they credited the Defendant's religious observance claims, they also offered no objection to not working on Fridays in an "abundance of caution". Normally, this Court, as other courts, acquiesces in applications made by a party to which there is no objection. In this case, however, the Court believed there were compelling reasons not to grant the Defendant's request.
Granting Mr. Canady's application would have created three problems. First, it would have made what was already scheduled to be a very long and difficult trial longer. Second, were this Court to allow Mr. Canady to control the timing of the trial through a fraudulent assertion, it is not clear why the Court would not be obliged to continue to validate Mr. Canady's claims had he made them for additional court dates. This Court is not aware that persons who study the Kaballah must observe the Sabbath in New York on two days (both when the sun sets in Israel and when the sun sets in New York). But that is obviously beside the point. It is not the Court's role to judge the legitimacy of religious beliefs. Had Mr. Canady, however, announced during the trial that he could not come to court on some other day for a reason this Court similarly had no knowledge about, the Court would be in the position of either implicitly recognizing one religious observance (that Mr. Canady could not work on Fridays and Saturdays) but not another (for example, that he could not work on the third Tuesday of each month) or allowing Mr. Canady to control the conduct of the trial by simply announcing whenever he chose that he could not come to court on a particular day for religious reasons.
There was finally a principle at stake. The right to the free exercise of religion is one of our most precious liberties. The use of religion to perpetrate fraud, on the other hand, is abhorrent. This Court, as others, obviously does not make every decision to vindicate a principle. Often, efficiency and the agreement of the parties are controlling. In this case, however, the principle was also important. It was important that Mr. Canady not use religion to defraud the court-as he had done on multiple prior occasions to defraud his victims.
Mr. Canady Received the Effective Assistance of Counsel
In this Court's view, based on the record, Mr. Canady received the effective assistance of counsel. Federal and state law provide two related but distinct standards for determining whether a defendant has received the ineffective assistance of counsel at a criminal trial. Under the federal standard, ineffective assistance of counsel requires both that counsel's performance fall below "an objective standard of reasonableness" and also that there exists a "reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different". Strickland v. Washington, 466 U.S. 668, 688; , 104 S.Ct. 2052, 80 L.Ed.2d 674 694 (1984), rehearing denied, 467 U.S. 1267, 104 S.Ct. 3562, 82 L.Ed.2d 864. A reasonable probability is one "sufficient to undermine confidence in the outcome." Strickland, at 694.
While New York law applies the first of these tests, New York case law has departed from the second "but for" Strickland prong and adopted "a rule somewhat more favorable to defendants". People v. Turner, 5 N.Y.3d 476, 480, 806 N.Y.S.2d 154, 840 N.E.2d 123 (2005). Under this New York rule, a defendant need not "fully satisfy" the Strickland prejudice test. Prejudice, under the New York standard, is "a significant but not indispensable element in assessing meaningful representation." People v. Stultz, 2 N.Y.3d 277, 284, 778 N.Y.S.2d 431, 810 N.E.2d 883 (2004), rearg. denied, 3 N.Y.3d 702, 785 N.Y.S.2d 29, 818 N.E.2d 671. A court must review whether counsel's conduct deprived a defendant of a fair trial. People v. Benevento, 91 N.Y.2d 708, 674 N.Y.S.2d 629, 697 N.E.2d 584 (1998). Counsel provides effective assistance "[s]o long as the evidence, the law, and the circumstances of a particular case, viewed in totality and as of the time of the representation, reveal that the attorney provided meaningful representation' ". Id., 91 N.Y.2d at 712, 674 N.Y.S.2d 629, 697 N.E.2d 584, quoting, People v. Baldi, 54 N.Y.2d 137, 147, 444 N.Y.S.2d 893, 429 N.E.2d 400 (1981). New York state courts have repeatedly asserted that the New York standard is, in practice and in intent, more generous to defendants than the federal standard ." Rosario v. Ercole, 601 F.3d 118, 125 (2d Cir.2010), rehearing in banc denied, 617 F.3d 683.
During pre-trial proceedings, Mr. Krauss filed written motions seeking, among other remedies, a severance from the case of Ms. Canady–Summers and vigorously litigated the bail issue which resulted in an order from this Court significantly reducing Mr. Canady's bail. Mr. Krauss successfully opposed the People's Monineux application. He was successful in limiting the scope of the People's cross-examination of Mr. Canady with respect to Mr. Canady's previous Alford plea to an earlier fraud. He made numerous motions both before and during the trial and was effective in selecting a jury. He vigorously cross-examined the People's primary fact witnesses and objected to the admission of numerous documents. He moved for a mistrial based on the Court's failure to grant his applications on multiple occasions. Throughout, he was in constant consultation with Mr. Canady in the courtroom and through multiple visits to Rikers Island on weekends. He also consistently pursued, in this Court's view, the only viable defense strategy in the face of overwhelming evidence that Mr. Canady had orchestrated a massive fraud.
That strategy, as the Court understood it, was two-fold. First, he was able through his cross-examination of the People's witnesses to elicit facts which supported the inference that Mr. Canady and his companies were legitimate businesses with real prospects for accessing large amounts of capital and fulfilling the contracts Mr. Canady entered into with his victims. Second, Mr. Krauss elicited what he argued were plausible reasons why the financial losses suffered by the victims were not the result of criminality but arose from other factors. In some cases the jury might have believed that Mr. Canady's victims did not fulfill their contractual obligations with Mr. Canady. In others, a careful reading of the contracts Mr. Canady entered into indicated that those contracts simply did not require "upfront" payments to be returned in all cases if loans were not provided. All of this allowed Mr. Krauss to argue in his two hour summation that in each instance of alleged fraud "these were all legitimate business deals that ended up failing for a variety of reasons" and were not indicative of criminality. Of course, Mr. Krauss was ultimately not successful in obtaining an acquittal. But that was not because he provided ineffective assistance.
June 5, 2017 transcript, p. 2873.
Mr. Canady Was Afforded the Right to Testify
A defendant in a criminal trial, of course, has a fundamental right to testify in his own defense at a criminal trial. That right can only be waived by a defendant and only if such waiver is knowingly, voluntarily and intelligently made. See, e.g., People v. Robles, 115 A.D.3d 30, 978 N.Y.S.2d 456 (3d Dept 2014), lv denied, 22 N.Y.3d 1202, 986 N.Y.S.2d 422, 9 N.E.3d 917 ; People v. Colon, 90 N.Y.2d 824, 660 N.Y.S.2d 377, 682 N.E.2d 978 (1997) ; People v. Cosby, 82 A.D.3d 63, 916 N.Y.S.2d 689 (4th Dept 2011), lv denied, 16 N.Y.3d 857, 923 N.Y.S.2d 419, 947 N.E.2d 1198.
Courts have discretion in establishing the order of a trial and it has been held that a court's refusal to allow a defendant to testify after the beginning of closing arguments or after the People have presented a rebuttal case is proper. See, e.g., People v. Maisonet, 304 A.D.2d 674, 760 N.Y.S.2d 58 (2d Dept 2003), lv denied, 100 N.Y.2d 584, 764 N.Y.S.2d 394, 796 N.E.2d 486 ; People v. Braxton, 254 A.D.2d 365, 681 N.Y.S.2d 544 (2d Dept 1998), lv denied, 93 N.Y.2d 850, 688 N.Y.S.2d 498, 710 N.E.2d 1097 (1999) ; People v. Broadhurst, 306 A.D.2d 15, 761 N.Y.S.2d 167 (1st Dept 2003), lv denied, 100 N.Y.2d 641, 769 N.Y.S.2d 206, 801 N.E.2d 427. On the other hand, it has been held to be reversible error to preclude a defendant from testifying, even after the close of the evidence in some cases. See People v. Harden, 99 A.D.3d 1031, 953 N.Y.S.2d 689 (3d Dept 2012) (reversible error to preclude defendant from testifying after the close of the evidence but prior to summations). In People v. Washington, 145 A.D.2d 670, 536 N.Y.S.2d 812 (2d Dept 1988) the Court even held that it was error under the particular circumstances of that case to preclude the defendant from testifying after summations but prior to the court's charge.
Here, the issue was whether this Court had the authority to direct the defendant to testify on the date he had previously agreed to do so. This Court believed it had that authority, under the circumstances here. This Court did not credit Mr. Canady's claim that he needed more time to prepare his testimony and even Mr. Canady disavowed that rationale in a later statement in which he said his testimony was aborted because he feared it was being "derailed" by his lawyer. Obviously, had this Court taken the position that Mr. Canady could control the timing of his own testimony, he would have been empowered to delay and obstruct the trial indefinitely, which, in this Court's view, is what he consistently sought to do. A defendant's fundamental right to testify is "not without limitation. The right may, in appropriate cases, bow to accommodate other legitimate interests in the criminal trial process" so long as such restrictions are not "arbitrary or disproportionate to the purposes they are designed to serve". Rock v. Arkansas, 483 U.S. 44, 55–56, 107 S.Ct. 2704, 97 L.Ed.2d 37 (1987) (internal quotation omitted).
See n. 48, supra.
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On the other hand, as a trial progresses, it is certainly also true that a defendant can change his mind and testify at any time, at least prior to the beginning of summations. But here, after saying he did not wish to testify on June 1, Mr. Canady did not indicate on the next court date (June 5) that he wished to testify. Had he done so, this Court would obviously have had to accommodate that decision. Instead, closing arguments proceeded and the issue was not raised again.
Here, of course, Mr. Canady also began and then aborted his testimony. There is no question, in this Court's view, that this decision was knowing, voluntary and intelligent. In the end, Mr. Canady succeeded in telling the jury from the witness stand that the Court had denied him adequate time to prepare his testimony without being cross-examined on that point or any other.
For all of those reasons, Defendant's and defense counsel's motions to vacate the judgment against him are denied.