Opinion
No. IND-70154-22
11-17-2023
The People of the State of New York, v. Solomon Feder, Chaim Liefer, Moshe "Moses" Weinberger, Carlos Santander, Big Apple Designers, Inc., Velocity Framers USA, Inc., CIS Construction LLC, CIS Enterprises Corp., Defendants.
For the People: New York County District Attorney's Office Assistant District Attorney Christopher Beard, of Counsel. Assistant District Attorney Garrett Baldwin, of Counsel. For the Defendants: Marc Agnifilo, Brafman & Associates, on behalf of Solomon Feder, Henry Mazurek, Meister Seelig & Fein LLP, on behalf of Chaim Liefer, Susan Necheles, Necheles Law LLP, on behalf of Moshe Moses Weinberger, John Esposito, Aidala, Bertuna & Kamins PC, on behalf of Carlos Santander, CIS Construction, LLC., and CIS Enterprises Corp., Abe George, Law Offices of Abe George, PC on behalf of Big Apple Designers, Inc., Adam Citron, Davidoff Hutcher & Citron LLP, on behalf of Velocity Framers USA, Inc.
Unpublished Opinion
For the People: New York County District Attorney's Office Assistant District Attorney Christopher Beard, of Counsel. Assistant District Attorney Garrett Baldwin, of Counsel.
For the Defendants: Marc Agnifilo, Brafman & Associates, on behalf of Solomon Feder, Henry Mazurek, Meister Seelig & Fein LLP, on behalf of Chaim Liefer, Susan Necheles, Necheles Law LLP, on behalf of Moshe "Moses" Weinberger, John Esposito, Aidala, Bertuna & Kamins PC, on behalf of Carlos Santander, CIS Construction, LLC., and CIS Enterprises Corp., Abe George, Law Offices of Abe George, PC on behalf of Big Apple Designers, Inc., Adam Citron, Davidoff Hutcher & Citron LLP, on behalf of Velocity Framers USA, Inc.
Hon. Althea E.M. Drysdale, AJSC
"Logic and reason join with all the authorities that have considered the question, in holding that the People may prosecute for a single crime a defendant who, pursuant to a single intent and one general fraudulent plan, steals in the aggregate as a felon and not as a petty thief.
"If this were not so, a crime of grand larceny would go unpunished and a felon escape because the law classified him only as a petty thief."
People v. Cox, 286 NY 137, 145 (NY Ct. App., 1941)
Summary of Facts
This case commenced with an indictment jointly charging the defendants with one count of Conspiracy in the Fourth Degree pursuant to PL §§105.10(1), one count of Insurance Fraud in the First Degree pursuant to PL §176.30, and six counts of Falsifying Business Records in the First Degree pursuant to PL §175.10, in relation to a scheme to defraud involving forty separate and distinct overt acts which include each of the defendants over a four-year period, resulting in the withholding of approximately $ 2.7 Million to the New York State Insurance Fund ("NYSIF"). The People allege that, as part of this scheme, the defendants colluded together and with others to fraudulently underreport the true size of their company payrolls by creating a substantial "off-the-books" cash payroll and falsifying business records in order to avoid payments to NYSIF.
Procedural History
The defendants were arraigned in New York County Supreme Court on February 16, 2022. The case was adjourned on consent of the parties to allow for the complete disclosure of discovery materials prior to the filing of motions. The People filed and served their Certificate of Compliance on June 10, 2022, at which point a motions schedule was set. The defendants' motions were filed on September 15, 2022, and the People filed their response on October 17, 2022. The Court issued its decision on December 20, 2022. As part of that decision, the Court inspected the grand jury minutes, found the minutes sufficient, and subsequently denied the defendants' motion to dismiss any counts of the indictment due to the alleged insufficiency of the evidence.
On January 10, 2023, the defendants jointly filed a motion to reargue their prior motion to dismiss count two of the indictment, Insurance Fraud in the First Degree pursuant to PL § 176.30, arguing that the evidence before the grand jury was insufficient to support the charge as the People had improperly relied on the doctrine of aggregation in order to reach the monetary threshold required for the charge. In their motion, the defendants claim that the Court, through its prior decision, failed to address "specifically whether the doctrine of aggregation permits the People to aggregate a number of individual alleged offenses occurring over the course of several years into one single offense so as to meet the one-million-dollar threshold required by the Crime of Insurance Fraud in the First Degree." Defendants' Motion to Reargue at p. 2, ¶ 4. The People filed a letter in response to the defendant's motion to reargue on February 1, 2023, arguing that the Court sufficiently ruled on the defendant's motion to inspect the grand jury minutes and dismiss counts of the indictment, and that the defendants' motion to reargue was the legal equivalent of "seeking a 'do-over.'" People's Response Letter at p. 2. For the reasons stated herein, the defendant's motion to reargue is granted, and the defendant's motion to dismiss count two of the indictment is, again, denied.
Conclusions of Law
a. Defendant's Motion for Leave to Reargue
"A motion for leave to reargue [ ] shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion." CPLR § 2221(d)(2). The purpose of such a motion "is not to serve as a vehicle to permit the unsuccessful party to reargue once again the very questions previously decided." Foley v. Roche, 68 A.D.2d 558, 567 (App. Div. 1st Dept. 1979). It is within the sound discretion of the Court to determine whether to grant a motion for reargument. People v. Glen, 30 N.Y.2d 252 (NY Ct. App. 1972), People v. Harrington 193 A.D.2d 756 (App. Div. 2nd Dept. 1993).
As a threshold matter, in the Court's original ruling, the Court granted the motion to inspect the grand jury minutes. The Court further denied the defendants' motion to dismiss or reduce the indictment due to legal insufficiency of the evidence or defects in the proceedings. In coming to this decision, the Court inspected the grand jury minutes and determined that the evidence presented to the grand jury established a prima facie case of the defendants' commission of the crimes charged in the indictment, which included count two charging the defendants with Insurance Fraud in the First Degree. The Court disagrees with the defendants' assertion that this issue was overlooked by the Court in the Court's prior decision, but the Court will grant the defendants' motion to reargue in order to provide a more detailed decision on the matter.
b. Defendant's Motion to Dismiss Count Two of the Indictment
Count two of the indictment charges the defendants collectively with one count of Insurance Fraud in the First Degree pursuant to PL § 176.30 under the theory that the defendants' actions over the course of a four-year scheme resulted in the withholding of $ 2.7 Million to NYSIF. The defendants argue that this count was improperly charged as the People impermissibly presented evidence of multiple alleged instances of fraud over several years and asked the grand jury to consider the aggregated amount of the fraud from each instance in order to reach the $1 Million threshold as outlined in Insurance Fraud in the First Degree.
Based on the evidence presented to the grand jury, the People properly asked the grand jury to consider a charge of Insurance Fraud in the First Degree based on the aggregate amount. The seminal law in New York regarding the theory of aggregation comes from the New York Court of Appeals decision in People v. Cox, 286 NY 137, 142 (NY Ct. App. 1941). In Cox, the defendant, with the assistance of others acting in concert, was charged with stealing thousands of dollars in the form of nickels from the New York City subway system over a period of years by "belting" the turnstiles to remove nickels from their registers and falsifying daily official reports regarding the contents of the registers. Id. At 140. The defendant argued that, because he never stole $100 or more of nickels at a time, he could not be charged with grand larceny, and instead could only be charged with a series of petit larcenies. Id. The Court held that "'[w]here the property is stolen from the same owner and from the same place by a series of acts, if each taking is the result of a separate, independent impulse, each is a separate crime; but if the successive takings are all pursuant to a single, sustained, criminal impulse and in execution of a general fraudulent scheme, they together constitute a single larceny, regardless of the time which may elapse between each acts.'" Id at 142-43, quoting 36 Corpus Juris at p. 798. By way of example, the Court compared a scheme to defraud to a thief and a truckman arranging to empty the furnishings of an unoccupied house over the course of several days:
At the time this crime occurred in 1941, the monetary threshold for Grand Larceny in the Second Degree Pursuant to PL § 155.40 was $100.
The thief arranged with a truckman that whenever he called him they would go together to the unoccupied house and remove a truckload of furnishings. In the meantime the house is kept locked to as to protect it from other marauders. Even if it took a long period of time and many truckloads of furnishings to empty the house, surely no one would contend seriously that defendant could not be convicted of the single crime of stealing articles of the total value of the furnishings of the house. To that end defendant arranged with the truckman for the crime, and the different trips were but incidents under the general intent and the one illegal plan. Likewise in the case at bar defendant arranged with the station agent so that all the takings were pursuant to one single intent, and the stealings on the separate days, like the takings by means of the various truckloads, were but incidents in carrying out the general plan.Id. at 141-142.
This doctrine has been widely accepted and applied by Courts of this state over the past eighty years. See, e.g. People v. Rossi, 5 N.Y.2d 396, 399 (NY Ct. App. 1959) (Upholding the aggregation of nine fraudulently-filed insurance claims to support a charge of taking by false pretenses.); People v. Miller, 145 A.D.3d 593 (App. Div. 1st Dept. 2016) (Upholding the defendant's conviction for Grand Larceny in the First Degree based on the aggregation of five thefts when the defendant acted in concert with the bookkeeper for the Kings County Public Administrator who had devised a method for generating fraudulent checks made payable to accomplices and camouflaging the unauthorized disbursements in the Public Administrator's record system.); People v. Prim, 47 A.D.2d 409, 411 (App. Div. 4th Dept. 1975), modified on an unrelated issue, 40 N.Y.2d 946 (NY Ct. App. 1976) (Holding that the defendant was properly charged and convicted of grand larceny based on the aggregate amount of funds collected from social services over a sixteen-month period.); People v. Gbohou, 186 Misc.2d 324, 328 (Sup. Ct. Bronx Cty., 2000) ("Additionally, the various thefts are aggregated in a single count of grand larceny and a single count of criminal possession of stolen property to reach the threshold for the degree of those crimes charged. New York, as do many other states, permits aggregation of separate acts of wrongful taking or obtaining of property '[as] long as the larceny is held to be pursuant to a single intent, and one complete, illegal scheme, [and] it matters not the length of the period over which the takings continued.'") quoting Cox, supra, at 142.
Here, the People permissibly presented evidence of aggregation to the grand jury. People v. Daghita, 276 A.D. 20, 22, 92 N.Y.S.2d 799 (App. Div. 3rd Dept. 1949), modified on an unrelated issue, 301 NY 223 (NY Ct. App. 1950) ("Whether there was unitary purpose in these thefts, so that in totality they may be evaluated together as grand larceny, rather than as components and therefore as petit larcenies, is finally on this record a question not of law, but of fact. [...] What is 'separate', what is 'single', what is 'sustained', what is 'independent', are all jury questions both by legal tradition and by necessity. No judge could apply these definitions rigidly as a matter of law, and the judicial supervision of the verdict is limited to seeing to it that there is factual foundation upon which reasonable men might reach the conclusion that these conditions attached to the series of acts under consideration.")
Furthermore, Courts have opined that the ultimate issue of aggregation rests not with the Courts, but with the jury's determination that the instances alleged were part of an ongoing scheme or plan. See, e.g. Rossi, supra, at 400-01, citing People v. Daghita, supra, ("The argument against applying the Cox rationale here is that, since these are alleged to have been false pretense takings [ ] with a separate pretense each time, there needs must have been in each instance a separate intent and a new enterprise. Of course, on the trial that may turn out to have been the fact. But the indictment alleges that this was in effect one taking with a single intent, carried out in successive stages. Proof of all that could make out a jury question of whether this was grand larceny under the Cox rule."); People v. Peck, 93 Misc.2d 838, 841 (Sup. Ct. 1978) (Holding that the defendant's motion to dismiss the indictment based on a misapplication of the aggregation theory was premature and therefore, denied. "The critical issue determining the validity of aggregating the checks is whether receipt of the checks occurred under a common scheme or plan. Evidence on this point must await the trial.")
For these reasons, the defendant's motion is premature and is therefore denied in its entirety. The People were permitted to ask the grand jury to consider a count of Insurance Fraud in the First Degree under the theory of aggregate withholdings. The grand jury found that there was legally sufficient evidence to support the charge. Whether the withholdings were all part of a common scheme or plan by the defendants is for a jury to decide.
This constitutes the Decision and Order of the Court.