People v. Barash, 41 N.Y.2d 20 (1976)

The terms “scheme or business of making or collecting usurious loans” in New York Penal Law § 190.42 are not unconstitutionally vague, and the statute applies to a series of interrelated usurious loan transactions by the same person constituting an integrated operation.

Summary

Barash was convicted of criminal usury for a series of loans he made to George Morgan. The New York Court of Appeals upheld the conviction, finding that the terms “scheme or business” in the criminal usury statute were not unconstitutionally vague. The Court determined that the evidence supported the jury’s finding that Barash engaged in a “scheme or business” of making usurious loans, due to the multiple, interrelated loans made to Morgan to benefit a club in which Barash had a financial interest. The Court also addressed a potential conflict of interest with Barash’s attorney, ultimately determining it did not warrant reversal.

Facts

Barash made four usurious loans to George Morgan over eight months. These loans were connected to the Italian-American Club’s operations, in which Barash had a financial interest. The loans carried extremely high interest rates (104% to 182% per annum). Morgan cooperated with law enforcement and testified against Barash.

Procedural History

Barash was indicted for first and second-degree criminal usury. The prosecution moved to disqualify Barash’s counsel due to a conflict of interest, which was denied. Barash was convicted on all counts. The Appellate Division affirmed the conviction, and the New York Court of Appeals granted leave to appeal.

Issue(s)

1. Whether the terms “scheme or business of making or collecting usurious loans” in Penal Law § 190.42 are unconstitutionally vague.
2. Whether the evidence was sufficient to sustain Barash’s conviction for criminal usury in the first degree.
3. Whether the trial court erred by not inquiring into a potential conflict of interest with Barash’s defense counsel.
4. Whether the trial court erred in denying a motion for a mistrial after receiving a note from a juror indicating an inability to render a fair verdict.

Holding

1. No, because the terms have a readily understandable meaning derived from common usage and legal dictionaries.
2. Yes, because the evidence showed a series of interrelated usurious loan transactions that constituted an integrated operation.
3. Yes, but this error did not warrant reversal.
4. No, because the note alone did not mandate a mistrial, and the defense did not request further inquiry.

Court’s Reasoning

The Court reasoned that “scheme” and “business” are commonly understood terms and not impermissibly vague. A “scheme” is “a design or plan formed to accomplish some purpose,” and “business” is “commercial activity engaged in for gain.” The Court emphasized the importance of context, stating that the statute applies to “a series of transactions, multiple as to loans if not borrowers, which are usurious and are made by the same person under such circumstances that they can factually be found to be interrelated and to constitute parts of an integrated single operation.”

The Court found sufficient evidence to support the conviction, citing the four loans made to Morgan over a short period at usurious rates, all connected to the Italian-American Club’s financial stability. The jury was justified in concluding this constituted a “scheme or business.”

Regarding the conflict of interest, the Court acknowledged that the trial court erred by not inquiring of Barash about the potential risks of his attorney’s prior representation of Morgan, the key prosecution witness. However, the Court held that Barash was not entitled to reversal because he failed to demonstrate that an actual conflict of interest, or even a significant possibility thereof, existed. The Court noted that Barash’s attorney reasonably believed he was no longer bound by confidentiality to Morgan due to Morgan’s cooperation with the prosecution, and his cross-examination of Morgan was diligent.

Finally, the Court found no error in denying the mistrial. Defense counsel did not request further inquiry of the juror and only moved for a mistrial. The juror continued to deliberate and ultimately joined in the unanimous verdict.