New York Law Review

Tag: Enterprise Corruption

  • People v. Keschner, 23 N.Y.3d 709 (2014): Continuity of Criminal Enterprise and Ineffective Assistance of Counsel

    People v. Keschner, 23 N.Y.3d 709 (2014)

    A criminal enterprise under New York’s Organized Crime Control Act requires continuity of existence beyond individual criminal incidents, not survivability after the removal of a key participant.

    Summary

    The New York Court of Appeals addressed two key issues in this case. First, the court held that to establish a criminal enterprise under New York’s enterprise corruption statute, the prosecution does not need to prove the enterprise would survive the removal of a key participant. Second, the court found that the defendants’ claims of ineffective assistance of counsel, based on the failure to object to the jury instructions on accomplice liability, were not supported because the errors in the instructions, while present, did not amount to the egregious failings required to establish ineffective assistance under the law. The case involved a fraudulent medical clinic scheme where the defendants were charged with enterprise corruption and other related crimes. The court affirmed the lower court’s decision.

    Facts

    Matthew Keschner, a chiropractor, and Aron Goldman, a medical doctor, participated in a fraudulent medical clinic scheme orchestrated by Gregory Vinarsky. Vinarsky hired “runners” to solicit patients from car accidents, who were then referred to the clinic. The clinic maximized insurance billings, regardless of actual patient need. Vinarsky set up the clinic with Goldman as the owner to satisfy regulations, and Keschner had a profit-sharing agreement with him. The scheme continued in a second clinic after the first was closed. The defendants were subsequently charged with enterprise corruption, scheme to defraud, and other crimes. During trial, the prosecution presented evidence of the fraudulent scheme, including testimony from former patients and undercover officers. The jury found both defendants guilty of various charges, including enterprise corruption, and both appealed.

    Procedural History

    Keschner and Goldman were convicted in the trial court of enterprise corruption and related charges. The Appellate Division affirmed the convictions. The defendants appealed to the Court of Appeals, which granted leave to appeal.

    Issue(s)

    1. Whether the People were required to prove that a criminal enterprise would survive the removal of a key participant to establish continuity of existence under Penal Law § 460.10(3).

    2. Whether the defendants’ trial counsel provided ineffective assistance by failing to object to the jury instructions on accomplice liability.

    Holding

    1. No, because the continuity element requires only that the organization exists beyond individual criminal incidents.

    2. No, because the omissions did not rise to the level of ineffective assistance of counsel.

    Court’s Reasoning

    The Court of Appeals clarified the meaning of “continuity of existence” in the context of enterprise corruption. The court rejected the argument that an enterprise must be able to survive the removal of its key participants. Instead, the court held that the focus should be on whether the organization continues “beyond the scope of individual criminal incidents,” and the Court cited People v. Western Express Intl., Inc., 19 NY3d 652 (2012) for this definition. The court reasoned that requiring proof of survivability would be practically impossible and would create a loophole for sophisticated criminal organizations. The court emphasized that the statute targets organized crime, and that a criminal enterprise is no less criminal because it has a powerful leader. The court found the trial court’s initial ruling to be in error, but because the error wasn’t properly preserved, it was not reversible error.

    Regarding the ineffective assistance claims, the court noted that the failure to object to the jury instructions on accomplice liability might have led to reversible error, but found it not to be “so clear-cut, egregious and decisive that it will overshadow and taint the whole of the representation.” The court also considered the fact that the Appellate Division also didn’t find reversible error in the instructions, as a further reason not to reverse.

    Practical Implications

    This case provides important guidance for prosecutors and defense attorneys in enterprise corruption cases in New York. Prosecutors must focus on proving that the criminal organization’s structure and criminal purpose extended beyond single criminal incidents. They do not need to prove that the enterprise would have survived the removal of a key participant. Defense attorneys should understand that merely pointing out an error isn’t enough to preserve an argument; it must be specific and clear. Additionally, it illustrates the high standard for proving ineffective assistance of counsel and the importance of a strategic trial approach.

  • People v. Rancharla, 23 N.Y.3d 296 (2014): Establishing a Criminal Enterprise

    People v. Rancharla, 23 N.Y.3d 296 (2014)

    To establish enterprise corruption, the prosecution must prove the existence of a criminal enterprise with a structure, continuity, and criminal purpose extending beyond individual criminal acts, but direct evidence of communications or planning among enterprise members is not essential; awareness and participation in the overarching criminal design are sufficient.

    Summary

    Rancharla and Barone, officers of Testwell Laboratories, were convicted of enterprise corruption for falsifying test results. The Appellate Division vacated these convictions, finding insufficient evidence of a criminal enterprise. The Court of Appeals reversed, holding that the Appellate Division applied an incorrect legal standard. The Court found sufficient evidence to establish a criminal enterprise based on the structure of Testwell Laboratories and the continuous, interrelated nature of the fraudulent testing schemes, and remitted the case for a reassessment of the weight of the evidence.

    Facts

    Testwell Laboratories, a materials testing company, and its officers, Rancharla (president) and Barone (vice-president), were indicted for engaging in a pattern of criminal activity. This activity included falsifying concrete mix-design reports, improper steel inspections, false certifications of inspectors, and alteration of compressive/flexural strength test data. Rancharla signed blank mix-design reports later fraudulently certified by employees. Barone directed employees to alter testing data to conceal inconsistencies. These activities spanned numerous construction projects.

    Procedural History

    Rancharla and Barone were jointly tried and convicted on multiple counts, including enterprise corruption. The Appellate Division modified the judgment by vacating the enterprise corruption convictions, citing insufficient proof of a criminal enterprise. The People appealed to the Court of Appeals. The Court of Appeals reversed the Appellate Division’s decision and remitted the case.

    Issue(s)

    Whether the Appellate Division applied the correct legal standard in reviewing the sufficiency and weight of the evidence supporting the defendants’ convictions for enterprise corruption under Penal Law article 460, particularly regarding the elements of a “criminal enterprise” as defined in People v. Western Express Intl., Inc.

    Holding

    Yes, the Appellate Division applied an incorrect legal standard because it improperly required direct evidence of a leadership structure, overall planning, and communications among the defendants to establish the existence of a criminal enterprise. The evidence presented was sufficient to support a jury’s rational conclusion that the defendants operated a criminal enterprise. Therefore, the Court of Appeals remitted the case for a proper assessment of the weight of the evidence.

    Court’s Reasoning

    The Court of Appeals held that the Appellate Division erred in its legal analysis. The Court emphasized that to prove enterprise corruption, it is necessary to distinguish mere patterns of criminal conduct from patterns demonstrably designed to achieve the purposes and promote the interests of organized, structurally distinct criminal entities. The Court stated that the Testwell Group had a “continuity of existence, criminal purpose and structure exceeding the individual crimes committed under the association’s auspices or for its purposes.” The Court highlighted the interrelated illegal schemes covering hundreds of construction projects as evidence of this continuity. Further, direct proof of communications or concerted activity was not essential; the jury could infer awareness and participation from the pattern of criminal activity and the involvement of individuals at various levels of Testwell Laboratories. As the Court noted, “the overall pattern of criminal activity and the involvement of various individuals at all levels of Testwell Laboratories’ corporate structure allowed the jury to infer that Rancharla and Barone, as high-level corporate officers, were aware of, participated in and directed others to commit crimes in furtherance of the Testwell Group’s objectives.” The Court emphasized that defendants need not be privy to every crime, only aware of the general structure, knowledge of the overarching design, and engagement in a requisite pattern of criminal activity.

  • People v. Western Express International, Inc., 19 N.Y.3d 652 (2012): Establishing ‘Ascertainable Structure’ for Enterprise Corruption

    People v. Western Express International, Inc., 19 N.Y.3d 652 (2012)

    To prove enterprise corruption under New York’s Organized Crime Control Act (OCCA), the prosecution must demonstrate not only a pattern of criminal activity but also the existence of a distinct criminal enterprise with an ascertainable structure separate from that pattern.

    Summary

    The New York Court of Appeals reversed the Appellate Division and reinstated the Supreme Court’s dismissal of enterprise corruption charges against appellants. The prosecution failed to prove that the appellants’ actions, which facilitated online transactions in stolen credit card data, were connected to a distinct criminal enterprise with an “ascertainable structure” beyond the general pattern of illegal online commerce. The Court emphasized that the OCCA requires proof of a structured criminal entity, not simply a pattern of criminal activity within an illicit market.

    Facts

    Douglas Latta, Lyndon Roach, and Angela Perez repeatedly bought stolen credit card data and used it fraudulently. Vadim Vassilenko, through Western Express International, Inc., facilitated transactions transferring the stolen data. Western Express offered services like check cashing, money orders, and digital currency exchange. The company’s services were used by carders (those trafficking in stolen credit card information). Western Express profited from commissions on digital currency exchanges that facilitated the purchase of stolen credit card information. Vassilenko knew a significant portion of Western Express’s business came from carding and sought more carder patronage, even attempting to advertise on a carding website.

    Procedural History

    The Supreme Court dismissed the enterprise corruption count, finding insufficient evidence of a “criminal enterprise” with an “ascertainable structure.” The Appellate Division reversed, reasoning that Vassilenko created a structured enterprise through Western Express. Two Appellate Division Justices dissented. One of the dissenting Justices granted appellants leave to appeal to the Court of Appeals.

    Issue(s)

    Whether the prosecution presented sufficient evidence to prove the existence of a criminal enterprise with an “ascertainable structure distinct from a pattern of criminal activity,” as required for a charge of enterprise corruption under New York Penal Law § 460.10(3).

    Holding

    No, because the prosecution’s evidence demonstrated only a pattern of criminal activity within the carding market, but failed to establish a distinct criminal enterprise with an ascertainable structure, common purpose, and association beyond individual transactions.

    Court’s Reasoning

    The Court focused on the statutory requirement in New York’s OCCA that a criminal enterprise have “an ascertainable structure distinct from a pattern of criminal activity” (Penal Law § 460.10 [3]). While the prosecution showed a pattern of illegal activity, it failed to prove that activity related to a distinct criminal enterprise with a structure. The Court distinguished this case from federal RICO cases, noting that the OCCA is more narrowly applied and requires a structure distinct from the underlying criminal pattern. The Court reasoned that Western Express’s services facilitated the carding market but did not create a structured criminal enterprise because the market participants acted according to their own interests, not as part of a structured, purposeful organization. The Court stated that while the internet can be used to facilitate crime, “crimes committed by resort to cyber means are not invariably referable to distinct nefarious enterprises.” The websites involved were accessible and used for business, and their legality depended on users’ independent agendas. “[T]he sites themselves presented simply as publicly accessible loci for the conduct of business, the legality of which turned in the end upon the independent agendas of individual users.” The Court required more than an inference of a beneficial relationship: there must be an enduring structurally distinct symbiotically related criminal entity with which appellants were purposefully associated. The court emphasized that the common purpose of the purported enterprise must be established, going beyond mere individual transactions. This differentiates a structured criminal organization from a loosely connected pattern of illegal acts.

  • People v. Besser, 96 N.Y.2d 141 (2001): Accomplice Corroboration in Enterprise Corruption Cases

    People v. Besser, 96 N.Y.2d 141 (2001)

    In an enterprise corruption prosecution, the accomplice corroboration rule (CPL 60.22[1]) requires only independent evidence tending to connect the defendant to the offense of enterprise corruption, not separate corroboration for each predicate criminal act.

    Summary

    Defendants Besser and Ciauri were convicted of enterprise corruption based on multiple predicate criminal acts. On appeal, they argued that the accomplice testimony used to prove each predicate act required independent corroboration. The New York Court of Appeals held that CPL 60.22(1) requires only that there be independent corroborative evidence tending to connect the defendant to the overall offense of enterprise corruption, not to each individual predicate act. The Court reasoned that the ‘offense’ is enterprise corruption, not the underlying acts, and thus the corroboration requirement is satisfied by a link to the enterprise.

    Facts

    James Besser and Jerry Ciauri, along with others, were indicted on enterprise corruption charges. The indictment alleged 62 pattern criminal acts in furtherance of an organized crime family’s activities between 1983 and 1993. Besser and Ciauri were charged with multiple pattern acts, including robbery, conspiracy to commit murder, grand larceny, and coercion. The evidence showed the crime family engaged in various illegal schemes like bookmaking, loansharking, and credit card fraud.

    Procedural History

    Besser and Ciauri were jointly tried and convicted of enterprise corruption. The Appellate Division affirmed their convictions. A judge of the New York Court of Appeals granted leave to appeal, and the Court of Appeals then affirmed the Appellate Division’s decision.

    Issue(s)

    Whether, in an enterprise corruption prosecution, the accomplice corroboration rule (CPL 60.22[1]) requires independent evidence tending to connect the defendant to each specific pattern criminal act, or whether it is sufficient for there to be independent evidence tending to connect the defendant to the overall offense of enterprise corruption.

    Holding

    No, because CPL 60.22(1) requires only independent evidence tending to connect the defendant to the offense charged, which in this case is enterprise corruption, not the individual pattern acts that make up the offense.

    Court’s Reasoning

    The Court reasoned that Penal Law § 10.00(1) defines an “offense” as conduct for which a sentence of imprisonment or a fine is provided. While enterprise corruption requires proof of at least three pattern acts, those acts themselves are not offenses that carry separate sentences. The “offense” is the overarching crime of enterprise corruption, which involves participation in a criminal enterprise through a pattern of criminal activity. The Court emphasized that the purpose of the enterprise corruption statute is to target the unique harm caused by complex criminal organizations, not merely to punish individual criminal acts already covered by other Penal Law provisions. The court noted the jury must find the defendant committed the acts to participate in an ascertainable criminal enterprise. Quoting CPL 60.22(1), the court stated that a “defendant may not be convicted of any offense upon the testimony of an accomplice unsupported by corroborative evidence tending to connect the defendant with the commission of such offense”. Here, the offense is enterprise corruption. The court also found sufficient independent proof linking the defendants to the crime family, including testimony from non-accomplice witnesses, documentary evidence placing defendants at a “safe house,” and telephone records corroborating accomplice accounts of communications.

  • People v. Breland, 83 N.Y.2d 294 (1994): Independent Criminal Acts and Accomplice Corroboration

    People v. Breland, 83 N.Y.2d 294 (1994)

    A witness’s participation in a crime is severed when the defendant commits a subsequent, independent criminal act against that witness, thus nullifying the need for accomplice corroboration regarding the independent act.

    Summary

    Victor Breland was convicted of enterprise corruption and multiple counts of murder and other crimes related to his leadership in a crack cocaine network. Key evidence included accomplice testimony regarding two sets of killings: one at a beauty parlor and another of a man named Lovell. Breland argued that the accomplice testimony was insufficiently corroborated, as required by CPL 60.22. He also argued that a witness, Ashton, who was also a victim of Breland’s violence, should have been considered an accomplice whose testimony required corroboration. The Court of Appeals affirmed the conviction, holding that Breland’s act of shooting Ashton constituted a separate and independent crime, thus eliminating the need for corroboration of Ashton’s testimony and that sufficient non-accomplice evidence connected Breland to the crimes.

    Facts

    Breland, a leader in a crack cocaine network, orchestrated a series of violent crimes. He and an accomplice murdered two people at the Glamorama Beauty Parlor, intending to kill a rival drug lord. Breland also shot and wounded Willie Ashton, an accomplice who was acting as a lookout, and killed another lookout, Mitchell Rich, to eliminate witnesses. A week later, Breland murdered Joseph Lovell, who had been used to register vehicles for the drug operation. Accomplices provided detailed accounts of both the Glamorama shootings and the Lovell murder.

    Procedural History

    Breland was convicted by a jury in the Supreme Court, Kings County, of enterprise corruption, multiple counts of second-degree murder, attempted murder, assault, and weapons possession. The Appellate Division affirmed the judgment. Breland appealed to the New York Court of Appeals, which granted leave to appeal.

    Issue(s)

    1. Whether Willie Ashton should be considered an accomplice as a matter of law regarding Breland’s attempted murder of Ashton, thus requiring corroboration of Ashton’s testimony under CPL 60.22.

    2. Whether there was sufficient non-accomplice evidence to corroborate the accomplice testimony regarding the Glamorama shootings and the Lovell murder, as required by CPL 60.22.

    3. Whether the police identification procedure used with Ashton was impermissibly suggestive, thereby tainting Ashton’s identification of Breland.

    Holding

    1. No, because Breland’s attempted murder of Ashton constituted a subsequent, independent criminal act, severing Ashton’s initial accomplice relationship.

    2. Yes, because the non-accomplice evidence sufficiently connected Breland to both sets of killings, satisfying the requirements of CPL 60.22.

    3. No, because Ashton’s prior relationship with Breland and the circumstances of their encounters ensured that the identification was not the product of police suggestion.

    Court’s Reasoning

    Regarding Ashton’s status, the Court reasoned that Breland’s act of shooting Ashton was a distinct criminal event, separate from the initial plan. "Breland’s attempted murder of his erstwhile accomplice, Ashton, constitutes a subsequent independent criminal frame in a series of violent criminal scenes and acts. His own shooting of Ashton outside the beauty parlor severed, in the most profound legal and actual sense, Ashton’s initial accomplice relationship to him." This eliminated the need to corroborate Ashton’s testimony.

    As for accomplice corroboration, the Court emphasized that the non-accomplice evidence need only "fairly tend[] to connect the defendant with the commission of the crime." The Court found sufficient corroboration for both the Glamorama shootings and the Lovell murder, including independent evidence regarding the location of Lovell’s body, vehicle registration records linking Breland to Lovell and the Glamorama attack, and testimony from a UPS driver who identified a getaway vehicle and another accomplice. The court noted, regarding corroboration: "The corroborative glue does not require independent proof of the elements of the crime to sustain a conviction; it just has to bind the accomplice evidence to the defendant."

    Finally, the Court dismissed Breland’s argument about police suggestibility, noting Ashton’s close and intense encounters with Breland. The Court noted "while Ashton’s viewings of Breland’s face and features, as described in the Rodriguez hearing, may have been relatively brief, they could not have been more intense or focused," further observing that Ashton’s face-to-face encounter with Breland at the time he was shot precluded any claims of police suggestibility.