New York Law Review

Tag: Scheme to Defraud

  • People v. Mikuszewski, 73 N.Y.2d 407 (1989): Sufficiency of Evidence for Scheme to Defraud and False Filing Charges

    People v. Mikuszewski, 73 N.Y.2d 407 (1989)

    Evidence presented to a grand jury is sufficient to indict if it establishes every element of the offense charged and the defendant’s commission of it, viewed most favorably to the People, but it must also demonstrate intent to defraud the requisite number of victims for a scheme to defraud charge.

    Summary

    Naneo Contracting Corp. and its vice-president, Mikuszewski, were indicted for fraudulent efforts to comply with minority business participation requirements in public works contracts. The Attorney-General alleged false representations regarding G.R. Trucking, a supposed minority-owned subcontractor. The Court of Appeals held that the evidence was sufficient to reinstate six counts related to offering a false instrument for filing, perjury, and making a false statement, but insufficient to support the scheme to defraud charge. The Court emphasized the necessity of proving intent to defraud ten or more persons, which was lacking in the evidence presented.

    Facts

    Naneo Corp. secured public works contracts contingent on allocating a percentage of work to State-approved Minority Business Enterprises (MBEs). Naneo Corp. represented that G.R. Trucking, owned by Gustave Roben, would fulfill this requirement. However, Roben was an employee of Naneo Corp., and G.R. Trucking was not an independent, State-approved MBE. Mikuszewski, as vice-president, allegedly made false representations in officially filed documents regarding G.R. Trucking’s status. This led to a criminal investigation and indictment against Mikuszewski and Naneo Corp.

    Procedural History

    The trial court dismissed nine counts against Mikuszewski and Naneo Corp. The Appellate Division affirmed the dismissals. Codefendant Roben pleaded guilty to a lesser offense. The People appealed to the Court of Appeals concerning seven of the dismissed counts against Naneo Corp. and Mikuszewski.

    Issue(s)

    1. Whether the Grand Jury evidence was legally sufficient to support the counts charging offering a false instrument for filing, perjury, and making an apparently sworn false statement.
    2. Whether the Grand Jury evidence was legally sufficient to support the count charging a scheme to defraud in the first degree.

    Holding

    1. Yes, because the evidence, viewed most favorably to the People, demonstrated that Mikuszewski, acting as vice-president of Naneo Corp., knew of the falsity in Roben’s affidavit and acted illegally with respect to it.
    2. No, because there was insufficient proof that the defendants intended to defraud or obtain property by false representations with respect to ten or more persons, as required by the scheme to defraud statute.

    Court’s Reasoning

    The Court emphasized that a Grand Jury may indict only if the evidence establishes every element of the offense and provides reasonable cause to believe the accused committed the offense. Regarding the false instrument, perjury, and false statement charges, the Court found sufficient evidence that Mikuszewski, as vice-president, knew of the falsity in Roben’s affidavit. The court noted Mikuszewski’s direct involvement in filling out forms related to G.R. Trucking’s MBE status and forwarding Roben’s affidavit, supporting an inference of knowledge. As for the scheme to defraud charge, the Court referenced the legislative history indicating that Penal Law §§ 190.60 and 190.65 were designed to prosecute consumer fraud schemes involving many victims defrauded of small amounts. The Court found a lack of evidence that the defendants intended to defraud ten or more persons of property, specifically noting that there was no proof other bidding contractors were defrauded. The Court stated, “In this case, while the People’s evidence before the Grand Jury may have been sufficient to establish that the one ‘person’ from whom property was actually obtained was the government or a few units of the government, there was absolutely no evidence that defendants made false representations to other bidding contractors…”

  • People v. Churchill, 47 N.Y.2d 151 (1979): Criminal Intent and Larceny by False Promise

    People v. Churchill, 47 N.Y.2d 151 (1979)

    In a prosecution for larceny by false promise, the prosecution must prove to a moral certainty that the defendant, at the time of making the promise, had no intention of fulfilling it; mere failure to perform a contract is insufficient to establish criminal intent.

    Summary

    Churchill, a novice contractor, was convicted of larceny by false promise for failing to complete home improvement contracts. The New York Court of Appeals reversed the conviction, holding that the prosecution failed to prove beyond a reasonable doubt that Churchill intended not to fulfill the contracts at the time he entered into them. The court emphasized that mere non-performance of a contract does not establish criminal intent and that the evidence must exclude every reasonable hypothesis except that of the defendant’s intention not to perform. The court found that Churchill’s actions were consistent with inexperience and poor business management rather than a scheme to defraud.

    Facts

    Churchill, after losing his job and struggling to find employment, started a home improvement contracting business. He entered into several contracts, including agreements with Kahn, Hild, Van Horn, and Vicki. While the Kahn and Hild contracts were completed (although Kahn was not fully satisfied), the Van Horn and Vicki projects were not. Churchill received substantial down payments for these projects and purchased some materials and equipment, but the work was either sporadic or incomplete. Homeowners became dissatisfied and took legal action. The District Attorney investigated, leading to charges of grand larceny in the third degree.

    Procedural History

    Churchill was indicted on four counts of grand larceny in the third degree. He was convicted by a jury on the counts related to the Hild, Van Horn, and Vicki contracts. The Appellate Division affirmed the conviction. Churchill appealed to the New York Court of Appeals.

    Issue(s)

    Whether the prosecution presented sufficient evidence to prove beyond a reasonable doubt that Churchill, at the time he entered into the contracts with Hild, Van Horn, and Vicki, intended not to perform those contracts, thereby committing larceny by false promise.

    Holding

    No, because the prosecution failed to prove to a moral certainty that Churchill intended not to perform the contracts at the time they were made. The evidence presented was insufficient to exclude every reasonable hypothesis except that of the defendant’s intent not to perform.

    Court’s Reasoning

    The court emphasized the high standard of proof required for larceny by false promise cases, as codified in New York Penal Law § 155.05(2)(d). The court noted that the statute explicitly states that “the defendant’s intention or belief that the promise would not be performed may not be established by or inferred from the fact alone that such promise was not performed.” Instead, the intention must be based on evidence that is “wholly consistent with guilty intent or belief and wholly inconsistent with innocent intent or belief, and excluding to a moral certainty every hypothesis except that of the defendant’s intention or belief that the promise would not be performed.” The court found the evidence presented was insufficient to meet this high standard.

    The court reasoned that Churchill’s actions, such as purchasing materials and starting work on the projects, indicated some intention to perform. The fact that the homeowners terminated the contracts or initiated civil suits also contributed to the incomplete performance. The court stated, “Stripped of all unseemly innuendos, the People have shown only that defendant had entered into three contracts for which he received substantial down payments and that he had failed to complete performance.” The court concluded that an equally strong inference was that Churchill was simply an inexperienced and incompetent businessman, rather than a criminal fraud. The court quoted People v. Ryan, 41 N.Y.2d 634, 639, stating that the legislature set forth “a high standard of proof for establishment of the defendant’s intent” recognizing that the criminal justice system is not an alternative for retribution from a defaulting, judgment-proof adversary.”