Lurie v. Wittner

• Decision Date: 02 July 1999
• Docket Number: No. 98 CIV. 7697(SAS).,98 CIV. 7697(SAS).
• Citation: 75 F.Supp.2d 117
• Parties: Brett K. LURIE, Petitioner, v. Bonnie G. WITTNER, Acting Justice of the Supreme Court of the State of New York; Dennis C. Vacco, Attorney General of the State of New York; Glenn S. Goord, Commissioner, New York State Department of Correctional Services, Respondents.
• Court: U.S. District Court — Southern District of New York

75 F.Supp.2d 117

Brett K. LURIE, Petitioner, v. Bonnie G. WITTNER, Acting Justice of the Supreme Court of the State of New York; Dennis C. Vacco, Attorney General of the State of New York; Glenn S. Goord, Commissioner, New York State Department of Correctional Services, Respondents.

No. 98 CIV. 7697(SAS).

United States District Court, S.D. New York.

July 2, 1999.

Mark M. Baker, Brafman, Gilbert & Ross, P.C., New York City, for Petitioner.

Christine Duisin, Assistant Attorney General for the State of New York, New York City, for Respondents.

OPINION AND ORDER

SCHEINDLIN, District Judge.

Brett K. Lurie ("Lurie" or "petitioner") has moved for reconsideration of that portion of the Opinion and Order dated April 26, 1999 ("Opinion and Order") denying habeas relief as to Count 28. Respondents have cross-moved for reconsideration of the entire Opinion and Order. On April 30, 1999, I withdrew the Opinion and Order pending the outcome of these motions. For the following reasons, I deny both motions and now re-instate the April 26, 1999 Opinion and Order.

Background

Petitioner was convicted, in Count 28, of violating section 175.35 of the New York Penal Law by filing a false instrument on November 1 to 3, 1989, to wit, the fourth amendment to the offering plan for the premises at 488 Ocean Parkway (the "Edgewood"). Section 175.35 reads as follows:

A person is guilty of offering a false instrument for filing in the first degree when, knowing that a written instrument contains a false statement or false information, and with intent to defraud the state or any political subdivision, public authority or public benefit corporation of the state, he offers or presents it to a public office, public servant, public authority or public benefit corporation with the knowledge or belief that it will be filed with, registered or recorded in or otherwise become a part of the records of such public office, public servant, public authority or public corporation.

N.Y. Penal Law § 175.35. Petitioner's false statement, in part, is found at the end of the fourth amendment to the Offering Plan, which states: "Except as set forth in this Fourth Amendment and the first three amendments to the plan, there have been no material changes in this plan." See pp. 119-120, infra, for a discussion of materiality. In fact, at the time this amendment was filed, petitioner was in substantial arrears on both the mortgage and maintenance payments.² See Letter dated May 19, 1999 from Mark M. Baker, Esq., counsel for petitioner ("May 19th letter"), Exh. F, pp. 2285 & 2287. See also id., Exh. D, p. 5 (for comparable language used in the fifth amendment to the Edgewood plan).

Petitioner's Motion for Reconsideration

Petitioner argues that Count 28 should be overturned on the ground that the precluded testimony of Richard Koral, his real estate attorney, would have negated a finding of fraudulent intent. He supports this conclusion by citing to certain changes made to the applicable New York City Regulations which were not disclosed and did not take effect until after November 3, 1989.³ As a result of these changes, amendments must now disclose:

(vi) A statement as to whether the sponsor or holder(s) of unsold shares is current on all financial obligations to the cooperative, including, but not limited to, payment of maintenance,... In addition, state whether the sponsor or holder(s) of unsold shares is current on payments of underlying mortgages and all obligations under financing arrangements for which unsold shares have been pledged as collateral....

13 N.Y.C.R.R. § 18.5(c)(3)(vi). According to petitioner, once it was announced on December 12, 1989 that these new requirements would soon be implemented, he was advised by Mr. Koral to include the above information in new amendments, which he did in a later filed fifth amendment to the Edgewood plan. See May 19th letter, p. 10 & Exh. D, p. 4.

Petitioner's argument is unavailing for a number of reasons. First and foremost, the requirement to disclose arrears in mortgage and maintenance payments was not newly enacted with the 1990 changes. In fact, 13 N.Y.C.R.R. § 18.5(a)(2), which was part of original Part 18 adopted on June 2, 1982, states that:

(2) An amendment must include a representation that all material changes of facts or circumstances affecting the property or the offering are included, unless the changes were described in prior amendment(s) submitted to but not yet filed with the Department of Law.

It is beyond dispute that the failure to make mortgage and maintenance payments is a material change of facts and circumstances. See State v. Rachmani Corp., 71 N.Y.2d 718, 530 N.Y.S.2d 58, 62, 525 N.E.2d 704 (1988)(an omitted fact is material if it would have "significantly altered the `total mix' of information made available" to a reasonable investor) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976)). In addition, Mary DiStephan, an expert witness at trial, made the following statement in her affidavit in Opposition to the Motion to Dismiss:

Finally, in August, 1990, the Attorney General promulgated regulations expanding the disclosures which would be required even if there were no default, on at least an annual basis, of the sponsor's total financial condition even in other projects where the sponsor or a principal of the sponsor owned in excess of ten percent of the shares or units.... This requirement to file an updating financial disclosure amendment at least annually expanded and supplemented the already existing requirement (existing almost 30 years) to immediately amend the offering plan whenever there is a material change of fact or circumstance affecting the offering.

May 19th letter, Exh. A, pp. 5-6 (emphasis added). Therefore, although the 1990 changes delineated the precise financial information to be included in amendments, the duty to disclose sponsor defaults was already well-established.⁴ Given this clearly delineated duty, it is inconceivable how any testimony from Richard Koral would impact on petitioner's fraudulent intent. Moreover, the evidence that would have been presented by Richard Koral is ambiguous. During the state court proceeding, petitioner's trial attorney told the judge:

Mr. Koral will come in and testify that, in fact it was his interpretation and his advice among other attorneys and there will be documents that we will submit which will show that it was his belief and Mr. Lurie compiled and that when the law changed on October 15[sic], Mr. Lurie had to file those amendments immediately.

A 951. Arguably, Koral's testimony would only explain why Lurie filed an accurate fifth amendment to the Edgewood Plan. The proffer of Koral's testimony does not include any representation by Koral that the fourth amendment to the Edgewood property was done in accordance with then-existing law based on his advice. Koral's proposed testimony is therefore irrelevant to Count 28. The exclusion of irrelevant evidence cannot support a violation of petitioner's Sixth Amendment right to present a defense. See U.S. ex rel. Ashford v. Director, Illinois Dep't of Corrections, 871 F.2d 680, 686 (7th Cir.1989), overruled on other grounds by, Tague v. Richards, 3 F.3d 1133, 1140 (7th Cir.1993) (such a violation occurs when the "testimonial evidence to be presented by the witness `was relevant, material, and vital to the defense, and ... the exclusion of that evidence was arbitrary'")(quoting Lange v. Young, 869 F.2d 1008, 1011 (7th Cir.1989)).

Even assuming, arguendo, that Koral addressed the content of the fourth amendment, it is nonetheless irrelevant to Count 28 for other reasons — namely the representations made by Lurie himself. The fourth amendment to the Edgewood property, much like the fifth amendment, contains a "No Material Changes" provision wherein Lurie stated that there have been no material changes in the plan despite the fact he was in default on the mortgage and maintenance payments. Lurie made a similar representation in the certifications filed with respect to the original offering plans, including the offering plan for the Edgewood property. See A 784 (where Mary DiStephan testified that "all of the Lurie plans have this identical certification"). With regard to each property, Lurie certified, in part:

I am the sponsor and/or the principle [sic] of sponsor of the offering to convert the subject property to cooperative ownership. I understand that I have primary responsibility for compliance with the provisions of Article 23-A of the general business law, the regulation permigated (ph) by the Attorney General in Part 18, and such are [sic] the laws and regulations as may be applicable.

I certify that the offering plan does and that all documents submitted hereafter by me which amend or supplement the offering plan will one, set forth the detailed terms of the transaction and be complete, current, and accurate ....

Three, not omit any material fact ....

Five, not contain any fraud, deception, concealment, suppression, false pretense, or fictitious or pretended purchase or sale....

I understand that violations are subject to the civil and criminal penalties of the general business and penal law.

A 785-86 (emphasis added). When Ms. DiStephan was asked when the certification expires, she responded: "It never expires, it indicates that anything that is filed with this certification, or anything that's filed thereafter, is subject to the certification." A 786.

In short, Lurie twice represented that documents filed in relation to the Edgewood property would contain complete and accurate information, in the original certification and in the amendment itself, when in fact they did not. Consequently, he cannot legitimately argue that he did not know of the falsity of the fourth amendment to the Edgewood property at the time of filing. Any testimony that could be presented by Richard Koral is therefore...