Carey v. Kitson

• Citation: 461 N.Y.S.2d 876,93 A.D.2d 50
• Parties: In the Matter of Martin T. CAREY, Petitioner, v. Donald KITSON, as acting Judge of the County Court of Suffolk County, Respondent.
• Decision Date: 04 April 1983
• Court: New York Supreme Court Appellate Division

Page 876

461 N.Y.S.2d 876

93 A.D.2d 50

In the Matter of Martin T. CAREY, Petitioner, v. Donald KITSON, as acting Judge of the County Court of

Suffolk County, Respondent.

Supreme Court, Appellate Division,

Second Department.

April 4, 1983.

Andrew M. Lawler, P.C., New York City (Moses Silverman, Kenneth Roth and Paul, Weiss, Rifkind, Wharton & Garrison, New York City, of counsel), for petitioner.

Robert Abrams, Atty. Gen., New York City (John Michael Ryan, Asst. Atty. Gen., New York City, of counsel), for respondent.

Before LAZER, J.P., and MANGANO, THOMPSON and WEINSTEIN, JJ.

PER CURIAM.

In this original proceeding pursuant to CPLR article 78, petitioner seeks to, inter alia, prohibit respondent from trying him under Indictment Number 3131/81 on the ground that he had been granted immunity from prosecution based on his testimony before a Suffolk County Grand Jury in April, 1980 "directly relating to the transactions charged in the indictment".

The two issues to be resolved on this proceeding are as follows:

(1) Can petitioner's claim of transactional immunity be raised in an original proceeding under CPLR article 78 for a writ of prohibition? and if it can,

(2) Did petitioner's testimony before the Suffolk County Grand Jury confer upon him immunity from prosecution for sales tax evasion and filing false sales tax returns as charged in the instant indictment?

I

In 1980 the District Attorney of Suffolk County convened a Grand Jury to investigate allegations concerning the Vantage Oil parkway gas stations. In connection with that investigation, the Suffolk County District Attorney issued a subpoena duces tecum directing petitioner, Martin Carey, to produce before the Grand Jury numerous books and records of petitioner's company, Petroleum Combustion International Inc. (hereinafter PCI), which operated gas stations on Long Island.

In addition to this subpoena duces tecum, the Grand Jury issued a subpoena ad testificandum directing petitioner to appear and give testimony. Petitioner appeared and testified to PCI's sales volume, his knowledge of that volume, his involvement in PCI's operation and his knowledge of PCI's financial situation. Specifically, the Grand Jury proceeding included the following questions and answers:

"Q. Are you familiar with P.C.I. Corporation?

"A. Yes, I am.

"Q. What does P.C.I. stand for?

"A. Petroleum Combustion International, Inc.

* * *

* * *

"Q. What was your relationship to that business?

"A. I was the President of it from its inception.

"Q. What type of business was it in?

"A. It went into the business of operating gasoline stations.

"Q. Did you know Dick McKay, at that time? (phonetic spelling).

"A. Yes.

"Q. Who did you know him to be?

"A. He was also employed by the company and had a versatile capacity, as well.

* * *

* * *

"Q. If you could, roughly, what was the amount of gasoline, per year, that was pumped by or supplied by P.C.I. to both its own stations and the lease holders?

"A. Well, depending upon the month of the year, on a yearly basis, I would assume that maybe in 1977 the total gallonage might be somewhere around 7 to 8 million gallons.

* * *

* * *

"Q. Was there any difficulties that P.C.I. was experiencing in that time [in 1977]?

"A. We had been experiencing difficulty for a period of time, previous to that.

"Q. Is it fair to say that the only credit line that existed for P.C.I. was with Vantage Petroleum Corporation?

"A. Yes, we had very limited, if any, with Crown at the time, and the important volume of gasoline was with Vantage on somewhat of a credit basis.

"Q. If Vantage had called the credit line in, is it fair to say P.C.I. would have gone under?

"A. Yes, because at that time, to my knowledge, it was not heavily secured and that they could call a credit line at any time.

* * *

* * *

"Q. There came a time in 1978 when the Salan Management contract was signed?

"A. Yes.

"Q. Would you explain how that came to be, sir?

"A. P.C.I. had run into additional financial difficulties. We had the leases pledged with Vantage Petroleum for some of the gasoline stations. At that time, it was felt that unless something was done to alleviate the situation, the leases could be in jeopardy.

* * *

* * *

"Q. In a sense, is it fair to say that Vantage Petroleum, in light of the outstanding debt, owed to it by P.C.I., would now take over operation and management of P.C.I.?

"A. Yes, according to this contract.

* * *

* * *

"Q. Mr. Carey, I direct your attention specifically to this meeting in 1978 at which Cheryl Iorizzo [of Vantage and Salan] placed two weapons on the table when you were discussing the Salan Management contract. Did Mr. Calamari [Mr. Carey's attorney] object, in any way, to your signing of this proposal?

"A. At the end of the entire contract, he called me aside and we went by ourselves and he considered it a rough contract, a difficult contract, and I think I was dismayed by that, because he didn't have much bargaining power.

"Q. Was that because of the fact that there were weapons on the table, or the economic condition of P.C.I. at that time?

"A. We had to be realistic that the economic condition was very bad."

Thereafter, the Attorney-General of the State of New York secured an indictment against petitioner charging him with one count of grand larceny in the second degree (sales tax evasion) and sixteen counts of offering a false instrument for filing in the first degree (false sales tax returns). The following language was used in the indictment (the second count is representative of the other 15 false instrument counts):

"FIRST COUNT

"THE GRAND JURY OF THE COUNTY OF SUFFOLK, by this indictment, accuse the defendants of the crime of GRAND LARCENY IN THE SECOND DEGREE, committed as follows:

"The defendants above-named in the County of Suffolk on or about and between March 18, 1977 and June 20, 1978 stole certain property from the State of New York having an aggregate value in excess

of ONE THOUSAND FIVE HUNDRED ($1,500.00) DOLLARS.

"SECOND COUNT

"THE GRAND JURY OF THE COUNTY OF SUFFOLK, by this indictment, further accuse the defendants aforementioned of the crime of OFFERING A FALSE INSTRUMENT FOR FILING IN THE FIRST DEGREE, committed as follows:

"The defendants on or about March 18, 1977 in the County of Suffolk, with intent to defraud the State and any political subdivision thereof and knowing that a written instrument, namely a New York State and Local Sales and Use Tax Return (Form ST-810), contained a false statement and false information, to wit, Gross Sales and Services and Taxable Sales and Services for the period December 1, 1976 to February 28, 1977 reported in an amount less than the true amount, did offer and present it to a public office and public servant, namely the New York State Department of Taxation and Finance, with the knowledge and belief that it would be filed with, registered, recorded in and otherwise become a part of the records of such public office and public servant."

Petitioner moved, inter alia, to dismiss the indictment on the ground that his testimony before the Grand Jury in April, 1980 had conferred upon him immunity from prosecution on the transactions charged in the indictment.

In support of the motion to dismiss on the ground of transactional immunity, petitioner argued that

"the amount of sales tax due by PCI in 1977 can be easily calculated by taking PCI's gasoline volume and multiplying it by the then prevailing gasoline prices. Testimony on volume of gasoline sold for all practical purposes is testimony on sales tax due."

In the words of Special Term, petitioner also argued that

"other, substantial portions of that prior testimony serve to demonstrate the defendant's working knowledge and active participation in PCI Corporation's affairs. This knowledge and participation are important factors, he has argued. This is because the People's case will require them to prove that the defendant knew of false statements in reporting taxes due. The charges arising from PCI's failure to report properly and pay taxes due, will require circumstancial [sic ] evidence involving the defendant's knowledge of and familiarity with that corporation. Thus, key factors of proof in the People's case, which will rest in large measure upon circumstantial evidence, are related to the testimony previously given."

In opposition to the motion, the Attorney-General argued, inter alia, that (1) neither petitioner nor his corporation was a target of the investigation conducted by the Suffolk County District Attorney in 1980; (2) he did not learn of petitioner's April, 1980 Grand Jury testimony until June, 1982 and (3) his investigation, which resulted in Indictment Number 3131/81, did not arise out of, or flow from, the prior investigation by the Suffolk County District Attorney.

With regard to the substance of petitioner's Grand Jury testimony, the Attorney-General argued that his answers before the Grand Jury were introductory and general in nature and of no evidentiary value.

Special Term rejected outright all of the Attorney-General's arguments except for one, viz., that petitioner's testimony before the Grand Jury in April, 1980 was not sufficiently related to the transactions which were the subject of the instant indictment. Special Term characterized the latter issue as "close and difficult" and invited oral argument on the question as to "whether the testimony would 'tend' to a conviction within the meaning of Matter of Doyle, [257 N.Y. 244, 177 N.E. 489] and how the quantum of testimony needed to confer immunity may relate to the nature of the crimes charged which are of the 'white collar' variety."

On January 12, 1983, after both sides had been heard, Special Term denied petitioner's motion, inter alia, to dismiss the indictment.

In so holding, Special Term concluded as follows:

"In the present case the prior testimony is not sufficiently connected with the transactions...