MATTER OF TAUB v. Altman

• Citation: 781 N.Y.S.2d 492,3 N.Y.3d 30,814 N.E.2d 799
• Parties: In the Matter of SHERMAN F. TAUB et al., Appellants, v. HERBERT I. ALTMAN, as Justice of the Supreme Court of the State of New York, et al., Respondents.
• Decision Date: 01 July 2004
• Court: New York Court of Appeals

3 N.Y.3d 30

814 N.E.2d 799

781 N.Y.S.2d 492

In the Matter of SHERMAN F. TAUB et al., Appellants, v. HERBERT I. ALTMAN, as Justice of the Supreme Court of the State of New York, et al., Respondents.

Court of Appeals of the State of New York.

Argued June 3, 2004.

Decided July 1, 2004.

Stillman & Friedman, P.C., New York City (Nathaniel Z. Marmur, Charles A. Stillman and Peter A. Chavkin of counsel), for appellants.

Robert M. Morgenthau, District Attorney, New York City (Deborah Hickey, AmyJane Rettew and Ellen Nachtigall Biben of

counsel), for respondent.

Judges G.B. SMITH, CIPARICK, ROSENBLATT and R.S. SMITH concur with Chief Judge KAYE; Judge READ dissents and votes to affirm in a separate opinion in which Judge GRAFFEO concurs.

OPINION OF THE COURT

Chief Judge KAYE.

Defendants Sherman Taub, a Queens County resident, and International Mortgage Servicing Company (IMSC), a New Jersey limited liability company in which Taub owns a half interest, were indicted by a New York County grand jury on 34 counts arising from an alleged scheme to steal millions of dollars through the imposition of allegedly inflated mortgages on Ocean House Center, a Queens County not-for-profit adult home for residents with mental disabilities.

On this appeal, defendants challenge New York County's jurisdiction to prosecute five of these counts, each of which charges defendants with the class E felony of offering a false instrument for filing in the first degree (see Penal Law § 175.35); jurisdiction as to the remaining 29 counts — including the class B and C felonies of grand larceny in the first and second degrees — is uncontested. The challenged counts are based on defendants' filing of allegedly false New York State and City tax returns, which did not reflect certain interest income derived from the mortgages held by IMSC on Ocean House.

Inasmuch as the evidence before the grand jury did not establish that defendants' tax returns were either mailed from or received in Manhattan, or that defendants committed any other act in Manhattan establishing an element of the relevant offenses (see CPL 20.40 [1] [a]), the People relied on a theory of "particular effect" jurisdiction in order to establish venue in New York County with respect to these counts.¹ This theory permits a criminal court of a particular county to exercise geographical jurisdiction, or venue, over an offense when — even though none of the conduct constituting the offense occurred within that county — "[s]uch conduct had, or was likely to have, a particular effect upon such county or a political subdivision or part thereof, and was performed with intent that it would, or with knowledge that it was likely to, have such particular effect therein" (CPL 20.40 [2] [c]). Conduct constituting an offense has a "particular effect" upon a county when it "produces consequences which, though not necessarily amounting to a result or element of such offense, have a materially harmful impact upon the governmental processes or community welfare of [the] particular [county], or result in the defrauding of persons in such [county]" (CPL 20.10 [4]).

After Supreme Court denied their motion to dismiss the five tax-related counts, made on the ground that jurisdiction did not lie in New York County, defendants brought this CPLR article 78 proceeding, seeking a writ of prohibition to enjoin prosecution of those counts.² The Appellate Division denied the petition, concluding that defendants' filing of the allegedly false New York City tax returns had a particular effect on New York County. We disagree, and now reverse.

I.

At the outset, we emphasize that, in order for prosecutorial jurisdiction to lie in New York County, it is that county — and not the City generally — that must suffer a particular effect as a result of defendants' alleged conduct. The statutory requirement that the conduct have a materially harmful impact may thus be satisfied only by a "concrete and identifiable injury" (Steingut, 42 NY2d at 318) to either the county's governmental processes (that is, the executive, legislative or judicial branch of government) or the welfare of the county's community. Moreover, to be materially harmful, the impact must be more than minor or incidental, and the conduct must harm "the well being of the community as a whole," not merely a particular individual (Fea, 47 NY2d at 77). In addition, because the jurisdiction of the county seeking to prosecute must be established before the grand jury, the type of injury or offense contemplated by the particular effect statute must "be perceptible and of the character and type which can be demonstrated by proof before a Grand Jury" (Steingut, 42 NY2d at 317). Because particular effect jurisdiction is to be applied only in "limited circumstances" (Fea, 47 NY2d at 76), it has been rarely invoked.

There is no dispute that defendants' conduct, if true, had a materially harmful impact on the governmental processes or community welfare of New York City as a whole. By underreporting income on their New York City tax returns, defendants deprived the City of revenue that would otherwise have been available to meet its financial obligations and fund its governmental operations. Such a loss of revenue, which could lead to cuts in city services or increases in taxes, clearly constitutes a perceptible injury to the City of New York. The question presented, however, is whether the evidence before the grand jury establishes a concrete and identifiable injury suffered specifically by New York County. We conclude that it does not.

The People's theory of venue is based on New York County's status as the "seat of City government," and the resultant processing of city income tax revenue in that county. Under this theory, defendants' alleged tax evasion has a particular effect on New York County because New York City taxes are processed and remitted to the City through the Transitional Finance Authority, which is located in New York County,³ and through city bank accounts also located there. Further, these accounts are controlled by the New York City Commissioner of Finance, whose office is located in New York County, as is the Department of Finance's Bureau of Treasury, which oversees the collection and management of the City's tax revenue.

We conclude, however, that — in a prosecution whose gravamen is the deprivation of revenue from New York City — the location of city agencies and bank accounts is alone insufficient to establish a particular effect on the county in which they happen to be located.

II.

In Steingut, the defendants were indicted for corrupt use of position or authority (see former Election Law § 448 [1], [3]), based on a meeting held in Manhattan at which defendants allegedly conspired to corrupt an election to be held in Kings County for city councilmember-at-large. Although Kings County was in some measure affected by this criminal conduct, we held that the mere fact that the allegedly tainted election was to take place in Brooklyn was insufficient to establish particular effect jurisdiction in Kings County. As is readily apparent, the conspiracy to corrupt the election in Steingut bore a closer relationship to Kings County, where the election was to take place, than the false filing here bears to New York County.

As we explained in Steingut, "If the injured forum jurisdictional statute were to be triggered by the amorphous fact that the voters of the county would be called upon to vote in an election allegedly tainted by criminal activity localized in a single county, then if the election was one for a State-wide office any county within the State would be able to assert jurisdiction to indict and prosecute. This is clearly not the intent of the statute" (42 NY2d at 317).

The same concerns exist in the case before us, where the facts proffered to establish particular effect are even more amorphous than those held insufficient in Steingut. Permitting New York County to exercise particular effect jurisdiction over an alleged underreporting of income on tax returns based solely on the "processing" of New York City tax revenues in Manhattan would effectively grant the New York County District Attorney jurisdiction throughout New York City to prosecute any income tax or other offense that arguably affects city revenue or expenditures.⁴ Such jurisdiction would include prosecution of a Bronx toll taker who embezzles funds, or of a person who steals from a city agency in Kings County or vandalizes city property in Queens or Richmond.

Moreover, under the People's theory, the Albany County District Attorney could prosecute any similar crime against the State, no matter where it occurred, including, for example, a Buffalo resident who steals from the till at a local Department of Motor Vehicles office or a driver who evades a toll on Long Island. These scenarios would constitute a vast expansion of the "limited circumstances" in which protective jurisdiction is to be applied (Fea, 47 NY2d at 76).

Rather, such "limited circumstances" have typically involved situations in which the injury to the prosecuting county is more particular and readily identifiable. If, for example, a person commits criminal mischief by maliciously blowing up a dam in Putnam County near the Westchester County line, thus flooding some Westchester territory — a result the individual either intends or knows is likely to occur — jurisdiction of the crime will properly lie in Westchester as well as in Putnam (see Steingut, 42 NY2d at 317; Preiser, Practice Commentaries, McKinney's Cons Laws of NY, Book 11A, CPL 20.40, at 133).

Other examples of perceptible, materially harmful impacts on counties where the offensive conduct has not occurred include the failure of a temporarily released prisoner to return to the county of confinement (see People v Scannelli, 49 AD2d 648 [3d Dept 1975]); the violation of an order of protection issued in a particular county, even if the...