People v. Abedi
Decision Date | 05 January 1993 |
Citation | 595 N.Y.S.2d 1011,156 Misc.2d 904 |
Parties | The PEOPLE of the State of New York, v. Agha Hasan ABEDI, Swaleh Naqvi, Clark M. Clifford, Robert A. Altman, and Faisal Saud Al Fulaij, Defendants. |
Court | New York Supreme Court |
Stillman, Friedman & Shaw, P.C. (Charles Stillman, Michael Grudberg, of counsel), New York City, for defendant Clark M. Clifford.
Newman & Schwatz (Gustave H. Newman, William Shields, Andrew Frisch, Michele C. Schecter, of counsel), New York City, for defendant Robert A. Altman.
Robert M. Morgenthau, Dist. Atty. (John W. Moscow, Harold J. Wilson, Marc Frazier Scholl, Veronica Bindrim-MacDevitt, Alan C. Michaels, of counsel), New York City, for the People.
The defendants have been indicted for the crimes of Scheme to Defraud in the First Degree and Conspiracy in the Fifth Degree. Clifford and Altman are also charged with Commercial Bribe Receiving in the First Degree. Altman has also been charged with the crimes of Falsifying Business Records in the First Degree and Offering a False Instrument for Filing in the First Degree. Altman has brought an omnibus motion seeking many forms of relief. Clifford has joined in this motion in so far as it is applicable to him. The other defendants, residents of other countries, have not yet been arrested in connection with this indictment.
This indictment arises out of a lengthy investigation conducted by the Office of the District Attorney of New York County into the affairs of the Bank of Credit and Commerce International ("BCCI"). The investigation delved into the relationship between BCCI and Credit and Commerce American Holdings ("CCAH"), a bank holding company that held a New York bank, First American Bank of New York ("FABNY"), through a chain of holding companies. The investigation examined the manner in which First American Bankshares (one of the chain of holding companies) and FABNY were acquired from their previous owners, how they were managed, the representations made to bank regulators and reports filed with those regulators. Defendant Abedi was the founder and first chairman of BCCI. Defendant Naqvi was president, then chairman of BCCI. Defendants Clifford and Altman were officers and directors of CCAH and its various subsidiaries.
Defendant Altman is first claiming that seven of the counts against him are based on false statements or omissions in Federal Reserve forms Y-6 submitted on behalf of CCAH. Altman contends that the District Attorney is predicating this prosecution upon a failure to comply fully and honestly with federal regulations and that he may not do so.
Altman asserts that the Federal Reserve Board has exclusive jurisdiction over its own regulations. He points out that the forms Y-6 are required by the Federal Reserve Board pursuant to the Bank Holding Company Act of 1956. 12 U.S.C. § 1841 et seq. That act vests broad regulatory authority in the Board over bank holding companies. Citing Easton v. Iowa, 188 U.S. 220, 23 S.Ct. 288, 47 L.Ed. 452 (1903), a case said by the Appellate Division, First Department, to be the "seminal case on Federal preemption of the regulation of national banks" People v. Calandra, 164 A.D.2d 638, 565 N.Y.S.2d 467 app'l den. 77 N.Y.2d 992, 571 N.Y.S.2d 918, 575 N.E.2d 404, Altman asserts that New York may not predicate any criminal charge on what the District Attorney considers to be false answers to questions contained in a federal form.
Defendant's arguments have two flaws. The first is that the cases he relies on deal with national banks. Obviously, the federal laws relating to national banks are more comprehensive than those relating to state banks. However, as the People point out CCAH is not a national bank, nor is First American Bank of New York ("FABNY"), the bank CCAH controls in New York State.
The second flaw in Altman's argument that this prosecution undermines the federal regulatory scheme is that the Federal Reserve Board has actually taken a position in this case. Acting through the United States Attorney, the Board of Governors of the Federal Reserve System has requested leave to submit (and has actually submitted) a Statement of Interest in opposition to Altman's omnibus motion. Altman has moved this Court to strike the statement of interest. The Court will allow the statement of interest to be considered. This Statement not only refutes Altman's claim that the District Attorney is usurping the jurisdiction of the United States but also "welcomes the vigorous prosecution by the District Attorney of Altman and Clifford for the submission to State regulators of false and misleading information."
Altman cites Gade v. National Solid Wastes Management Ass'n, 505 U.S. ----, 112 S.Ct. 2374, 120 L.Ed.2d 73, in support of his claim that federal law has pre-empted the field. Gade held that the Federal Occupational Safety and Health Act of 1970, 84 Stat. 1590, 29 U.S.C. § 651 et seq. ("OSHA") pre-empted state licensing acts to the extent they established occupational safety and health standards for training hazardous waste workers. Although Gade discusses pre-emption and finally holds a state statute to be pre-empted, it does not help the defendants in the instant case because of a significant difference in the pre-emption language of OSHA and the language of The Bank Holding Company Act of 1956.
OSHA provides that a state "shall" submit a plan if it wishes to "assume responsibility" for "development and enforcement ... of occupational safety and health standards relating to any occupational safety or health issue with respect to which a Federal standard has been promulgated." Gade held that:
"[t]he unavoidable implication of this provision is that a State may not enforce its own occupational safety and health standards without obtaining the Secretary's approval...." (505 U.S. at ----, 112 S.Ct. at page 2383.)
The Bank Holding Company Act of 1956, 12 U.S.C. § 1846, on the other hand states:
No provision of this [chapter] shall be construed as preventing any State from exercising such powers and jurisdiction which it now has or may hereafter have with respect to companies, banks, bank holding companies, and subsidiaries thereof.
This different language calls for a different result. The Bank Holding Company Act does not pre-empt the provisions of the New York Penal Law involved here.
The Statement of Interest of the United States is entitled to great weight in determining whether a federal statute has pre-empted the field. Liang Ren-Guey v. Lake Placid 1980 Olympic Games, Inc., 49 N.Y.2d 771, 426 N.Y.S.2d 473, 403 N.E.2d 178; Islamic Republic of Iran v. Pahlavi, 116 Misc.2d 590, 455 N.Y.S.2d 987 rev'd on other grounds 99 A.D.2d 1009, 473 N.Y.S.2d 801 aff'd 64 N.Y.2d 831, 486 N.Y.S.2d 939, 476 N.E.2d 338.
From the foregoing, it appears that the federal government has not pre-empted the field and that New York has jurisdiction to proceed in this matter.
In the first count of the indictment, the defendants are charged with the crime of Scheme to Defraud in the First Degree. The count reads, in part, as follows:
"Defendants ... in the County of New York and elsewhere, acting with others known and unknown to the Grand Jury, during the period from on or about September 1, 1977, through on or about August 18, 1991, with intent to defraud more than one person and to obtain property from more than one person, to wit, state and federal bank regulators and persons doing business with banks, by false and fraudulent pretenses, representations and promises, engaged in a scheme constituting a systematic ongoing course of conduct and so obtained property with a value in excess of one thousand dollars, to wit, approvals, charters and licenses from state and federal bank regulators to manage and control banks, banking institutions and bank holding companies and deposits and credit from persons doing business with such banks."
Altman is moving to dismiss this count on several grounds: that what he obtained was not "property"; if it were "property," it did not come from those defrauded; this count is both time barred and constitutes an ex post facto prosecution; the indictment charges defendants with "obtaining and maintaining" property in an effort by the People to evade statutory requirements; the charge fails to allege multiple victims. The indictment charges that the defendants obtained two kinds of property: bank licenses and charters from regulators and deposits and credits from customers. Altman contends that bank licenses and charters are not "property" within the meaning of the statute.
Contending that licenses, charters and approvals are not property, Altman also makes the related but different argument that whether the licenses are property in the hands of the licensees or not, before they are issued they are but symbolic expressions of the government's power and do not constitute property under the scheme to defraud statute. He argues that the defendant must have obtained "property" to commit the crime. Since the licenses were not property until issued, while the defendants may have caused the government to exercise its power, they did not take its property.
The question is whether bank licenses, charters and approvals are "property" within the meaning of this section. This section is apparently modelled on the federal mail fraud statute. Accordingly, federal law is often referred to in construing the scheme to defraud statute. Until 1987, there seems to have been little doubt that intangible rights such as licenses were property. In that year, the United States Supreme Court decided the case of McNally v. United States...
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