People v. Calandra

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: Before MILONAS; RUBIN
• Citation: 565 N.Y.S.2d 467,164 A.D.2d 638
• Parties: The PEOPLE of the State of New York, Respondent, v. Michael CALANDRA, Jon Levine and Marvin Roseman, Defendants-Appellants.
• Decision Date: 15 January 1991

Page 467

565 N.Y.S.2d 467 164 A.D.2d 638 The PEOPLE of the State of New York, Respondent,
v.
Michael CALANDRA, Jon Levine and Marvin Roseman,
Defendants-Appellants. Supreme Court, Appellate Division,
First Department. Jan. 15, 1991.

Page 468

[164 A.D.2d 639] Robert G. Morvillo, of counsel (Catherine M. Foti and Michael E. Quiat with him on the brief, Morvillo, Abramowitz & Grand, P.C., attorneys), for defendant-appellant Calandra.

Alan R. Kaufman, of counsel (Buchwald & Kaufman, attorneys), for defendant-appellant Levine.

Michael S. Feldberg, of counsel (Helene M. Freeman, Sheila Ginsberg Riesel and Michael McNamara, with him on the brief, Shea & Gould and Phillips, Nizer, Benjamin, Krim & Ballon, attorneys), for defendant-appellant Roseman.

Mark Dwyer, of counsel (Robert M. Morgenthau, Dist. Atty., attorney), for respondent.

Before MILONAS, J.P., and ROSENBERGER, ASCH, KASSAL and RUBIN, JJ.

RUBIN, Justice.

Defendants appeal from a judgment convicting them of misapplication of bank funds pursuant to Banking Law § 673 and from an order denying their post-judgment motion pursuant to CPL 440.10. The issue presented is whether defendants were properly prosecuted, pursuant to State law, for misapplication of the funds of a bank chartered under the laws of the United States.

[164 A.D.2d 640] Defendants Michael Calandra and Jon Levine were employed by Chase Manhattan Bank, N.A. in the Commercial Loan Department which has its offices in Kings County in the City of New York, Borough of Brooklyn. Calandra was the District Executive of Commercial Department District 3, which encompasses Brooklyn, Queens, Staten Island and Long Island, and Levine was one of four "team leaders" who worked closely with Calandra. The market served by the Department consists of mid-sized companies, and the loans extended by Chase in this market are largely unsecured. The prosecution charged that Calandra and Levine made loans, allegedly in the normal course of business, to one Irvin Freedman in return for kickbacks paid by Freedman

Page 469

to their friend, defendant Marvin Roseman, a prosperous businessman who had a longstanding relationship with Chase. Roseman had been a close friend of Calandra's for a number of years and provided him with what the prosecution terms "life-style benefits"--use of a car and apartment and reimbursement of expenditures for food and drink. Since at least 1975, Roseman had paid for various expenses charged to Calandra's credit card in amounts ranging up to over $9,000 a year. In addition, Roseman paid for airline tickets totalling over $5,000 for the three years ending in 1979. In that year, Calandra also had access to Roseman's East 36th Street apartment and use of his Jaguar automobile. It is not asserted that Levine, also a good friend of Calandra's, received any specific benefit from Roseman, only that he was involved as an accessory in a scheme to divert bank funds to an accomplice (Roseman).

The loans alleged to constitute misapplication of bank funds were made to Freedman and entities which he controlled in connection with various Florida real estate ventures. In the course of extending those loans to Freedman, it is asserted that Calandra and Levine violated lending policies specified in the Chase Credit Policy Guide including exceeding the amount of their lending authority, failing to maintain proper records, failing to consult with the bank's real estate department and writing loans outside their district.

Defendants challenge their convictions on a variety of grounds, including lack of a personal pecuniary interest in the misapplied funds (People v. Kagan, 56 N.Y.2d 193, 451 N.Y.S.2d 672, 436 N.E.2d 1274), improper venue (CPL 20.40[1][a], excessive sentences (Penal Law § 60.01[2][d], impropriety by a juror, and insufficiency of the evidence as to defendants Levine and Roseman. It is clear, however, that if defendants are correct in their contention [164 A.D.2d 641] that the State is without jurisdiction to prosecute them for an offense committed against a national bank, their other arguments are rendered immaterial.

It is significant that the People cite no case in which an officer of a national bank has ever been prosecuted under Section 673 of the Banking Law. Indeed, defendants assert that they have found no case in which the officers of a national bank have been prosecuted for misapplication of funds under a state banking statute. The officers of a state bank have been prosecuted under a state banking act where the bank was subject to Federal regulation as a member of the Federal reserve system (People v. Wilkin & Walsh, 276 Mich. 679, 268 N.W. 779 [1936], but no case has been brought to this court's attention involving the prosecution of officers of a national bank under state law. While the lack of precedent suggests preemption, further analysis of the doctrine is required to determine its application to the facts at bar.

Enforcement of Federal criminal law is exclusively the province of the Federal courts: "The district courts of the United States shall have original jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States" (18 U.S.C. § 3231). However, a particular act may constitute a crime under both Federal and State law. Thus, in the instant matter, misapplication of bank funds violates both 18 U.S.C. § 656 and Banking Law § 673. A determination of whether the State may prosecute the officers of a national bank for this crime involves a two-tiered analysis. From the broader perspective, the question is whether Congress has indicated the intent to preclude state regulation of the activities of national banks. From a narrower perspective, the focus is upon any conflict which exists between State law and...