People v. Calandra

• Decision Date: 15 January 1991
• 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.
• Court: New York Supreme Court — Appellate Division

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.

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.

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 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 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 statutes enacted by Congress.

The seminal case on Federal preemption of the regulation of national banks is Easton v. Iowa, 188 U.S. 220, 23 S.Ct. 288, 47 L.Ed. 452 in which a bank officer was prosecuted under a State statute forbidding the receipt of funds by a bank known by the defendant to be insolvent. The Supreme Court noted that "Federal legislation creating and regulating national banks * * * has in view the erection of a system extending throughout the country, and independent, so far as powers conferred are concerned, of state legislation which, if permitted to be applicable, might impose limitations and restrictions as various and as numerous as the States" (Easton v. Iowa, supra, at 229, 23 S.Ct. at 290; see also Farmers' & Mechanics' Nat. Bank v. Dearing, 91 U.S. 29, 23 L.Ed. 196). In defining the scope of Federal preemption the Court ruled, "Undoubtedly a state has the legitimate power to define and punish crimes by general laws applicable to all persons within its jurisdiction. So, likewise, it may declare, by special laws, certain acts to be criminal offences when committed by officers or agents of its own banks and institutions. But it is without lawful power to make such special laws applicable to banks organized and operating under the laws of the United States" (Easton v. Iowa, supra, 188 U.S. at 239, 23 S.Ct. at 294). Therefore, State law which extends generally to all persons within the State's jurisdiction also regulates the activities of national banks. Thus, civil rights legislation prohibiting geographic discrimination in lending (Banking Law § 9-f[3], laws governing tax escrow accounts (Real Property Tax Law § 952 et seq.) and statutes providing for the establishment of trusts (Banking Law §§ 14[1][c]; 100-c[7] all extend to national banks. None of these laws, however, intrudes upon the regulation of national banks by Congress under the National Bank Act (Title 12 U.S.C. § 21 et seq.).

It seems clear that the Legislature had this principle in mind when it designated the institutions subject to regulation by the Banking Law ( §§ 1; 2[1]. Specifically, the definition of "bank" in Section 2 of the statute contains no mention of a national bank, leading this court to conclude that Federally chartered banks are "not subject to the strictures of the New York Banking Law" (Jacobs v. Citibank, N.A., 92 A.D.2d 786, 787, 459 N.Y.S.2d 781, aff'd 61 N.Y.2d 869, 474 N.Y.S.2d 464, 462 N.E.2d 1182). The somewhat inartful wording of Section 673 of the statute which makes it applicable to employees or agents of "any corporation to which the Banking Law is applicable", seized upon by the People, does not circumvent the exclusion of national banks from its operation, both by the express language of the statute and by judicial interpretation.

Preemption, as applied to national banks, was a prominent issue in the case of State of North Dakota v. Merchants National Bank & Trust Company, 634 F.2d 368 [8th Cir.1980]. In that case, the court elaborated upon the rule set forth in Easton (supra), stating that "the quantum of evidence necessary to find a congressional intent to exclude state law from a given field should vary, depending on the relative generality of application of the state law to be excluded" (State of North Dakota v. Merchants Nat. Bank & Trust Co., supra, at 375). The court held that North Dakota's unfair competition statute, a State law of general application, was not preempted by Federal regulation of national banks, except insofar as it conflicted with a federal law providing for approval of name changes by the Comptroller of the Currency. The court relied on First National Bank in St. Louis v. Missouri ex rel. Barrett, 263 U.S. 640, 656, 44 S.Ct. 213, 215, 68 L.Ed. 486 which held that "national banks are subject to the laws of a State in respect of their affairs unless such laws interfere with the purposes of their creation, tend to impair or destroy their efficiency as federal agencies or conflict with the paramount law of the United States." Therefore, irrespective of any intent by Congress to exclude state regulation, "a state statute is void to the extent that it actually conflicts with a valid federal statute" (Ray v. Atlantic Richfield Co., 435 U.S. 151,...