People v. First Meridian Planning Corp.

• Decision Date: 02 November 1995
• Citation: 635 N.Y.S.2d 144,658 N.E.2d 1017,86 N.Y.2d 608
• Court: New York Court of Appeals Court of Appeals
• Parties: , 658 N.E.2d 1017, 64 USLW 2320 The PEOPLE of the State of New York, Respondent, v. FIRST MERIDIAN PLANNING CORPORATION et al., Appellants, et al., Defendants.

Page 144

635 N.Y.S.2d 144

86 N.Y.2d 608, 658 N.E.2d 1017, 64 USLW 2320

The PEOPLE of the State of New York, Respondent, v. FIRST MERIDIAN PLANNING CORPORATION et al., Appellants, et al., Defendants.

Court of Appeals of New York.

Nov. 2, 1995.

[86 N.Y.2d 610] [658 N.E.2d 1019] O'Connell and Aronowitz, Albany (Gloria Herron Arthur and Stephen R. Coffey, of counsel), for First Meridian Planning Corporation and others, appellants.

[86 N.Y.2d 611] Borstein, Sheinbaum & Lurie, New York City (Leon Baer Borstein and James B. Sheinbaum, of counsel), for Donald Kagin, appellant.

[86 N.Y.2d 612] Howard B. Arber and Gregg Roth, Hempstead, for Neil Berman, appellant.

Dennis C. Vacco, Attorney General, New York City (David Farman, Victoria A. Graffeo,

[658 N.E.2d 1020] John H. Carley, Rebecca Mullane, Ray Cerreta and Christine Duisin, of counsel), for respondent

[86 N.Y.2d 613] Ganz, Hollinger & Towe, New York City (David L. Ganz, of counsel), and George D. Hatie, of the Michigan Bar, admitted pro hac vice, for Industry Council for Tangible Assets and another, amici curiae.

OPINION OF THE COURT

LEVINE, Judge.

The 39-count indictment in this case arose out of an investigation by the Attorney-General of the investment promotional activities, commencing in 1982, of defendant First Meridian Planning Corp. (First Meridian), its officers and sales personnel. First Meridian portrayed itself to the investing public as a knowledgeable, experienced financial planning enterprise competent to advise clients on investment decisions through the formulation of a personalized investment plan tailored to the individual financial needs and objectives of each investor. In fact, however, First Meridian's plans invariably were limited to three highly leveraged investment vehicles--numismatic coin portfolios, art portfolios and condominiums in Florida and Indiana--in which First Meridian or, in coin portfolio purchases, its codefendant coin dealers, would arrange for the financing of the borrowed portion of the investment acquisitions.

Appellant Roger V. Sala was president and chief operating officer of First Meridian. Appellants Roger C. Sala and Meridian Arts (a First Meridian subsidiary) worked with First Meridian in promoting investments in the works of a group of local artists they had assembled. All of those appellants will be collectively referred to as the First Meridian defendants. Appellants Donald Kagin and Neil Berman were principals in four corporate coin dealerships who were codefendants in the indictment (hereinafter the coin dealer defendants).

The first count of the indictment charged all but one of the defendants with the crime of scheme to defraud in the first degree (Penal Law § 190.65). ^* In addition, various defendants were charged with counts of fraud in the sale of securities (General Business Law § 352-c[6], and grand larceny in the second or third degrees (in connection with sales of coins, artworks and condominiums to individual investors), failure to register as a commodity broker-dealer (General Business Law § 359-e[14][k] and failure to register as a commodity investment advisor (id.).

Following defense motions to dismiss, County Court dismissed the first count of the indictment as duplicitous. The court also dismissed all of the remaining counts of the indictment against the coin dealer defendants. It held that the evidence before the Grand Jury was insufficient to show their criminal responsibility for the larcenies allegedly committed against individual investors. County Court further held, as a matter of law, that the sale of numismatic coins did not constitute the sale of securities and, therefore, it granted the motions by defendants Kagin, Berman and several other coin dealer defendants to dismiss the counts of fraud in the sale of securities. Finally, the Trial Judge dismissed all counts against the coin dealer defendants charging them with failure to register as a commodity broker-dealer.

The Appellate Division reinstated count 1 of the indictment, concluding that it appropriately alleged and the Grand Jury could infer from the evidence, a single continuing scheme to defraud; thus, count 1 was not duplicitous (201 A.D.2d 145, 614 N.Y.S.2d 811). The Appellate Division further held that there was sufficient evidence presented to the Grand Jury to support a prima facie finding that the sale of numismatic coin portfolios for investment purposes in this case constituted the sale of securities. Therefore, the Appellate Division reinstated the counts of fraud in the sale of securities against the coin dealer defendants. The Court also found the evidence sufficient to support a reasonable inference that the coin dealer defendants shared the larcenous intent of the First Meridian personnel and, hence, reinstated the larceny counts of the indictment against those defendants. As to two larceny counts, however, the Court found the proof of the value of the property taken insufficient to sustain charges higher than grand larceny in the fourth degree and modified those counts accordingly. Finally, the Appellate Division sustained County Court's dismissal of counts 38 and 39 of the indictment charging defendants with failing to register as a commodity broker-dealer, and the Attorney-General has not sought to cross-appeal from that ruling.

I

We agree with the Appellate Division that count 1 of the indictment is not invalid for facial duplicity, that is, charging in a single count the commission of more than one offense (see, CPL 200.30[1] ). Duplicitous indictments are disallowed because of the danger that a jury may vote to convict on a count without having reached a unanimous verdict on the charges pleaded therein, and because it may undermine a subsequent double jeopardy defense (see, People v. Keindl, 68 N.Y.2d 410, 418, 509 N.Y.S.2d 790, 502 N.E.2d 577).

Where, however, a crime by its nature as defined in the Penal Law may be committed either by one act or by multiple acts and can be characterized as a continuing offense over time, the indictment may charge the continuing offense in a single count (see, id., at 421, 509 N.Y.S.2d 790, 502 N.E.2d 577; see also, People v. Shack, 86 N.Y.2d 529, 540, 634 N.Y.S.2d 660, 658 N.E.2d 706 [decided today]; People v. Sanchez, 84 N.Y.2d 440, 448, 618 N.Y.S.2d 887, 643 N.E.2d 509). Undoubtedly, the crime charged in count 1 of the indictment, scheme to defraud in the first degree, can by its very nature be committed by multiple acts and permits, if not requires, characterization as a continuing offense committed over time. Thus, a person is guilty of a scheme to defraud when "he [or she] * * * engages in a scheme constituting a systematic ongoing course of conduct with intent to defraud ten or more persons or to obtain property from ten or more persons by false or fraudulent pretenses, representations or promises, and so obtains property from one or more of such persons" (Penal Law § 190.65[1][a] [emphasis supplied]. Accordingly, count 1 of the indictment is not facially duplicitous. To avoid the danger that defendants may be convicted on count 1 with less than a unanimous verdict, the trial jury in this case should be instructed that they must all agree upon the existence of the same single scheme to defraud and must also be unanimous as to each defendant found guilty that he or she participated in that same over-all fraudulent scheme alleged in the indictment (see, United States v. Mastelotto, 717 F.2d 1238, 1247).

We likewise reject appellants' alternative contention that count 1 is fatally duplicitous because the evidence before the Grand Jury would not support the existence of a single scheme to defraud but, at most, the existence of disparate, multiple schemes to defraud involving unrelated participants (i.e., separate conspiracies to fraudulently induce investments in coins, artworks and condominiums, respectively). As the Appellate Division correctly recognized, the Legislature in amending the Penal Law to add crimes based on a scheme to defraud (Penal Law §§ 190.60, 190.65; L.1976, ch. 384), modeled the offenses upon the Federal mail fraud statute (see, Donnino, Practice Commentary, McKinney's Cons.Laws of N.Y., Book 39, Penal Law § 190.60, at 423). Therefore, we may look to Federal precedents applying similar statutory language which hold that, despite the presence of some diversity of criminal actors, modalities and victims, the evidence may yet support the existence of a single, unitary over-all scheme to defraud.

Thus, in United States v. Morse, 785 F.2d 771 [9th Cir.], the court was presented with parallel facts to the instant case--the bilking of investors through the promotion of several different investment vehicles as income-producing tax shelters, in which the codefendants played differing roles with respect to different victims and investment programs at different times. The court nonetheless ruled that such factors did not negate the existence of a single scheme (see, id., at 774). In Owens v. United States, 221 F.2d 351 [5th Cir.], the court similarly held that "the defrauding of different people over an extended period of time, using different means and representations, may constitute but one scheme" (id., at 354). That court found that "the necessary unity deriv[ed] from the fact that the technique planned and used in each transaction is of the same general type" (id., at 355). An additional factor the court in Owens relied upon as pointing to a unitary scheme was that a single corporation controlled by the defendants played some role in defrauding all of the victims (id.). The Second Circuit in United States v. Crosby, 294 F.2d 928, cert. denied sub nom. Meredith v. United States, 368 U.S. 984, 82 S.Ct. 599, 7 L.Ed.2d 523, held a single conspiracy could be inferred from "[a] mail fraud scheme consisting of a large number of similar transactions, conducted by a constant nucleus with differing subordinates"(id., at 945).

Under...