People v. First Meridian Planning Corp.

• Decision Date: 21 July 1994
• Citation: 201 A.D.2d 145,614 N.Y.S.2d 811
• Parties: The PEOPLE of the State of New York, Appellant, v. FIRST MERIDIAN PLANNING CORPORATION et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 811

614 N.Y.S.2d 811

201 A.D.2d 145

The PEOPLE of the State of New York, Appellant, v. FIRST MERIDIAN PLANNING CORPORATION et al., Respondents.

Supreme Court, Appellate Division Third Department.

July 21, 1994.

G. Oliver Koppell, Atty. Gen. (David C. Farman, Rebecca Mullane, Ray Cerreta and Christine Duisin, of counsel), New York City, for appellant.

O'Connell & Aronowitz (Gloria Herron Arthur and Stephen R. Coffey, of counsel), Albany, for First Meridian Planning Corp. and others, respondents.

Howard B. Arber, Hempstead, for Neil Berman, respondent.

Dreyer, Boyajian & Tuttle (William J. Dreyer, of counsel), Albany, for John W. Donovan, respondent.

Borstein, Sheinbaum & Lurie (Leon Baer Borstein, of counsel), New York City, for Donald Kagin, respondent.

Before MIKOLL, J.P., and MERCURE, WHITE, CASEY and YESAWICH, JJ.

MERCURE, Justice.

Appeal from an order of the County Court of Albany County (Marks, J.), entered February 19, 1993, which granted defendants' motions to dismiss the indictment against defendants Donald Kagin, Neil Berman, Joseph Saccento and Asset Services Inc. and to dismiss the first count of the indictment against the other defendants.

I

Defendant First Meridian Planning Corporation (hereinafter Meridian) was incorporated in 1978 to sell real estate, and its articles of incorporation were amended in 1982 to allow for the sale of precious metals, works of art and securities. Meridian sales representatives, including defendants Norman Whitney, Thomas George and Kenneth Hemming, would attempt to obtain clients for Meridian's financial planning service, promising a financial plan suited to each individual's needs. Financial information obtained from clients was submitted to Meridian's advisory board, which included defendants Roger V. Sala, Roger C. Sala, John W. Donovan and Martin Hayden, who were purportedly experts in various investment fields. Although clients were led to believe that Meridian had a wide array of investment vehicles from which to choose, the same three types of investments, rare coins, artwork and condominiums, were recommended to all clients. Clients were also encouraged to purchase these products by placing a down payment and borrowing the balance. ¹

Defendant Meridian Arts, a subsidiary of Meridian, managed a handful of contemporary artists whose works were sold as a part of Meridian's financial plans. Defendant Donald Kagin was associated with defendants Kagin's Numismatics Investment Corporation (hereinafter KNIC), Kagin's Numismatics Inc. (hereinafter KNI) and ADS Services Inc. (hereinafter ADS), while defendants Joseph Saccento and Neil Berman were the principal shareholders of defendant Asset Services Inc. (hereinafter Asset). These coin dealer defendants marketed leveraged numismatic coin portfolios as a part of Meridian's financial plans. With respect to the financial plans that it sold, Meridian did not disclose the large commissions paid both to Meridian and on the sales of the products to third parties, the relative nonliquidity of the investments and the volatility of and other risks associated with the markets in rare coins, artwork and condominiums.

The Attorney-General initiated an investigation and, after extensive testimony, Meridian, Meridian Arts, Roger V. Sala, Roger C. Sala, Donovan, Hayden, Whitney, Hemming, George, KNIC, KNI, ADS, Asset, Saccento and Berman were indicted on one count of scheme to defraud in the first degree. In addition, various defendants were charged in the 39-count indictment with fraud in the sale of securities, grand larceny in the second and third degrees, failure to register as a commodity broker-dealer and failure to register as a commodity investment advisor. Following motions by various defendants, County Court, inter alia, dismissed the first count of the indictment against all opposing defendants, finding that the count was duplicitous, as well as all other counts against Kagin, Berman, Saccento and Asset. ² The People appeal. A motion to dismiss a cross appeal by Meridian, Meridian Arts, Roger V. Sala and Roger C. Sala was granted by default.

II

Initially, we reject the argument that count one of the indictment is void for duplicity. An indictment must provide fair notice of the charge and of the time and place of the conduct underlying the accusation so the accused can defend the charge and establish the defense of double jeopardy against a subsequent prosecution for the same offense (see, CPL 200.50; People v. Davis, 72 N.Y.2d 32, 38, 530 N.Y.S.2d 529, 526 N.E.2d 20; People v. Keindl, 68 N.Y.2d 410, 418, 509 N.Y.S.2d 790, 502 N.E.2d 577). "If a count charges more than one offense, it fails to meet these requirements and is void for duplicity * * * " (People v. Davis, supra, 72 N.Y.2d at 38, 530 N.Y.S.2d 529, 526 N.E.2d 20 [citations omitted]; see, CPL 200.30[1]. The prohibition against duplicitous counts also seeks to prevent the possibility that individual jurors might vote to convict on a count on the basis of different offenses (see, People v. Davis, supra, at 38, 530 N.Y.S.2d 529, 526 N.E.2d 20; People v. Keindl, supra, 68 N.Y.2d at 418, 509 N.Y.S.2d 790, 502 N.E.2d 577). A count will not be found to be duplicitous, however, if the crime charged may by its nature "be committed either by one act or by multiple acts and readily permits characterization as a continuing offense over a period of time" (People v. Keindl, supra, at 421, 509 N.Y.S.2d 790, 502 N.E.2d 577; see, People v. Dunavin, 173 A.D.2d 1032, 570 N.Y.S.2d 369, lv. denied 78 N.Y.2d 965, 574 N.Y.S.2d 945 580 N.E.2d 417). In determining whether a particular count is duplicitous, a court will consider not only the indictment itself, as supplemented by any bill of particulars, but evidence presented to the Grand Jury as well (see, People v. Sulkey, 195 A.D.2d 1026, 600 N.Y.S.2d 858, lv. denied 82 N.Y.2d 759, 603 N.Y.S.2d 1001, 624 N.E.2d 187; People v. Corrado, 161 A.D.2d 658, 659, 556 N.Y.S.2d 95).

Here, count one of the indictment charged the crime of scheme to defraud in the first degree in violation of Penal Law § 190.65 against all defendants except Kagin. This statute proscribes obtaining property by engaging in "a scheme constituting a systematic ongoing course of conduct with intent to defraud * * * by false or fraudulent pretenses, representations or promises" (Penal Law § 190.65[1][a]. Further, if the property obtained is valued at $1,000 or less, an intent to defraud 10 or more persons must be established. Because this language contemplates a continuing offense, a count charging such a crime need not be limited to describing one act. We also reject defendants' claim that count one violates CPL 200.30(1) by charging multiple schemes. New York courts have found Federal mail fraud decisions to be "highly relevant" in construing parallel language in the New York statute (People v. White, 101 A.D.2d 1037, 1038, 472 N.Y.S.2d 730; see, 18 USC § 1341), and the Federal courts have not found duplicity merely because the count alleges that a defendant schemed to defraud different people over an extended period of time using different means and representations (see, United States v. Mastelotto, 717 F.2d 1238, 1245; Owens v. United States, 221 F.2d 351, 354) or the scheme consists of "similar transactions, conducted by a constant nucleus with differing subordinates" (United States v. Crosby, 294 F.2d 928, 945, cert. denied 368 U.S. 984, 82 S.Ct. 599, 7 L.Ed.2d 523). The key to determining whether a count is duplicitous is whether the fraudulent activity falls within "one unitary 'scheme to defraud' " (United States v. Mastelotto, supra, at 1244; see, United States v. Zemek, 634 F.2d 1159, 1167-1168, cert denied 450 U.S. 916, 101 S.Ct. 1359, 67 L.Ed.2d 341).

In our view, count one of the indictment is not duplicitous either on its face or in consideration of the evidence before the Grand Jury. The indictment alleges that all defendants acted in the furtherance of one ongoing scheme "to obtain money from the public by offering for sale and selling condominiums, numismatic coins, and artworks as investments". It identifies the roles played by each defendant and states that two groups of coin dealer defendants "promoted and sold leveraged numismatic coin portfolios as investments to the public through [Meridian] as part of a financial plan". Nor does examination of the evidence before the Grand Jury support County Court's apparent finding that there was insufficient evidence to support this count. All defendants who were principals of or employed by Meridian were clearly a part of one scheme to defraud purported investors, failing to disclose not only commissions but also that the coins and artwork were purchased at retail prices and would sell at wholesale prices and that the appreciation charts supplied to clients indicated unrealistically high returns. While the coin dealer defendants were more removed from the Meridian sales operations, the evidence before the Grand Jury also supports the indictment of these defendants as a part of one general scheme initiated by Meridian, the coin dealer defendants seeking to profit from coin sales to clients without disclosing material information. The fact that one scheme existed is not changed because the coin dealer defendants profited from only part of the scheme (see, United States v. Crosby, 294 F.2d 928, 945, supra ).

III

Next, the People argue that County Court improperly dismissed the counts against the coin dealer defendants charging fraud in the sale of securities. Again, we agree. We note at the outset that the Martin Act should be liberally construed to give effect to its remedial purpose (see, All Seasons Resorts v. Abrams, 68 N.Y.2d 81, 86-87, 506 N.Y.S.2d 10, 497 N.E.2d 33; Mihaly & Kaufmann, Practice Commentary, McKinney's Cons Laws of NY, Book 19, General Business Law art 23-A, at 9-13). We also note that in determining whether an interest is a security under General...