People v. Headley

• Decision Date: 06 June 2012
• Citation: 37 Misc.3d 815,2012 N.Y. Slip Op. 22257,951 N.Y.S.2d 317
• Parties: The PEOPLE of the State of New York, Plaintiff, v. John E. HEADLEY, Defendant.
• Court: New York Supreme Court

37 Misc.3d 815

951 N.Y.S.2d 317

2012 N.Y. Slip Op. 22257

The PEOPLE of the State of New York, Plaintiff,

v.John E. HEADLEY, Defendant.

Supreme Court, Kings County, New York.

June 6, 2012.

Ronald Margolis, Esq. New York, for Defendant John Headley.

Michael Spanakos, Esq., Kings County District Attorney's Office, Brooklyn, for the People.

MARK R. DWYER, J.

Defendant stands charged with Grand Larceny in the Second Degree, Falsifying Business Records, Conspiracy, and related crimes. The indictment alleges that defendant and the co-defendant Jacqueline Jackson fraudulently obtained paid assignments from the New York City Transit Authority (hereinafter “NYCTA”) to procure independent medical examinations of plaintiffs who had sued the NYCTA. Defendant is charged with obtaining the NYCTA vendor assignments for his company by using a fictitious name. The People say he thus concealed the fact that he had also been retained as outside counsel for the NYCTA in the defense of personal injury lawsuits—a circumstance which, the People say, would have disqualified him from being paid to procure medical examinations.

Defendant moved for dismissal of the indictment in its entirety, placing particular emphasis on the insufficiency of the larceny charges. At this court's request, defense counsel and the prosecutor submitted briefs outlining the issues.

BACKGROUND

Beginning in 2003, defendant, an attorney, acted as outside counsel for the NYCTA in personal injury lawsuits against the NYCTA. The People allege that defendant and co-defendant Jacqueline Jackson, the director of the Legal Support Unit (hereinafter “LSU”) at the NYCTA, formed a business, Advance I.M.E. Co. (hereinafter “Advance”). The indictment alleges that on April 9, 2007, defendant, employing the pseudonym “James Douglas,” submitted a business proposal on behalf of Advance at 80 Broad Street, New York, New York, to co-defendant Jackson in her capacity as director of the LSU. The proposal was approved by Jackson and called for Advance to receive assignments from the LSU to schedule IMEs of plaintiffs who had filed personal injury lawsuits against the NYCTA. In return, Advance would earn a fee of $400 per scheduled IME and IME report.¹ In their Memorandumof Law in opposition to defendant Headley's motion to dismiss the indictment, the People add that defendant Headley had a long-standing personal relationship with co-defendant Jackson. According to the indictment, defendant John Headley resided in the Brooklyn residence of Ms. Jackson from August through December, 2008.

The overt acts listed under the Conspiracy count in the indictment include an allegation that on June 16, 2008, defendant Headley paid Consolidated Edison $242.54 out of Advance's Bank of America account to satisfy the bill of Jacqueline Cutler, also known as Jacqueline Jackson, residing at 1489 East 46th Street, Brooklyn, NY. There is also an allegation in the list of overt acts that on June 14, 2008, defendant Headley drafted and signed a $676.57 check drawn on Advance's Bank of America account payable to National Grid for the billing account of Jacqueline Cutler, also known as Jacqueline Jackson, relating to the Jackson residence at 1489 East 46th Street, Brooklyn, NY. ²

The indictment further alleges, inter alia, the following:

“On April 9, 2007, defendant John E. Headley, employing the pseudonym of “James Douglas”, submitted a business proposal to defendant Jacqueline Jackson in her capacity as director of the LSU of the New York Transit Authority's Law Department, on behalf of Advance at 80 Broad Street, New York, New York.

“On April 9, 2007, Advance submitted to the NYCTA a copy of what purported to be a United States Department of Treasury, Internal Revenue Service W–9 form listing Advance at 80 Broad Street, New York, NY, and bearing the fabricated employer identification number of 680647760 and the signature of James Douglas.

“From April 9, 2007 through May 2008, defendant Jackson directed her staff to give preference to Advance for assignment of IMEs required by the Law Department of the NYCTA in the defense of personal injury law suits handled by that department. More than 200 assignments were made to Advance, pursuant to defendant Jacqueline Jackson's direction, during that time period.

“On August 10, 2007, a business certificate for Advance bearing the signature of defendant John E. Headley dated August 9, 2007, listing its place of business as 8 East 58th Street, Brooklyn, NY, was filed with the Kings County Clerk's Office.

“On August 10, 2007, defendant Headley opened a business checking account at Bank of America in the name of “DBA Advance I.M.E., Co.,” located at 80 Broad Street, New York, NY, and he identified himself as the sole proprietor of this account.

“At a meeting held in November 2008 at defendant Jacqueline Jackson's residence at 1489 East 46th Street, Brooklyn, New York defendant Jacqueline Jackson, in the presence of defendant John E. Headley, invited a witness known to the Grand Jury to join defendants Jacqueline Jackson and John E. Headley in the business of Advance with the NYCTA, but under a new name, in return for a $150 per invoice share of the business.”

The People's theory is that by misstating a material fact, to wit, his identity as the principal of Advance, defendant acted knowingly and intentionally to defraud the NYCTA, and thus committed larceny by false pretenses. For the payments to Advance for more than 200 IME assignments in 2007 and 2008, defendant is charged with stealing in excess of fifty thousand dollars from the NYCTA—every dollar Advance was paid for its work.

DEFENDANT'S ARGUMENT

Defendant Headley argues that the indictment must be dismissed because there was no evidence of intent to defraud the NYCTA or that the NYCTA sustained any pecuniary loss as a result of defendant's use of a fictitious name. More particularly, defendant contends that the crimes with which he has been charged require that he had the intent to defraud the NYCTA, and that, while his conduct may have been deceptive, there is no evidence that he acted with an intent to “defraud.” Relatedly, defendant asserts that the People have not shown that the NYCTA sustained a loss, a necessary element of larceny. Defendant argues that the basis of his bargain with the NYCTA was for defendant to provide IME examinations and reports to the NYCTA for a fee of $400 per examination plus report, that he did precisely that, and that defendant's concealment of his identity did not have any effect on the bargain. Thus, he argues, Advance provided the NYCTA with the exact product agreed to and defendant was fairly paid in accordance with the agreement.

According to defendant, all of the IME reports for which defendant was paid by the NYCTA were analyzed and certified by NYCTA in-house counsel for accuracy, for sufficiency, and for suitability for exchange with plaintiffs' counsel. No report was rejected or deemed insufficient, and there has been no allegation that the medical examinations were improperly done.

THE LARCENY AND CONSPIRACY COUNTS

Defendant is charged with larceny in eleven counts and with conspiracy to commit larceny in another. Penal Law § 155.05 defines larceny, in pertinent part, as follows:

1. A person steals property and commits larceny when, with intent to deprive another of property or to appropriate the same to himself or to a third person, he wrongfully takes, obtains or withholds such property from an owner thereof.

2. Larceny includes a wrongful taking, obtaining or withholding of another's property, with the intent prescribed in subdivision one of this section, committed in any of the following ways: (a) By conduct heretofore defined or known as common law larceny by trespassory taking, common law larceny by trick, embezzlement, or obtaining property by false pretenses....

The elements required to establish larceny by false pretenses are: 1) criminal intent to deprive the owner of property; 2) making a false material representation; 3) obtaining the property of another; and 4) reliance by the victim upon the representation. See People v. Drake, 61 N.Y.2d 359, 474 N.Y.S.2d 276, 462 N.E.2d 376 (1984); People v. Churchill, 47 N.Y.2d 151, 417 N.Y.S.2d 221, 390 N.E.2d 1146 (1979). Put another way, in order to establish larceny by false pretenses, the proof must show that the defendant obtained the property of another by means of an intentional false representation about a prior or existing material fact, upon which representation the victim relied in parting with the property. See People v. Drake, 61 N.Y.2d 359, 474 N.Y.S.2d 276, 462 N.E.2d 376 (1984); People v. Lobel, 298 N.Y. 243, 82 N.E.2d 145 (1948); People v. Vandermuelen, 42 A.D.3d 667, 839 N.Y.S.2d 835 (3rd Dept.2007); People v. Gross, 51 A.D.2d 191, 379 N.Y.S.2d 885 (4th Dept.1976).

Charges of larceny by false pretenses not infrequently originate in the context of a contractual relationship between the defendant and the complainant. Courts have struggled with the danger of applying criminal liability to conduct arising out of purely civil breaches of contract. “There is a very real danger that ordinary business transactions might be inhibited due to the risk of prosecuting one who is guilty of nothing more than a mere failure to pay his debts or an inability to perform contractual obligations.” People v. Churchill, 47 N.Y.2d 151, 157, 417 N.Y.S.2d 221, 390 N.E.2d 1146 (1979). “Criminal charges of false pretense are often instituted in reality to compel the payment of debt, and are easily fabricated.” People v. Williams, 135 Misc. 564, 567, 238 N.Y.S. 712 (Co. Ct. Cayuga Co.1930). See also People v. Lawrence, 102 Misc.2d 32, 422 N.Y.S.2d 869 (Crim. Ct. N.Y. Co.1979). “The law does not criminalize every breach of contract, and will only call it a larceny when a party has effectively obtained property by a fraud to the detriment of the other party.” People v. Morris, 28 Misc.3d 1215(A), 2010 N.Y. Slip...