People v. Kennedy

• Citation: 510 N.Y.S.2d 853,68 N.Y.2d 569,503 N.E.2d 501
• Parties: , 503 N.E.2d 501 The PEOPLE of the State of New York, Appellant, v. Michael KENNEDY, Respondent.
• Decision Date: 19 December 1986
• Court: New York Court of Appeals

Page 853

510 N.Y.S.2d 853

68 N.Y.2d 569, 503 N.E.2d 501

The PEOPLE of the State of New York, Appellant, v. Michael KENNEDY, Respondent.

Court of Appeals of New York.

Dec. 19, 1986.

[503 N.E.2d 502] Ronald Goldstock, Deputy Atty. Gen. (Martin Marcus, New York City, of counsel), for appellant

[68 N.Y.2d 571] Ralph S. Joseph, New City, for respondent.

OPINION OF THE COURT

KAYE, Judge.

This appeal presents a novel application of the business records exception to the hearsay rule (CPLR 4518): two miniature pocket diaries, identified by the People's retained expert as the master records of a loanshark kept in the regular course of his business, were received in evidence in a prosecution against defendant to establish that he was the loanshark's silent partner. We agree with the Appellate Division, 113 A.D.2d 843, 493 N.Y.S.2d 509, that a sufficient foundation for those records was not established, and there must be a new trial.

In this prosecution for conspiracy and criminal usury, the People sought to prove that defendant, a Clarkstown police officer, was the silent partner of a usurer and fellow police officer named Thomas Manuli. It was the People's theory that defendant had supplied the cash for Manuli to lend the victim (Frank DiMare) at a usurious rate of interest, in exchange for which defendant received a percentage of the usurious payments. The People's evidence at trial essentially consisted of the testimony of DiMare, certain admissions of defendant and bank evidence, tape recordings of two telephone conversations, and the diaries and related expert testimony.

DiMare testified that he had initially borrowed $5,000 from Manuli in February 1981, and in May 1981 obtained an additional $10,000 loan at an interest rate of 3% ($450) per week. In late May or early June, DiMare (who testified his nickname was "Cigars") repaid $5,000 and negotiated new terms for the balance--$475 per week for 32 weeks. By January 1982--the end of the 32 weeks--he still owed Manuli about $2,300. In January 1982, he negotiated a $5,000 loan ($2,700 net of his preexisting debt) to be repaid in 20 $300 weekly installments, and gave as security the certificate of title and registration to his car. Over the next five months, DiMare made 10 or 11 payments. When Manuli demanded further payments, DiMare suggested that he buy cocaine from him. Manuli purchased one ounce of cocaine for $2,000 and received back $300 against the indebtedness.

DiMare testified that throughout his various transactions with Manuli, he believed that Manuli was working alone, although Manuli had at one point told him that "some friend of mine * * * is complaining." DiMare did not know defendant.

Defendant admitted in a police interview that he had loaned $10,000 to Manuli, but said that the loan was to be repaid at the going rate of interest. Evidence from defendant's bank indicated that on May 14, 1981, the date of the $10,000 loan to DiMare, he requested $10,000 in cash, that he received a teller's check in that amount, and that the check was approved for cashing by another bank.

The People submitted two tape recordings of telephone conversations between defendant and Manuli. During the first, on July 6, 1982, defendant asked Manuli, "How did you make out with Frankie?" Manuli responded that he was going "to pick it up tonight" and "would work something out with him." Manuli told defendant that he had warned Frank that "this friend of mine, he, ah, you know, he's, he's not too happy." The next day--July 7, 1982--during a second conversation, Manuli told defendant that he "got the S---." In that conversation defendant said he would visit Manuli that evening. Later that same day, Manuli's apartment was searched pursuant to a warrant. In a metal box in the bedroom bureau the police found cash, the title and registration documents for a car belonging to DiMare's wife, contraband and the two diaries.

The diaries, one for 1981 and one for 1982, contained scattered entries at various dates in each book, consisting of handwritten words, names and initials often followed by numbers or other names. Some of the entries were in ink, some in pencil, some had been changed. As a foundation for admission of the diaries into evidence, the People offered the testimony of a private investigator, retired police officer Michael Emanuelo, qualified as an expert in the field of criminal usury and records pertaining to criminal usury. ¹

Emanuelo testified that, in his experience, loansharks often have partners who underwrite their loans and usually receive 1% per week of the principal advanced to the usurers and loaned to the victims. Criminal usurers ordinarily keep master records of their transactions, including records of money paid to victims, amounts received from them, and payments to partners; they maintain such records themselves; and they keep their records in cryptic fashion, consisting of numbers preceded by names or symbols, indicating that they are scheduled to meet their victims or partners to make or receive payments. Entries are sometimes prerecorded in anticipation of payments, with numbers added upon actual receipt of the money.

The following key questions were asked and answered, after which the diaries were received in evidence over the objection of defense counsel that a sufficient foundation had not been established:

"Q Do you have an opinion as to what the nature of these books is?

"A Yes, I do.

"Q What is that opinion?

"A These are master business records normally kept by usurers.

"Q Do you have an opinion as to whether these records were kept in the ordinary course of usury loan business?

"A Yes.

"Q What is that opinion?

"A They are loans given out to victims, payments received from victims and also payments of expenses to other individuals.

"Q Do you have an opinion by whom these entries were made?

"A I don't understand your question.

"Q Do you have an opinion as to who it was, either by name or by category of who maintained these records?

"A Just by category. It was a usurer that kept these records."

"THE COURT: Would these be the type of records which would ordinarily be kept in the business of a usurer?

"THE WITNESS: Yes, it is, your Honor."

After admitting the diaries, the court advised the jury that it was free to believe or disbelieve that these were regular records, despite the expert's testimony.

With the diaries in evidence, Emanuelo's remaining testimony was consumed by a detailed interpretation of the entries, identifying certain of the entries as names of victims and others as partners of the usurer. Emanuelo opined that in February and May 1981 certain entries reflected loans of $5,000 and $10,000 to Frank "Cigars"; that an entry in May 1981--"Cigar 5,000"--indicated repayment; and that other entries, including one on May 29, 1981--"Frank--600.00"--and one on June 5, 1981--"Frank--750.00"--referred to payments against the indebtedness. Emanuelo further testified that in his opinion entries for "M.K." and "Mike K" indicated one and the same person. The almost weekly notations, during the second half of 1981, reading "Mike K--100" and "M.K.--100" referred in Emanuelo's view to payments by the usurer to "Mike K", and were related to "Frank--$10,000". (There were approximately 26 $100 entries referring to "Mike K" or "M.K." in the 1981 diary, and none in the 1982 diary.) Because payments of $100 would be "approximately one percent" of $10,000, Emanuelo testified, "Mike K" was either the usurer's partner or an independent usurer who advanced the principal to be furnished to the victim.

Thus, the testimony of Emanuelo that payments of $100 to "Mike K" or "M.K." were actually payments to one person of 1% against a loan of $10,000, and that payments of 1% meant that Mike K. was the usurer's silent partner, connected defendant as a participant in Manuli's usurious loan to DiMare. The diaries and expert testimony also buttressed the testimony of DiMare, a convicted felon.

Defendant's conviction of conspiracy in the fourth degree and criminal usury in the second degree was reversed by the Appellate Division, and a new trial ordered, on the ground that the People had failed to lay a sufficient foundation for the admission of the diaries. Critically lacking, in the view of the Appellate Division, was "testimony from someone with knowledge of the particular usurer's record-keeping procedures that these diaries were made in the regular course of the usury business, that it was in the regular course of his business to make such records and that the notations were made at or soon after the purported transactions occurred." (113 A.D.2d, at pp. 844-845, 493 N.Y.S.2d 509.)

This appeal presents several questions relating to CPLR 4518(a), ² technically made applicable to criminal prosecutions by CPL 60.10. In that the diaries were admitted as evidence of the truth of their terms and thus constitute hearsay, the requirements of CPLR 4518(a)--pursuant to which they were offered ³--must be satisfied, however reliable such records may otherwise be deemed to be (see, People v. Nieves, 67 N.Y.2d 125, 131, 501 N.Y.S.2d 1, 492 N.E.2d 109). Moreover, while business records, once admitted, have no more probative force than any other evidence admitted pursuant to a hearsay exception, the threshold determination that they are business records satisfying the requirements of the statute is one of law. Whether records admitted pursuant to CPLR 4518(a) are in fact regular business records is not--as the trial court advised the jury--a matter going only to weight of the evidence; other circumstances of the making of the records may go to weight once the threshold requirements for admissibility are met (CPLR 4518[a] ).

Initially, neither the fact that records are those of a criminal enterprise, nor the fact that the alleged enterprise is a one-man business, disqualifies them from consideration as business records within CPLR 4518(a).

The...