People v. Mikuszewski
| Decision Date | 02 May 1989 |
| Parties | , 538 N.E.2d 1017 The PEOPLE of the State of New York, Appellant, v. John MIKUSZEWSKI and Nanco Contracting Corp., Respondents, et al., Defendant. |
| Court | New York Court of Appeals Court of Appeals |
Robert Abrams, Atty. Gen. (Christine Duisin, New York City, O. Peter Sherwood, John Michael Ryan, Edward D. Saslaw, Highland Mills, and Diane M. Peress, Kew Gardens, of counsel), for appellant.
Judd Burstein and Jay Goldberg, New York City, for respondents.
The criminal charges in this case stem from allegedly fraudulent efforts to feign compliance with minority business participation requirements in two public works contracts. The People through the State Attorney-General charge defendant Nanco Contracting Corp., acting through its vice-president and codefendant Mikuszewski, with making false representations, in required documents relating to the public works contracts, regarding G.R. Trucking, a supposedly State-approved independent minority-owned subcontractor. It was actually owned by codefendant Gustave Roben, an employee of Nanco Contracting Corp. (Nanco Corp.).
The issue is whether the Grand Jury evidence is legally sufficient to support seven counts of the indictment, the only ones now before us, which have been dismissed. We conclude that six counts should be reinstated and that the scheme to defraud charge was properly dismissed.
The 16-count indictment in this case emerged from the Attorney-General's criminal investigation of two Federally funded public works contracts awarded to Nanco Corp. by the New York City Department of Transportation in June 1982--a $4.5 million contract to reconstruct Merrick Boulevard in Queens and a $7.1 million contract to improve a portion of Ocean Avenue in Brooklyn. Under the terms of the contracts and consistent with Federal law, Nanco Corp. was obligated to allot 10% of the work to a State-approved "Minority Business Enterprise" (MBE) and 5% to a State-approved "Women-owned Business Enterprise" (WBE). The contracts also provided that failure to fulfill the MBE/WBE requirements could result in the stoppage of government payment or loss of the contracts altogether or both.
Nanco Corp. was awarded the contracts based in part on its representations that G.R. Trucking was one of the minority-owned businesses with which Nanco Corp. intended to subcontract in satisfaction of its MBE commitment. G.R. Trucking is a one truck-two employee operation owned by Gustave Roben, a native Ecuadorian. He and his wife are the two employees. In April 1983, New York City learned that at all relevant times Roben was a Nanco Corp. employee and concluded that his G.R. Trucking was neither an independent business as required (see, 49 CFR 23.53[a][2] nor a State-approved minority business enterprise. It ceased payment under the contracts.
Allegedly false representations in various officially filed documents regarding G.R. Trucking's nonaffiliation and certification as a State-approved MBE also generated a criminal investigation and later indictments against defendants Mikuszewski, Nanco Corp. and Roben for the crimes of offering a false instrument for filing, falsifying business records, perjury, making an apparently sworn false statement, attempted grand larceny, and engaging in a scheme to defraud.
On defendants' motions to dismiss for insufficient evidence, the trial court dismissed nine counts of the indictment against defendants Mikuszewski and Nanco Corp. and three counts against defendant Gustave Roben. After the Appellate Division affirmed the dismissals, 145 A.D.2d 1005, 536 N.Y.S.2d 363, codefendant Roben pleaded guilty to a lesser included offense in full satisfaction of his indictment. Thus, only Nanco Corp. and Mikuszewski are left before us on this People's appeal and only as to seven of the dismissed counts.
A Grand Jury may indict only if the evidence before it is legally sufficient to establish that the accused committed the offense charged and also provides reasonable cause to believe the accused committed the offense (CPL 190.65). On a motion addressed to sufficiency of an indictment (CPL 210.20[1][b], however, the defendant is entitled to a review based on whether there was competent evidence which, if accepted as true, would establish every element of an offense charged and the defendant's commission of it (CPL 70.10[1]; People v. Jennings, 69 N.Y.2d 103, 115, 512 N.Y.S.2d 652, 504 N.E.2d 1079). The evidence must be viewed most favorably to the People, and it need not "provide 'reasonable cause' to believe that the defendant committed the crime charged" (see, People v. Warner-Lambert Co., 51 N.Y.2d 295, 299, 434 N.Y.S.2d 159, 414 N.E.2d 660, citing Denzer, Practice Commentary, McKinney's Cons. Laws of N.Y., Book 11A, CPL 70.10, at 348 [1971]; see also, People v. Brewster, 63 N.Y.2d 419, 422, 482 N.Y.S.2d 724, 472 N.E.2d 686). The courts below appear to have mistakenly held the People to the higher "reasonable cause" standard and, thus, should not have dismissed counts 3, 4, 7, 8, 13 and 14. With respect to count 16, the Attorney-General failed to provide any proof with respect to an essential element of the crime of scheme to defraud first degree and, thus, the count was properly dismissed.
Count 16 charges the defendants with violating Penal Law § 190.65, which provides in part: (emphasis added). This count was dismissed because defendants' conduct did not fall within the reach of this particularized scheme to defraud statute. The Attorney-General urges reinstatement, claiming that defendants' scheme to obtain the two contracts by falsely claiming compliance with the MBE requirements constituted "a systematic ongoing course of conduct" sufficient to satisfy this statute's language and purpose. He adds that the 10 or more victims requirement elevating the offense to a felony has been satisfied because the scheme was intended to defraud not only three governmental agencies involved in the administration of the public projects but also 10 or more other bidding contractors.
We conclude the Grand Jury evidence was legally insufficient with respect to this count because there was no proof that defendants intended to defraud or obtain property by false representations with respect to 10 or more persons within the meaning of this statute.
The scheme to defraud crime (Penal Law §§ 190.60, 190.65) was added to the Penal Law in 1976 (L.1976, ch. 384). Under the relatively new theft statute, the misdemeanor offense is elevated to felony level first degree if the intent is to defraud or obtain property by false representations with respect to "ten or more persons" and property is obtained from "one or more" such persons (see also, L.1986, ch. 515; Penal Law § 190.65[1][b] []; see also, L.1986, ch. 833; Penal Law § 195.20 [].
The legislative history indicates that the applicable 1976 statute was designed to aid in the prosecution of consumer fraud schemes where many victims are bilked mainly of small amounts of money (see, Sponsor's Mem., 1976 N.Y.Legis.Ann., at 35-36). The enhanced prosecutorial option was thought to be needed because under the then existing offense choices these types of consumer scams often escaped successful prosecution under the larceny-by-false-promise statute (Penal Law § 155.05[2][d], which required that each victimization be separately pleaded and proved. The scheme to defraud concept borrowed the traditional larceny category of false pretense and false representation, but shifted the focus away from the amount of loss suffered by a particular victim and placed it instead on the nature and extent of the scam.
While the new scheme to defraud crime was derived in part from the Federal mail fraud statute (18 U.S.C. § 1341; see, Sponsor's Mem., 1976 N.Y.Legis.Ann., at 35-36), it differs significantly from the latter by additionally requiring that property actually be obtained from at least one of the persons sought to be defrauded (see, Donnino, Practice Commentary, McKinney's Cons.Laws of N.Y., Book 39, Penal Law § 190.60, at 425).
In this case, while the People's evidence before the Grand Jury may have been sufficient to establish that the one "person" from whom property was actually obtained was the government or a few units of the government, there was absolutely no evidence that defendants made false representations to other bidding contractors, or even that other bidding contractors had knowledge of the false representations made to the government or that they were in any way defrauded of property rights or interests. None of those putative bidders were involved in the defendants' scam or victimized in any way contemplated by this special statute. Since the People failed to supply any evidence to establish defendants' intent to defraud multiple victims an essential element under this particular statute, the scheme to defraud count cannot stand.
Counts 3, 4, 13 and 14 of the indictment are predicated on a...
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