People v. Reynolds
Decision Date | 05 May 1997 |
Citation | 667 N.Y.S.2d 591,174 Misc.2d 812 |
Parties | , 1997 N.Y. Slip Op. 97,631 The PEOPLE of the State of New York, Plaintiff, v. Joseph REYNOLDS et al., Defendants. |
Court | New York Supreme Court |
Gerald Lefcourt, New York City, for Joseph Reynolds, defendant.
Joel Stein, New York City, for Lance Barnett, defendant.
Steven Kartagener, New York City, for Ronald Batnick, defendant.
Robert Blossner, New York City, for Richard Cardali, defendant.
Henry Putzel, New York City, for Fred Duran, defendant.
Fred Hafetz, New York City, for Melvyn Estrin, defendant.
George Kosefas, New York City, for Stephen Fields, defendant.
Al Brackley, Brooklyn, for Moses Goldberg, defendant.
Spiros Tsimbinos, Kew Gardens, for Christ Golfinopoulos, defendant.
Peter Driscoll, New York City, for Frederic Grae, defendant.
Jeffrey Hoffman, for Edward Horn, defendant.
Seth Rosenberg, New York City, for Gittens Burl Hosten, defendant.
Ron Kleinberg, New York City, for Selwyn Karp, defendant.
Gary Becker, New York City, for Edward Kaufman, defendant.
Gustave Newman, New York City, for David Kreitzer and Gary Rothman, defendants.
Jack Hoffinger, New York City, for William Lazaroni, defendant.
Robert Koppelman, New York City, for Murray Mayer, defendant.
Mike Butler, for Carl Paulsen, defendant.
Sal Russo, for John Prins, defendant.
Norman Schwartz, for Ira Rogovin, defendant.
Ron Kleinberg, New York City, for Joseph Rosenzweig, defendant.
Felix Gilroy, Staten Island, for Thomas Rybicki, defendant.
Michael Ross, for Edward Sacks, defendant.
Barry Turner, New York City, for Raymond Sales, defendant.
Ben Brafman, New York City, for Lawrence Smith, defendant.
Jim Mulvaney, for Jack Sparr, defendant.
Eugene Feldman, for William Staubitzer, defendant.
Barry Fallick, New York City, for Patrick Sullivan, defendant.
Richard Levitt, New York City, for John Timoney, defendant.
George Farkas, Brooklyn, for Cyrus Wolf, defendant.
Joel Winograd, New York City, for Alan Zasky, defendant.
Robert M. Morgenthau, District Attorney of New York County, New York City (Suzanne R. Elovic and Steven Ringer, of counsel), for plaintiff.
This three hundred and sixty-five count indictment charges forty-five defendants, although not all are named in each count, with the crimes of Conspiracy in the Fifth Degree (Penal Law 105.05), Commercial Bribe Receiving (in the First and Second degrees) (PL 180.03 & 180.00), and Scheme to Defraud in the First Degree (Penal Law 190.65).
At issue is the applicability of these statutes to allegations that the personal injury insurance industry is rife with corruption among the insurance company adjusters, the plaintiff's personal injury lawyers, and a group of persons denominated as the "middlemen." It is the People's theory that in order to expedite the processing and settlement of personal injury claims, in a system where an individual claim may take years to resolve, a corrupt scheme developed, whereby plaintiff's attorneys would "kickback" a designated percentage of their settlement fee, through the middleman, to an adjuster. This "kickback" was split between the middleman and the adjuster. It is not alleged that the settlements obtained by this system were other than what would have been reached in the ordinary course of business, absent the kickback.
Article 180 of the Penal Law separately treats the giving of a commercial bribe and the receiving of a commercial bribe, which analytically are the opposite sides of the same transaction. Originally enacted as a Class B misdemeanor (L.1965, c. 1030), there were two subsequent amendments to the statutory scheme concerning commercial bribery: In 1976, the legislature created first and second degree commercial bribery crimes, making the former a Class A Misdemeanor, when the bribe is in excess of $500 (L.1976, c. 458). Thereafter, in 1983 the legislature raised the first degree level to a Class E felony, where the "value of the benefit [the bribe] * * * exceeds one thousand dollars and causes economic harm to the employer or principal in an amount exceeding two hundred fifty dollars." By the same amendment, all other commercial bribes, regardless of value, or economic harm, the second degree level, were raised to a Class A misdemeanor. (L.1983, c. 577, § 1).
There are three basic arguments: (1) that since there is no claim of an inflated settlement, there has been no loss to the insurance company and therefore, as a matter of law, there must be a failure of proof concerning the element of "economic harm" to the insurance company exceeding $250 requiring, at the worst, reduction of the felony charges to misdemeanors; (2) that the alleged payments were not made in order to influence the adjuster's conduct as an employee of the insurance company; and (3) that the alleged payments do not constitute a "benefit," as contemplated by the statute (either exceeding $1000 [first degree] or "any" benefit [second degree] ) because that portion of the payment kept by the middleman must be deducted from any calculation as to whether the statutory threshold has been met.
1. Economic Harm: Turning to the alleged lack of "economic harm," the People respond that the amount of economic harm must be calculated as the total amount of money that the plaintiff's attorney pays to the middleman, regardless of the payment to the insurance adjuster. They assert that "when the bribe is a kickback, and therefore paid with the employer's own money, then the bribe itself also constitutes the harm." Contrariwise, the defense claims that there has been no actual economic harm and that the People are merely relying upon economic theories, what one defense attorney calls "metaphysical proof." This is because, so the argument runs, to permit this theory of prosecution would be to relieve the People "of their inescapable burden of proving 'economic harm' in each individual count charged;" and "lacks financial logic, since ... any payments were not 'built in' to the settlements, but instead were deducted from the attorney's share of the settlement."
The statutory economic harm requirement was added in 1983 when first degree commercial bribery was raised to a Class E felony, although the term "economic harm" was not defined in either the statute and/or in the legislative history. Indeed, at the time of the amendments, Attorney General Robert Abrams, who considered the Bill to amend the commercial bribery statutes "part of [his] legislative program," and Senator James J. Lack, the Senate sponsor of the amendment, both thought that by adding the concept of "economic harm," they were creating an affirmative defense. The Attorney General wrote that "[l]ack of economic harm to the employer or principal is an affirmative defense to both commercial bribery and commercial bribe receiving in the first degrees." (Attorney General's Legislative Program, [No. 165-83] p. 1, Bill Jacket to L.1983, c. 577). During the Senate debate on the Bill, Senator Gold asked Senator Lack, To which Senator Lack replied, (Senate Debate Transcripts, pp. 9759-60, Bill Jacket, supra ).
However, since the statute did not declare lack of "economic harm" to be an affirmative defense, an affirmative defense was not created, nor was there created an ordinary defense (PL 25.00[1] ). Rather, of course, as the statute was written, "economic harm" constituted an element of the first degree offenses. This legislative misapprehension of the significance of the term "economic harm" may explain the absence of a statutory definition and may explain the difficulty that this language presents, when viewed as an essential element of these crimes. But this history does support the interpretation that in a "kickback" case, the amount of the "kickback" would constitute "economic harm," unless it arises in a factual situation such as in the example suggested by Senator Gold or some other uncommon situation.
This becomes clear from further examination of the legislative history. Attorney General Abrams indicated that (Memorandum in Support of Attorney General's Legislative Program, p. 1 Bill Jacket, op. cit.). Edward J. Kuriansky, The Deputy Attorney General for Medicaid Fraud Control, wrote that "kickbacks ... significantly increase the ... costs of health care" (Letter to Hon. Alice Daniel [Counsel to the Governor], Bill Jacket, op. cit.). This legislative concern over the effect of "kickbacks" is not disputed.
What is disputed is whether the "kickback" itself can be used to satisfy the statutory requirement that there be "economic harm" exceeding $250. As to this issue there have been found no reported decisions. While there is also no equivalent federal statutory requirement of "economic harm," there are numerous federal decisions concerning "kick...
To continue reading
Request your trial-
U.S. v. Rybicki
...trial court that tried and convicted other defendants who were involved in the same scheme. See People v. Reynolds, 174 Misc.2d 812, 667 N.Y.S.2d 591, 595-96 (N.Y.Sup.Ct.1997) (Fried, J.) (finding that kickback constituted economic harm to the employers, who were deprived of the opportunity......
-
People v. Wolf
...sufficient evidence. As the trial court determined in denying the dismissal motions made by defendant and his codefendants (People v Reynolds, 174 Misc.2d 812), defendant's conduct satisfies the elements of commercial bribing in the first and second degrees and scheme to defraud in the firs......
-
Lulkin, In re
...to respondent's defense that he was not the organizer of the scheme, as this is not a required element of the crime (People v. Reynolds, 174 Misc.2d 812, 667 N.Y.S.2d 591). Were any further rationale needed, respondent's plea allocution to the other three counts also satisfies the elements ......
-
People v. Chive
...misguided human deviousness attempts constantly to explore and lend to fraud new outlets for expression. (See, People v Reynolds, 174 Misc 2d 812, 828 [Sup Ct, NY County 1997]; 60A NY Jur 2d, Fraud and Deceit § 1 [fraud is any deception or artifice employed by one person "to deceive or gai......