New York Criminal Lawyer Blog
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All too often, criminal defendants face a rightful presumption of innocence coupled with a wrongful assumption of guilt. The greater the severity of the arrest, indictment or allegation, the stronger the negative inference. Although this should not be the case, as New York criminal lawyers this is the reality that we see many of our clients face. In fact, for one particular Crotty Saland PC client, this presumption-assumption issue followed him for a year after he was arrested and indicted for  Kidnapping in the Second Degree (New York Penal Law 135.20), Unlawful Imprisonment in the First Degree (New York Penal Law 135.10) and Stalking in the Second Degree (New York Penal Law 120.55). Fortunately, however, with diligence and hard work, our client’s presumption of innocence prevailed and the assumption of guilt was put to rest after a jury acquitted our client after trial of Kidnapping, Stalking and Unlawful Imprisonment.

On its face, the allegations against our client were horrific. It was alleged that our client kidnapped his ex-wife at knife point after he used a ruse to deliver her furniture from their former apartment to her home that she shared with her mother and daughters (from a different relationship) on her birthday. The complainant claimed that she had no idea our client was going to move her property, did not have plans with him on her birthday, had no contact with him other than responding to his unwanted texts and calls, and only got inside his vehicle after threats of violence were made. Doubling down, the complainant asserted our client brandished a knife and threatened to kill the complainant as well as her daughters and mother. Driving up to Bear Mountain, the complainant contended she only escaped after convincing our client to go to a diner where she then reached out for help from waitstaff. Compounding the accusation, numerous waitstaff stated that they heard our client repeat the threat to kill the complainant’s mother. Complicating matters further, upon arrest zip ties, duct tape and a rope were recovered form our client’s car. No knife was ever recovered.

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For years, the New York City Police Department has run the “Cash for Guns Program” in which it will pay $100 to any individual who turns in any handgun, revolver, semiautomatic and automatic pistols, sawed-off shotguns, or assault rifle. The police will not ask any questions about the weapon or ask for any identification, as the identity of every person will remain anonymous.

Over the years, thousands of guns have been taken off the streets of New York City. Even though the program promises anonymity, that does not always happen. Take the case of Robert Lee Miles. Back on January 19, 2011, Miles walked between subway cars and was stopped by police, as that was a violation of New York City law. The police frisked Miles and recovered an unloaded revolver in his waistband. As he was being arrested, Miles told the police that a friend gave him the gun so that Miles could collect money through the Cash for Guns Program and that he was on his way to delivering the gun to the Police Station to collect the $100.

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Last week I wrote about the recent national healthcare fraud takedown by the Department of Justice and its Medicare Fraud Strike Force.  We discussed the four cases brought in Brooklyn by the U.S. Attorney’s Office for the Eastern District of New York – U.S. v. Onyekwere, 14 CR 274; U.S. v. Thornhill, Thornhill and Johnson, 14 CR 278; U.S. v. Margossian; and U.S. v. Ahmed, 14 CR 277.

While these cases concern different offenses and schemes to defraud; one thing in common is the analysis that will be employed by the U.S. Attorney’s Office and the defense attorneys during plea negotiations regarding a potential sentence.

In virtually all Federal criminal cases, the Judge must consult the United States Sentencing Guidelines – this is a book that determines the seriousness of each offense as well as the criminal history of the defendant through a point (or “level”) system.  The idea is to make sure similarly situated defendants are treated virtually the same by all Federal Judges throughout the country.

In determining the seriousness of the offense, the Guideline establishes a “base offense level” for every Federal crime.  It then calculates “specific offense characteristics” – things that may or may not be a part of each case.

For purposes of Healthcare Fraud cases, the 2010 Patient Protection and Affordable Care Act (commonly referred to as “Obamacare”) changed, quite significantly, how that calculation is made. Continue reading →

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Per se crimes are dangerous offenses in New York. These crimes, and the arrests that result, are based not on malicious or intentional violations of the law, but often on otherwise harmless and ignorant actions. One of the most common strict liability and per se crime in the New York Penal Law is that of Criminal Possession of a Weapon in the Fourth Degree, pursuant to NY PL 265.01. Although there are many different types of items or objects that are “automatic” weapons (by automatic we are not speaking of a firearm, but automatic in the sense that their mere possession is a crime regardless of how the object is being used), the most common involve possession of gravity knives. In its simplest terms, these knives open with the force of gravity when flicked from the wrist. It is fairly routine that tourists to New York City or even residents of Manhattan, Brooklyn or Queens are arrested and either fully processed before a judge or given a Desk Appearance Ticket (DAT) after a police officer observes a clip on the accused’s pocket or or sees the blade during a car stop. Sadly, most of these individuals legally purchased these knives online or at a chain store outside of New York City or New York State.

While gravity knife arrests according to New York Penal Law 265.01(1) rank the highest by volume, other per se weapons are the subject of the same prosecutions. Arguably, though less common, switchblade knives pose a more serious risk. The reason for this is obvious. Still a violation of PL 265.01(1), Fourth Degree Criminal Possession of a Weapon, switchblade knives are not sold by Home Depot, a fishing store or other similar establishments. Gravity knives are. Right or wrong, many prosecutors, judges and police officers perceive switchblade knives are evidence of some potential criminal act. Because of the seriousness of the allegation and the potential long term implications of a criminal conviction beyond spending time in jail, it is critical to examine the many defenses that may be available for an arrestee. One such defense is to review the complaint against you to determine whether the allegations as set forth in the accusatory instrument (the paper charging you is called an information) is legally sufficient.

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Much has been written over the last week about the purported FBI “insider trading” investigation into the purchase of Clorox stock options by legendary golfer Phil Mickelson and infamous sports gambler William Walters.  If this story didn’t involve famous people such as Mickelson and Carl Icahn, it wouldn’t be much of a story – or a criminal case – at all.  Here’s why:

On July 15, 2011, billionaire Carl Icahn announced his interest in taking Clorox, a public company, private in a deal worth approximately $12.6 million.  Four days earlier, there was unusual trading involving Clorox options; presumably involving Mickelson and Walters.  After the announcement, Clorox’s stock price went up considerably – from about $70 per share to $75 per share — providing Mickelson and Walters (and presumably a lot of other people) with a quick, substantial profit.

The million dollar question that the FBI is trying to answer is:  Did Mickelson and Walters know about Icahn’s interest before it became public?  If they did, and they traded on that information, then maybe they engaged in insider trading or securities fraud.  Or maybe not.

On the surface it might sound as if this type of conduct is illegal – knowing something that is material about a stock that is not public and trading on that information.  However, we must look more closely at the securities law, rules and regulations to analyze this situation.

The potential crime is the Federal securities fraud statute, 18 U.S.C. § 1348, which states that anyone who defrauds another person (or company) in connection to any security, or anyone who fraudulently obtains any money related to the sale of a security is guilty of the offense and subject to jail of up to 25 years and a $250,000 fine.

Under existing law, securities fraud based on insider trading must involve the intentional trade (either a sale or purchase) of any security by an insider based upon material, non-public information.

When this law is parsed out, it becomes apparent that, even if the FBI could show that Mickelson and Walters knew Icahn and knew about his plan before it became public, Mickelson and Walter’s conduct very well may not be illegal.

Let’s take a look at why.  There are five things the FBI will have to prove to snare Mickelson or Icahn:  First, that Mickelson and Walters traded in a security.  This will be easy enough, as buying options qualify as securities.  Second, the information must be material to that transaction.  In other words, there must be a substantial likelihood that a reasonable investor would consider it important in making the decision that Mickelson and Walters made.  Here, it is likely that the FBI will be able to show that Icahn’s desire to take Clorox private would be material information.  Next, the information must be non-public.  In this case, it would have been non-public on July 11th (the date of the supposed options purchase) as Icahn made the information public on July 15th.  Fourth, the trade must be based upon the material information, which means that the trader was consciously aware of the material non-public information when they traded. Again, it is likely that the FBI and prosecutors would be able to show (at least circumstantially) that Mickelson and Walters’ trades were based upon Icahn’s information – although this may be difficult.  There does not seem to be any evidence (at least that has been made public) that shows Mickelson and Icahn knew each other or even met.  Finally, the person making the trade must be an “insider.”  Now that term is much more inclusive than you might think.  Obviously it includes an employee of a company whose stock was traded. But who else is an “insider.” Peculiarly, the term “insider” is not specifically defined; however, it includes anyone who has a fiduciary duty to the company based upon knowledge of non-public material information.  Interestingly, anyone who becomes aware of material, non-public information is deemed to have the same fiduciary duty as an employee or owner of the company.

It is this last “element” that will pose the greatest challenge to the FBI in its investigation of Mickelson, Walters and Icahn.  First, it is likely that Icahn had no fiduciary duty to Clorox.  Yes, he was a shareholder; however, he was not a corporate officer or employee of the company.  Merely being a shareholder does not confer a financial, or fiduciary, duty to the company.  So, if Icahn did not have a fiduciary duty, then he was not an insider.  If Icahn was not an insider, then Mickelson did not obtain information from an insider.  Even if that information was material and non-public, Mickelson and Walters’ trades would not be insider trading, or a violation of the securities fraud statute.

In addition, Icahn’s announcement was by letter and not a formal “tender offer.”  This is significant because the SEC has very specific rules regarding tender offers that might convey a fiduciary duty on Icahn.  However, since he did not make a tender offer, it is likely that he will not be adjudged to have had a fiduciary duty to Clorox.

So, while it is salacious and makes for front page news, and possibly will alter Mickelson’s mental state at his next tournament, it is unlikely to put him in jail or require him to pay a hefty fine.

As you can see, the law surrounding insider trading and securities fraud are subtle as well as complex.  If you find yourself in a situation such as Phil Mickelson or Carl Icahn, it is important that you seek out and retain a federal criminal defense attorney that is well versed in the nuances of the securities law.

To read more about Federal Securities Fraud crimes and Insider Trading, review this blog and the Crotty Saland PC website.

To learn more about FederalSecuries Fraud and Insider Trading crimes, contact Crotty Saland PC or follow the links throughout this blog entry.  A Federal criminal defense law firm located in lower Manhattan, the Federal criminal defense attorneys and former Federal prosecutors at Crotty Saland PC represent clients throughout the New York metropolitan area, as well as nationwide.

 

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In our last post, we discussed the history and tactics of the Department of Justice’s Medicare Fraud Strike Force.  We also talked briefly about the recent Healthcare Fraud nation-wide “takedown.”  But as we also mentioned, this was not one giant case involving 90 defendants, but rather dozens of cases, scattered throughout six different cities.  Each one of those cases has a different history; a different story.  From a practical perspective, it can be instructive to take a look at all the cases charged in a particular Strike Force city to get a feel or a sense of what types of cases are being brought there and how the government investigates healthcare fraud differently in different places.  In this installment, we’ll start off by looking at the four cases brought in the Eastern District of New York in Brooklyn.

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In March 2007 the Medicare Fraud Strike Force originated in South Florida as a ground-breaking joint effort between the U.S. Department of Justice’s Criminal Division Fraud Section, the U.S Attorney’s Office for the Southern District of Florida, Health and Human Services Office of Inspector General, as well as state and local law enforcement agencies to prosecute individuals and businesses that did not provide legitimate health care services, but existed and operated for the sole purpose of stealing money from the Medicare coffers.

Over the last seven years, this first-of-its-kind strike force in the health care arena has become a model of innovation in terms of strategy, methodology and practice, but also quite some controversy.  According to the Department of Justice, as of early 2014, the Strike Force, now in nine cities, has charged more than 1400 defendants, who have collectively billed the Medicare program for more than $4.8 billion.  In addition, hundreds of millions of dollars have been returned to the Medicare Trust Fund through restitution and forfeiture.  The question has been asked, however, whether the government has overreached in some of these healthcare fraud investigations and prosecutions.  This aggressive approach smells from governmental over-reach, and requires anyone charged in a Strike Force case to seek out a Federal Criminal Attorney well experienced in Healthcare Fraud matters to present an effective defense.

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When arrested for drunk driving in New York City or New York State (some attorneys and non-lawyers alike call this crime DWI or DUI), there are certain elements for each of the two major DWI crimes that transcend every case. That is, for example, if you “blow” a .08 or above in terms of your BAC, the police will arrest you for the per se Vehicle and Traffic Law offense of VTL 1192.2, Driving While Intoxicated. Even if you do refuse to blow, you are not home free. Not only will your refusal result in a separate Department of Motor Vehicle (DMV) proceeding for the revocation of your license, but the police and the local District Attorney can still charge you with DWI or DUI pursuant to VTL 1192.3. This “non blow” version of DWI is no different than VTL 1192.2. The potential outcome is the same, but prosecutors must ultimately prove beyond a reasonable doubt that you were operating a motor vehicle while intoxicated through the eyes of the arresting officer (and other witnesses). In such cases the officer would testify about the smell of alcohol on your breath, your watery and blood shot eyes, your gate and demeanor, and other relevant factors. In New York City (Manhattan, Brooklyn, Bronx and Queens), the NYPD video tapes you at the precinct while conducting certain mobility tests. For better or worse, the municipalities in the suburbs of Rockland and Westchester Counties do not.

Without further addressing these crimes (materials on these offenses are found on the Crotty Saland PC website’s DWI section and throughout the NewYorkCriminalLawyerBlog.Com), what happens if you do decide to blow and take a PBT (portable breath test) at the scene of your arrest and the BAC reading is well below .08 (arguably, if it is low enough there may be no probable cause for your arrest)? What if back at the precinct you blow on the intoxilizer with a reading again below .08? How can prosecutors prove their case beyond a reasonable doubt? For starters, as noted above, the police can testify as to your traits or characteristics when attempting to establish a DWI or DUI crime even if you did not provide a BAC sample. They can do the same here. However, there are certain presumptions in the law that could potentially be favorable (or unfavorable) to you. These presumptions are found in VTL 1195.

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When it comes to the criminal law, many people become obsessed with theoretical loopholes and “get out of jail free” cards. While prosecution of the guilty is a noble purpose of government, sometimes there are other, competing governmental interests (such as avoiding a Police State and governmental violations of an individual’s Constitutional rights) that are more compelling. One of those compelling issues is the concept of Diplomatic or Consular Immunity. This comes into play in New York more than almost anywhere else in the country.

New York is the largest city in the United States and one of the political capitals of the world, as home to the General Assembly of the United Nations. All 194 member and observer countries have permanent delegations to the United Nations. New York is also home to 116 nations’ consulates-general. What this means is that there are more foreign diplomats in New York City than almost anywhere else in the world. By some estimates there can be between 3,000 and 10,000 foreign dignitaries in New York at any one time. Not surprisingly, there are occasions that either the State or Federal government will charge a foreign dignitary with a serious crime.

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I recently posted a blog entry briefly analyzing a Second Degree Forgery (New York Penal Law 170.10) conviction where one of the central issues was whether the defendant had the intent to “defraud, deceive or injure” the bank when a deceased man’s credit card was used and all principle and interest payments were made. Although there was more to that case (the blog entry is from May 11, 2014), the lesson learned is that intent to defraud has a very liberal, as opposed to conservative and strict, definition. Recognizing this fact is important for not only you, as an accused, but your criminal attorney identifying and implementing your best defense. Following up with further review of New York’s Forgery and Criminal Possession of a Forged Instrument crimes, statutes and laws, this entry will once again address these offenses.

In People v. Lydon, 2006 NY Slip Op 7125 (1st Dept. 2006), the defendant was convicted after trial of multiple counts of Forgery (it is not clear from the decision whether the crimes were for the felony of Second Degree Forgery or the misdemeanor of Third Degree Forgery pursuant to New York Penal Law 170.05). The facts at trial established that the defendant would order pizzas over the phone for delivery using one of two credit card numbers, but then go to the restaurant and complete the purchase. When the defendant signed the receipts for the pizzas, he would write a relatively illegible name or “Mike.” Neither of the credit card holders, a husband and wife, were named Mike.

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