New York Criminal Lawyer Blog
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It may be great tabloid fodder for the foreseeable future, but hacking computers, PCs, mobile devices and Apple’s ICloud is a very dangerous and risky pastime.  Sure, sharing intimate and naked photos of Jennifer Lawrence, Kate Upton and Kirsten Dunst may be good for sophomoric kicks and gossip sites. Arguably, many of the images of the also-rans and lesser knowns who were exposed may have secondary and post embarrassment value in boosting their respective profiles. Irrespective of the consequences to the victims both “good” and bad, computer hacking is a serious Federal crime with equally serious punishment. Make no mistake. You need not be the anonymous celebrity hacker to feel the power and wrath of law enforcement from Federal agents to prosecutors. There will be few, if any, Federal judges who will not come down hard with bail upon your arrest or punish you severely at your sentencing should you be convicted of a computer hacking offense. If nothing else is clear, you and your criminal lawyer will have a long road ahead if you are accused, the target, or a subject of a computer hacking offense. If prosecutors have successfully executed search warrants and found materials on your computers, tracked IP information, and obtained any statements from you during the course of their investigation, your predicament can easily go from bad to worse.

The following blog entry will address some of the potential Federal crimes that the anonymous celebrity hacker  – or anyone – would face if prosecuted in Manhattan’s Southern District of New York, Brooklyn’s Eastern District of New York, Newark’s District of New Jersey or any other Federal jurisdiction.

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I the realm of criminal prosecutions in New York City’s Criminal Courts and New York State’s local Town and Village Courts, one of the most common offenses that are pursued by police and prosecutors is the crime of Third Degree Assault pursuant to New York Penal Law 120.00. This crime can be quite a serious offense even where the degree of an injury is well below the felony threshold. For example, one can punch another person square in the face and break that person’s nose or strike someone hard enough to cause an ugly laceration and welt, but the crime will remain a misdemeanor Assault int the Third Degree. Whether that injury sustained causes a bloody hemorrhage or only a small bruise, as long as there is physical injury and substantial pain the accused will face up to one year in jail on an NY PL 120.00 arrest or conviction (NOTE: In New York City – Manhattan, Brooklyn, Queens, etc., first time offenders may be issued a NYC Desk Appearance Ticket (DAT) when arrested, but the charge and potential punishment is no less grave).

Due to the direct and collateral consequences to an arrest for PL 120.00 even without a conviction, it is critical to collect evidence and move forward with your defense at the beginning of the process. While one way your criminal lawyer will pursue your defense may be through speaking with witnesses (even the complainant) or securing videos or photographs, another means of attack is through the charging document (called the criminal court complaint or criminal court information). The following legal decision addresses one such attempt to challenge the legal sufficiency of an information while also shedding some light on how prosecutors can pursue criminal cases without the assistance of the victim him or herself.

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A conviction for driving while intoxicated, drunk driving, DWI, DUI, or any other name you want to call a New York VTL 1192 crime, can, and often does, has a host of damaging consequences. The foreseeable consequences range from fines to incarceration and suspension / revocation of licenses to an interlock being placed on your vehicle (where you, the defendant, must pay for the maintenance and installation). As bad as these punishments may be (along with a criminal record that does not get expunged), there are consequences that can be much worse terms. Forget the fact that local law enforcement such as the NYPD or Westchester County Police may seek the forfeiture of your vehicle, there are few employers who would look favorably on a conviction relating to DWI even if the conduct does not rise to the felony level. With this in mind, it is never too early to challenge a criminal complaint or information. While your strongest defense may be at trial, should there be any grounds to challenge the sufficiency of the DWI accusation at an earlier stage, both you and your criminal attorney or New York DWI lawyer should seize the opportunity and do so.

Although the following case did not result in the appellate decision the defendant was hoping for, the case and decision are worth noting in this blog as they further define and illustrate the elements of New York’s DWI and Reckless Driving crimes and the minimum standards that prosecutors are required to meet to sustain a conviction.

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In the State of New York a violation is defined as an offense for which a defendant can be sentenced to no more than 15 days in jail. Disorderly Conduct (New York Penal Law 240.20) is a violation of the New York State Penal Code. A Disorderly Conduct conviction can have wide ranging consequences for most people ranging from community service and fees to incarceration (not likely in most scenarios) and damage to a professional career. Disorderly conduct should only be charged when you act in a way that provokes public disorder. Furthermore, you can be charged with Disorderly Conduct as long as you intend to cause “public inconvenience, annoyance or alarm, or recklessly creat[e] a risk thereof.” Therefore, if you do not provoke or intend to provoke, public disorder then a Disorderly Conduct arrest should not stand on its own two feet. This was exemplified in the case of People v. Zuckerberg.

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Most of the direct consequences for a DWI (Driving While Intoxicated or DUI) crimes in New York are fairly standard. While there is deviation between sentence to sentence and case to case, the maximums remain the same for any misdemeanor offense involving New York Vehicle and Traffic Law sections 1192.2 or 1192.3. In addition to being burdened with a criminal conviction for a misdemeanor, the law allows up to a one year jail sentence, probation, community services and fines. Beyond the possibility of incarceration, sentences also include completion of the Drinking Driver Program (sometimes called the Drunk Driving Program). Additional punishment will include a license suspension and the placement of a ignition interlock device on your car that requires you to “blow” before, and sometimes during, the operation of your vehicle. Simply, the potential punishment for a conviction for New York for VTL 1192.2 or New York VTL 1192.3 are quite serious for anyone accused of or arrested for a DWI offense. This fact alone is why it is essential to ascertain and implement a defense that can lead to mitigation of your conduct to a non criminal offense or even dismissal. When you are a professional, such as an attorney licensed to practice law in the State of New York, however, the consequences can be even more grave and the need to challenge the allegations that much more important.

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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.