117 Misc. 2d 972 | N.Y. Sup. Ct. | 1983
OPINION OF THE COURT
The defendants have been charged in a 94-count indictment with grand larceny in the second degree (Penal Law, § 155.35); abstraction of bank funds (Banking Law, § 673); and falsification of bank reports (Banking Law, § 672, subd 1) based upon the alleged diversion by the defendants
The defendants challenge the court’s geographical jurisdiction over these offenses, since the locus of their conduct was primarily in Kings County. (CPL 210.20, subd 1, par [h].) If jurisdiction over these offenses is exclusively in Kings County, then the indictment must, of necessity, be dismissed. (Matter of Steingut v Gold, 42 NY2d 311, 316.) The determination of proper venue is a question of fact, which must be established by a preponderance of the evidence (People v Moore, 46 NY2d 1, 6-7). It is necessary, therefore, to review in some detail the proof before the Grand Jury as to the specific manner in which the transactions alleged in the indictment occurred.
The 179 form was also used to modify any terms of an original loan, such as the principal amount, interest rate, and frequency of interest payments. The process for modification was the same as for the creation of an original loan. The 179 containing the new or additional information would be completed by the loan officer whose signature authorized a loan clerk to enter the modifications on computer input sheets, subsequently transported to Manhattan and logged into the bank’s computer.
In addition to the 179 form, the loan officer was required to complete a customer profile form (No. 178) which con
Within 45 days of making a loan, the officer who authorized the loan was required to file a report to higher management regarding the -terms of the loan and financial condition of the borrower. Loans in excess of $100,000 but less than $250,000 were reported and reviewed at the district level, which was in Brooklyn. The report of loans in this range was entitled credit authorization report. Loans in excess of $250,000 were reported by means of credit facility reports, filed periodically in the group headquarters of the commercial loan department, in Manhattan, for review by senior management. The purpose of review was to ensure adherence to the bank’s lending policy guidelines at the district level. The credit facility reports were the senior management’s only source of information about the loans.
A document similar to the 179 loan form, entitled new account memorandum, was required to be prepared by the account’s relationship officer whenever a checking account was opened at the branch. The memorandum contained the name and address of authorized signatories, and relationship to any existing accounts. This information, when authenticated by the bank officer’s signature, was entered into the bank’s computerized records in the same manner as information recorded on the 179 form. The branch also maintained signature cards by which to verify the signatures of the authorized signatories.
In the event of an overdraft against a checking account, the relationship officer would receive a computer-issued refer card upon which he would indicate whether the draft should be paid or returned. The officer’s signature authorized the bank’s bookkeeping department in Manhattan, where the cards were sent, to pay or refuse to pay the overdraft and to modify the bank’s records accordingly. If
The loan guarantee was a letter, similar to a letter of credit, drafted by Calandra in Brooklyn. The purpose of this unique document was to assist a Freedman company, R. S. Grist, to obtain a subsidiary mortgage on Florida real estate known as Holiday Isle, in order to repay an original Chase loan used to purchase the Holiday Isle property. A copy of the letter was delivered to the NBNA in Manhattan first for revisions by NBNA counsel in consultation with Calandra by telephone, and subsequently at the closing when the letter was exchanged for the checks representing the principal paid on the mortgage. No copy of the letter was ever filed with Chase’s counsel in Manhattan, as required by bank policy. R. S. Grist defaulted on the mortgage loan to NBNA and NBNA invoked the guarantee by Chase, which Chase honored in the amount of $2.8 million.
LARCENY AND ABSTRACTION
The court has essentially two kinds of geographical jurisdiction: that in which conduct constituting an element or essential result of the crime has occurred within the county (CPL 20.40, subds 1, 2, par [a]; subd 3), and that which is necessary to protect the people and institutions within the county from conduct occurring elsewhere. (CPL 20.40, subd 2, pars [b], [c], [d], [e]; see People v Fea, 47 NY2d 70, 75-76.) There is a third category of jurisdiction, legislatively prescribed, in specific circumstances. (CPL 20.40, subd 4; see People v Moore, 46 NY2d 1, supra.) In determining whether venue is properly in New York County with respect to the various offenses set forth in the indictment, the court has accepted the factual allegations therein on their face, and has not considered whether the allegations establish the offenses charged.
Venue of the larceny and abstraction (Banking Law, § 673) counts is established in New York County based upon the commission, within the county, of an element of the offenses. Twenty-two of the larceny counts relate to loan transactions and one relates to the loan guarantee Calandra made to NBNA. Twenty-one of the abstraction
The loan transactions as framed in the indictment are a species of larceny by embezzlement. (Penal Law, § 155.05.) The bank entrusted control over certain amounts of its money to the defendant officers for a specified purpose, and the officers allegedly converted the money to the unauthorized use and control of their codefendants, with larcenous intent (see People v Meadows, 199 NY 1, 6-7; compare People v Lobel, 298 NY 243; see Hechtman, Practice Commentaries, McKinney’s Cons Laws of NY, Book 39, Penal Law, § 155.45). Conversion is an essential element of larceny by embezzlement (People v Yannett, 49 NY2d 296, 301). Conversion of the money, funds, property or credit of a bank to an authorized use by an officer of the bank is also an essential element of abstraction (Banking Law, § 673), encompassed within the definition of “abstracts or wilfully misapplies” (see United States v Northway, 120 US 327, 332-333; US Code, tit 18, § 656; see, also, United States v Gallagher, 576 F2d 1028, 1044-1046 [construing a parallel Federal statute]). Conversion being an element of proof essential to both crimes, geographical jurisdiction vests in the courts of the county in which the conversion occurred. (CPL 20.40, subd 1, par [a].)
In general, conversion is an unauthorized exercise of dominion or control over property by one who is not the owner, which interferes with and is in defiance of the owner’s possession. (See Meese v Miller, 79 AD2d 237, 242-243.) In the context of larceny, the interference must be to the degree that the owner is deprived altogether of the economic value of his property. (Penal Law, § 155.00, subds 3, 4.) Conversion of the loan principal in the various transactions subject to this indictment occurred in two ways. In regard to loans in which the principal was credited to the purported borrower’s checking account, conversion was accomplished by the computerized transfer of funds from the bank’s control to the borrower’s (see State v Johnson, 109 Kan 239 [transfer on books of bank is a conversion]). In regard to loans in which the principal was
The place of conversion, where the purported borrower ultimately obtained control over money belonging to Chase Manhattan Bank, was, in both transactions, New York County. The borrower’s account was not credited with the loan principal until the officer’s directive to make the loan was entered into the bank’s computerized records in Manhattan. The funds of Chase Manhattan represented by checks issued in the amount of the loan principal were not affected until Chase reacquired the checks, by payment through the Federal Reserve System or Clearing House Association in New York County.
Similar considerations support the venue in New York County of the larceny count based upon the loan guarantee given by Calandra to NBNA. The unauthorized guarantee induced a transfer of funds in Manhattan from Chase to NBNA when the guarantee was honored. No Chase asset was exchanged prior to the said transfer, which was a form of asportation. (Compare United States v Posner, 408 F Supp 1145, 1153; Penal Law, § 155.05, subd 1.) Until the guarantee was honored there was no conversion equivalent to larceny, since the guarantee may have never been invoked. (Compare State v Riley, 151 W Va 364, 386, supra.)
In those instances of abstraction (Banking Law, § 673) based upon reversals of interest due on loans and payments
FALSIFICATION OF BANK REPORTS
Falsification of bank reports may be committed either by making a false entry or by willfully omitting to make a true entry in such reports. (Banking Law, § 672, subd 1.) In either event the entry or omission must be that of a bank employee whose intent is to deceive the bank’s officers, examiners, or a public authority in regard to the affairs or condition of the bank. The defendants argue that since, as in the case of forgery, the offense of falsification is complete when the entry is made with the requisite intent, and since all the forms at issue were completed in Kings County, no element of the offense was committed in New York County (see People v Schlatter, 55 AD2d 922). The defendants argue further that the prosecution has failed to show a sufficient impact upon New York County as a result of the falsifications alleged in the indictment to warrant an exercise of protective jurisdiction. (People v Fea, 47 NY2d, supra, at pp 76-77.)
Included within the venue article (CPL art 20) is a provision which deems any “written statement made by a person in one jurisdiction to a person in another jurisdiction by means of * * * any * * * method of communication * * * to be made in each such jurisdiction” (CPL 20.60, subd 1). The documents which are the subject of the falsification counts constituted a “method of communication” among Chase officials in the ordinary course of the bank’s business. All of the documents specified in the indictment were written by or at the direction of the defendant bank officers and the information contained therein authenticated by the officers’ signatures. The information contained in the signature cards, credit file memoranda, credit facility reports, and credit authorization forms was communicated among bank officials on the face of the documents themselves. The information contained in the 179 form, the customer profile, and new account memoranda was transposed, once the authorizing signature on the document was verified, to computer input forms which were physically transported to Manhattan where the information was entered in the bank’s computerized records. The court finds CPL 20.60 (subd 1) equally applicable to those documents which conveyed information on their face, and those documents which contained information subsequently trans
Therefore, CPL 20.60 (subd 1) establishes jurisdiction in New York County insofar as the documents allegedly falsified were used to convey information from a person in Kings County to a person in New York County, since the documents are deemed to have been made in each jurisdiction. The “making” of the falsified document is, of course, an element of the offense (Banking Law, § 672, subd 1; cf. People v Schlatter, supra; CPL 20.40, subd 1, par [a]). Insofar as the falsification charges are based upon omissions, the evidence shows that the information allegedly omitted was required by the form of the documents to be reported. Accordingly, the omissions were a form of misrepresentation integral to the written statements and may also be deemed to have been “made” in New York County for purposes of venue.
This reasoning (CPL 20.60, subd 1) is, of course, inapplicable to any documents which were not communicated from the Kings County branch to the central Manhattan offices of the bank. There was no evidence before the Grand Jury that the signature cards, or credit file memoranda were ever used to convey information outside of the Court Street branch in Kings County. The evidence indicates that the credit files were maintained at the branch and were only reviewed by audits undertaken there. The credit authorization forms completed in regard to loans of less than $250,000 were limited to review at the district level in Brooklyn. Any misrepresentation of information contained in these documents was confined entirely to Kings County. Therefore, the falsification counts based upon these documents are dismissed for lack of sufficient evidence of proper venue. (Counts Nos. 4,12, 35,39, 57, 60, 64, 77.)
Twenty-one of the falsification counts in the indictment are based upon the defendant bank officers’ failure “to file” “in the County of New York and elsewhere” internal bank
It is certain, in any event, that the omission “to file” or to make or create a document may not, like the omission to include information in a completed document conveyed from one county to another, constitute a jurisdictional basis under CPL 20.60 (subd 1), since no “oral or written statement” has been “made” between persons in separate jurisdictions. Although the failure to convey information which is required to be reported under specific circumstances, may be regarded as a “method of communication” that such circumstances do not exist, the statute (CPL 20.60, subd 1) must be strictly and literally construed (People v Moore, 46 NY2d, supra, at p 8).
The counts as framed suggest that the defendants failed to perform a duty imposed by law “which duty * * * was required to be or could properly have been performed” in New York County, in which case venue would properly vest here under CPL 20.40 (subd 3). However, what is made criminal by the falsification statute (Banking Law, § 672, subd 1) is not the failure to file documents as required by bank policy, but the failure to make or create documents or to complete statements in an attempt to deceive the bank’s managers. The duty imposed by the statute is “to make * * * true entities] of any material particularly] pertaining to the business of [the bank] in any
Moreover, falsification (Banking Law, § 672, subd 1) is not a “result” offense (CPL 20.10, subd 3), the essential consequence of which may be prosecuted in the county where it occurs (CPL 20.40, subd 2, par [a]). Falsification does not require as an element of the offense that any specific consequence occur as a result of the willful misstatements or omissions. Although intent to deceive must be proved, there is no requirement that the bank officers, examiners or public authorities have been deceived in fact. Nor is proof of loss to the bank an element of the offense. (Cf. People v Crean, 115 Misc 2d 996.)
Therefore, the only cogent basis for venue over these falsification counts in New York County is the protective theory of jurisdiction (People v Fea, 47 NY2d, supra, at p 76). Jurisdiction may be invoked under this theory when the extraterritorial criminal conduct produces consequences within the county of prosecution, which are not elements of proof of the crime itself, but which so affect the community welfare or governmental processes of the county that prosecution is justified by the need to protect the county’s residents. The District Attorney of the county seeking to apply the long-arm aspect of criminal jurisdiction must prove to the Grand Jury by a preponderance of evidence that the county meets the criteria of an injured forum: that the extraterritorial conduct was intended to affect the injured county in particular; that the injury to the county was material and subject to proof; and that the injury was not limited to the welfare of a particular person but affected the county’s community as a whole. (Matter of
The court is also persuaded that the particular injurious effect upon which the county bases its jurisdictional claim must be pleaded in the indictment. One basis for this conclusion is dicta in Matter of Steingut (42 NY2d, supra, at p 318), in which the court stated in reference to the form of the indictment that “invoking of the extraordinary injured forum jurisdictional statute requires the specification of a * * * concrete and identifiable injury.” This conclusion is supported by close scrutiny of the relevant statutory provisions. CPL 200.50 (subd 5) requires that an indictment recite in each count that the offense “was committed in a designated county”. The essence of protective, or particular effect, jurisdiction is that the conduct constituting the offense has occurred outside of the county of prosecution (CPL 20.10, subd 4; see Matter of Steingut v Gold, supra, at p 317). Therefore, it would appear from an otherwise accurate pleading based upon a protective jurisdictional theory that the courts of the prosecuting county did not have jurisdiction over the offense (CPL 210.25, subd 2), unless the facts upon which jurisdiction rests in the prosecuting county are specifically pleaded. It is, of course, no answer to allege that the offense was “committed in” the prosecuting county when in fact only the injurious but nonelemental consequences occurred there.
The Grand Jury presentation in this case failed to establish that New York County’s general welfare suffered material injury as a result of the defendants’ alleged conduct in failing to file credit facility reports or a copy of the loan guarantee with the Chase Manhattan Bank’s central office. Moreover, those falsification counts based upon the failure to file such documents are inaccurate to the extent
The indictment is sustained except to the extent indicated herein. The foregoing constitutes the opinion, decision and order of the court.