THE PEOPLE OF THE STATE OF NEW YORK, Appellant, v JIMMY TZITZIKALAKIS, Respondent.
Court of Appeals of New York
February 15, 2007
217 | 864 NE2d 44 | 832 NYS2d 120
Argued January 2, 2007
Robert M. Morgenthau, District Attorney, New York City (Paula-Rose Stark and Mark Dwyer of counsel), for appellant. Since defendant fraudulently induced payment of $950,136 from the City, he stole that entire amount. In restitution, defendant was not entitled to any credit to offset that amount except to the extent that he was able to document his actual expenditures. (People v Horne, 97 NY2d 404; People v Consalvo, 89 NY2d 140; People v Fuller, 57 NY2d 152; People v Thigpen, 60 AD2d 860; People v Feldman, 204 AD2d 347; People v Kim, 91 NY2d 407; People v Francis L.M., 278 AD2d 919; People v David N., 140 AD2d 460; People v Bennett, 79 NY2d 464; Smith v Brady, 17 NY 173.)
Law Offices of Gerald L. Shargel, New York City (Ross M. Kramer, Gerald L. Shargel and Henry E. Mazurek of counsel), for respondent. I. The hearing court violated Mr. Tzitzikalakis’ due process rights by failing to follow the substantive and procedural requirements for determining restitution under
OPINION OF THE COURT
Chief Judge KAYE.
Defendant was the principal of Foundation Construction
Defendant was charged with grand larceny in the second degree, attempted grand larceny in the second degree, and 26 counts of both criminal possession of a forged instrument in the second degree and falsifying business records in the first degree. Defendant pleaded guilty to grand larceny in the second degree and one count of falsifying business records in the first degree, in full satisfaction of the indictment. Supreme Court sentenced him to 1 to 3 years for grand larceny and ordered restitution with a conditional discharge for falsifying business records.
At a restitution hearing to determine the amount of the city‘s out-of-pocket loss, the sole witness was Christine Carl, a confidential investigator for the city Department of Investigation. Carl testified that, in order to be paid under the DCAS contract, defendant had to submit periodic payment requests with supporting invoices from subcontractors. Once a payment request with supporting documentation was received, the DCAS resident engineer would review the request and certify that the work had been completed and the materials supplied. If the engineering unit signed off on the request, the audits and accounts unit would review the request to ensure that the total payment matched the supporting documentation, and payment would be made.
Carl further explained that, as a result of her investigation, she determined that a number of defendant‘s invoices were falsified. In calculating the city‘s loss, she subtracted from the face amount of these invoices the actual costs reported to her by the subcontractors; where the subcontractor provided her with a range of actual costs (for example, $40,000 to $50,000), she subtracted the higher amount. However, in the case of two of the subcontractors—Vack Electric and Essex Glass—Carl included the full face amount of the invoices because neither company existed at the time it allegedly provided the goods or services reflected on the invoices. By Carl‘s calculations, the city‘s out-of-pocket loss was $340,143.
Following the hearing, the court issued a written decision adopting the restitution amount proffered by the prosecution, $340,143. In that decision, the court reiterated its view that the People‘s burden of proof does not require any recognition of the value of goods or services actually delivered by defendant. That burden fell to defendant and was not satisfied. On appeal, defendant argued that the hearing court violated
Restitution—seeking to ensure that an offender‘s punishment includes making the victim whole—has been a part of New York‘s criminal justice system since at least 1910 (see People v Amorosi, 96 NY2d 180, 183 [2001]; People v Fuller, 57 NY2d 152, 157 [1982]). While long available to crime victims, restitution has become more prevalent over the past quarter-century (see People v Hall-Wilson, 69 NY2d 154, 156-157 [1987]), and courts since 1983 have been required to consider including restitution as part of the sentence imposed upon a person convicted of an offense (see id. at 157;
Restitution is “the sum necessary to compensate the victim for out-of-pocket losses” (People v Consalvo, 89 NY2d 140, 144 [1996]; see also
If the court is unable to make a finding as to the actual out-of-pocket loss based on the record before it, or if the defendant so requests, the court must conduct a hearing in accordance with the procedure set forth in
“At any hearing held pursuant to this section the burden of proof rests upon the people. A finding as to the amount of the defendant‘s gain from the commission of the offense must be based upon a preponderance of the evidence. Any relevant evidence, not legally privileged, may be received regardless of its admissibility under the exclusionary rules of evidence.” (Emphasis added.)
At a restitution hearing, the People bear the burden of proving the victim‘s out-of-pocket loss—the amount necessary to make the victim whole—by a preponderance of the evidence (see People v Horne, 97 NY2d 404, 410-411 [2002]; Consalvo, 89 NY2d at 145).2 To meet that burden, the People must show both
Most often there will be no reductions, as criminals rarely confer a benefit on their victims, and the People may satisfy their burden simply by proof of the amount taken. In this case, however, it is undisputed that the city did receive benefit on the projects for which defendant submitted false invoices. The prosecution, therefore, in making a prima facie showing of the proper restitution amount was required to subtract from the face amount of the improper invoices the value of the benefit conferred in connection with the underlying projects.
Indeed, the prosecution did precisely that with respect to all but two of the falsified invoices. Carl testified that, in determining the restitution amount, she reduced the face value of the invoices by the actual cost of the services rendered by the subcontractors to whom the invoices related. For the Vack and Essex invoices, however, the People failed to introduce any evidence as to the value of defendant‘s work on those projects, although the DCAS resident engineer had certified that the work was completed when he approved the payment requests. The People might have satisfied that burden by calling a DCAS engineer or other qualified employee to estimate the benefit conferred, or the costs the city might incur for comparable work, but failed to do so.
We agree with the Appellate Division that legislative reform in this area would be useful, and thus echo that Court‘s call for
Upon remittal, defendant should be permitted to offer evidence that the work reflected in the invoices was actually done (see Consalvo, 89 NY2d at 145 [“At the hearing, the court must permit the defendant to speak on the out-of-pocket loss . . .“]).
Accordingly, the order of the Appellate Division, insofar as appealed from, should be affirmed.
SMITH, J. (dissenting). I agree with the majority that the burden of proving offsets in a restitution hearing ought to be on the defendant (majority op at 222-223). I do not agree, however, that the Criminal Procedure Law forbids us from placing that burden where it belongs.
The factual issue the court below had to decide was “the actual out-of-pocket loss to the victim caused by the offense” (
The statute does place on the People the initial burden of producing evidence sufficient to establish a prima facie case on the ultimate issue: If the People fail to produce such evidence at the hearing, the issue must be decided in defendant‘s favor. But that does not mean the People bear a like burden as to every narrower factual issue that could affect the outcome of the hearing. It is a basic principle that “depending upon the status of the evidence in the record at any particular time, the burden of producing evidence during the trial may shift from one party to the other and back again” (Fisch § 1088, at 611-612; see e.g. Matter of Philip M., 82 NY2d 238, 244 [1993]). A statute placing “the burden of proof” on one party (here, the People) should not be read as repealing this principle.
To take a simple example: Suppose the People produce evidence that a defendant snatched a purse containing $20. Must the People also come forward with evidence showing that the defendant never returned any of the money? Of course not. Once the theft of $20 has been proved, the People have made a prima facie case, and if the defendant wants a finding that he returned some of the money, he must come forward with evidence showing that he did so. Placing this burden upon him does not violate the statute, but merely recognizes that, in showing the theft of $20, the People have discharged the initial burden of producing evidence that the statute places on them.
This case is fundamentally the same. The People produced evidence that defendant had obtained, through false invoices, a sum exceeding $950,000. That established the People‘s prima facie case. As the hearing judge observed, the People could have stopped there and left it to defendant to produce evidence as to what, if anything, he gave New York City in return for its money. The People, acting with appropriate professionalism, went beyond this, and placed before the hearing court such information as they had about what defendant had provided, thus reducing the restitution amount to $340,143. In doing so, the People were bearing part of defendant‘s burden for him; while of course
The majority holds that the People had to go farther than they did—that they had to seek out and put before the court proof of all “the benefit conferred” by defendant on the City (majority op at 222). This is evidence favorable to defendant that defendant was in a better position to supply than the People were. In concluding that the statute compels this misallocation of the burden, the majority gives the statute a needlessly broad reading.
Judges CIPARICK, GRAFFEO and PIGOTT concur with Chief Judge KAYE; Judge SMITH dissents in a separate opinion in which Judge READ concurs; Judge JONES taking no part.
Order, insofar as appealed from, affirmed.