People v. Western Express International, Inc.People v. Western Express International, Inc.
Lead Opinion
OPINION OF THE COURT
Appellants have been indicted for enterprise corruption (
Appellants’ conduct, the People claim, was part of a larger enterprise to traffic in stolen credit card information. To make out the corrupt enterprise, the People adduced before the grand jury proof that Eastern European vendors of stolen credit card data engaged in Internet transactions with buyers in New York. There was also proof that, in consummating these transactions, buyers and sellers sometimes availed themselves of services offered by Western Express through its publicly accessible Internet websites. While Western Express’s menu of services—i.e., check cashing, mail receiving, issuing money orders, digital сurrency exchange, and Russian/English translation—was superficially unremarkable, the services themselves being legal and admitting of legitimate utility in the conduct of international transactions, there was evidence that some Western Express customers, among them defendants Latta, Roach and Perez, used the company’s services for “carding” purposes, i.e., to traffic in stolen credit card information.
The People, in presenting the matter to the grand jury, dwelt principally on the carders’ use of Western Express’s digital currency exchange service. Western Express, having purchased large sums of the unregulated Internet currencies EGold and Webmoney, was an authorized vendor of those forms of tender. For a commission of between two and five percent, the company would transfer intо a customer Internet account held in an assumed name digital currency purchased from it by the customer with US dollars. The digital currency could then be, and on occasion was, transferred to pay for stolen credit card information, after which the vendor would sell the digital currency received in payment back to Western Express for its value in another digital currency or US dollars, with Western Exprеss taking an additional commission. This transactional pattern recommended itself for money laundering purposes by reason of the circumstance that E-currency was not government regulated and that international transactions using it went largely unscrutinized.
There was evidence that Western Express was not a neutral observer of this use of its services; its employees offered advice on how tо structure transactions to avoid detection and defendant
Supreme Court granted appellants’ respective motions to dismiss the subject indictment’s enterprise corruption count upon the ground that the proof before the grand jury, even when viewed most favorably to the People, did not make out the existencе of a “criminal enterprise.” As is here relevant, guilt of enterprise corruption under New York’s Organized Crime Control Act (OCCA) (
“Here, the People have failed to even articulate— much less adduce evidence proving—any system of authority or hierarchy in which the defendants participated . . . [W]hat the People allege are a series of arms-length business transactions—admittedly extensive and, if the People’s allegations are true, illegal—conducted by a variety of organizations and individuals, each operating independently and with no overarching structure or system of authority. In essence, the People have described an illegal industry rather than a corrupt enterprise,*657 the criminal parallel of a typical legitimate industry consisting of producers, wholesalers, distributors, retail outlets, and credit suppliers, each of [whom] has a unique but independent role in the industry.”
In reversing and reinstating the enterprise corruption count (
New York’s OCCA was enacted in 1986 to afford state prosecutors a means of exacting heightened penalties for criminal activity referable to or generative of structured criminal enterprises (see
The common challenge posed both federal and state legislators in penalizing enterprise corruption as a separate crime was
There is no question that the People presented as to each appellant considerable evidence of a pattern of illegal activity. The issue to be decided is whether they also presented evidence from which a petit jury could reasonably infer (see People v Bello,
The People urge that a criminal enterprise need not be hierarchical to be structured and that structure may be inferred from patterns of criminal conduct. While both of these propositions may be true in theory, it remains that under the OCCA a “common purpose” is required and the structure of a criminal enterprise must be “ascertainable.” Here these conditions are not met. The presented evidence was indicative of no more than the manner in which international transactions in stolen сredit card data were commonly conducted, with or without the use of Western Express’s services;
It is true that in Boyle the RICO requirement of enterprise structure was deemed satisfied simply by proof of the underlying pattern of criminal activity and the inference of structure that that proof would bear (see
Doubtless, the Internet may be used to facilitate crime, and we do not exclude the possibility that a website singularly preoccupied with processing a screened clientele’s illicit transactions could be understood as elemental to and reflective of a criminal enterprise. But crimes committed by resort to сyber means are not invariably referable to distinct nefarious enterprises, and the websites here involved do not permit the inference of an overarching criminal purpose or organization; while Western Express may have sought to make its websites attractive to carders, the sites themselves presented simply as publicly accessible loci for the conduct of business, the legality of which turned in the end upon the independent agendas of individual users. To the extent that the usage was for illegal purposes, it reflected the existence of a prevalent black market but did not reasonably justify the additional inference necessary to the viability of the proposed enterprise corruption prosecution, that there was within that market an enduring structurally distinct symbiotically rеlated criminal entity with which appellants were purposefully associated.
Accordingly, the order of the Appellate Division, insofar as appealed from, should be reversed and the orders of Supreme Court, New York County, dismissing the enterprise corruption count of the indictment as against appellants, reinstated.
Notes
. These included scheme to defraud, conspiracy, grand larcеny, money laundering, possession of stolen property, and falsifying business records. No issue is before us respecting the sufficiency of the counts charging these offenses; this appeal concerns no more than the sufficiency of the evidence offered in support of the enterprise corruption count.
. Vassilenko estimated that 5% of his business was from carding transactions. The People contend that the actual percentage was much higher.
. As is here relevant the legislature in enacting the OCCA was careful to explain that
“[t]he organized crime control act is a statute of comparable purpose [to that of RICO] but tempered by reasonable limitations on its applicability, and by due regard for the rights of innocent persons. Because of its more rigorous definitions, this act will not apply to some situatiоns encompassed within comparable statutes in other jurisdictions” (Penal Law § 460.00 [emphasis supplied]).
. We note that, while the Appellate Division offered that the common purpose of the purported enterprise was to encourage more and larger criminal transactions, there was no proof that Western Express’s customers availed themselves of the company’s services with any objective other thаn the expedient conduct of their own individual transactions.
. There are numerous providers of such services and, in fact, after Western Express’s demise, its carder clientele simply switched to different providers of comparable services.
Dissenting Opinion
The days of traditional organized crime families seem to be fading. Instead, in today’s modern world, criminal organizations now vary in size and even operate on a global span by way of the computer. Criminal organizations operating on the Internet do so without any notion of a hierarchy or any formalized decision-making process. The New York State Legislature, recognizing that organized crime is evolving,
The majority correctly summarizes the grand jury presentation by the People, noting the following: (1) defendant Western Express purchases “large sums of the unregulated Internet currenc[y]”; (2) it then transfers this money to customers with “assumed name” accounts; (3) those “customers” then buy stolen credit cаrd information with this unregulated money; and (4) the “customer” then sells the currency back to Western Express obtaining U.S. dollars in return with Western Express taking an additional commission (majority op at 655). As the majority notes, this is simply a digital form of money laundering.
My colleagues conclude that no “ascertainable structure” was presented to the grand jury in this case because, although there was a “prevalent black market” for stolen credit card information, within that market there was no “enduring structurally distinct symbiotically related criminal entity with which appellants were purposefully associated” (majority op at 660). I find no such requirement in the statute.
The People allege that a cybercrime group (which the People termed the Western Express Cybercrime Group), was formed. The group included a preеxisting corporation, Western Express International, Inc., that acted as the “money mover” for the other members of the group. Those other members included “vendors” and “buyers” who trafficked in stolen credit card numbers and other stolen personal identifying information.
The group acted with a common purpose to engage in conduct constituting the crime, among others, of trafficking stolen information, while avoiding detection by law enforcement. Specifically, the vendors and buyers, through Western Express, were permitted to conduct anonymous transactions, via the Internet and by other means, using sophisticated payment schemes. Western Express further assisted the buyers and vendors by helping structure the transactions to avoid federal reporting requirements. For instance, via computer, Wеstern Express employees advised certain members to structure wire transfers in small amounts under various names. Thus, although the members had their own self-interest to profit from the criminal activity, they also acted for the benefit of both the vendors and buyers. Indeed, all of the participants of the group were acting
The purpose in enacting the enterprise corruption statute “was to address the particular and cumulative harm posed by persons who band together in complex criminal organizations” (People v Besser,
I would, therefore, affirm the order of the Appellate Division.
Judges Ciparick, Graffeo, Read, Smith and Jones concur with Chief Judge Lippman; Judge Pigott dissents and votes to affirm in a separate opinion.
Order, insofar as appealed from, reversed, etc.