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Defendant Charged with Offering a False Instrument


In this criminal case, in 1986 although the installation of individual water meters was required in commercial and industrial buildings, 630,000 one and two family homes were unmetered and billed for water on an arcane basis unrelated to usage and predicated on property frontage. A New York Criminal Lawyer said the City decided to meter these homes and to do so through a municipal installation project rather than by requiring the individual homeowners to install them. The City would use a competitive bidding process, and award contracts according to the boundaries of the City’s community boards. As is common in such contract bidding processes, the City prepared bid packages for prospective bidders. In addition to technical information and cost estimates, the bid package informed prospective bidders that they would be required to calculate labor costs in accordance with Labor Law Section 220, which requires contractors performing public works projects to pay the workers the prevailing wage. The bid packages let out in 1989 and 1990 also required that the contracting party would have to perform certain work known as pre-plumbing work. In essence, the contracts with the City would require that pre-plumbing work be supervised by a licensed master plumber.

After conducting pre-bid conferences, the City circulated an addendum to the bid specifications which set forth the specific wages that the bidders would be required to pay their employees. The defendants received this addendum. After the bids were publicly opened, the lowest bid was determined and the contracts were awarded to the defendants. A New York Criminal Lawyer said the defendants executed formal contracts, to which were annexed the bid information and the wage schedules, which were also incorporated by reference. Each contract provided: The wages to be paid and the supplements to be provided, for a legal day’s work, to laborers, workmen or mechanics employed by the Contractor shall not be less than the prevailing wages and supplement required to be paid to such employees, as ascertained and prescribed by the Comptroller in the Specifications attached hereto.

A New York Grand Larceny Lawyer said that, the indictment charges larceny by false promise, larceny by false pretenses, scheme to defraud, and filing of a false instrument, conspiracy, and perjury. The thrust of the indictment is that the defendants never intended to comply with the prevailing wage and pre-plumbing master plumber requirements. Among other evidence which was presented to the Jury was that the defendants calculated their bids based on piecework rather than hourly costs, that they promised workers the higher of piecework or hourly rate, but only paid a piecework rate that resulted in a lower wage than an hourly rate at the prevailing wages, that the defendants arranged with a licensed plumber to falsely make it appear that a licensed plumber was supervising pre-plumbing work, and that the defendants submitted false and perjurious forms to the City certifying they had complied with the contracts.

A New York Drug Possession Lawyer said that, the defendants have moved for discovery and inspection of the grand jury minutes and dismissal of the indictment. Alternatively, they seek a further bill of particulars and discovery.

The issue in this case is whether defendants are entitled to the dismissal of their indictments.

In count two, the defendants are charged with the crime of scheme to defraud in the first degree. Specifically, the defendants are charged with engaging in a scheme constituting a systematic ongoing course of conduct with intent to defraud ten or more persons by false and fraudulent pretenses, representations, and promises, to wit, soliciting meter installers by promising they would be paid at an hourly wage, and so obtained property from one or more of such persons. In response to a request for a bill of particulars, the People assert that the “property” obtained from the installers by means of the alleged scheme was “money, labor and the right to be paid the prevailing wage”.

The defendants argue that they obtained nothing from the installers, and certainly not “property”. Also, they claim that if they did obtain property, it was not by deception. The People respond that the defendants cheated their workers by advertising a high hourly wage. Then the installers were promised the higher of the prevailing hourly wage or of a piecework rate. Only when they began to work and received their first paychecks did the installers realize that they were only being paid piecework for meters actually installed. This rate of pay was considerably less than the prevailing hourly wage, because, although the pay at piece rates for installing one meter was more than the pay for one hour at the prevailing hourly wage, it usually took an installer several hours to install a meter, but the defendants falsified the records to show that only one hour was spent to install each meter.

The Court said that, the essence of the defendants’ argument that property was not taken from the installers is that the installers’ labor cannot be considered property, and that the installers’ right to be paid the prevailing wage created no more than a debtor/creditor relationship between the defendants and the installers, which could not be the basis for a larceny prosecution.

The principal basis for the defendants’ suggestion that labor cannot constitute property for purposes of the scheme to defraud statute is that the grand larceny statute excludes labor from the definition of property which can be stolen. As the People point out, however, the scheme to defraud statute was enacted in part to permit prosecution of conduct which skirted the grand larceny statute. Further, the definition of property is not limited to the definition under the grand larceny statute. The Court agrees with the People that the definition of property for purposes of the crime of scheme to defraud is broad enough to encompass the services provided by the installers. As to the defendant’s suggestion that the installers were not deceived, sufficient evidence was presented to the Jury to the effect that the installers were deceived by the defendants’ words and conduct, including alleged misleading advertisements, and misstatements to trainees and installers. The sum total of this conduct constitutes a pattern of behavior calculated to deceive persons of ordinary prudence and comprehension. Accordingly, the motion to dismiss count two is denied.

The defendants attack the sufficiency of Counts three to fourteen on many grounds, including whether they may properly be charged with stealing the government contracts they entered into. Specifically, these counts alleged that the defendants committed grand larceny by stealing from the City 12 contracts for the installation of water meters. Each larceny allegedly occurred when the City executed the contract. Specifically, larceny by false promise is alleged in that when defendants signed the contracts, they did not intend to keep their covenant to comply with Section 7.5 of each contract (pertaining to the methodology of paying wages) and Section 10.3, (requiring the use of master plumbers to supervise certain pre-plumbing work under the contracts).

The Court held that larceny by false promise is committed when a person “pursuant to a scheme to defraud, obtains property of another by means of a representation, express or implied, that he or a third person will in the future engage in particular conduct when he does not intend to engage in such conduct.”. A New York Sex Crimes Lawyer said the law recognizes the dangers inherent in the loose application or unbridled expansion of this criminal statute: “There is a very real danger that ordinary business transactions might be inhibited due to the risk of prosecuting one who is guilty of nothing more than a mere failure to pay his debts or an inability to perform contractual obligations.”

In order to avoid prosecuting mere civil wrongs, larceny by false promise requires evidence “wholly inconsistent” with innocent intent, which excludes to a moral certainty every hypothesis except the intention not to perform. Guilty intent cannot be inferred from the mere failure to perform, when viewed in retrospect, but rather must be established by independent evidence. In order to apply the larceny statute to the contracts here, the contracts must be “property” within the meaning of the larceny statute. Penal Law Section 155.00(1) defines property as:

“Any money, personal property, real property, computer data, computer program, thing in action, evidence of debt or contract, or any article, substance or thing of value, including any gas, steam, water or electricity, which is provided for a charge or compensation.”

The obvious starting point for analysis is the fact that Penal Law Section 155.00(1) explicitly refers to “evidence of contract”. It also refers, however, to evidence of debt, and there is no suggestion that a debt per se is property capable of being stolen. Rather, the courts have held that this statutory reference pertains to the promissory note itself or other physical evidence of indebtedness, and the reference to evidence of contract refers as well to the spiriting off of the actual physical contract document itself. Obtaining possession of such documents, among other things, makes proof of the debt or contract more difficult for the contracting party. Putting aside the issue of actual physical embodiment of the contractual relationship, concluding that one may actually “steal” a necessarily inchoate contract to which one is a party is a much more difficult task. A contract is nothing more than a bundle of rights which the law will presumptively confer upon two parties who complete the rituals required for “formation” of a contract. In its simplest form, it requires an offer by one party, an acceptance of the offered terms by the other party without material deviation, and the passage of “consideration” from each to the other, which consideration ordinarily consists of either tangible value (e.g., payment of money) or a promise of performance (e.g., to install water meters). The parties to a contract exist in a commercial form of symbiotic relationship. The “contract” does not exist independent of that relationship. Viewed in this context, the Court must conclude that a party to a contract (or, in the case of a corporate entity, its contracting officers) cannot steal that contract. Accordingly, the motion to dismiss counts three to fourteen is granted.

The defendants next challenge counts fifteen to one hundred seventy three, which charge larceny by false pretense, as also going beyond the scope and intent of the larceny statute. Penal Law Section 155.05(2)(a) provides: Larceny includes a wrongful taking, obtaining or withholding of another’s property, with the intent prescribed in subdivision one of this section, committed in any of the following ways: (a) By conduct heretofore defined or known as common law larceny by trespassory taking, common law larceny by trick, embezzlement, or obtaining property by false pretenses. Larceny by false pretenses requires criminal intent to deprive and defraud the owner of property, the making of a material false representation about an existing fact, obtaining the property of another, and reliance upon the representation to the point that the victim is induced to give the property to the defendant.

In the counts at issue, the alleged victim is the City of New York, and the property alleged to be stolen is the full amount of each check paid to Vanguard under the twelve installation contracts. Representations to the City that Vanguard had paid its meter installers the prevailing wage as required by the contract, and that pre-plumbing work had been performed under the supervision of a master plumber are alleged to be false. The defendants challenge these counts on various grounds. Pointing out that the meters were installed, they challenge the allegations that the entire payment under the contract was “stolen”. Closely related to this argument is their assertion that one who performs a contract but makes certain misrepresentations collateral to the essence of the contract cannot be charged with stealing the consideration received from the other contracting party.

The Court held that, it is well settled that fraud that does not go to the basis of the bargain between the two parties cannot be the basis for criminal prosecution. The People do not attempt to respond to this line of authority, but merely argue that had they known the true facts as to Vanguard’s conduct with respect to prevailing wages and plumber supervision, they would not have paid Vanguard at all. This is however, frequently the posture of a party that has received most of what it bargained for in a contract; such posture usually differs significantly from the final resolution of the controversy.

While ordinary rules of quantum meruit may be altered somewhat in the civil context when dealing with municipal contracts, more serious concerns are raised when the People seek to charge the contractor with theft. To adopt the People’s theory would mean that any time a party contracted with the City, delivered the essence of the performance promised at a price which is in no way inflated, but did not perform strictly in accordance with the methodology agreed upon, that contractor would be guilty of stealing the entire contract price. Again the Court declines to adopt such an expansive reading of the larceny statute. Indeed, to do so would constitute a dangerous expansion of the larceny statute. Accordingly, the motion to dismiss counts fifteen to one hundred seventy three is granted.

The defendants are charged in twenty one counts with offering a false instrument for filing in the first degree. Each count is tied to one of the installation contracts and alleges either that the defendants filed a false Labor Law Section 220-a certificate, certifying that the defendants had complied with the wage provisions of Labor Law Section 220, or that the defendants had filed lists of addresses where pre-plumbing work was performed which wrongly stated that the pre-plumbing work had been performed by licensed master plumbers.

Penal Law Section 175.35 provides:

A person is guilty of offering a false instrument for filing in the first degree when, knowing that a written instrument contains a false statement or false information, and with intent to defraud the state or any political subdivision thereof, he offers or presents it to a public office or public servant with the knowledge or belief that it will be filed with, registered or recorded in or otherwise become a part of the records of such public office or public servant.

The defendants do not deny they submitted the Section 220- a certificates as part of the process of obtaining their progress payments or that the certificates certified compliance with Labor Law Section 220. Nor do they suggest that such certification was not false. They merely suggest that a review of the Jury minutes would show that the minutes do not contain sufficient evidence to allow these charges to proceed for trial, because they assert it would have been difficult to assemble such evidence. The Court, however, has reviewed the Jury minutes and has concluded that the standard of evidence that must be presented to that body to justify indictment has been satisfied. The defendants further allege that even were the certificates false the evidence does not show that the defendants acted intentionally. However, this claim too is refuted by the Jury minutes.

The evidence before the Jury similarly sustains the counts (counts one hundred eighty, one hundred eighty three, one hundred eighty six, one hundred eighty nine, one hundred ninety two, one hundred ninety five, one hundred ninety eight, two hundred one, and two hundred six) relating to certifications that the defendants had complied with the requirement that all pre-plumbing work be supervised by a master plumber. The defendants contend that the level of supervision provided by Vanguard’s licensed master plumber was sufficient. This assertion is refuted by the Jury minutes. In fact, there was no supervision at all. The master plumber simply lent the use of his seal while having no other involvement, directly or indirectly, in the pre-plumbing work.

Finally, the defendants argue that the City suffered no pecuniary loss as a result of these filings. However, the statutes require no such proof, merely that legitimate government interests and processes be frustrated by the false filing. Here, the City’s reason for requiring such filings was to ensure its interest in having the prevailing wage paid and proper plumbing supervision, and the filings frustrated such government interests. Accordingly, the motion to dismiss these twenty one counts is denied.

The defendants next challenge the perjury counts. The defendants are accused of submitting false sworn certificates under Labor Law Section 220. The defendants first argue that the Section 220-a certificates were not false because the certificates said that the defendants had complied with Labor Law Section 220, including payment of the prevailing wage. They argue that the People in their response to the demand for a bill of particulars assert that the employees were paid on a piecework basis rather than an hourly wage. Defendants contend that payment on a piecework basis is not prohibited. While this is correct, such payments must equal or exceed payments calculated at the prevailing wage for the number of hours worked. The People contend, and the evidence before the Jury shows, that the piecework payments to the installers were substantially less than the prevailing hourly wages the defendants were required to pay.

The defendants next argue that unless the notary public before whom the certificates were sworn testified before the Jury, there was insufficient evidence of the oath necessary to form the underpinning of a perjury charge. However, courts have held that a jurat and signature of the notary are prima facie evidence that the oath was administered. None of the cases cited by the defendants counters this authority, dealing instead with issues of fact raised at trial when actual evidence was introduced challenging the notarization. Finally, the evidence before the jury was sufficient to establish the certificates were materially false, and were intended to deceive the City of New York.

The motion to dismiss counts one hundred seventy five, one hundred seventy seven, one hundred seventy nine, one hundred eighty two, one hundred eighty five, one hundred eighty eight, one hundred ninety one, one hundred ninety four, one hundred ninety seven, two hundred, two hundred three, and two hundred five is denied.

In view of the foregoing, the Court held that, the motion is granted to the extent that counts one, three to fourteen and counts fifteen to one hundred seventy three are dismissed. The motion is otherwise denied.

If you have been a victim of the crime of larceny, seek the advice of a New York Grand Larceny Attorney in order to file the proper charges against the accused. New York Criminal Attorney at Stephen Bilkis and Associates can represent your case and make sure that the party at fault will be punished

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