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New York Appellate Court Discusses Insurance Fraud and Other White Collar Crimes


New York Insurance Fraud, Grand Larceny and Your Criminal Defense: Does the Acquittal of One Charge Require the Acquittal of the Other?

“White-collar crime” is an umbrella term used to define non-violent crimes that are financial in motivation. White-collar crimes tend to exist when people use deception or fraud to steal property, rather than force. White-collar crime can include identity theft, embezzlement, insider trading, etc.

Insurance fraud occurs most often when an insured individual or entity makes a false or exaggerated insurance claim, seeking compensation for injuries or losses that were not actually suffered. Insurance fraud can also be committed upon customers, through 1) the sale of unlicensed or bogus insurance coverage to unsuspecting clients, or 2) an insurance broker or agent’s diversion or theft of insurance premiums paid by clients. –

With the search by New York State to find money to plug the budget gap, prosecutors are continuing to come down hard on New York white collar crimes where restitution or asset forfeiture may be part of a disposition. Two sets of crimes, New York Insurance Fraud (Article 176 of the NY Penal Law and New York Grand Larceny (Article 155 of the NY Penal Law, are two such crimes. In fact, often times when one is investigated, arrested or indicted for Insurance Fraud in New York, the crime of Grand Larceny is an integral part of that investigation, arrest or indictment.

Types of Insurance Fraud

Police and prosecutors typically refer to an insurance fraud scheme as either “hard fraud” or “soft fraud.”

• Hard Fraud: Someone deliberately fakes an accident, injury, theft, arson or other loss to collect money illegally from insurance companies. Crooks often act alone, but increasingly, organized crime rings stage large schemes to steal millions of dollars.

• Soft Fraud: Normally honest people often tell “little white lies” to their insurance company for the purposes of filing or maximizing a claim. Many people think it’s just harmless fudging. But soft fraud is a crime, and raises everyone’s insurance costs.

While I will not address the definitions of each of these crimes (extensive information on Grand Larceny in New York and Insurance Fraud in New York can be found through the respective links), an interesting question is as follows: If you are charged with both crimes, but ultimately you are acquitted of one of those crimes, can you still be convicted of the other or is it legally “repugnant” and invalid?

On its face, if you are alleged to have perpetrated Insurance Fraud and as a result obtained or “stole” money you were not entitled to, but a judge or jury acquits you of the Grand Larceny, how can the Insurance Fraud “survive?” After all, isn’t it the purpose of the alleged criminal scheme involving Insurance Fraud to steal money and commit a larceny?

Unfortunately, law is not math or science. The answer to the above question is it “depends” on your jurisdiction since New York’s highest court has not rendered a specific decision as to Insurance Fraud and Grand Larceny along with a repugnant verdict. Although the following is not an in depth analysis of the issue and should not be relied upon as a substitute to discussing the evidence in your case with an experienced New York criminal defense attorney, the following two cases certainly shed light on the question.

In People v. People v. Alfaro, 108 A.D.2d 517 (2nd Dept. 1985), the Appellate Court held that the verdict acquitting Alfaro on the attempted larceny offense did not render his conviction on the Insurance Fraud repugnant or legally improper. The Court stated that:

“In creating the crime of insurance fraud, the Legislature and the Governor obviously did not believe that it and the crime of larceny contained identical elements ( see, Insurance Law § 38; Governor’s Approval Memorandum, 1981 McKinney’s Session Laws, pp 2617-2618) and the statutory language itself shows this to be so. Larceny requires a finding of an “intent to deprive another of property or to appropriate the same” and a wrongful taking, obtaining or withholding of property from its owner (Penal Law § 155.05 [1]). On the other hand, insurance fraud requires a finding that the defendant “knowingly and with intent to defraud presents any written statement as part of, or in support of, an application for the issuance of a claim for payment or other benefit pursuant to an insurance policy” (Penal Law § 176.05).”

“Thus, it is clear that the elements of the two are completely different and that an acquittal of a larceny charge does not negate an essential element of insurance fraud. While larceny provisions address the wrongful taking of property with the intent to deprive someone of that property, the essence of insurance fraud is the filing of a false written statement as part of a claim for insurance. Consequently, the trier of fact may have concluded that the defendant intended to defraud the insurance company but did not intend to steal property. Despite the holding in Alfaro, a lower court in Ulster County confronted with similar facts found that the acquittal on the attempted larceny charge rendered a conviction on the Insurance Fraud count repugnant and therefore, invalid. In People v. Alfano, 131 Misc.2d 843, (Ulster Cty Ct. 1986), a County court sided with the dissenting justice in the Alfaro decision (names are close, but different). The Ulster County court, citing the dissent, reasoned that: “There does not appear to be any logical way that a person could engage in insurance fraud by knowingly and with intent to defraud submitting papers in support of a false claim for payment, without at the same time attempting to commit a larceny. That is, when one submits false papers in support of a claim for payment for his own benefit or that of another, he is concomitantly attempting to commit a larceny by wrongfully obtaining property by false pretenses from the insurer. Thus, even though the language of the statutes is not the same, the underlying meaning clearly coincides.”

Insurance Fraud in the First Degree is codified in New York Penal Code Section 176.30. It is a class B felony. If a person with no prior felony convictions is convicted of a class B felony, the minimum period of incarceration is an indeterminate sentence of 1-3 years in prison and the maximum is 8 1/3 – 25 years. An indeterminate sentence is one in which the person is sentenced to a range and the department of corrections determines how much of that range the person must serve before he is eligible for release. If the person has been previously convicted of a prior felony within 10 years of the new conviction, excluding time spent in prison, the minimum period of incarceration is 4 1/2 – 9 years and the maximum is 12 1/2 – 25 years. In all circumstances, the person is forced to be on parole between 1 to 3 years after his release.

For the government to sustain a conviction for Insurance Fraud in the First Degree, the government must prove the following three elements beyond a reasonable doubt. It must prove: the person committed a fraudulent insurance act; the person did so knowingly and with the intent to defraud; and the person thereby wrongfully took, obtained or withheld.

While the two cases above are not from the Court of Appeals, New York’s highest court, they certainly give insight into the reasoning behind the respective decisions. Although neither the 2nd Department or Ulster County renders decisions that are controlling in a Manhattan courtroom, for example (the 1st Department is the appellate court for Manhattan), both of these cases may be applicable in your particular circumstances and are worthy of further discussion or review with your New York criminal defense attorney.

Are you facing criminal charges? Seek the help of a New York Fraud Attorney and New York Criminal Attorney at Stephen Bilkis and Associates.

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