September 24, 2013
Goal is to Give New York Prosecutors the Proper Tools to Prosecute Sophisticated Fraud, and Better Align New York Law in This Area with Other States and Federal Law
Manhattan District Attorney Cyrus R. Vance, Jr., Chair of the Board of the New York State District Attorneys Association (DAASNY) and Nassau County District Attorney Kathleen M. Rice, President of DAASNY, today announced the recommendations of the New York State White Collar Crime Task Force and the public release of its 102-page report. Convened in October 2012 during District Attorney Vance’s tenure as DAASNY President, the Task Force brought together a diverse and non-partisan group of legal experts, whose recommendations include procedural changes, as well as amendments to New York’s laws governing the prosecution of corruption, fraud (including elder fraud and tax fraud), cybercrime and identity theft, and money laundering.
The criminal law in New York State has not undergone a comprehensive revision since 1965. With the exception of the 2008 changes in state criminal tax laws, the last substantial modernization of white-collar crime laws occurred in 1986.
The Task Force was comprised of elected District Attorneys and Assistant District Attorneys, members of the defense bar and academia, and other government officials, including one federal prosecutor. The Co-Chairs were Erie County District Attorney Frank A. Sedita, III, and Manhattan Chief Assistant District Attorney Daniel R. Alonso. The members examined New York’s laws and made recommendations for reform in each relevant area.
“The last time our State Legislature took a purposeful look at white collar laws was more than a quarter century ago, before smartphones, the internet, social media, or the explosion of e-commerce,” said District Attorney Vance. “In addition, fraud and public corruption schemes have grown more intricate and sophisticated. State laws have simply not kept pace with technological and other advancements, greatly impeding the ability of local prosecutors to combat these crimes. In particular, New York State law woefully lags behind federal laws and laws in many other states. For example, today, a cyber-swindler who schemes to defraud his victims out of $2,000 or $2 million faces identical punishment. That is unacceptable, and one of the reasons why I convened the White Collar Crime Task Force in 2012 – to issue common-sense recommendations for reform. I firmly believe that it is not too late to bring our laws and procedures into the 21st century.”
DAASNY President, Co-Chair of the Moreland Commission to Investigate Public Corruption, and Nassau County District Attorney Kathleen M. Rice said: “Decades-old laws are making it very hard for prosecutors to respond to the crimes, challenges and opportunities of the 21st Century. This report makes specific and practical recommendations that would give law enforcement the tools we need to fight cybercrime and modern financial fraud, use technology to make the justice system faster and more cost-effective, and protect the rights and safety of all New Yorkers. White-collar crime keeps changing, and our laws and justice system practices need to always stay one step ahead.”
Erie County District Attorney and Task Force Co-Chair Frank A. Sedita, III, said: “The Task Force sought to remedy shortcomings in the law in the areas of fraud and corruption, issues that matter to New Yorkers from all corners of our State. I was proud to co-Chair the Task Force and am gratified by our final product, particularly the recommendations we are presenting to curb elder abuse and level the playing field for older adults, who face unique challenges not completely addressed by current law. I look forward to joining my colleagues in presenting these recommendations to the Legislature and the Governor and I thank the Task Force for its hard work and dedication.”
Manhattan Chief Assistant District Attorney and Task Force Co-Chair Daniel R. Alonso said: “The members of the Task Force underwent a comprehensive 9-month process, recommending only those policy changes that gained consensus among the group. We are optimistic that State policymakers will welcome the members’ recommendations and look forward to presenting them to the Legislature and the Governor. I thank the Task Force for its diligence and valuable contributions, and would also like to thank my co-Chair, DA Sedita, for his leadership. I would like to give special thanks to our Chief Counsel, Manhattan ADA Sally Pritchard, for her significant contributions to the Task Force’s report.”
The members agreed on three key principles when making recommendations: (1) each idea would be considered on its own merits, not based on its political viability; (2) consensus would be required for any recommendation; and (3) the Task Force would not duplicate the efforts of the New York State Permanent Commission on Sentencing, which is already examining New York’s indeterminate sentencing scheme for non-violent crimes. The Task Force as a whole met 10 times between October 2012 and July 2013, and its six subcommittees met numerous additional times on an as-needed basis. The Task Force also solicited input from governmental bodies and bar associations, and experts in various fields. A summary of the various recommendations follows. The full report is available at www.Manhattanda.org.
Recommendations to Streamline Fraud & Trademark Counterfeiting Laws: Our Penal Law is largely a product of the analog age and requires many updates in the areas of Fraud and Trademark Counterfeiting, including enhancements to ensure that the punishment matches the crime:
- Gradate the crime of Scheme to Defraud to punish serious fraud schemes more seriously, bringing the sentence in line with the amount of money wrongfully obtained or the number of victims. The gradations would range from the existing class E felony for schemes that obtain more than $1,000 or intend to defraud 10 or more victims, up to a new class B felony for schemes to obtain more than $1 million or intend to defraud 1,000 or more victims.
- Eliminate the requirement that a Scheme to Defraud target more than one victim in all instances. A scheme is not any less fraudulent because only one victim is involved.
- Expand the crime of Larceny to cover theft of personal identifying information, computer data, computer programs, and services, to adapt to modern technological realities.
- Provide state jurisdiction and county venue over cases involving Larceny of personal identifying information, computer data, and computer programs, where the victim is located in the state or the county.
- Gradate Trademark Counterfeiting based on the number of counterfeit goods possessed, maintaining the current cap of a class C felony.
Partnership for New York City President and CEO Kathryn Wylde said: “The Task Force has offered common sense recommendations that, if enacted, will result in a better business climate and help the city’s employers deal with the rapidly escalating problem of cybercrime.”
Former Assistant Attorney General in Charge of the Criminal Division of the U.S. Department of Justice Lanny Breuer said: “The Task Force’s report is a critical step forward in the effort to reform the laws aimed at fighting white collar crime.”
Anti-Corruption Recommendations: The alarming number of corruption scandals implicating elected officials in the last several years compelled the Task Force to recommend strengthening New York’s anti-corruption laws in the public and private sectors in the following ways:
- Enact a new crime of Undisclosed Self-Dealing by Public Servants. This would address courses of conduct where public servants have secret interests in government business above a certain threshold, such as ownership of property by the public servant through a shell corporation involved in public business.
- Replace the “agreement of understanding” requirement in New York’s bribery law with a requirement of an “intent to influence” the public servant. New York does not require such an agreement under its commercial, labor, and sports bribery laws. The Task Force seeks to harmonize our bribery laws and make it easier to prosecute those seeking to unduly influence public officials.
- Upgrade the existing crime of Official Misconduct, currently only a misdemeanor, to create two new crimes of Official Misconduct in the First and Second Degrees (class D and E felonies, respectively) to calibrate the penalties with the financial benefit or harm associated with the conduct.
- Enact a sentencing enhancement for Abuse of Public Trust, to increase sentence ranges by one crime level in cases where public servants use their position to commit crimes that are not otherwise defined as corruption crimes.
- For example, if a public official were to use her position to embezzle money from a charity, the elements of Grand Larceny would not capture the defendant’s abuse of her position. The Task Force believes that the facts cause additional harm – the public-servant status of the offender and the abuse of her official position – and should be captured through an appropriate sentence enhancement.
- Remove the $250 economic harm requirement from the felony Commercial Bribery statutes. The economic harm element has made felony-level prosecutions all but impossible, and allowed private corruption schemes to go unpunished, despite the real-world realization that the harm in a bribery scheme is the employee’s breach of loyalty, which is not always economically quantifiable.
Executive Director of Citizens Union Dick Dadey said: “We applaud District Attorney Vance and the rest of the task force for shining much-needed light on the myriad improvements that can be made to the state’s criminal laws to better empower prosecutors to combat public corruption, particularly in bribery cases. We urge the state to take these recommendations to heart and modernize criminal law.”
Cybercrime & Identity Theft Recommendations: Because of New York’s status as a global financial center, we are especially vulnerable to cyber-criminals and identity thieves. In keeping with its approach to update our penal laws, the Task Force has concluded that several changes are necessary to bring laws governing cybercrime and identity theft up-to-date:
- Strengthen the laws against computer intrusions:
- Expand the definition of “computer material” to allow for the felony prosecution of computer hacking cases that do not necessarily involve an “advantage over competitors.” This change would enhance our ability to use the existing Computer Trespass law to prosecute those who without authorization access private emails of another; hack into webcams for sexual gratification or for spying on unwitting victims; and those who access a school database to take disciplinary records of children. Under the current definition of “computer material,” these crimes are limited to class A misdemeanors.
- Upgrade the existing Computer Tampering law and create a first-degree crime as a class B felony. The proposed change would put Computer Tampering on par with Grand Larceny statutes, which gradate the crime based on the harm caused.
- Gradate the existing crime of Identity Theft, up to a class B felony, based on dollar threshold amounts or the number of victims, amendments necessary to address the realities of criminal activity perpetrated by identity thieves.
- Upgrade the crime of Unlawful Possession of a Skimmer Device from a class A misdemeanor to a class D felony and change the language from “unlawful possession,” to “criminal possession,” to more accurately reflect the seriousness of the offense.
- Amend the crime of Enterprise Corruption under the Organized Crime Control Act to add Identity Theft as a predicate crime, thereby recognizing the new reality of criminal enterprises involved in organized Identity Theft.
Elder Fraud Recommendations: Because New York is home to the third-largest older population in the country, it is critical to update our laws to protect this group from exploitation in the following ways:
- Amend the Criminal Procedure Law to allow for the conditional examination of victims who are at least 75 years of age.
- Many older adults never have the opportunity to face their abuser in court because of trial delays that increase the chances that the victim will become unavailable. Conditional examination before trial would ensure that victims have the opportunity to testify.
- Amend the definition of Larceny so that purported consent by a victim with diminished mental capacity is not a defense to Larceny.
- Amend the Criminal Procedure Law to permit a caregiver to accompany a vulnerable victim into the grand jury, with the consent of the District Attorney. The definition of “caregiver” would include both informal caregivers and professional social workers.
- Allow prosecutors to obtain medical records of mentally impaired victims of financial exploitation, without requiring a waiver from those very victims.
President/CEO of Lifespan of Greater Rochester and Co-Chair of the New York State Coalition on Elder Abuse Advisory Board Ann Marie Cook said: “Lifespan’s Elder Abuse Prevention Program has been providing direct social work and advocacy intervention services to older adult victims in 10 upstate New York counties for over 15 years. The majority of our cases involve financial exploitation, often combined with other forms of abuse or neglect, and often with a family member as the perpetrator. We welcome this comprehensive package of proposed amendments, including important changes to the larceny statute. Those who prey on vulnerable older adults need to be held accountable for their actions – it is the only way to stop the abuse and exploitation.”
Hebrew Home at Riverdale President and CEO Daniel A. Reingold said: “We applaud the recommendations of the White Collar Crime Task Force and especially the recommendations designed to curb financial exploitation of older adults. I am gratified to see that there is a consensus among law enforcement officials about how to address this area of enormous concern.”
Procedural Reform Recommendations: White collar and corruption cases are impaired by New York’s antiquated grand jury rules, often forcing prosecutors to choose between foregoing critical testimony or relying upon the testimony of a witness who has been given a free pass via immunity. The Task Force set forth three core proposals for procedural reform:
- Reform grand jury procedure to lower the cost of grand jury presentations for taxpayers; reduce the burden on private businesses, which lose employees for long periods of time when they serve as grand jurors; and reduce the hardships on civilian witnesses. This can be achieved by:
- Expanding the Criminal Procedure Law to allow all businesses to authenticate by certification any records they keep and maintain in the ordinary course of business.
- Allowing witnesses located out-of-state or more than 100 miles from the grand jury to testify via a secure videoconference connection.
- Allowing lack of consent for Identity Theft prosecutions to be established by sworn certification, as it currently is in Larceny, Forgery, and Criminal Possession of Stolen Property cases.
- Amend the Criminal Procedure Law to authorize a grant of use immunity rather than transactional immunity, thereby conforming New York law to federal law and the law of most other states, and allowing for fuller use of the grand jury to investigate complex crime. New York is the only state in the Country that automatically grants complete transactional immunity to every witness who testifies before a Grand Jury.
- Amend, but do not eliminate, the accomplice corroboration requirement of the Criminal Procedure Law to allow cross-corroboration by a separate accomplice.
District Attorney Vance thanked the members of the Task Force and its staff:
Hon. Frank Sedita (Co-Chair)
District Attorney, Erie County
Daniel R. Alonso (Co-Chair)
Chief Assistant District Attorney, New York County
Partner, Wachtell, Lipton, Rosen & Katz
Executive Assistant District Attorney
Office of the New York City Special Narcotics Prosecutor
Steven M. Cohen,
Zuckerman Spaeder LLP
Hon. Sandra Doorley
District Attorney, Monroe County
Chief Assistant U.S. Attorney, Eastern District of New York
Hon. William Fitzpatrick
District Attorney, Onondaga County
Daniel J. French
Of Counsel, Bond, Schoeneck & King
Chief Risk Management Officer, New York State Department of Taxation & Finance
NYU School of Law
Kirkland & Ellis, LLP
Andrew C. Hruska
King & Spalding
Morvillo Abramowitz Grand Iason & Anello, P.C.
Adam S. Kaufmann
Lewis Baach, PLLC
Lankler & Carragher
Chief of Economic Crimes Bureau
Suffolk County District Attorney’s Office
Partner, Baker & Hostetler
Hon. James Murphy
District Attorney, Saratoga County
Daniel C. Richman
Columbia Law School
Hon. Albert Rosenblatt
NYU School of Law
John M. Ryan
Chief Assistant District Attorney, Queens County
Karen Patton Seymour
Partner, Sullivan & Cromwell
Chief of Investigation Division
New York County District Attorney’s Office
Sally Pritchard, Chief Counsel
John Doscher, Counsel
(Chair, Elder Fraud Working Group)
Christina Skinner, Counsel
District Attorney Vance also thanked the following lawyers who assisted in the work of the Task Force after its formation:
Robert J. DeMarco
Caitlin J. Halligan
Duncan P. Levin
Gilda I. Mariani
Gregory C. Pavlides
J. Christopher Prather
Gabriel M. Nugent
Edward D. Saslaw
Ann C. Sullivan
Albert J. Teichman
Marshall D. Trager
District Attorney Vance also thanked law student John Hughes.
Finally, District Attorney Vance thanked the law firm of Zuckerman Spaeder LLP for its sponsorship of the Task Force’s work.
|WCTF Report.pdf.pdf||1.31 MB|