Martin, P. J.
The appellants have been convicted of the crime of conspiracy to falsify books, reports and statements of a corporation which is subject to the Banking Law, and of three crimes of forgery in the third degree. The record discloses an elaborate scheme to defeat the usury laws and collect excessive amounts of interest by devious methods.
The indictment covered the period November 1, 1935, to March 1,1940. The basic charge is that the conspirators caused to be made many usurious loans by exacting from borrowers, sums of money in the guise of insurance premiums. in excess of the charges permitted by the Banking Law. In furtherance of the conspiracy and to meet the scrutiny of the examiners of the State departments, false and fraudulent entries were made in the books of the corporations through which the appellants conducted the operations. The corporations involved are Madison Personal Loan, Inc., a New York corporation duly licensed under article IX of the Banking Law; United American Lloyds, a Lloyds type insurance company with a legislative charter; Independent Agency Company, Inc., an attorney in fact for United American Lloyds; Wilten Agency, Inc., which, while holding a broker’s license, was in reality a complete insurance unit; Avon Finance Corporation; Metro Factors, Inc., and Delmar Factors, Inc.
Avon Finance Corporation had a contract with Madison Personal Loan, Inc., whereby notes and mortgages were to be sold by Madison to Avon or the latter’s designee, and this contract provided, among other things, that insurance was to be procured from brokers or companies approved or designated by Avon. Avon also had the right to designate Madison’s bookkeeper and fix her salary. Delmar Factors in 1936 agreed to purchase from Metro Factors all of the outstanding capital stock of Madison Personal Loan, Inc., for a consideration of $25,000 payable in monthly installments of $600, the last- of which was due February 1, 1940, and during [221]*221this period Metro was to retain full title to the Madison stock until the last note was paid and all the terms and conditions of the agreement were fulfilled. Delmar guaranteed the performance of the contract between Madison and Avon under which Madison was to sell its notes and mortgages to Avon, procure insurance through brokers or companies designated by Avon, and employ a bookkeeper selected by Avon at a salary fixed by it.
Madison Personal Loan, Inc., was limited by article IX of the Banking Law (§ 352) to the making of loans not exceeding $300. In most instances the loans made by Madison were secured by a chattel mortgage on the borrower’s automobile. Madison was within its rights in requiring the borrower to insure for its benefit the automobile pledged as collateral. However, Madison could not impose such a condition as a cover for obtaining greater compensation than the law permits (Martorano v. Capital Finance Corp., 289 N. Y. 21, 23-24).
The trial court charged the jury that if the transactions between Madison and the borrower were for the purpose of protecting Madison in the event of damage or loss to the collateral for the loan, such transactions were legal; but if the true purpose was to secure excess compensation to Madison, a different result would obtain. The trial court instructed the jury, “ insurance which is merely a cover for obtaining to the lender greater compensation on the loan than the law permits is not lawful * * *. Whether such is the case here is for you to say.”
A typical transaction may be summarized as follows: The borrower had to sign two papers before obtaining a loan. One was a combination note and chattel mortgage by which he undertook to pay off the loan at the statutory rate of 3% per month on the unpaid balance not exceeding $150, and 2per month on the unpaid principal balance exceeding $150, and he mortgaged his automobile to Madison as security for such obligation. The other paper was an application for insurance which purported to direct Wilten Agency, Inc., to place with United American Lloyds a specified amount of automobile insurance in favor of the borrower and Madison “ as their interest may appear.” After signing such papers the borrower would receive a Madison check for the face amount of his loan, less a .filing fee and less the insurance premium (generally ranging from $10 to $30) fixed in his application for insurance. The application contained a table of some fourteen possible risks against which the borrower might wish to [222]*222insure, and by its terms a policy could be written either on a single interest or a double interest basis, the former protecting Madison’s interest in the car alone, while the latter was to cover the interest of both Madison and the borrower. The rates for single interest coverage were comparatively low, a total premium of between $5.50 and $10 depending upon the size and date of the loan, but the amount of the premiums which could be collected on double interest coverage could run as high as $60 for collision insurance.
The record indicates that the clerks making the loan on behalf of Madison did not know the rates and did not discriminate between single coverage and double coverage.. The clerks of Madison exacted the premium. The witness F.ox, a loanmaker at the Jamaica branch of Madison, testified that they would take “ from the borrower as much as we could get.” The record indicates that during part of the period covered by the indictment, neither the loan-making clerk nor the borrower knew what kind of insurance was being purchased.
After the borrower had executed the. application, it would be sent by Madison to Wilten, together with a check for the amount of the premium named in the application. Wilten employees would then prepare a certificate of insurance, breaking down the lump sum premium into individual coverages which would conform to the insurance rates as published in the manuals. Where the application was blank they would try to .work ou,t a combination of coverages which would consume the gross premium collected. Sometimes, however, they were unable to arrive at precisely the correct combination of coverages, in which event they would either assign a higher value to the insurance and make up the difference by taking it out of Wilten’s petty cash or they would fix the lower value and remit the difference to Madison for credit to the borrower's account. To avoid the latter alternative they resorted to the device of issuing a policy for a fifteen months’ period even though the loan agreement was for a year or less.
About 98% of all policies were written on a double interest basis. During the years 1937 through 1-939 Wilten took in over $300,000 and paid out about $18,000, or about 4%% of the gross premiums, to persons other than Madison, and this sum included all expenses incident to any claim.
The record establishes that moneys exacted in the form of premiums came back to Madison through the medium-of false claims.. When Madison needed money, the bookkeeper for -Madison would go through delinquent accounts, select a [223]*223group of them, calculate the net unpaid balance of the loans shown and the group would then be sent to Wilten. Proofs of loss would be prepared at the Wilten office and these would be executed by Madison with indifference to determination of the fact that an insurable loss had been suffered. It appears that in some instances conversion claims were made where Madison had actually repossessed the car and resold it. When checks were received from Wilten they were credited on Madison’s books.
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Martin, P. J.
The appellants have been convicted of the crime of conspiracy to falsify books, reports and statements of a corporation which is subject to the Banking Law, and of three crimes of forgery in the third degree. The record discloses an elaborate scheme to defeat the usury laws and collect excessive amounts of interest by devious methods.
The indictment covered the period November 1, 1935, to March 1,1940. The basic charge is that the conspirators caused to be made many usurious loans by exacting from borrowers, sums of money in the guise of insurance premiums. in excess of the charges permitted by the Banking Law. In furtherance of the conspiracy and to meet the scrutiny of the examiners of the State departments, false and fraudulent entries were made in the books of the corporations through which the appellants conducted the operations. The corporations involved are Madison Personal Loan, Inc., a New York corporation duly licensed under article IX of the Banking Law; United American Lloyds, a Lloyds type insurance company with a legislative charter; Independent Agency Company, Inc., an attorney in fact for United American Lloyds; Wilten Agency, Inc., which, while holding a broker’s license, was in reality a complete insurance unit; Avon Finance Corporation; Metro Factors, Inc., and Delmar Factors, Inc.
Avon Finance Corporation had a contract with Madison Personal Loan, Inc., whereby notes and mortgages were to be sold by Madison to Avon or the latter’s designee, and this contract provided, among other things, that insurance was to be procured from brokers or companies approved or designated by Avon. Avon also had the right to designate Madison’s bookkeeper and fix her salary. Delmar Factors in 1936 agreed to purchase from Metro Factors all of the outstanding capital stock of Madison Personal Loan, Inc., for a consideration of $25,000 payable in monthly installments of $600, the last- of which was due February 1, 1940, and during [221]*221this period Metro was to retain full title to the Madison stock until the last note was paid and all the terms and conditions of the agreement were fulfilled. Delmar guaranteed the performance of the contract between Madison and Avon under which Madison was to sell its notes and mortgages to Avon, procure insurance through brokers or companies designated by Avon, and employ a bookkeeper selected by Avon at a salary fixed by it.
Madison Personal Loan, Inc., was limited by article IX of the Banking Law (§ 352) to the making of loans not exceeding $300. In most instances the loans made by Madison were secured by a chattel mortgage on the borrower’s automobile. Madison was within its rights in requiring the borrower to insure for its benefit the automobile pledged as collateral. However, Madison could not impose such a condition as a cover for obtaining greater compensation than the law permits (Martorano v. Capital Finance Corp., 289 N. Y. 21, 23-24).
The trial court charged the jury that if the transactions between Madison and the borrower were for the purpose of protecting Madison in the event of damage or loss to the collateral for the loan, such transactions were legal; but if the true purpose was to secure excess compensation to Madison, a different result would obtain. The trial court instructed the jury, “ insurance which is merely a cover for obtaining to the lender greater compensation on the loan than the law permits is not lawful * * *. Whether such is the case here is for you to say.”
A typical transaction may be summarized as follows: The borrower had to sign two papers before obtaining a loan. One was a combination note and chattel mortgage by which he undertook to pay off the loan at the statutory rate of 3% per month on the unpaid balance not exceeding $150, and 2per month on the unpaid principal balance exceeding $150, and he mortgaged his automobile to Madison as security for such obligation. The other paper was an application for insurance which purported to direct Wilten Agency, Inc., to place with United American Lloyds a specified amount of automobile insurance in favor of the borrower and Madison “ as their interest may appear.” After signing such papers the borrower would receive a Madison check for the face amount of his loan, less a .filing fee and less the insurance premium (generally ranging from $10 to $30) fixed in his application for insurance. The application contained a table of some fourteen possible risks against which the borrower might wish to [222]*222insure, and by its terms a policy could be written either on a single interest or a double interest basis, the former protecting Madison’s interest in the car alone, while the latter was to cover the interest of both Madison and the borrower. The rates for single interest coverage were comparatively low, a total premium of between $5.50 and $10 depending upon the size and date of the loan, but the amount of the premiums which could be collected on double interest coverage could run as high as $60 for collision insurance.
The record indicates that the clerks making the loan on behalf of Madison did not know the rates and did not discriminate between single coverage and double coverage.. The clerks of Madison exacted the premium. The witness F.ox, a loanmaker at the Jamaica branch of Madison, testified that they would take “ from the borrower as much as we could get.” The record indicates that during part of the period covered by the indictment, neither the loan-making clerk nor the borrower knew what kind of insurance was being purchased.
After the borrower had executed the. application, it would be sent by Madison to Wilten, together with a check for the amount of the premium named in the application. Wilten employees would then prepare a certificate of insurance, breaking down the lump sum premium into individual coverages which would conform to the insurance rates as published in the manuals. Where the application was blank they would try to .work ou,t a combination of coverages which would consume the gross premium collected. Sometimes, however, they were unable to arrive at precisely the correct combination of coverages, in which event they would either assign a higher value to the insurance and make up the difference by taking it out of Wilten’s petty cash or they would fix the lower value and remit the difference to Madison for credit to the borrower's account. To avoid the latter alternative they resorted to the device of issuing a policy for a fifteen months’ period even though the loan agreement was for a year or less.
About 98% of all policies were written on a double interest basis. During the years 1937 through 1-939 Wilten took in over $300,000 and paid out about $18,000, or about 4%% of the gross premiums, to persons other than Madison, and this sum included all expenses incident to any claim.
The record establishes that moneys exacted in the form of premiums came back to Madison through the medium-of false claims.. When Madison needed money, the bookkeeper for -Madison would go through delinquent accounts, select a [223]*223group of them, calculate the net unpaid balance of the loans shown and the group would then be sent to Wilten. Proofs of loss would be prepared at the Wilten office and these would be executed by Madison with indifference to determination of the fact that an insurable loss had been suffered. It appears that in some instances conversion claims were made where Madison had actually repossessed the car and resold it. When checks were received from Wilten they were credited on Madison’s books. Madison, however, still insisted that the borrowers continue to pay. If Madison were fortunate enough to collect from borrowers, such collections were credited to the Wilten account.
The proof here leaves no doubt that what the lender Madison wanted was not bona fide insurance protection. It was going through the form of insuring the car as a cover for the unlawful exaction of excessive compensation by way of the insurance premium which the borrower had no choice but to pay.
Tenner and Wolf were officials of Madison and, as such, had general supervision of the loans, the obtaining of the insurance premiums from borrowers and the collection of the insurance claims from Wilten. Apart from their official identity with Madison, there is testimony that Tenner personally participated in transactions with individual borrowers and that Wolf participated in the collection of insurance claims from Wilten. The appellant Pallant, as president of Wilten, personally instructed employees of Wilten with respect to their handling of the borrowers’ applications for insurance and the making of bookkeeping entries covering the claims. As to the appellant Schwartz, the proof is that he owned Metro Factors which in turn owned Madison. Despite the agreement with Delmar covering the sale of the Madison stock, Metro retained all the beneficial rights of the Madison stock until the final payment by Delmar which, under the agreement, was to be made in 1940. Through his ownership of Metro, Schwartz controlled Madison. The testimony of the witness Kohn establishes that Schwartz participated in the financial affairs of Madison. Schwartz also owned Avon, and Madison’s agreement with Avon required it to place insurance with the company selected by Avon. The insurance was placed with United, which Schwartz owned. The testimony of the witness Hamilton shows that Schwartz was familiar with the use of the insurance premium scheme to enable the lender to make large profits in the small loan business.
[224]*224The appellants contend that there was no direct proof of the conspiracy, but the testimony as to their conduct and the evidence disclosed by the records fully warrant the finding by the jury of the existence of a conspiracy.
There is proof of the falsification of the books. To establish that, it was shown that there was in fact no collision in which the so-called Kander-Sable automobile was involved. That car had been surrendered to Madison and the borrower released from liability under the loan before the claim was made. Nor were the Sizer and Pope cars converted. The Sizer car had been in possession of Madison for over a month before the conversion claim was made, and the Pope car had no conversion coverage. It is urged that in the absence of proof of what is referred to as Master Policy No. 101, it is impossible to characterize the claims as fraudulent and the entries as false. The proof offered by the People, however, establishes that it was impossible for the appellants’ insurance company lawfully to provide coverage such as is claimed by the appellants. There had been no Insurance Department approval of such forms of coverage, and the rating organization of which the insurance company (United) was a member, limited conversion claims to wrongful conversion, embezzlement or secretion by a borrower and-permitted such a claim only after the loan company had made all reasonable efforts to locate the borrower, collect overdue balances and repossess the automobile in connection with which the claim was asserted. It, also, limited collision coverage claims to impairment of the interest of the loan money as a result of one accidental collision or upset.
The record establishes that the claims asserted were false and any book entries based on such false claims were likewise false. (People v. Rabenold, 262 App. Div. 737, affd. 287 N. Y. 832.) As to the falsification of the books, the proof is that the appellants Tenner and Wolf had charge of the proof-of-loss system for Madison, Pallant supervised the activities of Wilten clerks in the making of the bookkeeping entries, and it is clear from the record that Schwartz is responsible for the initiation of the insurance plan which culminated in the payment of the false claims and he is chargeable therewith, although there is no proof of specific directions concerning particular entries.
We find no errors either in the charge or in the rulings of the trial court which justify interference with the verdict of the jury. The judgments of conviction and the orders should be affirmed.