People v. Wein

294 A.D.2d 78, 743 N.Y.S.2d 439, 2002 N.Y. App. Div. LEXIS 5843
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJune 6, 2002
StatusPublished
Cited by5 cases

This text of 294 A.D.2d 78 (People v. Wein) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
People v. Wein, 294 A.D.2d 78, 743 N.Y.S.2d 439, 2002 N.Y. App. Div. LEXIS 5843 (N.Y. Ct. App. 2002).

Opinion

OPINION OF THE COURT

Marlow, J.

Over the People’s objections, this counseled defendant entered into a plea and sentencing agreement with the court whereby he pleaded guilty to an entire 113-count indictment charging grand larceny and related crimes. In exchange for this plea, the court promised defendant a total prison sentence of 1 to 3 years, and that he would be ordered to pay his victims approximately 80% of their losses, on the condition they waive their right to separately sue defendant in a civil forum for any unpaid balance. Furthermore, and also over the District Attorney’s protests, the court directed that all restitution payments be made to, and distributed by, a court-appointed “special master” to whom defendant was ordered to pay a fee of $10,000 instead of a mandatory 5% surcharge. Finally, the Justice fined defendant $10,000.

On this People’s appeal, we face the question whether, as the People maintain, we can modify the judgment to excise ancillary, but clearly illegal portions of a plea agreement, and otherwise affirm defendant’s sentence; or whether, as defendant contends, he is entitled to either specific performance of the plea agreement or vacatur of the plea and a return to his preplea status. We modify the sentence to excise only its illegal portions, and otherwise affirm.

The Indictment

A New York County grand jury filed an indictment on July 25, 2000 accusing defendant, a New York stockbroker, of a total of 113 counts, including grand larceny in the second and third degrees; forgery in the second degree; criminal possession of a forged instrument in the second degree; scheme to defraud in the first degree; falsifying business records in the first degree; and securities fraud under General Business Law § 352-c (5) and (6).

The first 112 counts were based on defendant’s sale to his customers of $4.4 million in unregistered preferred stock in Millennium Services Corporation, a company which repre[80]*80sented it owned or had under contract a large number of funeral homes. Defendant received a commission of $440,000 for selling the securities. Because most of defendant’s clients were not qualified under federal securities laws to buy Millennium’s unregistered stock, defendant forged their investor suitability forms. Millennium apparently owned no funeral homes and dissipatqd the funds by self-dealing transactions with an investment company owned by defendant’s close Mend and by other related entities. Dividends were also paid to the earliest investors in what turned out to be a “Ponzi scheme.”

The indictment’s 113th count alleged that defendant defrauded his brokerage-account clients when, without their authorization, he traded and margined their accounts in order to increase his commissions, and, when, in order to benefit himself, he failed to follow his clients’ specific instructions to sell certain securities.

On March 22, 2001, the assigned Trial Justice was apparently concerned that a lengthy trial resulting in high legal fees would dissipate defendant’s assets and would tie up the court and jurors for months. At a conference the next day, the court described the trial as a “monster” and discussed the ways he intended to limit the People’s proof, saying “the idea that the People can drag [defendant] through months of an expensive trial and running up huge amounts of money is grossly unfair.” The court stated a “full[ ] intension] to circumscribe [the prosecutor’s] ability to beat the hell out of [defendant].”

The Plea Negotiations and Agreement

On March 26, defense counsel raised the prospect of a guilty plea and argued for a prison term of no more than 1 to 3 years and restitution of $1 million. The People recommended 3 to 9 years and full restitution. During the discussion, defense counsel said that, as a condition of the payment of restitution by defendant, he wanted releases from all the victims and from the Securities and Exchange Commission, which had commenced a civil enforcement action against defendant.

The following day, defendant offered to plead guilty and pay $2 million in restitution in exchange for a one-year sentence. However, the People explained that a one-year sentence is illegal, citing this Court’s decision in People v Furman (280 AD2d 385). The Justice acknowledged his familiarity with that case, but nevertheless stated the sentence in Furman “clearly was within the parameters, but *** outside the technicalities,” and “made a gre[a]t deal of sense, except to the Appellate Division.” [81]*81In any event, the court was unwilling to impose 3 to 9 years or 2 to 6 years with full restitution.

Plea negotiations continued, essentially between the defense and the court. Because the Justice believed some victims had received distributions, he declined to direct defendant to make full restitution. Defendant pressed for general releases from the victims as a condition of receiving any restitution, but the prosecutor did not believe the law allows a court to require such releases. The court acknowledged it could not require victims to sign releases, but determined that it had the power “to set up funds which says, if you want it, this is the price * * * they don’t have to take [it].”

Until this point, the restitution discussions had been based on losses incurred by those who had invested in Millennium, and the People raised the issue of restitution for the defrauded brokerage account victims (count 113 of the indictment). Although the People presented proof that defendant’s actions caused this latter group of victims to lose approximately $437,000, the court decided it would fine defendant $10,000 on this last count instead of allowing restitution as part of the plea agreement.

On March 28, 2001, the court and defense counsel discussed the mechanics of the proposed releases at length, and the court concluded the restitution money earmarked for any investor unwilling to sign a release would be returned to defendant. The prosecutor vehemently objected and read Penal Law § 60.27 (6) into the record, which provides: “Any payment made as restitution or reparation pursuant to this section shall not limit, preclude or impair any liability for damages in any civil action or proceeding for an amount in excess of such payment.”

The prosecutor again emphasized that requiring victims to sign releases in exchange for restitution violates this statute. The court then asked defense counsel if the defense would take the risk that the releases would be invalid under the Penal Law. Counsel responded that he would “take that risk.”

In order to ensure that restitution would be conditioned on victims executing general releases, the court decided to retain control over the funds by appointing a special master to administer them. The People further objected, citing CPL 420.10 (8), which requires that restitution be paid through an agency designated by the New York City Mayor, and Penal Law § 60.27 (8), which mandates that a defendant pay a 5% surcharge to the designated agency. However, the Justice rejected these clear legislative edicts, characterizing the [82]*82government as “worse than a bookie” that charges a “vig.” He then decided that defendant could plead conditionally with a promised sentence of 1 to 3 years, disregarding the People’s request that, before the Justice determined what sentence he would impose, he hear and consider the defrauded victims’ statements.

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Bluebook (online)
294 A.D.2d 78, 743 N.Y.S.2d 439, 2002 N.Y. App. Div. LEXIS 5843, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-v-wein-nyappdiv-2002.