The People, Respondent,v.John F. Haggerty, Jr., Appellant, et al., Defendant.BriefN.Y.June 3, 2014To be Argued by: PAUL SHECHTMAN (Time Requested: 30 Minutes) APL-2013-00199 New York County Indictment No. 2598/10 Court of Appeals of the State of New York THE PEOPLE OF THE STATE OF NEW YORK, Respondent, – against – JOHN F. HAGGERTY, JR., Defendant-Appellant. BRIEF FOR DEFENDANT-APPELLANT JOHN F. HAGGERTY, JR. PAUL SHECHTMAN ZUCKERMAN SPAEDER LLP Attorneys for Defendant-Appellant 1185 Avenue of the Americas, 31st Floor New York, New York 10036 Tel.: (212) 704-9600 Fax: (212) 704-4256 Date Completed: September 16, 2013 TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES ................................................................................... ii PRELIMINARY STATEMENT ............................................................................. 1 QUESTION PRESENTED ..................................................................................... 2 :INTRODUCTION ................................................................................................... 2 STATEMENT OF FACTS ...................................................................................... 3 ARGUMENT .......................................................................................................... 5 THE TESTIMONY ABOUT THE TERMS OF THE BLOOMBERG TRUST VIOLA TED THE BEST EVIDENCE RULE ................. 5 A. Background ......................................................................................... 6 B. Discussion ........................................................................................... 9 CONCLUSION ..................................................................................................... 14 1 TABLE OF AUTHORITIES PAGE CASES Davis v. Alaska, 415 U.S. 308 (1974) ................................................................... 10 Harmon v. Matthews, 27 N.Y.S.2d 656 (Sup. Ct. Bronx Cty. 1941) ..................... 9 Kearney v. City ofNew York, 92 N.Y. 617 (1883) ......................................... 10-11 Mahaney v. Carr, 175 N.Y. 454 (1903) .................................................................. 2 People v. Hamilton, 304 A.D.2d 500 (1st Dept. 2003) ......................................... 11 Schozer v. William Penn Life Ins. Co. ofN.Y., 84 N.Y.2d 639 (1994) .................................................................... 5, 9, 11-12 United States v. Holley, 463 F.2d 634 (5th Cir. 1972) ......................................... 11 United States v. Lee, 106 U.S. 196 (1882) ....................................................... 12-13 United States v. Nixon, 418 U.S. 683 (1974) ........................................................ 13 OTHER AUTHORITIES 2 McCormick on Evid. §239 (6th ed.) ................................................................... 11 Barker & Alexander, Evidence in New York State and Federal Courts, §10.1 ...... 9 Fed. R. Evid. 1 004(b) ............................................................................................ 11 11 PRELIMINARY STATEMENT This appeal is from a judgment of conviction entered on December 19, 2011, by the Supreme Court, New York County (Zweibel, J.). In June 2010, a grand jury in New York County returned an Indictment charging defendant- appellant John F. Haggerty, Jr., and Special Elections Operations, LLC ("SEO") with Grand Larceny in the First Degree, Penal Law §155.42; Money Laundering in the Second Degree, Penal Law §4 70.15(1 )(b )(ii)(A)(iii); and three counts of Falsifying Business Records in the First Degree, Penal Law § 1 7 5.10. After a jury trial, Mr. Haggerty was found guilty of Grand Larceny in the Second Degree, Penal Law §155.40, and Mr. Haggerty and SEQ were found guilty of the money laundering charge. The falsifying business record counts were dismissed before the case was submitted to the jury. On December 19, 2011, Mr. Haggerty was sentenced to 1 1/3 to 4 years' imprisonment. On February 7, 2013, the Appellate Division, First Department, affirmed the convictions. Thereafter, Chief Judge Lippman granted leave to appeal to this Court. 1 Mr. Haggerty was free on bail pending the First Department's decision. He surrendered himself after that decision and served five months in state prison. After leave was granted, Chief Judge Lippman reinstated Mr. Haggerty to bail. 1 QUESTION PRESENTED Whether oral testimony about the terms of the Bloomberg Revocable Trust violated the "best evidence rule"? INTRODUCTION This appeal presents one issue: did the introduction of oral testimony about the terms of Michael R. Bloomberg's Revocable Trust violate the best evidence rule? As discussed below, the issue arose because the indictment alleged that Mr. Haggerty had stolen money from "Michael R. Bloomberg" and the proof showed that the money belonged to the Bloomberg Revocable Trust. As the trial court noted, that discrepancy raised the question of whether "[Mayor] Bloomberg could authorize the payment from that trust account." (A. 118). To answer that question, the People called the lawyer who had drafted the trust agreement to testify to its terms. They declined to offer a redacted copy of the trust instrument because Mayor Bloomberg would not allow it. The best evidence rule, however, applies to documents in the possession of the wealthy and poor alike, and its violation requires a reversal of Mr. Haggerty's conviction. See Mahaney v. Carr, 175 N.Y. 454, 462 (1903)("when it appear[s] that [a] transaction [i]s in writing, it [i]s incumbent upon [the party] to produce it, or show that it [i]s lost or destroyed"). 2 STATEMENT OF FACTS In 2009, Michael R. Bloomberg decided to seek a third term as Mayor ofNew York City. Among those who volunteered to assist his campaign was John Haggerty. An experienced campaign consultant, Mr. Haggerty was assigned to oversee ballot security operations on Election Day, November 3, 2009. The assignment was to ensure that workers were at polling sites to check that voting machines were operating properly and that the election laws were followed. (A. 26-30). As the jury learned, ballot security has a "negative connotation" in some circles, in which it is viewed as "voter suppression." (A. 161). As a result in 2009, as in 2005, the Bloomberg campaign sought to distance itself from the operation. In 2005, it used the New York State Republican Party to perform ballot security. (A. 18-21).2 In 2009, because Mayor Bloomberg was running as an independent (and not a Republican), the plan was to use the Independence Party in that role. (A. 17). $1.2 million would be contributed to the Independence Party, and it would use the money to support ballot security operations, keeping $100,000 for itself. (A. 23). 2 There was testimony that in 2005 the Bloomberg campaign contributed $800,000 to the Republican Party for ballot security and that the party spent only $200,000 of that sum for its intended purpose. (A. 99). 3 On October 30, 2009, Mr. Haggerty met with senior members of the Bloomberg campaign and provided a detailed budget for ballot security. (A. 60). The budget called for $1,076,750 to cover the cost of 1,355 poll watchers, 230 drivers and other expenses. (A. 65-70). Following the meeting, $1.2 million was sent in two wire transfers from the "Bloomberg Revocable Trust" to the "Housekeeping Account" ofthe Independence Party. (A. 79-80, A. 102-03).3 The understanding was that up to $1.1 million of the funds would be used for ballot security for the Bloomberg campaign and that the remainder would stay with the party. (A. 23, A. 89). In anticipation of the wtre transfers, Mr. Haggerty told Thomas Connolly, the Vice Chairman of the Independence Party, that "there would be some entity coming forward [perhaps] a consultant ... that would put together this ballot security operation" and that the Independence Party would contract with it. (A. 87). The agreement that was eventually signed was between the Independence Party and SEO and identified Mr. Haggerty as SEQ's "sole member." (A. 95). It provided that SEO would receive "a sum not to exceed $1.1 million" to effectuate the ballot security plan. (A. 96). The proof further showed that the Independence Party transferred $750,000 to SEO; that only $32,000 was used for ballot security; 3 Several witnesses testified without contradiction that the Independence Party, as a matter of law, had "unfettered discretion under the law to employ the $1.2 million according to its discretion." (A. 37). 4 and that Mr. Haggerty used the bulk of the money to help purchase his brother's share of a house in Queens, which Mr. Haggerty's father had left to his two sons. Although most of the $750,000 was used to purchase the Queens home, Mr. Haggerty did organize a ballot security operation, albeit one far more modest than that detailed in his written budget and one which used volunteers, and not paid workers.4 ARGUMENT THE TESTIMONY ABOUT THE TERMS OF THE BLOOMBERG TRUST VIOLATED THE BEST EVIDENCE RULE As discussed below, the testimony of attorney Mrujorie Friday as to the terms of the Bloomberg Revocable Trust violated the best evidence rule, which "requires the production of an original writing where its contents are in dispute and sought to be admitted." Schozer v. William Penn Life Ins. Co. ofN.Y., 84 N.Y.2d 639, 643 (1994). 4 There was also evidence that, following the election, a New York Post reporter began to inquire about Mayor Bloomberg's $1.2 million contribution to the Independence Party. In response to that inquiry, Mr. Haggerty prepared three checks which he falsely claimed SEQ had issued to poll watchers. The three checks formed the basis of the falsifying business record counts, which were dismissed before the case was submitted to the jury. 5 A. Background The Indictment in this case charged that Mr. Haggerty "stole property from Michael R. Bloomberg."5 At trial, the People called Matthew Paul, a financial investigator, to trace the money from Mayor Bloomberg to the Independence Party to SEO and Mr. Haggerty. On direct examination, Mr. Paul testified that a total of $1.2 million had been transferred from a Bloomberg Revocable Trust Account to the Independence Party. Mr. Paul's testimony on direct examination led to this exchange on cross-examination: Q: But my question is a little bit different. Don't you think to determine whose money it is you need to look at the trust documents? A: I don't know that. I don't know if this is -- I've seen the words "revocable trust" on personal accounts, so I don't know if this is a personal account or really a trust account, and if there are trustees, I don't know. * * * Q: [D]o you have an understanding of trust law in terms of who controls the trust? A: No. 5 The charging language of Count One read as follows: "[t]he defendants JOHN F. HAGGERTY, JR., and SPECIAL ELECTION OPERATIONS, LLC, in the County of New York, from in or about the late summer of 2009 through in or about June 2010, stole property from Michael R. Bloomberg and the value of the property exceeded one million dollars." (A. 252). 6 (A. 112-13). * * * Q: And so you also don't know who actually could approve the trust giving out funds if you didn't look at the terms of the trust; is that fair to say? A: No, I did not know who had approval. Recognizing that the cross examination had exposed a deficiency in their proof, the People sought a brief delay to locate a witness who could testify about the trust account. (A. 115)(the prosecutor: "[i]f Your Honor would permit us to bring in a witness to testify to the fact that that account ... really contains Mayor Bloomberg's personal money on a rebuttal case," then we can rest today); id. at 117 ("the fact that it is Mayor Bloomberg's personal money ... has never been an issue in this case until cross-examination of Mr. Paul"). After chiding the prosecutor for not being better prepared, the court granted the request. 6 6 The trial court said this: (A. 118-19). THE COURT: We will know eventually more about that trust and whether Bloomberg could authorize the payment from that trust account . . . . I mean, if that's the case, and he had the authority to do it, that's the end of that issue I would think .... [THE PROSECUTOR]: Well, Judge ... we never thought it was an issue. THE COURT: Well, you should have known more about the account. 7 The next trial day, the People called Marjorie Friday, a lawyer at the firm of Willkie Farr and the principal drafter of the trust agreement. Prior to Ms. Friday's testimony, the defense was allowed to see a redacted version of the trust agreement. {A. 135-40); id. at 128 (the prosecutor: "it's very short ... [i]t's not lengthy at all"). Over a best evidence objection, Ms. Friday was then permitted to testify that although the trust is a separate legal entity, Major Bloomberg "can take any amount of property at any time" from it. {A. 141, A. 150). According to Ms. Friday, the trust permitted the grantor to contribute to political parties or make other gifts, and Mayor Bloomberg was the grantor. (A. 149-51). Remarkably, the redacted trust agreement was kept not only from the jury but from the record. There was this exchange at sidebar: [THE PROSECUTOR]: Judge, we don't have an obligation to subpoena the record. It is our choice and we did not subpoena the record. We are not subpoenaing the record. We don't have the record. We don't control the record. My understanding is we will not get the record voluntarily, and, that's our position. We would like to call the witness. THE COURT: I think the issue is fully aired. We will proceed .... [DEFENSE COUNSEL]: Is the redacted version going to be made a court exhibit? I move that it is. [THE PROSECUTOR]: I don't have that authority because I don't have possession. (A. 140)( emphasis added). 8 B. Discussion Plainly, Ms. Friday's testimony was improperly admitted. As defense counsel argued unsuccessfully below, Ms. Friday was being asked to testify to the contents of a complex legal instrument, and "the best evidence rule" prohibits such testimony. (A. 141)(defense counsel: "[i]t's the best evidence rule"). As every trial lawyer knows, the "best evidence rule . . . requires the production of an original writing where its contents are in dispute and sought to be admitted." Schozer v. William Penn Life Ins. Co. ofN.Y., 84 N.Y.2d at 643. The rule applies with special force where the document at issue is "a deed, will, judgment or other dispositive instrument." Barker & Alexander, Evidence in New York State and Federal Courts, §10.1 at 1109. Only when the unavailability of the original document has been explained and the proponent of the substitute evidence has not procured its loss in bad faith may secondary evidence of contents be admitted. Id. at 1355. And the more important a document is to the resolution of the ultimate issue in the case, "the stricter becomes the requirement of the evidentiary foundation [establishing loss] for the admission of secondary evidence." Harmon v. Matthews, 27 N.Y.S.2d 656, 663 (Sup. Ct. Bronx Cty. 1941). The document setting forth the terms of the Bloomberg Revocable Trust was not lost or missing. It was present in the courtroom, albeit in redacted form. Rather than admit the redacted document, the court excluded it presumably 9 to keep Mayor Bloomberg's financial affairs from public airing. Indeed, it accepted the prosecutor's bizarre representation that he did not "have [the] authority" to allow the document even to become a court exhibit. The court acted as if the trust instrument was beyond legal process and available only as a matter of grace. Thus, as things now stand, we have only Ms. Friday's word for its terms, and that will not do. As noted, the trust instrument was treated with such reverence that it is not part of the record for this Court to review. The normal practice of making it a court exhibit and placing it under seal was not followed because the prosecutor claimed not to have "authority" to do so and the court seemingly agreed. We know of no other case where a critical document -- one whose contents are directly at issue -- has been kept not only from the jury but from reviewing courts at the behest of a witness. Cf. Davis v. Alaska, 415 U.S. 308, 320 (1974)("the State cannot . . . require the [defendant] to bear the full burden of vindicating the [witness'] interest in ... secrecy"). Nor do any of the exceptions to the best evidence rule apply. As noted, the trust agreement was not beyond the reach of the proponent. The People made the "choice" not to subpoena it. See Kearney v. City ofNew York, 92 N.Y. 617, 621 (1883)(the party seeking to offer secondary evidence "must show that he has in good faith exhausted ... [the] means of discovery [of the document] which 10 the nature of the case would naturally suggest"); Cf. Fed. R. Evid. 1 004(b )(excusing production where document "cannot be secured by any available process"). Likewise, the contents of the trust agreement were not "collateral to the issues." People v. Hamilton, 304 A.D.2d 500, 501 (1st Dept. 2003). That exception applies "in the case of merely incidental references to documents [when there is no] need for perfect exactitude in the presentation of the document's contents." 2 McCormick on Evid. §239 at 11 (6th ed.)(emphasis added). At trial, the People (and the court) recognized the significance of the trust agreement, which is why an adjournment was granted at the People's request. Finally, the admission of Ms. Friday's testimony cannot be deemed harmless for the simple reason that there is nothing in the record to permit this Court to make that assessment. See United States v. Holley, 463 F.2d 634, 637 n.2 (5th Cir. 1972)("[o]bviously the easiest way ... to demonstrate the harmlessness of the error in admitting testimony ... would be to quote [the document] to this court"). The prosecutor told the trial court that he lacked "authority" to follow that routine procedure. Being mayor has its privileges, but one of them is not the power to keep a critical document from this Court. In rejecting our claim below, the Appellate Division wrote only this: "We have considered and rejected defendants' arguments concerning the best evidence rule (see generally Schozer v. William Penn Life Ins. Co. of N.Y., 11 84 N.Y.2d 639, 643-644 [1994])." But Schozer is hardly controlling. There, this Court ruled that secondary evidence -- the testimony of a doctor and his report - were admissible to prove the contents of an x-ray that had been lost. Id. at 647 ("the existing case law does not per se preclude a party from introducing secondary evidence of an X ray, if the necessary showing of unavailability is made"). Here, by contrast, the trust agreement was not lost. It was in the courtroom, but its owner was unwilling to have the jury see it. 7 * * * What occurred at the trial was wrong. The rules of evidence apply to all witnesses, and in our country "[n]o man ... is so high that he is above the law." United States v. Lee, 106 U.S. 196, 220 (1882). Moreover, the notion that the 7 At the pages of the Schozer opinion that the Appellate Division cites, this Court wrote: Under a long-recognized exception to the best evidence rule, secondary evidence of the contents of an unproduced original may be admitted upon threshold factual fmdings by the trial court that the proponent of the substitute has sufficiently explained the unavailability of the primary evidence and has not procured its loss or destruction in bad faith. Loss may be established upon a showing of a diligent search in the location where the document was last known to have been kept, and through the testimony of the person who last had custody of the original. Indeed, the more important the document to the resolution of the ultimate issue in the case, the stricter becomes the requirement of the evidentiary foundation establishing loss for the admission of secondary evidence. Id. at 644 (citations omitted). There could be no showing of unavailability here because the trust agreement was available. 12 prosecutor lacked the "authority" to subpoena the trust agreement cannot be taken seriously. The document was not beyond the process of a court. To be sure, protecting Mayor Bloomberg's fmancial affairs was a worthy goal, but it could have been accomplished by other means. The trust agreement could have been redacted so that only the relevant portion was received. Simply stated, the course followed here -- flouting the rules of evidence to accommodate a witness's wishes -- is not one our law allows. See United States v. Nixon, 418 U.S. 683, 709 ( 197 4 )("[ t ]he very integrity of the judicial system and public confidence in the system depend on full disclosure of all the facts, within the framework of the rules of evidence"). 13 CONCLUSION For this reason, Mr. Haggerty's convictions should be reversed and a new trial ordered. Dated: New York, New York September 16, 2013 14 Respectfully submitted, Zuckerm:J_'1er LP ~ By:. __ ~~L---------------- Paul Shechtman 1185 A venue of the Americas New York, NY 10036 · (212) 704-9600 Attorney for Defendant-Appellant John F. Haggerty, Jr.