The People, Respondent,v.Lawrence P. Frumusa,, Appellant.

Brief

N.Y.May 3, 2017

Brief Completed: June27,2016 To Be Argued By: Robert J. Shoemaker Time Requested: 10 Minutes STATE OF NEW YORK COURT OF APPEALS THE PEOPLE OF THE STATE OF NEW YORK, Respondent, -vs- LAWRENCE P. FRUMUSA, Defendant-Appellant. BRIEF FOR RESPONDENT APL-20 16-00065 SANDRA DOORLEY District Attorney of Monroe County Attorney for Respondent By: Robert J. Shoemaker Assistant District Attorney Suite 832 Ebenezer Watts Building Rochester, New York 146 I 4 Phone: (585) 753-4810 Fax: (585) 753-4576 TABLE OF CONTENTS TABLE OF AUTHORITIES QUESTION PRESENTED PRELIMINARY STATEMENT STATEMENT OF FACTS ARGUMENT CONCLUSION The Civil Judgment of Supreme Court Was Properly Admitted. 1. Intent to Permanently Deprive a. Defendant's claim of innocent possession or intent to repay. 2. Standard ofReview: Abuse of Discretion 3. Harmless Error - I · .. ... II, Ill 2 4 9 13 14 16 17 TABLE OF AUTHORITIES CASES Balls v Tow-Motor Forklift Company, 66 F3d 743 (5th Cir 1995) . . . . . . . . . . . . . . . . . . . . . . 15 Malter of Brandon's Estate, 55 NY2d 206 ( 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 14 Melton v Deere & Company, 887 F2d 1241 (5th Cir 1989) ......... .. ......... ....... . 15 People v Argentieri, 66 AD 3d 558 (1st Dept 2009), lv denied 14 NY 3d 769 (20 1 0) . . . . . . . . 13 People v Becoats, 17 NY3d 643 (20 11 ), cert denied 132 S Ct 1970 (20 12) . . . . . . . . . . . . . . . 15 People v Blackna/1, 63 NY2d 912 ( 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 People v Brooks. 79 NY2d 1043 ( 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 People v Forlano, 19 AD2d 365 (1st Dept 1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 People v Frumusa, 134 AD3d 1503 (4th Dept 2015) . ....... ........ .... . ............. 3 People v Generoso, 219 AD2d 670 (2d Dept 1995), lv denied 87 NY2d 901 ( 1995) . . . . . . . . 12 People v Heiss. 221 AD2d 562 (2d Dept 1995), lv denied 87 NY2d 1020 ( 1996) . . . . . . . . 11, 12 People v Jennings, 69 NY2d 103 ( 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 14 People v Jensen, 86 NY2d 248 ( 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 People v Kaye, 295 NY 9 (I 945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 People v Marino, 271 NY 3 I 7 ( 1936) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 People v Mishkin. 134 AD2d 529 (2d Dept 1987), /v denied 71 NY2d 900 ( 1988) . . . . . . . . . 14 People vShears, 158 AD 577 (2d Dept 1913), affd209 NY 610 (19I3) .................. I4 People v Small, 12 NY3d 732 (2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 People v Williams, 41 AD 3d 1252 (4th Dept 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 .j j. STATUTES CPL440 .......... ... .... .. .......... .. . . ...... .... ...... . ......... . ..... .. . 3 Penal Law § 155.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Penal Law§ 155.40 ....... ... . . .......................... ...... ....... . . ...... 2 ·iii· Question: Answer of the Trial Court: Answer of a majority in the Appellate Division: QUESTION PRESENTED Was a civil default judgment properly admitted into evidence? Yes. Yes. PRELThflNARYSTATEMENT Defendant was tried and convicted of grand larceny in the second degree for secretly funneling certain credit card proceeds to bank accounts located in Pennsylvania, when the money should have remained under the control of Webster Hospitality Development LLC, a company of defendant's that was being run by a court-appointed receiver. Defendant was sentenced to four to twelve years in prison (Appendix [A] 13; 410). There has been no stay of the sentence and it appears defendant has been released to parole. This is an appeal from a judgment of Monroe County Court (Victoria M. Argento, J.) dated September 30, 2011, convicting defendant-appellant Lawrence P. Frumusa, after a jury verdict, of grand larceny in the second degree (Penal Law § 155.40 [1]). At issue on appeal is whether it was proper to admit, at trial, evidence of a civil contempt order against defendant's businesses for failing to return the misappropriated money. The Appellate Division, Fourth Department, affirmed defendant's conviction in a 3-2 decision. As relevant here, the majority concluded that County Court properly admitted evidence of a civil contempt order because the order had "significant probative value inasmuch as it showed that defendant's conduct did 2 not merely constitute poor financial management but, rather, that defendant, through his businesses, intended to deprive [Webster Hospitality Development LLC] of [certain] diverted money pennanently" (People v Frumusa, 134 AD3d 1503, 1504 [4th Dept 2015]). The contempt order did "not constitute a finding that defendant stole the money; rather, it demonstrat[ed] that defendant's businesses failed to abide by the earlier order to return money to WHD ... " (id.). Therefore, said the Appellate Division majority, the contempt order was properly admitted "as relevant evidence of defendant's intent to deprive WHO of the money by withholding it or causing it to be withheld from WHD pennanently" (id. [quotation omitted]). The dissent found that the contempt order was not Molineux evidence because it was proof of the same crime for which defendant was on trial (id. at 1506 [Centra and Lindley, JJ., dissenting]). And even if the contempt order did constitute Molineux evidence, said the dissent, its probative value did not outweigh its prejudicial effect (id. at 1507). A dissenting justice granted leave to appeal (27 NY3d 971 [March 18, 2016]; A 2). Defendant moved to vacate his conviction via a CPL 440 motion. County Court denied that motion on March 19, 2015. Defendant then sought leave to appeal that denial to the Fourth Department, which denied leave on December 9, 2015. 3 STATEMENT OF FACTS The charge stemmed from allegations that the defendant, who owned a hotel in the Town of Webster, surreptitiously funneled American Express charges to a PNC/National City bank account belonging to one of his wholly-owned LLCs, when those charges should have gone into certain accounts under the supervision of a court-appointed receiver. At trial, Marianela Hernandez testified that she was introduced to defendant so that they could engage in a hospitality investment in the Town of Webster (A 95). Together they formed Webster Hospitality Development, LLC (WHD) (A 96-97). Eventually, Ms. Hernandez became aware that defendant was commingling WHO's money into the accounts of some of his other businesses (A 106). Because of this, Ms. Hernandez initiated a lawsuit against defendant in Supreme Court, and in February of 2009 a receiver was appointed to run WHO (A 107; 500-507). Both defendant and Ms. Hernandez were thereafter prohibited from collecting any "monies, revenue or proceeds from the operation of WHO and/or hotel property" (A 112). Supreme Court additionally ordered that defendant was prohibited from "transferring, releasing, assigning, encumbering, or otherwise disposing of any assets or property" of WHO (A 111). 4 The receiver, Timothy Foster, testified at trial (A 147). According to Mr. Foster, he met with defendant in order to obtain financial records and information (A 153). However, defendant did not discuss American Express accounts or PNC bank accounts with Mr. Foster (id.). After a few months, the receiver became aware of the accounts to which the American Express money was being sent (A 156).1 The account had been opened, at defendant's direction, by a property manager for one of defendant's other, unrelated businesses. According to Christine Gfeller, the property manager, this request came in December of 2008, via e-mail (A 82). As part of the request, Ms. Gfeller was specifically asked to open an account in the name of Webster Hospitality Development, even though she did not work for that company (A 83 ). Two other individuals besides defendant originally had access to the WHD account opened by Ms. Gfeller, but by February or March of 2009 both of those indi victuals were removed from the account (A 87). From that point on, the account was accessible by defendant alone. 1The secret account is variously referred to as a PNC account and a National City account, due to the then-recent takeover of one company by the other (see Eric Dash, PNC Gets National City in Latest Bank Acquisition, NY Times, Oct. 24, 2008; A 82ln. 16-17). 5 Other witnesses for the People included the custodian of records for American Express (A 184), a general manager of the hotel (A 192), a Sheriffs investigator (A 236), and, importantly, William Astor, a reporter from the Rochester Business Journal (A 226). In his testimony, Astor discussed interviewing defendant for his newspaper. During that interview, defendant admitted that the American Express money was being deposited into an account of which the receiver was unaware: "W A [William Astor]: What is happening with the American Express? [Defendant]: Its .. its sitting in an account. Alright? W A: What account? [Defendant]: The account it was going to before .... The National City Account. WA: Ohok. [Defendant]: Its .. .it was just. .. its going there. They haven' t changed it. W A: And can you access that account? [Defendant]: Yeah. Yeah. Lets .. .lets wait here. W A: Can Tim Foster access that account? [Defendant]: He doesn't know about.. .he never asked about that account or any other accounts .... I know that the AmEx is going to mine I don't know where the other ones are going" (A 236, 522) 6 Eventually, defendant was held in contempt because he failed to tum over any of the money that had been inappropriately transferred to defendant's accounts (A 115). The order of Supreme Court, which was admitted and read from at trial, adjudged defendant's businesses "to be in contempt of Court in having willfully and deliberately failed to obey the terms of the order in [that] they have converted ... $249,196.28 ofWHD's monies and refused to comply with the express direction in the Order to pay over to WHD all monies received by each of them, or paid on their behalf, from a[n] ... account at National City Bank ... " (A 116; see A 517-519). In his summation, the prosecutor asked the jury to infer guilty knowledge based on the orders that Supreme Court directed at defendant and defendant's businesses: "February 9th, and this is just, what, a week after he opens the [secret Pennsylvania PNC] bank account? It is ordered that he shall be immediately enjoined .... " (A 313); "Again, February 13, in more detailed report .... " (A 313; see A 500-507); "Again, March 4, 2009 .... June 30th .... He's continued to be ordered. July 10, 2009 .... He's told once again ... " (A 314; see A 511-513; 514-516). That defendant did not respond to these orders, coupled with keeping the American Express account secret, showed that he was "trying to hide that account from the receiver and from Ms. Hernandez" (A 312-313). Defendant specifically asked Ms. 7 Gfeller to open the account, said the prosecutor, "because he doesn't want Holiday Inn to know what's going on" (A 312). Defendant was eventually convicted (A 373) and this appeal ensued. 8 ARGUMENT THE CIVIL JUDGMENT OF SUPREME COURT WAS PROPERLY ADMITTED The civil order was properly admitted because it was relevant to show the defendant's knowledge and lack of mistake in not only misappropriating funds, but in keeping and refusing to return the funds. 1. Intent to Permanently Deprive Prior to trial, the People sought to introduce a Supreme Court order holding defendant's corporations in contempt (A 529, 17-19). In court, the prosecutor proffered: ''The contempt order refers to some motions made by the receiver's attorney and Ms. Hernandez's attorney to find the defendant in contempt of failing to tum over money that was allegedly transferred to his other business's bank accounts when it was rightfully the property of Webster Hospitality. The order of contempt refers to funds that weren't turned over from February of 2009 to the present, and the date of this order is October 26th, 2009, which corresponds with an indictment which charges the 9 defendant with stealing property between December 9th, 2008, and June 15th, 2009. The purpose of the order is not to suggest that just because a judge found ... defendanC s company ... in contempt of Court, that they should convict him on this charge. It is really to show the defendanC s intent and his knowledge that he couldn't make these transfers. "I think really the defendant's only defense would be that he didn't know that he couldn't make these transfers or didn't intend to steal it, that essentially, because he was the majority partner of this company that he was allowed to transfer these to other businesses without offending any court orders; and here it is clear that not only was the defendant not allowed to do that, he was ultimately held in contempt for doing that. " .... So the purpose of the order would be for that, to show his knowledge of intent, that he wasn't allowed to keep that money" (A 529-530). This last sentence is crucial. In order to prove a larceny, the People are required to show "a purpose to exert permanent or virtually permanent control over the property taken" (People v Jennings, 69 NY2d 103, 118 [1986]; see Penal Law §§ 155.00 [3], [4]). The People's burden would "simply not" have been 10 "satisfied by an intent temporarily to use property without the owner's permission, or even an intent to appropriate outright the benefits of the property's short-term use" (People v Williams, 41 AD3d 1252, 1254 [4th Dept 2007]). The jury was charged on the requirement of an intent of permanent or near- permanent deprivation (A 337-338) and indeed, had it not been, the charge "could have misled the jury into thinking that any withholding, permanent or temporary, constituted larceny" (People v Blacknall, 63 NY2d 912, 914 [ 1984] [citation omitted; emphasis in original]). As the prosecution had anticipated, defendant argued in his closing that he maintained the right to appropriate and spend the money at issue. Counsel argued, "And so Mr. Frumusa decided that, you know what? I'm the majority stakeholder. I have a 75 percent interest in this LLC, I'm just going to open up these accounts and I'm going to do business. I'm going to continue to manage this place as I have continued to manage it the last two years ... " (A 296). The contempt order shows that defendant was explicitly and repeatedly told that the money he appropriated was not his. The order also reveals that defendant was given the opportunity to purge his contempt by paying the money back (A 519). Still, defendant kept the money. An illustrative situation is found in People v Heiss (221 AD2d 562 [2d Dept II 1995], lv denied 87 NY2d 1020 [1996]). In that case, a bank accidentally credited defendant's business's bank account with $38,592. Heiss "withdrew the money and refused to return it even after being informed of the error" (id. at 562). In that case, four civil judgments against the defendant were admitted at trial, but this was error because, inter alia, "[t]he judgments were not related to the alleged larceny" (id. at 563). In this case, on the other hand, the contempt order is related to the larceny. It allowed the jury to infer that, even once defendant was informed that the money was not his, he nevertheless refused to return it. This proved that defendant "intended permanently to deprive" the LLC of the money (People v Brooks, 19 NY2d 1043 [1992]; see generally People v Generoso, 219 AD2d 670 [2d Dept 1995], lv denied 87 NY2d 901 [1995]; People v Jensen, 86 NY2d 248, 252 [1995] ["The intent to 'deprive' prescribed in section 155.05 is satisfied by the exertion of 'permanent or virtually permanent control over the property taken"']). Defendant's claim that he rightfully or legally took the money in order to continue to manage his LLC is refuted by Supreme Court's contempt order. The order was admissible: "( w ]here guilty knowledge or an unlawful intent is in issue, evidence of other similar acts is admissible to negate the existence of an innocent state of mind" (Matter of Brandon's Estate, 55 NY2d 206, 211 [ 1982]). "The 12 probabilities of an honest mistake diminish as the number of similar transactions indicating a scheme or system increases" (People v Marino, 271 NY 317 [1936]). Similarly, so does the probability of an honest mistake diminish with each successive order. Each instance was a notice that the money he appropriated was not actually his to appropriate. a. Defendant's claim of innocent possession or intent to repay It matters not whether defendant appropriated the money for the benefit of Webster Hospitality Development (see Brief for Appellant [App Br] at 35). Once the receiver was appointed around mid-February, 2009 (A 507), defendant was "enjoined and restrained from collecting any monies, revenue or proceeds from the operation of WHD ... " (A 505). The money was simply not his to take. It is also irrelevant that defendant may have intended to repay the money he stole, but was unable to do so because of his growing inability to pay the money back (see App Br at 35-6). After all, courts may appropriately instruct juries that "an unrealistic hope of eventual repayment does not necessarily negate larcenous intent...' (People v Argentieri, 66 AD3d 558, 559 [1st Dept 2009], lv denied 14 NY3d 769 [2010]). In other words, "[t]he possibility that [defendant] may have hoped to be able to replace the funds at some later date does not suffice to avoid a finding of 13 larcenous intent" (People v Mishkin, 134 AD2d 529, 529 [2d Dept 1987], lv denied 71 NY2d 900 [1988]; see also People v Shears, 158 AD 577 [2d Dept 1913], affd 209 NY 610 [1913]; People v Kaye, 295 NY 9 [1945]). It would not have been possible for the People to trace the deposited funds to specific personal expenditures on the part of defendant (cf. App Brat 39-40) since "money is quintessentially fungible property" (People v Jennings, 69 NY2d at 122). Furthermore, the larceny occurred not when the money was spent or misspent, but when it was misappropriated from WHC. That defendant has continuously argued that he did not have larcenous intent when he surreptitiously directed the funds at issue to his secret bank accounts (see App Br at 39; A 296) only serves to reinforce the People's argument that the civil order was relevant and extremely probative. By putting his state of mind at issue, defendant rendered "evidence of other similar acts ... admissible to negate the existence of an innocent state of mind" (Matter of Brandon's Estate at 211). 2. Standard of Review: Abuse of Discretion Relevancy having been established, this Court reviews a trial judge's decision weighing the probative value of Molineux evidence against the potential 14 for undue prejudice for an abuse of discretion (People v Small, 12 NY3d 732, 733 [2009]). "Discretion, by definition, implies the power to decide a question either way, and it is not abused unless a right-minded individual could not have made the decision reached. It is no test of abuse that a reviewing Judge would have acted differently" (People v Forlano, 19 AD2d 365, 366-367 [1st Dept 1963, Steuer, J., dissenting]). "Indeed, the idea of discretion necessarily means that the court has room to decide the issue either way without committing error" (Melton v Deere & Co., 887 F2d 1241, 1245 [5th Cir 1989], abrogation recognized by Batts v Tow- Motor Forklift Co., 66 F3d 743 [5th Cir 1995]). Discretion being the standard of review here tips the scales heavily in favor of the People. It is a "very tolerant standard that purposefully insulates most judicial decisions respecting the management of a trial from retrospective appellate scrutiny" (People v Becoats, 17 NY3d 643, 658 [2011, Lippman, C.J., dissenting], cert denied 132 S Ct 1970 [2012]). The mere fact that a County Court Judge and three Appellate Division Justices decided one way, while two other Appellate Division Justices decided another way, is evidence that reasonable minds may differ on this issue. Given County Court's discretion in deciding whether to admit Molineux evidence (Small, supra), it would have been correct in declining to admit the evidence in this case; it was correct in admitting the evidence. 15 3. Harmless Error The evidence of defendant's guilt was "conclusively established" (App Br at 34) and overwhelming (see Respondent's Appellate Division Brief at 8)- bank records, witness testimony, and especially defendant's own admission to a newspaper reporter ensured that (see A 522 ["I know that the AmEx is going to mine"] [emphasis added]; A 310). Any error, whether in admitting the Molineux evidence, in the unpreserved argument that County Court gave no limiting instruction, or the unpreserved argument that the Prosecutor improperly commented on the Molineux evidence, was therefore harmless. 4. Conclusion Because the civil court order was relevant to defendant's larcenous intent, and because County Court did not abuse its discretion in allowing the order into evidence, the judgment should be affirmed. 16 Dated: June 27, 2016 17 Respectfully submitted, SANDRA DOORLEY Monroe County District Attorney ~~ BY: ROBERT J. SHOEMAKER Assistant District Attorney Ebenezer Watts Building Suite 832 Rochester, NY 14614 STATE OF NEW YORK COURT OF APPEALS THE PEOPLE OF THE STATE OF NEW YORK, Respondent. ~vs- LAWRENCE P. FRUMUSA, Defendant-Appellant. STATE OF NEW YORK) COUNTY OF MONROE) SS: CITY OF ROCHESTER) AFFIDAVIT OF SERVICE BY MAIL APL-2016-00065 LINDA GORDON, being duly sworn, deposes and says that deponent is not a party to this action, is over the age of eighteen ( 18) years and resides at Rochester, New York. That on the 28th day of June, 2016, deponent served three (3) copies of the Brief for Respondent upon Drew R. DuBrin, Esq., attorney for Defendant- Appellant in this action at The Monroe County Public Defender's Office, I 0 North Fitzhugh Street, Rochester, NY 14614, by depositing true copies of the same, enclosed in a postpaid properly addressed wrapper, in an official depository under the exclusive care and custody of the United States Postal Service within the State of New York. Sworn to before me this 28th day of June 2016. ~~/ N RY PUBLIC · Roxanne M. Emler Notary Pubfic, Stato or New Yotic 01EM6203185 qualified in Monroe County commission expires Mer. 30.~ 7 drc~J L)-l;y;b- LINDA GORDON