The criminal charge of Scheme to Defraud in New York often arises in the context of intricate and large-scale thefts. As such, there is typically a Grand Larceny or other theft-related offense accompanying the Scheme to Defraud charge on a felony complaint or indictment. While it is tempting to see this overlap and view a Scheme to Defraud charge as just another form of larceny, doing so can have disastrous consequences for any criminal defense. Scheme to Defraud is quite clearly a distinct charge, with its own unique nuances, related statutory rules, and methods of proof.
In People v. Cassandro, 2017 NY Slip Op 02515 (1st Dept. 2017), the appellate court recently addressed the issue of whether a trial judge must instruct a jury on the requirement of proof involving “moral certainty” as to a Scheme to Defraud charge. The “moral certainty” standard comes from New York State Penal Law 155.05(2)(d). This statute has to do with the various methods by which a prosecutor can prove that a defendant committed a larceny. One such method of proof, or theory of a larceny case, can be theft by a “false promise.” “A person obtains property by false promise when, pursuant to a scheme to defraud, he obtains property of another by means of a representation, express or implied, that he or a third person will in the future engage in particular conduct, and when he does not intend to engage in such conduct or, as the case may be, does not believe that the third person intends to engage in such conduct.” PL 155.04(2)(d). This sounds a lot like the charge of Scheme to Defraud. The statute even uses the words “scheme to defraud” in its description of this kind of larceny! When the prosecution is based on this theory of larceny, a prosecutor cannot simply rely on the fact that the promise was never actually performed. They need to prove more. The prosecutor must prove that the evidence is completely consistent with fraudulent intent, inconsistent with innocent intent, and exclude every other explanation for the defendant’s actions other than their intent and belief that the promise would never be performed to a “moral certainty.” This is a difficult standard for any prosecutor to meet. It requires evidence that not only proves the defendant’s guilty, but also disproves alternative explanations for the defendant’s conduct.
One would think that if the rationale for this is to protect the innocent defendant whose prosecution is based on a “false promise” from punishment for an innocent mistake, that this same reasoning would apply to protect the person who engaged in the same conduct but instead just happens to be charged with Scheme to Defraud which happens to be in a different section of the Penal Law.
The Court in Cassandro held that this is not the case. That, instead, the “moral certainty” standard and rule applies only to larceny charges under Article 155 of the New York State Penal Law, the Article in which the rule is found, and not to Scheme to Defraud, which is found in Article 190 of the Penal Law. The Court in Cassandro did not provide any rationale for its decision, other than to say that the “moral certainty” standard simply isn’t found in the Scheme to Defraud Statute, but that is the law. Failing to recognize this small distinction can have a large impact on trial strategy and the way in which a criminal defense attorney and his or her client approach a Scheme to Defraud case. Relying on this additional layer of protection would be unfounded and misguided, because it will not be there when the legal instructions are given to the jury before their deliberations.
This blog entry is not an attempt to substitute for an examination of your particular case by your own criminal defense lawyer who will determine what is best for your case. Instead, this entry can give you the foundation to better understand Scheme to Defraud offenses. To better understand these crimes, possible defenses, and how you can best protect yourself, consult with your criminal lawyer.