Identity Theft and Criminal Possession of Stolen Property

Identity theft is an issue that affects more and more people in New York and the country every year. In this digital age, criminal charges relating to identity theft can become extremely complex and difficult to analyze. For example, can a person unlawfully “possess” someone’s credit card number without actually possessing the card itself? Is a person unlawfully assuming another person’s identity when they use a stolen credit card number? In New York, the answer to these questions was given in People v. Barden, 117 A.D.3d 216 (1st Dept. 2014) as “yes” and “no” respectively.

In Barden, the defendant was working with another businessman in a venture. On multiple occasions, the other businessman paid for the defendant to stay in hotels as part of the venture by supplying his credit card information to the hotels and giving them permission to charge the card, with certain spending limits. On one such occasion, the business associate agreed to pay for the defendant to stay at a Manhattan hotel for five days with an expense limit of $2,300. As a result, the business associate’s credit card information became linked with the defendant on the hotel’s computer system, and remained associated with the defendant even after that particular hotel stay. The defendant allegedly stayed at the hotel on subsequent occasions, billing the business associate’s credit card without his permission and even after their business relationship ended. Unauthorized charges eventually exceeded $10,000. The defendant continued to rack up charges with the hotel which eventually exceeded $50,000. After a jury trial, the defendant was convicted of Identity Theft in the First Degree, Criminal Possession of Stolen Property in the Fourth Degree, and lesser charges. He was sentenced to concurrent terms of 2 1/3 years to 7 years for identity theft, 1 1/3 to 4 years for possession of stolen property.

The most critical issue raised by this case, especially in the modern era, is whether and how a person can “possess” stolen intangible property, such as a credit card number (not the card itself). The answer to this questions affects so much of how laws are enforced and how we interact with each other in this digital age. In the context of this case, it is relevant to both the Identity Theft and Criminal Possession of Stolen Property counts. The Court in Barden ultimately decided that yes, you can possess intangible property unlawfully in circumstances such as this. It is important to not that in Barden, the defendant never actually knew the credit card number. He only had access and use of it due to the hotel’s mistaken linking of that credit card number to the defendant’s account. Nevertheless, the Court held that this was sufficient to sustain a guilty verdict on these charges. The implications of this are obviously far-reaching. Anyone with use or access to to a credit card or other payment account online, say for an employer, must be vigilant in ensuring that they have permission for each and every transaction they make using that account, or risk prosecution for theft-related charges.

In answer the the second questions posed above, the Court in Barden held that it is not enough that a person used another’s credit card number unlawfully to establish that they were assuming that person’s identity. The intent to assume another’s identity is a critical element of the Identity Theft statute under the New York State Penal Law. Without proof of that intent, a prosecution for that crime cannot stand. The Court in Barden reasoned that the defendant, in this particular case, never demonstrated any intent to mislead or deceive anyone into believing that he was, in fact, this business associate. If the defendant had forged a signature and submitted a fake form authorizing further use of the credit card, the answer might be different. But here, the defendant never made such a representation, and instead continued to use the credit card number under the pretense that he had permission from the card-owner, not that that he was in fact the card-owner.

This last point is perhaps the most critical point with respect the necessity of having an experienced and knowledgeable criminal defense lawyer on such a case. It is easy for a prosecutor, a juror or a judge to conflate the ideas of using someone else’s credit card number or identifying information, and actually purporting to be that person. Understanding this difference, and being aware of the nuances of this criminal charge, is essential to a successful defense.

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 Identity Theft offenses. To better understand these crimes, possible defenses, and how you can best protect yourself, consult with your criminal lawyer.

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Scheme to Defraud and The Martin Act

Financial crimes such as Scheme to Defraud and charges under the Martin Act are notoriously complex and difficult to understand and interpret. This complexity only becomes more significant when there are, as is typically the case with such criminal charges, hundreds of thousands of pieces of documentary evidence. In those circumstances, it is easy for prosecutors to make glaring oversights or unintentionally misrepresent the facts, and just as easy for criminal defense attorneys to let those negligent misdeeds go unnoticed. The question then becomes, “How does the Court deal with these prosecutorial errors when they become apparent.” This was exactly the question faced by by the New York County Supreme Court, Criminal Term in People v. Thompson, et al., 2016 NY Slip Op 50777(U) (N.Y. Co. Sup. 2016).

In Thompson, a white-collar criminal case involving a penny stock pump-and-dump scheme, the prosecutor presented numerous documents to the Grand Jury to obtain an indictment, including marketing emails to potential investors. Importantly, the prosecutor omitted highly relevant disclaimers that the defendants had included in those promotional emails, which were highly exculpatory with regard to the defendant’s intent. The Court found that the prosecutor should clearly have included the entire contents of those emails. While prosecutors are not generally obligated to to present all, or even any, evidence that is favorable to an accused person to the Grand Jury, the Court held that the prosecutor does have a duty of fairness to the accused which should prevent them from selectively omitting critical portions of a document that they are already presenting to the Grand Jury.

However, the Court in Thompson then gave the answer to the question above, which was that the indictment should still not be dismissed because, in this particular case, the Court did not believe that the prosecutor deliberately misled the Grand Jury, and those particular documents were just some of many that were presented, and not a critical part of the Grand Jury presentation.

With that issue resolved, the Court then turned to the issues of whether the prosecutor had submitted enough evidence to establish the Martin Act and Scheme to Defraud charges in the first place. Fraud under the Martin Act generally includes any deceitful practices contrary to principles of honesty and all acts tending to mislead the public. If that isn’t broad enough, it does not need to be alleged that classic common-law fraud was committed, or that any alleged victim even relied on any false statements made by the accused. However, it does have to be established that the accused obtained property as a result of the wrongdoing. In other words, there must be a causal link between the defendant’s actions and receiving money or property. In Thompson, the Court held that this was clearly established in that the evidence before the Grand Jury clearly established that the defendants received money as the direct result of misleading investor victims.

Criminal charges under the Martin Act are not to be confused with charges under the New York State Penal Law, such as Scheme to Defraud in the First Degree, Penal Law § 190.65, which was at issue in Thompson. Subdivision (a) of this statute applies when an accsued person is alleged to have engaged in a “systematic ongoing course of conduct with intent to defraud ten or more persons…by false and fraudulent pretenses” and obtains property from at least ten such persons. Subdivision (b) applies when the same conduct occurs, but it need only be directed at one victim if more than one thousand dollars are obtained. The financial thresholds under both this statute and the Martin Act are often not at issue, since prosecutions tend to arise from alleged large-scale schemes. In Thompson, the Court held that there was clearly evidence presented to the Grand Jury to establish that the defendants targeted more than ten people, and that it resulted in monetary gain far exceeding $1,000. Just as with the Martin Act, the Scheme to Defraud statute was clearly designed to be extremely broad and flexible so that it could apply to almost any kind of scheme that a person might think of in the future. While ensuring this kind of breadth is sensible, it also leaves a great deal of room for prosecutorial abuse, and mishandling by criminal defense attorneys.

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 and Martin Act offenses. To better understand these crimes, possible defenses, and how you can best protect yourself, consult with your criminal lawyer.

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The “Owner” of Property for the Purpose of Theft Crimes in New York

In New York, in order to be charged and convicted of a theft-related crime, it generally must be alleged that the defendant stole the property from an “owner” of that property. In other words, you can’t steal property from someone who doesn’t own that property, and you can’t steal property that rightfully belongs to you. This makes all the sense in the world, and doesn’t seem like it could ever lead to any ambiguity. However, it often does, particularly in the context of family and other close personal relationships.

In People v. Favors, 2017 NY Slip Op 07632 (3d Dept. 2017), the appellate court recently had to grapple with the issue of who was the “owner” of a cell phone that was taken by the person who purchased the phone and paid the phone bill from the person who it had been given to to use day-to-day. The Court held that “ownership is not limited to the title owner of the property. Rather, it is enough that [the victim] have a right to possession of the property superior to that of the thief.” What this means is that just because one person purchased an item and gave it to another person as a gift, does not give the purchaser the right to go take it back over the receiver’s objection. That will be considered a theft in New York. Importantly, specifically with regard to cell phones, just because the purchaser is also paying the phone bill and the phone plan is in the purchaser’s name, does not necessarily give the purchaser a right to that phone that is greater than the receiver. Just the opposite, the person who received the cell phone as a gift will be considered the “owner” of the phone even if the person who gave them the phone pays the phone bill and has the phone plan in his or her name.

It is easy to imagine a sensible, intelligent person coming the exactly the opposite conclusion in their day-to-day life. Not knowing that this is how the courts in New York will view a situation like this can lead to a significant misunderstanding that can lead to drastic, unexpected consequences. Thinking that you are going into an ex-girlfriend’s home to retrieve your cell phone, and turning around to find that you are facing felony Burglary charges can be quite a shock. Having an criminal attorney who not only understands the law surrounding this issue, but also understands the real-world, practical circumstances that many people in this kind of situation face is critical.

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 property crimes. To better understand these crimes, possible defenses, and how you can best protect yourself, consult with your criminal lawyer.

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