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The Moral Certainty Standard in a New York Grand Larceny Case: A Criminal Law Assessment of Theft by False Promise with a Touch of Scheme to Defraud

In in a previous blog entry I addressed what constitutes a New York Scheme to Defraud under Penal Law 190.60 and 190.65. Experienced New York Grand Larceny defense attorneys, specifically those familiar with white-collar theft and fraud crimes, know that a Scheme to Defraud indictment often comes hand-in-hand with the charge of Grand Larceny. Many times, this Grand Larceny is premised in “false promises.” Logically, a Scheme to Defraud must be set into action by a lie; the scheme is predicated on a false promise or false representation. Thus, if you are involved in a Scheme to Defraud in Manhattan, Brooklyn, Queens, the Bronx or Westchester County, you likely may also be charged with “larceny by false promise” as defined under New York Penal Law 155.05(2)(d). Remember, that such a larceny is the manner in which the crime is perpetrated. The potential punishment or degree of the offense is still dictated by the value or amount of the actual theft.

In the context of Scheme to Defraud, a false promise is a representation that the schemer makes promising some future conduct will occur. This if often part of an overarching Scheme to Defraud (whereby the schemer ultimately steals property), without the intention to ever follow through with promised conduct. For instance, suppose I run a business that is going bankrupt. In a scheme to defraud, I tell a twenty investors that my company is gaining significant profits and they will surely receive a high amount of return in the next fiscal quarter. I fully intend to take their money and head for my villa in the south of France. In this hypothetical, I have committed a larceny by false promise and a Scheme to Defraud. The investors were never actually going to receive any profits from my failing business, and I never intended to give them any return on their investment as I promised.

Under New York law, the promise may be express or implied, but the essential component of larceny by false promise is whether the schemer/defendant intended or believed that the promise would NOT be performed. As New York PL 155.05(2)(d) states, it must be shown that “the facts and circumstances of the case are wholly consistent with guilty intent or belief and wholly inconsistent with innocent intent or belief.” This is a heightened standard, which is not altogether straight forward, is one that any New York criminal lawyer must be aware of to provide a proper defense for his/her client. The prosecution cannot base their conviction on the fact alone that the defendant did not complete his/her promise (maybe you truly tried, but just failed in your obligations). Instead, they must prove to a moral certainty that the defendant intended or believed the promise would not be performed in order to convict the defendant of larceny by false promise. Again, this false promise is the means by which the larceny occurred. New York Assistant District Attorneys must also prove certain value levels in order to satisfy the felony elements of Grand Larceny whether it be in the First, Second, Third or Fourth Degree.

This heightened standard has been written into the penal code largely to differentiate this criminal offense (larceny by false promise) with civil wrongs like breach of contract or nonperformance. If I don’t perform on our contract/agreement I will likely be liable of breach (and thus have to pay you damages), but I may not have induced you by a false promise into a scheme to intentionally defraud, which would be criminal (and for which I could go to jail). For example, in Perry v. Ferry 142 App. Div.2d 994 (1988) the defendant sold advertising space to local merchants in a book which he promised would be published within the year. The defendant left town, did not contact the merchants, and did not publish the book within the agreed time. However, the defendant did publish the book two years later. The court overturned the conviction of larceny by false promise because evidence did not show to a “moral certainty” that at the time he was soliciting the ads, he did not intend to keep his promise to publish the book. The court wrote, “the proof was inconsistent with intent”–specifically because the defendant actually did spend time and money to publish the book. Perry is a clear example of a civil wrong (he did breach the contract by not performing in a timely fashion and not reaching out to the merchants), but not a criminal violation.

On the other hand, People v. Carey, 103 App. Div.2d 934 (1984) demonstrates when a false promise meets the heightened standard rising to criminal liability. Carey was dating a widow and told her that he needed money for a cable television business he was starting. The prosecution was able to prove that Carey, in fact, never intended to start the business and had made up this story only to fraudulently gain the money. Carey never even completed any paperwork necessary for starting such a business, and instead had gone on several spending sprees using the widow’s cash, including a trip to Florida with another woman. Clearly, the court applied the standard correctly. No doubt Carey was scheming the poor widow the entire time, and never intended to make good on his promise of starting a business. He was properly convicted of larceny by false promise. When contrasted with Perry, it is easier to see how the court applies this heightened (and somewhat complicated) standard for larceny by false promise.

To learn more about the degrees and types of Grand Larceny in New York, including larceny by false promise and Scheme to Defraud, follow the highlighted links. Additional information, from analysis of violent and white collar criminal statutes and a review of case law further defining those offenses, follow the links below to the websites and blogs.

The two New York criminal defense attorneys who founded Crotty Saland PC previously served as prosecutors with the Manhattan District Attorneys Office. Crotty Saland PC represents those accused of all Grand Larceny, Scheme to Defraud and other white collar theft crimes throughout the New York City region.

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