New York City, more than anywhere in the nation, is the venue for criminal prosecutions of financial professionals such as investment bankers, Wall Street traders, and compliance professionals. These kinds of cases might as well be considered a completely separate area of law from the more typical criminal practice involving the defense of charges such as Assault, Burglary, Criminal Possession of a Weapon, and the like. For one, understanding the financial markets and how they are regulated is often critical, as well as understanding the kinds of collateral consequences that such a person faces, as with FINRA, that may not be present in the context of the “average” arrest and criminal defendant. Whether you hold a series 3, series 6, series 7 or another certification, you, and more importantly your criminal attorney, must be aware of the legal and professional consequences before, not after, your case comes to a close.
From corporate enterprises and families to small businesses to the New York State government, budgets always seem to get tighter and tighter. By no means an excuse to commit a crime of deceit or fraud, it is far from atypical to hear of investigations and arrests involving Criminal Tax Fraud as set for New York State Tax Law Article 1800. With penalties in terms of dollars and prison looming overhead, what may be a simple mistake has the potential to devolve into a felony with crippling consequences. Whether through a criminal lawyer versed in tax crimes and laws or on your own, to best prevent yourself from running afoul of any of these statutes, and particularly a “tax fraud act” defined in New York State Tax Law 1801, knowledge is key. Serving only as a cursory analysis of the various criminal offenses associated with failing to remit, providing materially false or fraudulent information on a return, evading taxes and other misconduct, this entry will briefly address when Criminal Tax Fraud is also violates the Grand Larceny statute found in Article 155 of the New York Penal Law.
Most New York tax crime lawyers who are also experienced criminal defense attorneys represent clients charged with committing “tax fraud acts” as defined and identified in New York State Tax Law sections 1802, 1803, 1804, 1805 and 1806. These New York tax crimes, however, are certainly not the only potentially felony offenses you may be exposed to should you be arrested or indicted for an illegal withholding or stealing of tax monies. In fact, one of the more common tax crimes investigated in Queens, Brooklyn, the Bronx, Manhattan and even Westchester and Long Island, tax crimes relating to cigarettes has spiked in recent years. Codified throughout various subsections of New York Tax Law 1814, failure to pay taxes on certain tobacco products or the possession and transportation of untaxed cigarettes is can potentially lead to a significant period of incarceration. The ease by which prosecutors in New York can charge a person with violating one of the many crimes relating to improperly or untaxed cigarettes is highlighted by the subject of this blog entry, People v. Ran Yang, 2009 NY Slip Op 50793(U) [23 Misc 3d 1117(A)].
In pertinent part, New York City Administrative Code 11-4012 (a)(1) states that if you willfully attempt in any manner to evade or defeat any tax imposed [in this section] or the payment of that tax you are guilty of a misdemeanor. Further, New York City Administrative Code 11-4012 (b) makes it a misdemeanor crime if you possess or transport for the purpose of sale any unstamped or unlawfully stamped packages of cigarettes subject to tax. Alternatively, if you sell or offer for sale unstamped or unlawfully stamped packages of cigarettes it is also a misdemeanor crime. These two criminal violations of the New York City Administrative Code generally mimic, but are distinct crimes, from New York State Tax Law 1814(a)(1) and New York State Tax Law 1814(d). The latter of these crimes involve the illegal transportation and sale of unstamped or unlawfully stamped cigarettes while the former is a more generic tax crime.
What can easily be described as one of the best results one could achieve in a case involving allegations of New York Criminal Tax Fraud and Grand Larceny, the New York criminal defense lawyers and Grand Larceny defense attorneys at Crotty Saland PC secured a misdemeanor plea without probation or incarceration for a client accused of New York tax crimes in excess of $180,000. Initially, prosecutors sought our client’s surrender, arrest and potential indictment for crimes including Grand Larceny in the Second Degree, New York Penal Law 155.40 and Criminal Tax Fraud in the Second Degree, New York Tax Law 1805. If convicted of these crimes, our client faced as much as five to fifteen years in state prison on each count. Simply, it was alleged our client withheld these tax dollars and wrongfully filed returns.
Unfortunately, upon being advised of the investigation, the Assistant District Attorney spearheading the criminal case initially sought a felony plea. Crotty Saland PC argued that while sales tax monies may in fact be owed, the dollar amount suggested by prosecutors was incorrect. Regardless of the amount, our client did not have the intent to steal. Obviously, the defense pursued on our client’s behalf was very fact specific, but was not without its pitfalls, for example, one commits a Tax Fraud Act, the basis of any Criminal Tax Fraud crime, if one fails to file a return. In that regard, there were certain difficulties in a complete defense to the allegations. Despite these concerns, however, one of our criminal lawyers successfully argued that not only should the crime be prosecuted as a misdemeanor New York Criminal Tax Fraud 1802, but that the dollar amount was more than $40,000 less than the $180,000 claimed by the District Attorney’s Office.
New York City prosecutors and District Attorneys are eager to find financial frauds. Not only does it give law enforcement credibility in their equal pursuit of all criminal activity from the “streets to the suites,” but they also receive a portion of the restitution that they may recover.
While it is in no way fair to assert a restitution motive is the driving force behind the prosecution of these New York Grand Larceny and New York Tax crimes, it certainly gives prosecutors an added incentive to ferret out offenders whether their theft crimes occur in Manhattan, Brooklyn, Queens or even Westchester County. Whatever the reasoning may be, it is critical to understand that an allegation, arrest or indictment in New York for Grand Larceny, Criminal Possession of Stolen Property or Tax crime is in no way proof that you are in fact guilty. While your immediate future will undoubtedly by frightening, your criminal lawyer may be able to establish that prosecutors are just off the mark.
Not paying taxes is bad enough, but getting caught by the New York State Department of Taxation and Finance and then getting prosecuted by the Queens County District Attorney’s Office is far worse. Having represented numerous individuals for New York theft and tax fraud crimes, including one individual for alleged tax fraud crimes after wrongfully incurring a tax liability of $5 million, I know full well how aggressive prosecutors can be in their pursuit of making the State “whole.” Fortunately for that client, prosecutors agreed to accept forfeiture or re-payment of less than $2 million along with no incarceration or prison. Each case however, especially in these tumultuous economic times, is unique and arguably more difficult to resolve in such a manner. In fact, two New York City attorneys find themselves in a serious predicament, albeit with significantly less alleged fraud, and likely face a battle ahead.
According to the New York Law Journal, two attorneys, David Schnall and Ralph Duthely, were arrested and arraigned in Queens Criminal Court on numerous criminal charges including New York Criminal Possession of Stolen Property and New York Criminal Tax Fraud for failure to pay taxes over many years. Unrelated criminal acts, it is alleged that Schnall had a tax liability of $53,629 while Dudthely had a relatively smaller tax liability of $17,209. Although I am not familiar with Duthely’s counsel, Schnall is in the capable hands of John Diaz, a skilled practitioner whom I personally know having served alongside him for years in the Manhattan District Attorney’s Office.