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Non Disclosure Agreements, Severance Packages, and Demanding Payment for Silence: Understanding New York Extortion and Blackmail in the Workplace

On television, the internet, radio and print media, it is far from atypical to hear of a dispute between parties – often time famous or affluent people – whereby one side shuts his or her mouth and the other provides an undisclosed sum of monies. Sounds reasonable enough, right? Heck, if they do that in Hollywood and in the corporate realm, why cant you demand compensation for your silence? You pay me and I promise not to expose any bad thing about you. Taking this belief a step further or at least in another direction, can you advise an employer that if he or she does not provide you some form of property, usually a sum of money, you are going to expose them as frauds? Is this whistle blowing? What if there is or was no fraud? Now does it become Blackmail or Extortion? It would be great if this blog would answer any of the scenarios above, or, for that matter, the question that likely caused you to land on the or NewYorkCriminalLawyerBlog.Com websites, but it does not. Each case is different as are all sets of facts. What doesn’t change, however, is the magnitude of criminal exposure you can face in New York if the path you choose to follow is one of Extortion or Blackmail even if you believed you had some legal and civil right to demand money, property or compensation in return for not exposing an employer, colleague, partner, friend, fling, flame, or subordinate (you get the point).

In People v Rackett, 2011 NY Slip Op 52314(U) (First Dist. Nassau Cty. 2011), an employer fired an employee for various and apparently legitimate reasons. Instead of saying, “damn you,” “please give me my job back,” “can I have another chance” or “&*@@$*!!!”, the defendant demanded that he be paid a severance package that provided him with a vehicle and half a year’s salary. Of course, due to the costs of healthcare, the defendant also requested that this package include COBRA for an extended period of time to cover his insurance. I mean, who wouldn’t? On its face, making these requests or demands, as much as you can demand when you are fired, are not problematic. They employer would potentially say yes or no and take the next steps. When does it get messy, criminal, and potentially land you in handcuffs under arrest and indictment or with your criminal defense lawyer before a judge? Rackett just may be the case that will assist you in finding that answer before making a grave mistake.

At bottom, Rackett threatened to hurt his employer’s business and good name when he demanded payment for silence of an alleged fraud. During a meeting with his employer, Rackett gave his employer a note that read:

“[Defendant] is aware of improper business practices that [employer has] taken part in and that upon [Defendant’s] termination to ensure these improprieties are kept secret from [emlpoyer’s] business partners and franchisees [Defendant] is to recieve (sic) a substantial severance package. Package incl. 6 months salary in one lump sum (Yearly sal = $34,000). Transfer of title for a 2007 Ford Expedition to [Defendant’s] name with clean bill of sale and continuation of [Defendant’s] COBRA benefits for 1 year, paid in full by RMNY. Then upon meeting of [Defendant’s] demands [Defendant] will then sign a non-disclosure document … Choose wisely and don’t underestimate [Defendant’s] resolve in following through with his intended agenda … These actions can place [employer] in a very uncomfortable position both legally and professionally. ”

What Mr. Rackett obviously did not think through when drafting and providing this heart warming letter was that in relevant part, New York Penal Law 155.05(2)(e) makes it a crime of Extortion to compel or induce another person, here an employer, to provide you property or to another third party by instilling in him a fear that if he does not give you what you seek you will either “expose a secret or publicize an asserted fact, whether true or false, tending to subject some person to hatred, contempt or ridicule” or you will “[p]erform any other act which would not in itself materially benefit the [Defendant] but which is calculated to harm another person materially with respect to his health, safety, business, calling, career, financial condition, reputation or personal relationships”

Applying PL 155.05(2)(e) and the two applicable subsections (the ones referenced are not all of them), the Court rightfully recognized that if completed, the offense satisfied the elements of Extortion. Because Extortion is form or means of larceny that is automatically felonious irrespective of the dollars taken, the defendant’s actions violated New York Penal Law 155.30(6). This class “E” felony is punishable by up to four years in prison. In the event the Blackmail was successful, then the aggregated amount of the property received would enhance the degree of the crime to a higher level offense. Here, because no monies or property was ultimately transferred, the crime is merely an attempted one and the degree is reduced by one level.

Extortion and Blackmail are serious crimes. Make no mistake about it. Hollywood actor, CEO of a Fortune 500 company or teacher, partner in a restaurant business or merely a boyfriend, if you are a victim of Grand Larceny or attempted Grand Larceny by Extortion or you are the person who is perpetrating a Blackmail crime the consequences are as drastic as they are grave. The embarrassment for a victim is often as devastating as the incarceration of the convicted. Don’t be foolish or naive. Don’t be reckless or cavalier. Understand the law before you violate it.

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