Court Opinion

ID: 4175472
Source: CourtListenerOpinion
Date Created: 2017-06-08 13:12:10.999883+00
Date Added: 2024-06-11T14:25:17.201476
License: Public Domain

This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 65
The People &c.,
            Respondent,
        v.
Lawrence P. Frumusa, &c.,
            Appellant.

            Drew R. DuBrin, for appellant.
            Kelly C. Wolford, for respondent.

FAHEY, J.:
            For over one hundred years, this Court has applied and
refined its holding in People v Molineux (168 NY 264 [1901]).
Here, we are presented with a more fundamental question
concerning how to identify such propensity evidence in the first
instance.    We are asked to determine whether the trial court

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abused its discretion as a matter of law by admitting into
evidence a contempt order issued in a civil action involving the
same funds defendant was criminally charged with stealing.     We
conclude that the contempt order did not constitute Molineux
evidence.    We further conclude that the trial court did not abuse
its discretion as a matter of law at the pretrial hearing in
concluding that the evidence was admissible because it was
relevant to defendant's larcenous intent and its probative value
was not substantially outweighed by the danger of undue prejudice
to defendant.
                                  I.
            In 2006, defendant entered into a joint business
venture with Marianela Hernandez to construct and operate a
hotel.   Defendant and Hernandez formed Webster Hospitality
Development LLC (WHD) for that purpose.    Hernandez initially
invested $1 million in exchange for a 25% ownership share in WHD.
Defendant had a 75% ownership share and acted as WHD's managing
member, with authority to obtain financing, manage the hotel's
accounting, and pay creditors.
            The hotel opened in 2007, and despite a steady flow of
customers, the hotel quickly encountered financial problems.
Hernandez became suspicious of defendant's business practices
after she learned of liens placed on the property by unpaid
construction contractors.    Sometime in 2008, Hernandez discovered
that some of the hotel's proceeds were being transferred into

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accounts defendant held for his other separate businesses.    She
consulted attorneys and commenced a civil action against
defendant in New York Supreme Court in early 2009.    Defendant was
indicted on the criminal charge of grand larceny in the second
degree in September 2010.   The People alleged that defendant
stole approximately $300,000 from WHD between December 2008 and
June 2009 by diverting credit card proceeds from the hotel to
accounts that he held for his other businesses.
          Several orders entered by Supreme Court in the civil
action were admitted into evidence during the criminal trial
without objection by defendant.    In February 2009, Supreme Court
appointed a receiver to take control of WHD and prohibited both
defendant and Hernandez from transferring, encumbering, or
otherwise disposing of WHD's assets, and from taking any action
whatsoever on behalf of WHD.   The receiver, Timothy Foster, was
authorized to oversee all WHD operations, hire a management
company to continue operation of the hotel, and manage all bank
accounts and accounting for WHD.   Defendant and Hernandez were
ordered to pay over to Foster any WHD assets currently in their
possession and were further enjoined from collecting any money on
behalf of WHD.
          In June 2009, Hernandez and Foster learned that
defendant had opened bank accounts in the names of his other
businesses at PNC Bank and had been transferring credit card
proceeds from the hotel into those bank accounts.    Motion

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practice in the civil action followed, and in October 2009,
Supreme Court issued the contempt order at issue.
            That contempt order held three of defendant's other
businesses in contempt for failing to obey a July 2009 order of
the court directing defendant's businesses to turn over all WHD
funds deposited into the PNC accounts.    The contempt order stated
that defendant's businesses had "willfully and deliberately
failed to obey the terms" of the earlier order "in that they have
converted $249,196.28 of WHD's monies and refused to comply with
the express directions in the [earlier order] to pay over to WHD
all monies received by each of them."    In addition, the contempt
order stated that the conduct of defendant's businesses "was
calculated to and actually did defeat, impair, impede and
prejudice the rights and remedies of WHD."    Defendant's
businesses were allowed to purge themselves of the contempt by
paying a fine and returning the funds to WHD.    Hernandez and
Foster testified at trial that neither defendant nor his
businesses ever returned those funds to WHD.
            Before defendant's criminal trial began, the People
sought permission to introduce the contempt order as Molineux
evidence.    The People anticipated that defendant would contend at
trial that he did not act with larcenous intent when he took the
funds from WHD, and the People argued that because defendant was
the majority owner of WHD, his intent could not be easily
inferred from his actions.    The People contended that the

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contempt order was relevant to defendant's intent in that he
failed to return to WHD the funds that his businesses were
ordered to turn over.    Defendant opposed the motion, arguing that
the jury might afford undue weight to the contempt order and that
the burden of proof was "completely different" in a civil case.
For those reasons, defendant asserted that the prejudice to
defendant would outweigh any probative value of the contempt
order.   The court granted the People's Molineux application.
            During the criminal trial, defendant did not dispute
that he transferred WHD funds to the PNC accounts in violation of
court orders prohibiting him from doing so.    He contended,
however, that he did not act with larcenous intent because when
he took the funds, he merely intended as the managing member of
WHD to ensure the continued operation of the business and the
payment of its creditors, and his actions were the result of his
concerns regarding the competence of Foster as receiver.
            The People presented evidence that defendant opened the
accounts at PNC Bank before a receiver was appointed in the civil
action, and defendant began transferring credit card proceeds to
those accounts two days after Foster was first appointed
receiver.    Foster testified that defendant never informed him of
the existence of those accounts, despite a lengthy meeting the
two had in late February 2009.    By March of 2009, the PNC
accounts were accessible only by defendant.    Furthermore,
defendant gave an interview to a local business newspaper in

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August 2009, in which he admitted that certain credit card
proceeds paid to the hotel were being transferred to an account
he referred to as "mine," and that Foster did not know about that
account because he never asked about it.      According to the
People's evidence, between January and June of 2009, defendant
transferred approximately $299,500 of WHD's credit card revenue
into the PNC accounts.    The jury found defendant guilty as
charged.
            On appeal, a divided Appellate Division affirmed the
judgment.    The court held that the contempt order was properly
admitted as relevant to defendant's intent and that the probative
value of the order outweighed its potential prejudice (see People
v Frumusa, 134 AD3d 1503, 1504 [4th Dept 2015]).       The two
dissenting Justices concluded that the contempt order was not
Molineux evidence, but even if it was, its probative value did
not outweigh its prejudicial effect, inasmuch as the contempt
order constituted "a judicial finding of defendant's larcenous
intent" (id. at 1507 [Centra & Lindley, JJ., dissenting]).       One
of the dissenting Justices granted defendant leave to appeal to
this Court (27 NY3d 971 [2016]).      We now affirm.
                                II.
            Initially, we conclude that the contempt order was not
Molineux evidence.    "[T]he familiar Molineux rule states that
evidence of a defendant's uncharged crimes or prior misconduct is
not admissible if it cannot logically be connected to some

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specific material issue in the case, and tends only to
demonstrate the defendant's propensity to commit the crime
charged" (People v Cass, 18 NY3d 553, 559 [2012] [emphasis
added]).   Molineux evidence is presumptively inadmissible unless
it is relevant to some material issue in the case and the trial
court determines in its discretion that the probative value of
the evidence outweighs the risk of undue prejudice to the
defendant (see id. at 560; People v Alvino, 71 NY2d 233, 242
[1987]).
           The Molineux rule "'is based on policy and not on
logic'" (People v Arafet, 13 NY3d 460, 465 [2009], quoting People
v Allweiss, 48 NY2d 40, 46 [1979]).    "It may be logical to
conclude from a defendant's prior crimes that he is inclined to
act criminally, but such evidence 'is excluded for policy reasons
because it may induce the jury to base a finding of guilt on
collateral matters or to convict a defendant because of his
past'" (Arafet, 13 NY3d at 465, quoting Alvino, 71 NY2d at 241).
           "Molineux analysis is limited to the introduction of a
prior uncharged crime or a prior bad act" (People v Brewer, 28
NY3d 271, 276 [2016]).   Although we have extended the Molineux
rule to allow for admissibility of subsequent crimes or bad acts
under certain circumstances (see generally People v Ingram, 71
NY2d 474, 480-481 [1988]), the common thread in all Molineux
cases is that the evidence sought to be admitted concerns a
separate crime or bad act committed by the defendant.    This

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becomes clear when one considers the reason for the rule: "When
we limit Molineux or other propensity evidence, we do so for
policy reasons, due to fear of the jury's human tendency to more
readily believe in the guilt of an accused person when it is
known or suspected that he has previously committed a similar
crime" (Brewer, 28 NY3d at 276 [internal quotation marks
omitted]).    In other words, the courts limit the admission of
Molineux evidence because of the danger that the jury might
conclude that if the defendant did it once, he or she likely did
it again.
            Where, as here, the evidence at issue is relevant to
the very same crime for which the defendant is on trial, there is
no danger that the jury will draw an improper inference of
propensity because no separate crime or bad act committed by the
defendant has been placed before the jury.    The People were not,
for example, seeking to introduce evidence that defendant had
previously embezzled money from a separate business several years
before.   Rather, the contempt order stated that defendant's
businesses had failed to return to WHD the very same funds that
defendant was on trial for stealing from WHD.    It therefore would
be impossible for the jury to conclude from the contempt order
that defendant had a "propensity" to steal or otherwise commit
crime.
            "That the People classified it as Molineux evidence,
and the trial court considered it on that basis, does not prevent

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us from concluding it was not," because the parties' arguments
below regarding the probative value of the contempt order and its
prejudicial effect "would remain the same" (Brewer, 28 NY3d at
276 n 1).    Nor do we seek "to discourage the People from bringing
a challenging or problematic evidentiary issue to the attention
of the court and defendant before trial" (id.).
                                III.
            Under general evidentiary principles, "'all relevant
evidence is admissible unless its admission violates some
exclusionary rule'" (People v Harris, 26 NY3d 1, 5 [2015],
quoting People v Scarola, 71 NY2d 769, 777 [1988]).    Here, as
explained, the contempt order is not Molineux evidence and
therefore its admission does not violate that exclusionary rule.
            We agree with the People that portions of the contempt
order were relevant to defendant's intent in committing grand
larceny in the second degree.    The People were required to prove
that defendant acted with intent to "deprive" WHD of its property
(see Penal Law § 155.05 [1]).
            "To 'deprive' another of property means (a)
            to withhold it or cause it to be withheld
            from him permanently or for so extended a
            period or under such circumstances that the
            major portion of its economic value or
            benefit is lost to him, or (b) to dispose of
            the property in such manner or under such
            circumstances as to render it unlikely that
            an owner will recover such property" (Penal
            Law § 155.00 [3]).
The People were therefore required to prove that when defendant
transferred the funds, he was without legal authority to do so,

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and that he did so not to benefit WHD, as he claimed, but rather
with the intent to deprive WHD of those funds permanently.
            The Appellate Division correctly concluded that the
contempt order was relevant to prove defendant's larcenous intent
because "it showed that defendant's conduct did not merely
constitute poor financial management but, rather, that defendant,
through his businesses, intended to deprive WHD of the diverted
money permanently" (Frumusa, 134 AD3d at 1504).    The fact that
defendant's businesses failed to return the funds to WHD after
they were ordered by Supreme Court to do so makes it less likely
that defendant took the funds to benefit WHD, and more likely
that he took them with the intent to permanently deprive WHD of
the money.
            Defendant contends that the contempt order did not
affirmatively disprove his theory that he acted with the intent
to assure the continued viability of the business.    That is true,
but defendant's argument misapprehends the nature of relevant
evidence.    "Evidence is relevant if it has any tendency in reason
to prove the existence of any material fact, i.e., it makes
determination of the action more probable or less probable than
it would be without the evidence" (Scarola, 71 NY2d at 777).      The
fact that the contempt order, standing alone, would not prove
defendant's larcenous intent beyond a reasonable doubt does not
mean that it was irrelevant.    Again, the continued retention of
WHD's funds by defendant's businesses, in defiance of a court

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order to return those funds, is relevant to whether defendant
took the money with intent to permanently deprive WHD because it
makes it more likely that this was defendant's intent in
committing the taking.
          Defendant relatedly contends that his intent could not
be inferred from the fact that he failed to return the money to
WHD because other evidence presented at trial -- namely, his
personal bankruptcy and the fact that his other businesses were
suffering financially -- suggested that he was unable to return
the funds at the time the contempt order was issued.     That
argument goes to the weight and not the admissibility of the
contempt order.   Defendant was free to argue during trial that
the jury should draw a different inference from the contempt
order, i.e., that his businesses were simply unable to comply
when ordered to return the funds to WHD, than the inference of
intent for which the People argued.
                                IV.
          Relevant evidence "may still be excluded in the
exercise of the trial court's discretion if its probative value
is substantially outweighed by the potential for prejudice"
(Harris, 26 NY3d at 5 [internal quotation marks omitted];
see Scarola, 71 NY2d at 777; People v Davis, 43 NY2d 17, 27
[1977], cert denied 435 U.S. 998 [1978], cert denied sub nom. New
York v James, 438 U.S. 914 [1978]).     We review the trial court's
exercise of its discretion in this balancing analysis for an

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abuse of discretion as a matter of law (see Brewer, 28 NY3d at
277).
          "Plainly, almost all relevant, probative
          evidence the People seek to admit in a trial
          against a defendant will be, in a sense,
          prejudicial. The People generally wish to
          admit evidence supporting the theory that a
          defendant is guilty of the crime for which he
          is charged. Evidence which helps establish a
          defendant's guilt always can be considered
          evidence that 'prejudices' him or her. But
          the probative value of a piece of evidence is
          not automatically outweighed by prejudice
          merely because the evidence is compelling"
          (Brewer, 28 NY3d at 277).
Rather, the court must weigh the probative value of the evidence
against the danger of unfair or undue prejudice to the defendant
(see Scarola, 71 NY2d at 777; Davis, 43 NY2d at 27).
          It was not unduly prejudicial to defendant that the
contempt order stated that defendant's businesses had funds
belonging to WHD and that the businesses failed to return those
funds to WHD.   The contempt order was not entered against
defendant himself and, as noted, defendant conceded at trial that
he took the money from WHD and transferred it to accounts in the
names of his other businesses without legal authority to do so.
Furthermore, as explained above, it was relevant to defendant's
larcenous intent that his businesses failed to return the funds
to WHD after being ordered to do so.
          Granted, the contempt order was not without the
potential to unduly prejudice defendant.   As defense counsel
noted in opposition to the People's Molineux application, there

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are different burdens of proof in civil and criminal cases.       The
contempt order also stated that the actions of defendant's
businesses were "calculated to and actually did defeat, impair,
impede, and prejudice the rights and remedies of WHD."     The
dissenting Justices at the Appellate Division concluded that this
might be viewed by the jury as constituting a "judicial finding
of defendant's larcenous intent," and that a limiting instruction
should have been given to minimize any potential prejudice to
defendant (Frumusa, 134 AD3d at 1507 [Centra & Lindley, JJ.,
dissenting]).   Defendant never requested a limiting instruction,
however, and we therefore cannot address that issue.   We
reiterate, however, that a limiting instruction generally may be
used to minimize any potential undue prejudice from the admission
of evidence, even outside the Molineux context (see generally
Harris, 26 NY3d at 5).
           Defendant further contends that certain remarks by the
prosecutor during summation were improper and contravened the
prosecutor's assertions to the court during the pretrial hearing
that the contempt order would be introduced to support intent
rather than to suggest that the jury should ratify the judge's
findings in the contempt order.   We cannot address that
contention, however, because defendant failed to object to those
remarks.   Instead, our review is limited to the court's ruling at
the time of the pretrial hearing regarding the admissibility of
the contempt order.

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            For the foregoing reasons, we cannot conclude on this
record that the probative value of the contempt order was so
substantially outweighed by the danger of undue prejudice to
defendant that the trial court abused its discretion as a matter
of law by admitting it into evidence.
            Accordingly, the order of the Appellate Division should
be affirmed.
*   *   *    *   *   *   *   *     *      *   *   *   *   *   *   *   *
Order affirmed. Opinion by Judge Fahey. Chief Judge DiFiore and
Judges Rivera, Stein, Garcia and Wilson concur.

Decided June 8, 2017

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