Court Opinion

ID: 3134072
Source: CourtListenerOpinion
Date Created: 2015-10-22 15:09:54.647672+00
Date Added: 2024-06-11T11:53:56.940477
License: Public Domain

State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: October 22, 2015                   106816
________________________________

THE PEOPLE OF THE STATE OF
   NEW YORK,
                    Respondent,
      v                                     MEMORANDUM AND ORDER

NORMAN J. MICHAELS JR.,
                    Appellant.
________________________________

Calendar Date:   September 15, 2015

Before:   Peters, P.J., Lahtinen, McCarthy and Lynch, JJ.

                             __________

      Zuckerman Spaeder, LLP, New York City (Paul Shechtman of
counsel), for appellant.

      John M. Muehl, District Attorney, Cooperstown (Michael F.
Getman of counsel), for respondent.

                             __________

Peters, P.J.

      Appeal from a judgment of the County Court of Otsego County
(Lambert, J.), rendered July 21, 2014, upon a verdict convicting
defendant of the crimes of grand larceny in the second degree and
scheme to defraud in the first degree.

      Defendant, an insurance broker of nearly 40 years, was
charged with crimes stemming from his involvement in an allegedly
fraudulent scheme in which more than 400 people were enrolled in
health insurance policies for which they were purportedly not
eligible. The trial evidence established that, in January 2008,
the Otsego County Chamber of Commerce (hereinafter the Chamber)
and MVP Health Insurance Company entered into an agreement
whereby members of the Chamber could purchase health insurance
                              -2-                106816

from MVP under the Chamber's group policy. The "Eligibility"
provision of the agreement provided that, in order to be eligible
for coverage, an individual or entity "must satisfy [the
Chamber's] eligibility requirements." Notably, the agreement did
not purport to define such eligibility requirements; instead, it
expressly stated that the Chamber would establish the criteria
for insurance under its group policy.1

      In the fall of 2008, defendant and codefendant Robert R.
Robinson, the chief executive officer of the Chamber, entered
into an arrangement whereby defendant's company became the broker
of record for the Chamber. Pursuant to that arrangement,
defendant agreed to perform customer service for those
individuals who had purchased MVP insurance policies through the
Chamber, in return for which he would receive a brokerage
commission from MVP of five percent of the premiums that it
collected. In 2010, a new class of Chamber members arose –
referred to as "associate members" – who only took advantage of
the Chamber's insurance plan. According to defendant, Robinson
explained to him that any member organization that became a
member of the Chamber could access for its own constituents the
benefits associated with membership in the Chamber regardless of
the individual's connection to Otsego County. Testimony showed
that a number of organizations and associations thereafter joined
the Chamber and began marketing MVP insurance to their members.
Members of such organizations who elected to purchase MVP
insurance through the Chamber group policy became "associate
members" of the Chamber and were charged a monthly $5 Chamber
membership fee and a $5 administrative fee in addition to their
health insurance premiums. By September 2010, defendant had
enrolled more than 400 associate members in MVP insurance though
the Chamber's group policy, as a result of which he was paid
approximately $63,000 in commissions from MVP. Upon discovering
that individuals who had no connection to Otsego County were

    1
        The only conditions placed on the eligibility
requirements were that they be established in a manner consistent
with state and federal laws and regulations, applied in a fair
and consistent manner, and similar to those adopted for other
health care options.
                              -3-                106816

being enrolled through the Chamber group policy, MVP cancelled
all insurance policies that had been issued through the Chamber
agreement, regardless of their legitimacy.

      Almost three years later, defendant and Robinson were
charged by indictment with, as relevant here, grand larceny in
the second degree, grand larceny in the third degree and scheme
to defraud in the first degree.2 The bill of particulars
specified that defendant enrolled applicants into MVP insurance
plans offered through the Chamber knowing that those individuals
were ineligible for such coverage because they were not
legitimate members of the Chamber, and that defendant and
Robinson wrongfully created a new class of "[a]ssociate
[m]embers" in the Chamber to promote this allegedly impermissible
arrangement. Defendant's case was severed from that of Robinson
and, following a jury trial, he was acquitted of grand larceny in
the third degree but convicted of grand larceny in the second
degree and scheme to defraud in the first degree. County Court
sentenced him to six months in jail, five years of probation and
500 hours of community service, and imposed a $5,000 fine.

      Defendant appeals, asserting that his convictions for grand
larceny and scheme to defraud are not supported by legally
sufficient evidence. A person is guilty of grand larceny in the
third degree when he or she, "with intent to deprive another of
property or to appropriate the same to himself [or herself],
. . . wrongfully takes, obtains or withholds such property from
an owner" and the value of the property exceeds $50,000 (Penal
Law § 155.05 [1]; see Penal Law § 155.40 [1]; People v Waugh, 52
AD3d 853, 854 [2008], lv denied 11 NY3d 796 [2008]). Larcenous
intent "'is rarely susceptible of proof by direct evidence, and
must usually be inferred from the circumstances surrounding the
defendant's actions'" (People v Brown, 107 AD3d 1145, 1146
[2013], lv denied 22 NY3d 1039 [2013], quoting People v Russell,
41 AD3d 1094, 1096 [2007], lv denied 10 NY3d 964 [2008]). In a
prosecution for larceny by trespassory taking, it is a defense

    2
        A count of the indictment charging defendant with
insurance fraud in the second degree was dismissed prior to
trial.
                              -4-                106816

"that the property was appropriated under a claim of right made
in good faith" (Penal Law § 155.15 [1]). A good-faith claim of
right negates larcenous intent, and the People have the burden of
disproving such defense beyond a reasonable doubt (see People v
Zona, 14 NY3d 488, 492-493 [2010]; People v Green, 5 NY3d 538,
542 [2005]).

      In analyzing the legal sufficiency of a conviction, we must
view the evidence in a light most favorable to the People and
"determine whether there is any valid line of reasoning and
permissible inferences which could lead a rational person to the
conclusion reached by the jury on the basis of the evidence at
trial and as a matter of law satisfy the proof and burden
requirements for every element of the crime charged" (People v
Bleakley, 69 NY2d 490, 495 [1987] [citation omitted]; see People
v Lee, 129 AD3d 1295, 1297 [2015]). Here, the People's entire
case rested upon the theory that the approximately 400
individuals enrolled by defendant, having no connection to Otsego
County, were ineligible to receive MVP insurance coverage through
the Chamber group policy. To that end, the People presented the
testimony of two MVP employees who stated that, in addition to
being a member of the Chamber, MVP required that an individual or
entity have some residential or business connection to Otsego
County in order to receive insurance under the Chamber group
policy. However, the agreement between MVP and the Chamber does
not contain any such geographic restriction. Rather, as noted,
the contract expressly grants to the Chamber the power to
determine eligibility requirements for insurance through its
group policy. The testimony as to what MVP may have intended,
but failed to expressly state in the agreement, cannot serve to
elevate defendant's conduct to a crime, as "[t]he written terms
and conditions of a contract define the rights and obligations of
the parties" (Matter of Ongweoweh Corp., 130 AD3d 1291, 1291
[2015] [internal quotation marks and citation omitted]; see
W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]).

      Although the establishment of eligibility requirements for
insurance under the group policy was left to the Chamber, it does
not appear that such requirements have ever been memorialized or
otherwise formally documented, and the People's witnesses failed
to provide consensus as to eligibility. Moreover, no documentary
                              -5-                106816

evidence concerning Chamber membership eligibility was presented.
Even if a rational jury could find that eligibility for MVP
insurance under the Chamber group policy was contingent upon
Chamber membership, that only individuals or businesses with a
connection to Otsego County could become a full member of the
Chamber, and that "associate members" were not legitimate members
of the Chamber because this category of membership had not been
formally authorized by the Chamber, it was unreasonable for jury
to conclude that the People proved beyond a reasonable doubt that
defendant did not have a subjective, good-faith basis for
believing that associate members were legitimate members of the
Chamber and, thus, eligible to receive coverage under the group
policy (see People v Rios, 107 AD3d 1379, 1382 [2013], lv denied
22 NY3d 1158 [2014]; see generally People v Zona, 14 NY3d at
492-494).

      Defendant was fully aware that the contract between MVP and
the Chamber vested the Chamber with the right to determine the
eligibility requirements for insurance under its group policy,
and it was his understanding that, as the chief executive officer
of the Chamber, Robinson had the authority to determine who
became a member of the Chamber and what the necessary
qualifications were. No evidence was presented to suggest that
defendant should have questioned Robinson's assurances that
associate members qualified for insurance under the Chamber's
group policy, especially in the absence of any documented
eligibility requirements. Further, defendant explained that only
after confirming with Robinson that an applicant was a member of
the Chamber would he process the application for MVP insurance
through the group policy. Notably, there is no evidence that
defendant ever submitted any false or inaccurate information to
MVP when he enrolled associate members in the Chamber group
policy. Thus, viewing the evidence in the light most favorable
to the People (see People v Danielson, 9 NY3d 342, 349 [2007]), a
finding that defendant acted with larcenous intent when he
enrolled associate members in MVP insurance through the Chamber
group policy would be based upon "mere conjecture or suspicion"
(People v Castillo, 47 NY2d 270, 277 [1979]; see People v St.
Andrews, 82 AD3d 1356, 1357-1358 [2011]; People v King, 265 AD2d
678, 680 [1999], lv denied 94 NY2d 904 [2000]; People v Wager,
199 AD2d 642, 642 [1993], lv denied 83 NY2d 811 [1994]).
                              -6-                106816

Accordingly, his conviction for grand larceny in the second
degree must be reversed.

      We reach a similar conclusion with respect to defendant's
conviction for scheme to defraud in the first degree. That crime
required proof that defendant "engage[d] in a scheme constituting
a systematic ongoing course of conduct with intent to defraud ten
or more persons or to obtain property from ten or more persons by
false or fraudulent pretenses, representations or promises, and
so obtain[ed] property from one or more of such persons" (Penal
Law § 190.65 [1] [a]; see People v First Meridian Planning Corp.,
86 NY2d 608, 616 [1995]). Similar to the grand larceny count,
the scheme to defraud charge rested upon the supposition that
defendant and Robinson, acting in concert, enrolled individuals
as associate members of the Chamber knowing that "there was no
such thing" as an associate member, as a result of which each
such member paid $10 a month in fraudulent fees. However, like
the grand larceny count, there was not legally sufficient
evidence from which it can be inferred that defendant shared the
criminal intent or purpose of Robinson (see Penal Law § 20.00;
see also People v Brigham, 261 AD2d 43, 50-52 [1999], appeal
dismissed 94 NY2d 900 [2000]; compare People v Monteiro, 93 AD3d
898, 899-900 [2012], lv denied 19 NY3d 964 [2012]). To the
extent that the People attempted to show that, irrespective of
the legitimacy of the monthly fees, associate members had not
been informed that such fees were included in their premiums,
their proof was likewise inadequate. Neither the contract of
insurance nor any documentation supplied to the associate members
in connection with their purchase of MVP insurance through the
Chamber policy was introduced into evidence. The single
statement of the sole associate member who testified at trial
that he was not "aware" that he was paying the fees was woefully
insufficient to establish that such fees were not, in fact,
disclosed.

     Defendant's remaining arguments have been rendered
                              -7-                  106816

academic by our decision.

     Lahtinen, McCarthy and Lynch, JJ., concur.

      ORDERED that the judgment is reversed, on the law, and
indictment dismissed.

                             ENTER:

                             Robert D. Mayberger
                             Clerk of the Court