Court Opinion

ID: 5484958
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:08:09.429622+00
Date Added: 2024-06-11T08:33:40.306603
License: Public Domain

OPINION OF THE COURT
Read, J.
On May 15, 2000, petitioner Lawrence Schwartz pleaded guilty in the United States District Court for the Southern District of New York to a two-count federal information charg*430ing insider trading. On June 9, 2000, he was sentenced to 18 months in prison, followed by supervised release for a term of three years. As a condition of the supervised release, petitioner was required to pay $786,402 in restitution “no later than 90 days prior to the end of [his] supervised release.”
Shortly thereafter, on June 16, 2000, petitioner pleaded guilty in Supreme Court to one count of scheme to defraud in the first degree (Penal Law § 190.65) in satisfaction of state charges pending against him in New York County. He admitted that he had “schemed and conspired” with his son and certain rival contractors and others to rig bids, thereby inflating prices of construction-related contracts at various residential and commercial buildings in the New York metropolitan area.
Petitioner was sentenced on August 29, 2000, to an indeterminate prison term of 1 to 3 years, to be served concurrently with his federal sentence. He agreed to pay $750,000 in restitution and $250,000 in lieu of forfeiture, the former payable in installments and the latter payable in full on or before the date of sentence. The forfeiture stipulation specified that the $250,000 “shall be forfeited pursuant to CPL § 220.50 (6) and, in accordance therewith, distributed pursuant to CPLR § 1349.”
On May 6, 2003, while petitioner was still under the supervision of the New York State Division of Parole and on federal supervised release, his attorney wrote to the District Attorney, seeking information as to how petitioner’s restitution and forfeiture payments had been disbursed. Noting that petitioner still owed more than $250,000 in federal restitution, his attorney asked the District Attorney to verify that the $250,000 state forfeiture payment would be applied to the federal restitution obligation “as required by the order of priority set forth in CPLR § 1349.” As relevant, this provision states at subdivision (2) (c) that
“moneys realized as a consequence of any forfeiture pursuant to this article shall be apportioned and paid in the following descending order of priority:
“(c) Amounts ordered to be paid by the defendant in any other action or proceeding as restitution, reparations or damages to a victim of any crime committed by the defendant even though such crime did not constitute the basis for forfeiture under this article, to the extent that such amounts remain unpaid.”
*431On July 24, 2003, the District Attorney responded, informing petitioner that $80,000 of the forfeited amount had been sent to the state substance abuse service fund (see CPLR 1349 [2] [g]), with the remainder retained by the District Attorney in his capacity as claiming agent and claiming authority. The District Attorney refused to apply any portion of the forfeited moneys to satisfy petitioner’s federal restitution debt, noting that CPLR 1349 (2) (c) “was clearly designed to protect victims of crimes— not the defendants who commit them.” Further, if petitioner’s “assets were totally depleted (an allegation that has not been made) and he were to default upon his agreed upon payments, then the unpaid victims may have standing to claim money from the District Attorney’s Office.”
On September 24, 2003, petitioner commenced a CPLR article 78 proceeding in the nature of mandamus, seeking to compel the District Attorney to apply the $250,000 forfeiture payment, “together with appropriate interest,” to his federal restitution debt. Petitioner claimed that the District Attorney had violated CPLR 1349 (2) (c) when “[i]nstead of paying the money to the benefit of the [federal] victims,” he “retained $170,000 for [his] own purposes and donated $80,000 to a substance abuse program.” On October 8, 2003, the District Attorney moved to dismiss the petition on the grounds that it was untimely and petitioner lacked standing, and thus had failed to establish a clear legal right to the requested relief. In the event the petition was not dismissed, the District Attorney requested a reasonable time to file an answer as CPLR 7804 (f) requires.
On July 8, 2004, Supreme Court denied the motion to dismiss and granted the petition, first rejecting the District Attorney’s statute-of-limitations and laches defenses. The court also concluded that petitioner had standing because
“a plain reading of CPLR § 1349 shows that the legislature, in establishing the order of priority set forth in the statute, intended not only to benefit the victims of crimes, but ‘arguably’ to provide an indirect benefit to the perpetrators of crime by allowing funds forfeited by them to be applied to other unrelated crimes that they committed.”
Supreme Court held that “[t]hrough [his] failure to apply the funds to the restitution debt remaining in the Federal Case, . . . [the District Attorney] failed to comply with the order of priority set forth in CPLR § 1349 and adopted by the Stipula*432tion.” The court ordered the District Attorney to apply the full $250,000 forfeiture payment to petitioner’s federal restitution obligation.
The Appellate Division subsequently reversed Supreme Court’s judgment on the law, granted the District Attorney’s motion, denied the petition, and dismissed the proceeding. The Appellate Division concluded that the petition was untimely, and that petitioner lacked standing. We subsequently granted petitioner permission to appeal, and now affirm the Appellate Division on the ground that petitioner lacks standing to press a claim for violation of CPLR 1349 in this CPLR article 78 proceeding.
“[T]he contemporary rule is that a party has standing to enforce a statutory right if its abuse will cause him injury and it may fall within the ‘zone of interest’ protected by the legislation” (Matter of District Attorney of Suffolk County, 58 NY2d 436, 442 [1983]). “Simply stated, a party must show that the in-fact injury of which it complains (its aggrievement, or the adverse effect upon it) falls within the ‘zone of interests,’ or concerns, sought to be promoted or protected by the statutory provision under which the agency has acted” (Society of Plastics Indus. v County of Suffolk, 77 NY2d 761, 773 [1991]).
Here, petitioner’s purported injury — the windfall he failed to realize when the District Attorney refused to apply the state forfeiture to satisfy petitioner’s federal restitution obligations— does not fall within the zone of interests protected by CPLR 1349. The Legislature restructured forfeiture procedures in 1984 to create a “forfeiture statute [that] can be used by law enforcement agencies throughout the state as an effective tool to take the profit out of crime” (Governor’s Mem approving L 1984, ch 669, Bill Jacket, at 7). In 1990, the Legislature strengthened forfeiture yet again to allow state and local agencies to receive a share of forfeited property so as to recover some of their expenses in investigating and preparing forfeiture actions (see Governor’s Program Bill Mem, Bill Jacket, L 1990, ch 655). Legislation does not “take the profit out of crime” or encourage district attorneys to pursue forfeiture by empowering a criminal defendant like petitioner to direct forfeited moneys so as to suit his own best interests.
Further, CPLR 1349 (2) (c) requires the claiming authority to apply forfeited moneys to restitution debts “to the extent that such amounts remain unpaid.” Thus, a criminal defendant must exhaust his resources before forfeited moneys may be tapped to *433pay off his restitution debts. To interpret the statute otherwise, as petitioner urges, would risk rendering forfeiture meaningless. Here, petitioner has not even alleged that he lacks the funds to pay his federal restitution obligations, much less proven this. As the District Attorney intimated in his letter to petitioner, any unpaid victims of petitioner’s other crimes, as the intended beneficiaries of CPLR 1349 (2) (c), have standing to enforce the statute by making a claim against the District Attorney for the forfeited moneys. Petitioner, however, does not. He has standing to enforce his plea agreement, but in this case the plea agreement says no more than that the District Attorney will comply with CPLR 1349. The plea agreement does not compel the District Attorney to use petitioner’s state forfeiture to satisfy his federal restitution obligations. In short, petitioner may not bootstrap the reference to CPLR 1349 in his plea agreement into standing to enforce this statute.
As a final matter, in this case the District Attorney seems to have committed forfeited moneys to lower-priority purposes before he had any reason to know whether petitioner had sufficient resources to pay federal claimants. While this course of action appears somewhat risky, here we have no way of knowing why the District Attorney proceeded as he did because an answer was never filed.
The order of the Appellate Division should be affirmed, without costs.
Chief Judge Kaye and Judges Ciparick, Rosenblatt, Graffeo and R.S. Smith concur; Judge Pigott taking no part.
Order affirmed, without costs.