DA Vance Testimony to Moreland Commission on Public Corruption

September 18, 2013 |

Thank you to Co-Chairs Fitzpatrick, Rice, and Williams, and to the entire Commission, for the invitation to testify today. By way of background, I have been District Attorney of New York County since January 1, 2010, and I also currently serve as Co-Chair of the New York State Permanent Commission on Sentencing. Between July 2012 and this year, I served a one-year term as President of the District Attorneys Association of the State of New York (DAASNY). In that capacity, last October I formed the New York State White Collar Crime Task Force. The Task Force is co- Chaired by District Attorney Frank Sedita of Erie County, and my Chief Assistant, Dan Alonso, who is with me today.

The purpose of the Task Force was to have a thoughtful group of lawyers study our fraud and corruption laws from top to bottom, not thinking politics but thinking sub- stance, to come up with a set of recommendations that could be considered by the Legislature in its 2014 session next January. This type of study of white-collar crime had never been done in New York in a comprehensive way, nor had our fraud and corruption laws undergone significant revisions since 1986.
 
The Task Force was not made up exclusively of District Attorneys or Assistant District Attorneys. To the contrary, I broadened the membership to make sure that it reflected the views of a number of lawyers outside law enforcement, from private practice, the bench, and academia.
 
To that end, only about half of our members are sitting state prosecutors. The other half are lawyers in private practice, academics, a sitting federal prosecutor, a New York State tax official, and a retired Judge of the New York Court of Appeals, Al Rosenblatt. In addition to DA Sedita, it includes three other elected District Attorneys, including the co-Chair of this Commission, Bill Fitzpatrick of Onondaga County, and a number of ADAs from around the state.
 
The recommendations of the Task Force were unanimously adopted by the Board of Directors of the Association this past July. We will be publicly presenting the findings of the Task Force and releasing its full report next week. In the meantime, I am pleased to give you a summary of the Task Force’s recommendations in the public corruption area, including procedural reforms that are, we believe, crucial for the effective enforcement of the law.
 
But before I do that, I’d like to give you some background. When I became District
Attorney, it was clear to me that the state sorely needed serious upgrades of its outdated corruption and procedural laws. In 2010, my first year in office – a year in which three members of the state Legislature plus the State Comptroller were charged with crimes – I worked with the District Attorneys Association and then- Senator Eric Schneiderman, together with other members of the Senate and the Assembly, to suggest reforms in this area. That proposal, whose sponsors styled it the Public Corruption Prevention and Enforcement Act (Exhibit A), included a crime that punishes ongoing schemes to defraud the public of the faithful services of public officials; a proposal to fix New York’s bribery laws to punish offers to bribe as seriously as agreed-upon bribes; greater transparency in the use of discretionary legislative funds; and closing a loophole that led to the acquittal of an elected state judge in 2010 on charges that she had disguised campaign contributions that exceeded the legal limit.
 
We thought it was a great proposal, and two editorial boards – the New York Times (Exhibit B) and the Daily News (Exhibit C) – endorsed our proposal. Most of our state legislators, on the other hand, were not particularly enthused, and the proposals stalled after the Senate Codes Committee passed it.
 
In 2011, a year in which two members of the State Legislature were charged with crimes, my office and the Association worked with the State Bar Government Ethics Task Force to suggest penal reforms such as an unlawful gratuity statute, which would have punished giving benefits over $3,000 to public officials (or receiving such benefits) simply because of the official’s position, as well as a reform to New York’s bribery law. Additionally, DAASNY proposed reforms of the State Inspector General’s office to enhance its independence, and also proposed that there should be an Inspector General for the Legislature. (Exhibit D). When these proposals were entered into the mix during the negotiations leading up to the Public Integrity Reform Act of 2011, we were told that the Legislature had taken penal reform off the table. All of our proposals, including the Inspector General proposals, were dropped.
 
Finally, in 2012, a year in which two members of the State Legislature were charged with crimes, as president of DAASNY, I created the White Collar Crime Task Force to examine these problems in detail, from top to bottom. The goal was to make good government recommendations that could potentially be embraced by diverse interests around the state.
 
It is worth noting that, while the Task Force was conducting its deliberations in 2013, a year in which three members of the State Legislature have been charged with crimes, my office worked closely with the Executive Chamber to provide input into Governor Cuomo’s corruption legislation, styled the Public Trust Act, and which, like previous efforts, did not pass either house. (Exhibit E). That was despite the recommendation of each and every one of the 62 District Attorneys in New York State that the bill pass. (Exhibit F).
 
Before I turn to the Task Force’s specific recommendations, I’d like to address why we are recommending these laws. As you just heard from the U.S. Attorneys, and as everyone in New York government knows well, the F.B.I. and federal prosecutors have been remarkably successful in policing our corrupt officials.
 
That success has led some to suggest that New York does not need criminal law re- form in the area of corruption. Why, according to this point of view, do we need to do anything at all, when federal authorities have been doing a fine job?
 
The answer, I believe, is that reliance on the federal government to safeguard state and local government integrity, although it may be working in the sense that public corruption is being exposed, is risky public policy and is inherently in tension with a federal system of sovereign states. To be sure, in terms of corruption enforcement, the U.S. Attorneys and the United States Attorney General, to say nothing of the FBI, are currently active in rooting out this New York problem. But there is nothing in federal law or politics that requires that they continue to do so in the future.
 
Why, in a government that gives states primacy in police power, would New York cede this area to a federal government of limited powers, whose future resources and attention may be diverted to different priorities?
 
Now, as we all know, some high-level government officials (and many low-level ones) do, on occasion, wind up in our state courts. Attorneys General Schneiderman and Cuomo, in the recent past, successfully prosecuted Senator Shirley Huntley and Comptroller Alan Hevesi, respectively. DA Charles J. Hynes of Brooklyn sent two Supreme Court Justices to state prison, and did the same to Assembly member Clarence Norman, his Democratic county leader. And my own office, the Manhattan DA’s office, a little more than a decade ago obtained the convictions of Assembly member Gloria Davis and Senator Guy Velella.
 
But these successes, a fraction of those of our federal counterparts, came about in spite of the state system, not because of it. Criminal prosecution may not be the answer to all of society’s problems, but any system of  corruption enforcement is doomed without effective criminal sanctions. It is simply time to stop handcuffing state prosecutors and allow them to do the jobs that they should be doing to root out corruption.
 
To this end, the Task Force made seven recommendations that most closely relate to the problem before the Moreland Act Commission. Two are procedural and five are substantive.
 

New York should eliminate Automatic Transactional Immunity.

Federal grand juries may use hearsay without limitation, but state grand juries

of the events at issue. And under current New York law, which is unique in the country and not required by any Supreme Court precedent, every witness before a state grand jury automatically receives full transactional immunity about anything to which they testify, which means that they can never be prosecuted in a state court for matters about which they testify in response to questions. Even witnesses who lie still can’t be prosecuted for the crime under investigation, only for perjury – often a particularly difficult crime to prove. The results have been abysmal for New York, in two ways.

First, there have been numerous miscarriages of justice. In the violent crime area, for example, in more than one case a supposed murder witness who had, unbeknownst to the prosecutor, actually committed the murder, was called be- fore the grand jury and absolved of all liability. In white collar crime, a business executive whose company had been victimized was called before a grand jury to describe the company’s operations and testify about a possible extortion. Subsequently, a different prosecutor began investigating the executive for tax fraud connected to the company. Because the defendant had been asked about the company’s operations by the first prosecutor, the case against him was dismissed and prosecution was barred.

Many similar cases have unfolded over the years. But they pale in comparison to the current law’s second fatal flaw: the chilling effect on investigations and prosecutions of all kinds, particularly of corruption. Prosecutors are understandably reluctant to call the very people who know about corruption for fear of giving them a pass for all of their transgressions, forever – to say nothing of the credibility issues that witness must face at trial, having been “granted” full immunity from prosecution.

In the words of a criminal surreptitiously recorded by my office many years ago: “I never knew about this thing, immunity . . . . They can’t throw you before the grand jury ’cause they don’t know what’s gonna come out. That’s the name of the game.”

I believe, and all 62 of the District Attorneys in New York State agree, that it would be much more sensible for New York to adopt the federal “use immunity” rule, used in a majority of states, which in practice has much less of a chilling effect on corruption investigations. In 1982, state prosecutors, sup- ported by the first Governor Cuomo, former Attorney General Robert Abrams, and every major editorial board in the state, tried and failed to get this law changed. I believe that it’s time to try again.

I recommend, therefore, that the Legislature amend CPL §§ 50.10(1) and 190.40(2) to authorize a grant of use immunity rather than transactional immunity on witnesses, thereby conforming New York law to federal law and the law of most other states and allowing for fuller use of the grand jury to investigate complex crime.

 

New York Should Amend the Accomplice Corroboration Requirement.

The lifeblood of prosecution of sophisticated crime, which corruption typically is, is the use of informants, co-conspirators, and accomplices, who are in the best position to supply information about the inner workings of criminal enterprises.

But in New York, even when co-conspirators “switch governments,” to use the famous words of Sammy Gravano, New York’s accomplice corroboration rule makes it impossible to prosecute others without independent corroborating evidence. This is a sensible rule in concept, and one that even federal prosecutors follow in practice, but its interpretation in New York makes it a poison pill in corruption investigations. Federal prosecutors often corroborate the testimony of one cooperator with another. But in New York, even nine cooperators corroborating the tenth are not enough – the evidence must be independent. How about a tape? Sure, but it had better be a non-accomplice that vouches for its authenticity, or it won’t be admissible. These hyper- technical hurdles have no place in a system that is serious about cleaning up its government.

Corrupt public officials, corporate criminals, gang members, and many others continue to reap the benefit of New York’s outdated and overly restrictive law. Although accomplice testimony deserves sharper scrutiny, it is not necessarily untrustworthy. New York’s rule codifies a blanket judgment that an accomplice is per se unreliable just because he participated in the defendant’s crimes, when there are myriad factors that make witnesses unreliable. With proper safeguards, such as an instruction from the trial court on the inherent dangers of accomplice testimony, such factors ought to be for the jury to weigh in assessing credibility. A cellmate who committed assault should not be presumed more trustworthy, as he is under current law, than a self-confessed accomplice to forgery.

I recommend, therefore, that New York amend, but not eliminate, the accomplice corroboration requirement of CPL § 60.22 to allow cross-corroboration by a separate accomplice.

 

 

New York Should Amend Its Public Servant Bribery Law.

Although New York’s public bribery law by its terms is violated when a bribe is merely of- fered or solicited, it paradoxically also requires an illicit “agreement or under- standing” between the bribe giver and the bribe receiver in order for the crime to be complete. This exacting element is not required under New York’s other bribery laws, including labor bribery, sports bribery, and commercial bribery, and the laws of most other jurisdictions, which are subject to the less exacting requirement of an “intent to influence” the recipient of the bribe.

As it stands, therefore, those who bribe public officials are less likely to be prosecuted than those who bribe boxers. The Task Force’s proposal would align New York’s public bribery law with these other bribery laws, but would carve out an exception for campaign contributions, which would continue to be treated as they are under current law. This distinction is in recognition of the nature of campaign contributions, the First Amendment interests at stake, and the observations of the U.S. Supreme Court in the context of the federal law on extortion under color of official right.

The Task Force therefore recommends replacing the “agreement or under- standing” requirement in New York’s bribery law with a requirement of an “intent to influence” the public servant. This would legislatively overrule the Court of Appeals’s decision in People v. Bac Tran, 80 N.Y.2d 170 (1992).

 

New York Should Create a Law Against Undisclosed Self-Dealing.

The Task Force has also proposed a new law to deal with courses of conduct where public servants conceal their interests in government business above a certain threshold.

Under current law, undisclosed self-dealing can at best be prosecuted as a failure to provide proper disclosure under Article 4 of the Public Officers Law, which is punishable as a Class A misdemeanor and only applies to state employees. Or, if the interest or transaction is one that must otherwise be dis- closed in a filing with a public office, it could be prosecuted as Offering a False Instrument for Filing – which, depending on the circumstances could either be a Class A misdemeanor or a Class E felony – but that law also requires a filing in all circumstances. Neither, therefore, is a sufficient deterrent to self- dealing conduct. The state should demonstrate a more serious commitment to ending the abuses of public trust that accompany self-dealing behavior.

The Task Force proposes that New York criminalize public servants intentionally engaging courses of conduct in connection with the award of public business or funds, where they or a relative are receiving or intending to receive undisclosed benefits.

 

New York Should Upgrade the Crime of Official Misconduct.

The Task Force solicited the views of a number of public officials and other groups. One suggestion that we adopted came from Comptroller DiNapoli, who suggested that we recommend upgrading the existing crime of Official Misconduct, currently only a misdemeanor, to create two new crimes of Official Misconduct in the Second and First degrees (Class E and D felonies, respectively).

By way of background, Official Misconduct criminalizes a public servant’s un- authorized action (or his or her failure to perform an act his or her duty re- quires) with the intent to obtain a benefit or deprive another person of a benefit. So, if a high-ranking police official voids moving violations and parking tickets issued to her family members, the level of the offense is the same whether the revenue lost to the municipality totals $50 or $5,000. Similarly, if a law enforcement official fails to act on an embezzlement complaint because the alleged perpetrator is the son of a friend, the level of that offense is a Class A misdemeanor, regardless whether that failure to act prevented the victim company from recovering $500 or $5,000 in stolen funds. And, while our Pe- nal Law includes sections for Rewarding Official Misconduct and Receiving a Reward for Official Misconduct, which present a range of E and C felonies, these offenses do not reach situations where there is no reward to the official, that is, when the breach of the official’s duty serves only to deprive a third party of a benefit.

I recommend, consistent with the Task Force’s conclusions, that the Legislature upgrade the existing crime of Official Misconduct based on the amount of the benefit obtained or deprived.

 

New York Should Enhance Sentences for Abuse of Public Trust.

Bribery, bribe receiving, and rewarding official misconduct, as examples, all include the actor’s status as a public servant as an element of the offense, and our lawmakers plainly considered the actor’s status in grading the seriousness of the offenses and the potential penalties. But unfortunately, wayward public officials have not always confined their misdeeds to the sections of the penal statutes that specifically reference them.

So, for example, if a Senator uses her position to embezzle money from a charity, or a police officer uses his position to facilitate a drug transaction, the elements of a Grand Larceny charge or a drug sale charge do not capture each defendant’s abuse of position, nor do the potential penalties. The Task Force believes that the facts that cause the additional harm – the public-servant status of the offender and the abuse of his or her official position – should be captured though an appropriate sentencing enhancement.

For example, if a Commissioner uses his status to facilitate getting away with a private fraud, say, a class C felony, that defendant would now be punished for a class B felony and be subject to more serious punishment. This would apply only to public servants who commit non-corruption offenses that are significantly facilitated by their position. The enhancement would work much in the way that hate crimes or crimes of terrorism are currently enhanced under our penal law. Abuses of trust should be treated in the same way.

I therefore recommend legislation providing that, upon a conviction for the substantive offense, the level of the underlying substantive offense would be elevated one category for sentencing purposes if the actor uses his position, or attempts to do so, in a manner that significantly facilitates the concealment or commission of the crime.

This was also a proposal made to the Task Force by Comptroller DiNapoli and embraced by the Task Force.

 

New York Should Enhance the Crime of Defrauding the Government.

New York currently has a law called Defrauding the Government, which sounds like it could be very useful, but it’s not. Its usefulness is greatly diminished by two major problems that mar its effectiveness: it only applies to schemes committed by or with people inside the government, and it treats a scheme that obtained more than $1 million no more seriously than one that obtained more than $1,000. This is unacceptable.

The Task Force has proposed, in a similar manner as that proposed in the Governor’s Public Trust Act, that the crime be gradated according to the seriousness of the offense. The current crime is always a class E felony, and likely for that reason, it is rarely used, is rarely used, having been charged only 41 times statewide between 2007 and 2011. Our proposal would gradate the crime from an E felony up to a B felony for schemes that obtain more than $250,000.

We also propose that the amended law apply to schemes that target the government, whether or not they were committed by or with the help of insiders. The reality is that government fraud and corruption often go hand in hand, but the requirement that the prosecutor prove in all instances the involvement of an insider is an unnecessary burden. There is no good reason to handcuff prosecutors in investigating both. I urge that this potentially useful statute be made actually useful.

We have also made some additional recommendations to amend this statute, which are beyond the scope of this hearing but which may be found in the Task Force’s final report.

 

Conclusion

I would like to conclude by quoting from a 1987 article in the New York Times that followed the New York City corruption scandals of the mid-1980s. (Exhibit G). That article reported, among other things, that “[h]alf a dozen district attorneys said local officials they believe to be corrupt have gone unprosecuted because New York laws make it too difficult – more difficult than in most other states – to bring corruption cases.”

That was 26 years ago. Things have only gotten worse. Thank you for the chance to give you my thoughts this evening. Dan or I would be happy to answer any questions you might have.