PEOPLE v. CARTER

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Supreme Court, Appellate Division, First Department, New York.

The PEOPLE of the State of New York, Appellant, v. Donald CARTER, Defendant-Respondent.

Decided: February 25, 1999

ROSENBERGER, J.P., ELLERIN, TOM and MAZZARELLI, JJ. David J. Mudd, for appellant. Mark M. Baker, for defendant-respondent.

Order, Supreme Court, New York County (Brenda Soloff, J.), entered on or about August 28, 1998, which, to the extent appealed from, granted defendant's motion to vacate a July 25, 1990 judgment convicting him, upon his guilty plea, of grand larceny in the third degree (Penal Law § 155.35) and filing a false and fraudulent personal New York State tax return (Tax Law § 1804[b] ), unanimously reversed, on the law and the facts, the defendant's motion to vacate denied, and the judgment of conviction reinstated.

Defendant brought the instant motion to overturn his conviction on the grounds that the People had failed to disclose Brady material prior to his decision to waive indictment and plead guilty to the above charges under a Superior Court Information (Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 [establishing prosecution's duty to turn over exculpatory evidence to defense] ).   The People contend that Brady obligations are not triggered at the pre-indictment stage, and that, in any event, the undisclosed information was not exculpatory.

In 1975, defendant founded his wholly-owned company, the Carter Organization (“TCO”), a proxy solicitation firm specializing in helping public companies resist hostile takeovers.   In the 1980s, a criminal investigation by New York State's Organized Crime Task Force (“OCTF”) focused on a fraudulent overbilling scheme at TCO, as well as on defendant's personal tax returns.   OCTF uncovered evidence indicating that defendant routinely billed TCO's clients for non-existent or inflated expenses and manufactured false records to justify these charges when questioned by clients.   Between 1987 and 1989, defendant allegedly stole more than $1 million from TCO's clients.

OCTF also claimed it had discovered defendant's falsification of his 1986 New York State personal income tax return.   Defendant allegedly classified hundreds of thousands of dollars of personal expenses, e.g., his apartment renovations, as TCO's business expenses, and falsified TCO's records to support his illegal deductions.

After extensive plea negotiations initiated by defendant, on March 20, 1990, defendant waived indictment and pleaded guilty under a Superior Court Information (“SCI”) to the crimes of third-degree grand larceny and filing a fraudulent tax return.   At the plea allocution, the predicate facts he admitted as the basis for the grand larceny charge were that he stole $1 million from TCO clients “in or about 1987 to in or about 1989”.   He also admitted that he filed a false 1986 tax return knowing that he unlawfully understated his tax liability.   Defendant broadly and repeatedly admitted his wrongdoing to the court.   He was sentenced to two concurrent terms of 1 1/313 to 4 years and ordered to pay a fine of $50,000 and to establish a $1 million restitution fund.   He has since served his term, paid the fine and established the fund.

In September 1996, more than six years after his guilty plea, defendant moved to vacate his conviction and withdraw his plea pursuant to CPL 440.10.   He described how he had discovered, allegedly for the first time, that TCO's treasurer Robert Wolberg and his assistant Ronald Roth had embezzled funds from TCO and had overbilled clients to cover up the theft.   According to the affidavit of defendant's private investigator, the embezzlement scheme took place from January to June 1987.   It is not disputed that OCTF learned of their scheme and never disclosed it to defendant, opting instead to refrain from prosecuting Wolberg and Roth in return for their promise to testify against defendant.   Defendant asserted that OCTF thereby withheld exculpatory evidence in violation of Brady v. Maryland, supra.

Notwithstanding his and his previous attorney's prompt and unconditional admissions of defendant's guilt in 1990, defendant now claims that he was really innocent, but was framed by a revenue-hungry OCTF that had targeted him as the person most able to pay for a large restitution fund (a portion of which was given to OCTF).   He argues that he was deliberately misled by OCTF into thinking that Wolberg and Roth were credible witnesses who would seal the case against him.   Now, he claims, it is his belief that the crimes to which he pleaded guilty were actually committed by Wolberg and Roth. Under this theory, the falsified client billing records were created to cover up their embezzlement scheme, not any fraud by defendant.   Defendant also asserts for the first time that in 1985 he had to reprimand Wolberg for mistakenly allocating some of defendant's personal expenses to TCO's account.   He speculates that subsequent misallocations by Wolberg in 1986 must have taken place but escaped defendant's notice.   Notably, this story does not explain why the same “mistake” was repeated on defendant's 1986 personal tax return, which was not prepared by Wolberg.

Defendant's Brady claim is basically that if he had known about the wrongdoing by Wolberg and Roth before taking his plea, he would have gone to trial and raised this theory to show his innocence.   The evidence is exculpatory, he alleges, because the undisclosed criminal behavior by Wolberg and Roth is precisely that criminality with which defendant was personally charged.

In opposition, the People note first of all that they had several sources of incriminating evidence other than the testimony of Wolberg and Roth. The People describe the proposed testimony (backed up by documentary evidence) of six witnesses whom defendant had asked to create inflated invoices and false expense records, or who had been present when defendant asked others to do so.   Had the case proceeded beyond the pre-indictment stage, defendant would have learned of these witnesses and likely decided to plead guilty after all.   At most, the People argue, the undisclosed embezzlement scheme constitutes impeachment material concerning two witnesses whose testimony was not the linchpin of the case.   It is not truly exculpatory, since there are too many factual discrepancies in defendant's attempt to cast the blame for the charged crimes on Wolberg and Roth. The People also assert that Brady obligations should rarely, if ever, be triggered at such an early stage.

When presented with the above arguments, the motion court granted defendant's CPL 440.10 motion.   The court concluded that while normally the People can wait somewhat longer to disclose Brady material, their obligation was triggered at the pre-indictment stage in this case because the entire process was “telescoped”.   The court also rejected the People's characterization of the withheld information as merely impeachment material;  it was evidence going to the crime itself, whose disclosure would have created a reasonable probability that defendant would have gone to trial.   As we reject the latter finding, we reverse the motion court's decision and reinstate defendant's conviction.

 We acknowledge the force of the motion court's reasoning that the withholding of truly exculpatory evidence necessarily casts doubt on the voluntariness of a guilty plea (People v. Martin, 240 A.D.2d 5, 8, 669 N.Y.S.2d 268, lv. denied 92 N.Y.2d 856, 677 N.Y.S.2d 86, 699 N.E.2d 446), regardless of when during the proceedings the plea occurs (see, People v. Rowland, 157 Misc.2d 114, 117, 595 N.Y.S.2d 881 [noting that there is no specified time to disclose Brady material as long as it is provided in time for the defense to use it effectively] ).   However, we need not decide under what circumstances the People will be required to disclose Brady material at the pre-indictment stage, since we find that the information at issue here was not Brady material.

 The United States Supreme Court originally stated that the prosecution must disclose “evidence favorable to an accused ․ where the evidence is material either to guilt or to punishment” (Brady v. Maryland, supra, 373 U.S. at 87, 83 S.Ct. 1194).   Under New York law, evidence is Brady material only if there is a reasonable possibility that the outcome of the proceeding would have been different if the evidence had been disclosed to the defense (People v. Vilardi, 76 N.Y.2d 67, 77, 556 N.Y.S.2d 518, 555 N.E.2d 915).

 However, to be considered exculpatory and therefore subject to disclosure under Brady, the withheld evidence must actually bear on the issue of the defendant's guilt or innocence.   It is not enough that possession of this evidence might affect a defendant's tactical decision to plead guilty or change his assessment of the strength of the People's case (People v. Jones, 44 N.Y.2d 76, 404 N.Y.S.2d 85, 375 N.E.2d 41, cert denied 439 U.S. 846, 99 S.Ct. 145, 58 L.Ed.2d 148).   Nor is it enough that the defense's use of the evidence at trial might have swayed the jury to decide differently for “improper or trivial” reasons (United States v. Agurs, 427 U.S. 97, 109, 96 S.Ct. 2392, 49 L.Ed.2d 342).  “Information which would be convenient for a defendant to know, or might even have influenced him in the matter of his plea, is not necessarily exculpatory, for it does not bear upon the guilt or innocence of the defendant” (People v. Roldan, 124 Misc.2d 279, 280, 476 N.Y.S.2d 447).

 Under this standard, OCTF's nondisclosure of the embezzlement scheme by Wolberg and Roth was not a Brady violation.   Their undisclosed misdeeds have no bearing on defendant's filing of a fraudulent tax return, since they were not involved in its preparation.   Even if we credit defendant's claim that Wolberg allocated defendant's personal expenses to the corporation without defendant's prior approval, the falsified records were merely cumulative evidence that his misrepresentation on the tax return was willful.   Indeed, if defendant really did learn that Wolberg had made such a mistake and reprimanded him for it, it is unlikely that defendant would make the same mistake innocently on his own tax return.   Most importantly, by defendant's own admission, he already knew about Wolberg's alleged mistake (if it took place at all) long before he was arrested.

 Nor does the existence of his employees' embezzlement scheme in early 1987 go to the issue of defendant's guilt on the larceny charge.   Again by his own admission, this scheme lasted from January to June 1987 at the latest, whereas the larceny to which he pleaded guilty continued from 1987 to 1989.   It is simply implausible for him to claim that all the falsified records and inflated client charges were created by Wolberg and Roth. Perhaps defendant would have chosen to take the gamble and present this story to a jury, but (particularly in light of the People's numerous other eyewitnesses to defendant's wrongdoing) the withheld evidence does not “create[ ] a reasonable doubt that did not otherwise exist” (Agurs, supra, 427 U.S. at 112, 96 S.Ct. 2392).   The mere general impeachment value of the undisclosed evidence does not suffice to vacate defendant's plea when Wolberg and Roth were not the sole source of the evidence establishing defendant's guilt (People v. Martin, supra, 240 A.D.2d at 9, 669 N.Y.S.2d 268).

MEMORANDUM DECISION.