In the summer of 1986, Gov. Mario M. Cuomo signed New York’s Organized Crime Control Act (OCCA) into law.1 Penal Law article 460 et seq., OCCA, which is basically New York’s version of the federal anti-Racketeering statute (more commonly known as RICO2), took three years and many revisions to get to the governor’s desk.3 OCCA’s key feature was the class "B" felony of enterprise corruption, P.L. §460.20(1).4
On Jan. 15, 2013, as a part of New York SAFE (Secure Ammunition and Firearm Enforcement) Act of 2013, the legislature amended article 460 by adding a §460.22, aggravated enterprise corruption. This new offense is aimed at those criminal enterprises whose members commit armed felony offenses and traffic in illegal firearms.5
The law that Cuomo signed in 1986 was a compromise born of two competing factions: prosecutors who wanted a "tough bill like RICO," and "assembly members who wanted to limit the potential for prosecutorial abuses inherent in RICO."6
Assemblyman Daniel L. Feldman, a principal architect of the statute, in a letter to the governor, noted that OCCA had protections that RICO did not—specifically it had been refined to a point where "no one will be indicted who has not committed three different crimes," and "no one will be joined to any other defendants without having joined himself or herself to those other defendants in a substantial way, by knowingly engaging in activities designed to further the interests of a criminal enterprise."7
Notwithstanding this clear intent from the legislature, early litigants (and even courts) that interpreted OCCA relied on federal RICO case law given the absence of any state authority. While this trended downwards over the years, the death knell of resorting to federal RICO analysis was resoundingly sounded by the New York Court of Appeals on Oct. 18, 2012, when the court reminded us that OCCA was not meant to be RICO and rejected the district attorney’s arguments that the U.S. Supreme Court’s definition of structure in Boyle v. United States, 556 U.S. 938 (2009), should apply. See People v. Western Express, 19 N.Y.3d 652, 659 (2012) (evidence did not establish "an enduring structurally distinct symbiotically related criminal entity with which [defendants] were purposefully associated"; "OCCA, unlike RICO…specifically demands that the structure be distinct from the predicate illicit pattern").
The court’s decision in Western Express really could not have come as much of a surprise given where the legislature started from in 1983. In this case, divining the legislature’s intent was, in many ways, as simple as reading the preamble to the statute where the legislature had set forth detailed findings regarding its intent in crafting OCCA. See P.L. §460.00.8 As the court noted, "[t]he organized crime control act is a statute of comparable purpose [to that of RICO] but tempered by reasonable limitations on the applicability, and with due regard for the rights of innocent persons."9
The enterprise corruption statute was designed to combat criminal enterprises, whose "sophistication and organization make them more effective at their criminal purposes." Penal Law §460.00; see People v. Besser, 96 N.Y.2d 136, 142 (2001). The legislature observed that preexisting criminal laws were "not adequate" to address the "continuing growth of organized criminal activities." Penal Law §460.00. The governor’s Approval Memorandum noted prior criminal laws were "developed during a less complicated era," when crimes were generally committed in isolation and by individuals who were not part of an organized group," but cautioned that "[c]rimes committed by individuals who engage in a brief series of criminal acts in an ad hoc and unstructured group are not subject to prosecution under [OCCA]."10
While OCCA is, to be sure, concerned with "organized crime," the legislative findings emphasize that "the concept of criminal enterprise should not be limited to traditional criminal syndicates or crime families." Penal Law §460.00 at ¶3.11
Due to concerns about overzealous federal prosecutions, the legislature provided two procedural protections for possible minor participants.12 First, OCCA provides a court with the power to dismiss a charge of enterprise corruption in the interest of justice upon a finding that "prosecution of that count is inconsistent with the stated legislative findings" in article 460. See CPL §210.40(2).13 Second, OCCA requires that when filing an indictment containing a charge of enterprise corruption, the district attorney personally submit a special information to the court that "attests that he has reviewed the substance of the evidence presented to the grand jury and concurs in the judgment that the charge is consistent with [the] legislative findings in said article." CPL §200.65.14
Penal Law §460.20(1), provides that a person "having knowledge of the existence of a criminal enterprise and the nature of its activities, and being employed by or associated with such enterprise," can commit the crime of enterprise corruption in three ways, if he or she:
(a) intentionally conducts or participates in the affairs of the enterprise by participating in a pattern of criminal activity; or (b) intentionally acquires or maintains any interest in or control of an enterprise by participating in a pattern of criminal activity; or (c) participates in a pattern of criminal activity and knowingly invests any proceeds derived from that conduct, or any proceeds derived from the investment or use of those proceeds, in an enterprise.
A "pattern of criminal activity" occurs when persons engaged in the corrupt enterprise commit three or more separate "criminal acts," which are not "isolated incidents," in furtherance of the criminal scheme. See Penal Law §460.10(4). Further, the Penal Law defines a "criminal enterprise" as a "group of persons sharing a common purpose of engaging in criminal conduct, associated in an ascertainable structure distinct from a pattern of criminal activity." Penal Law §460.10(3).15
Penal Law §460.10(1) defines what a criminal act is. The list is lengthy, and has been added to over the years by way of amendment, but there are some surprising omissions. Identity theft-related offenses are not eligible as criminal acts,16 nor are Labor Law violations (which traditionally reaped great benefits to labor racketeers), and some tax offenses are while others are not.17
To be charged with enterprise corruption, an individual defendant must (1) have knowledge of the existence of the enterprise and the nature of its activities, and (2) be employed by or associated with the enterprise. Penal Law §460.20(1)(a). The statute requires that a defendant commit at least three qualifying "criminal acts" that are "included in the pattern" and that he did so "with intent to participate in or advance the affairs of the criminal enterprise." Penal Law §460.20(2).18 Additionally, to qualify, two of the acts must be felonies other than conspiracy, two acts (one of which is a felony) must have occurred within five years of the commencement of the action, and each of the acts must have occurred within three years of a prior act. Penal Law §460.20(2)(a)-(c).
While OCCA requires the commission of three pattern acts—which are not so close temporally that they consist of a single criminal transaction—(P.L. §460.10(4)(b)) "specialization in one type of criminal activity does not preclude prosecution for enterprise corruption." People v. Conigliaro, 290 A.D.2d 87 (2d Dept. 2002).19
While the legislature intended OCCA to be narrower than RICO in significant ways, they did provide valuable provisions that previously were unavailable to state prosecutors in New York.
In drafting OCCA the legislature appreciated that expanded venue provisions were necessary to combat the many organized crime enterprises that do not limit their criminal activities to a single county. See Penal Law §460.40. Indeed, typical enterprises may involve criminal ventures in more than one county. See People v. Association of Trade Waste Removers of Greater New York, 267 A.D.2d 137, 138 (1st Dept. 1999) (city-wide cartel under auspices of Mafia dominating New York City’s private sanitation industry). Without the ability to charge these "out of county" offenses a prosecution would be segmented into many smaller pieces in multiple jurisdictions.20
OCCA also provides additional criminal forfeiture provisions and "triple-the-gain" fines. Penal Law §460.30(5). The legislature’s stated intent was to provide prosecutors with "new penal prohibitions and enhanced sanctions, and new civil and criminal remedies [that] are necessary to deal with the unlawful activities of persons and enterprises engaged in organized crime." Penal Law §460.00. The forfeiture provisions also may allow for a defendant to be stripped of any property interest or contractual right that has afforded him a source of influence over the enterprise whose affairs he has controlled. See Penal Law §460.30(1).
Of no less significance, the Court of Appeals has held that accomplice corroboration for each act in a pattern of criminal activity is not required in order to convict a defendant for enterprise corruption; rather, there need only be corroboration for the enterprise in general. People v. Besser, 96 N.Y.2d 136 (2001); accord People v. AS Goldmen, 9 A.D.3d 283 (1st Dept. 2004). This is extremely significant as in many cases a prosecutor is relying on accomplice testimony and under normal circumstances the New York Criminal Procedure Law requires that testimony be corroborated. See C.P.L. §60.22.
While some observers believe that the fallout from Western Express has just begun—in late December a panel of the First Department cited it in reversing the enterprise corruption convictions of two executives whose material testing company had falsified documents in connection with construction projects throughout the city, People v. Barone, 2012 WL 6698978 —A.D.3d— (1st Dept. 201221)—the core of the court’s decision in Western Express is a plain reading of the original intent of the legislature in enacting OCCA. At the end of the day, although OCCA isn’t RICO, it can be in the hands of a prosecutor who knows how to employ it as what it was intended to be—an important tool in tackling organized criminal activity in New York state.
Michael A. Scotto, counsel to Meyer, Suozzi, English & Klein, is a former deputy chief of the Investigations Division, chief of the Rackets Bureau, and chief of the Labor Racketeering Unit-Construction Industry Strike Force at the New York County District Attorney’s Office.
1. N.Y. Laws of 1986, Chapter 516.
2. Racketeering Influenced Corrupt Organization, 18 U.S.C. §1961 et seq. When OCCA was passed, observers affectionately, or perhaps derisively, referred to it as "Little Rico." See Kessler, "And a Little Child Shall Lead Them: New York’s Organized Crime Control Act of 1986," St. John’s L. Rev., Vol. 64, Issue 4, (1990); Gerber, "A RICO You Can’t Refuse: New York’s Organized Crime Control Act," 53 Brooklyn L. Rev. 979 (1988).
3. OCCA was first introduced by state Attorney General Robert Abrams in 1983, as part of his legislative program. Daniel L. Feldman and Gerald Benjamin, Tales From the Sausage Factory: Making Laws in New York State, Ch. V, "The Organized Crime Control Act," p. 119 (SUNY Press 2010).
4. As a class B non-violent felony, enterprise corruption is punishable with a mandatory minimum sentence of 1- to 3-years imprisonment and a maximum of 8 1/3 to 25 years imprisonment. P.L. §70.00)(2)(b) & (3)(b).
5. A person is guilty of aggravated enterprise corruption when he or she commits the crime of enterprise corruption and two or more of the acts that constitute his or her pattern of criminal activity are class B felonies or higher, and at least two acts are armed felonies or one act is such an armed felony and one act is a violation of subdivision two of §265.17 of Penal Law or one act is a class B violent felony and two are violations of subdivision two of §265.17. Aggravated enterprise corruption is a class A-I felony that carries a mandatory minimum sentence of 15 years to life. Cuomo signed the bill soon after it passed in the Assembly, and it is effective March 16, 2013. One prosecutor with experience in OCCA litigation opined that the addition of the aggravated enterprise corruption statute shows that there is no dispute that the legislature always intended enterprise corruption apply to any criminal enterprise and not just violent ones—a heretofore standard defense argument in attacking "white collar" indictments, despite the absence of a requirement that any of the criminal acts be violent offenses.
6. Tales From the Sausage Factory, supra note 3, at p. 120.
7. July 18, 1986 Feldman letter to Evan Davis, counsel to Cuomo. The legislature amended the joinder provisions of the Criminal Procedure Law to assuage these concerns. C.P.L. §200.40(1)(d)(i) provides that defendants who are not charged with enterprise corruption may not be joined with those who are, even if the they committed some crimes that amounted to pattern acts charged in the enterprise. §200.40(1)(d)(ii) provides that no offense may be charged in the indictment that is not also charged as a pattern act. Finally, joinder of both the defendants and the substantive offenses is permissible only if, without relying on the enterprise corruption count, each defendant could have been jointly charged under C.P.L. §200.40(1)(a)(b) or (c) with at least one other defendant in an indictment charging at least one pattern act.
8. At oral argument one of the judges of the court noted it was clear that the legislature’s intent was drafting a statute that was not as broad as RICO. http://www.nycourts.gov/ctapps/arguments/2012/Sep12/Sep12_OA.htm (People v. Western Express, No. 156, Sept. 5, 2012).
9. People v. Western Express, 19 N.Y.3d 652 at n. 3.
10 See Bill Jacket for L. 1986, Ch. 516, Governor’s Approval Memorandum for Assembly Bill No. 11726 (July 24, 1986). One early example of an "ad hoc association" enterprise corruption, which ended in a dismissal, was People v. Yarmy, 171 Misc.2d 13 (Sup. Ct. N.Y. Co. 1996). Yarmy involved one defendant who provided firearms to a second defendant who occasionally sold them with assistance of others.
11. See People v. Wakefield Financial, 155 Misc.2d 775, 786 (Sup. Ct. N.Y. Co. 1992) (recognizing that the legislature intended the statute to cover any form of organized criminal activity conducted through the structure of a criminal enterprise, "notwithstanding the absence of La Cosa Nostra" involvement); People v. Joseph Stevens, 31 Misc.3d 1223 (A), 2011 WL 1757051 (Sup. Ct. N.Y. Co. 2011) (concept of criminal enterprise should not be limited to traditional criminal syndicates or crime families, and may include persons who join together in a criminal enterprise for the purpose of corrupting legitimate enterprises). Indeed, OCCA has often been used successfully to prosecute a huge range of criminal activity, including white-collar defendants, and the appellate courts have repeatedly affirmed these convictions. See People v. Nicelli, 74 A.D.3d 1235 (2d Dept. 2010) (funeral director who was one of several participating in a human-tissue harvesting enterprise); People v. Thomas, 55 A.D.3d 357 (1st Dept. 2008) (securities firm); People v. Marasa, 32 A.D.3d 369 (1st Dept. 2006) (group committing stock fraud); People v. AS Goldmen, 9 A.D.3d 283 (1st Dept. 2004) (brokerage firm); People v. Basbus, 68 A.D.3d 441 (1st Dept. 2009) (doctor working in no-fault insurance clinic).
12. In enacting the statute, the legislature cautioned that: "this article is not intended to be employed to prosecute relatively minor or isolated acts of criminality which, while related to an enterprise and arguably part of a pattern as defined in this article, can be adequately and more fairly prosecuted as separate offenses. Similarly, particular defendants may play so minor a role in a criminal enterprise that their culpability would be unfairly distorted by prosecution and punishment for participation in the enterprise." Penal Law §460.00.
13. See, e.g., People v. Salzarulo, NYLJ, Feb. 14, 1996, p. 30, col. 6 (enterprise-corruption charge dismissed as to one person on "the bottom tier" of the enterprise, who was a "late comer" and committed only three criminal acts during a brief two-month period).
14. "The legislature inserted this provision, CPL 200.65, to assure that the indictment has received personal review and concurrence in the charge by the chief prosecuting officer of the jurisdiction." People v. Gary, 34 Misc.3d 523, 527 (Sup. Ct. Nassau Co. 2011). The district attorney’s failure to timely file a certification is not fatal where evidence establishes that the district attorney had knowledge of the evidence and approved the indictment. Gary, 34 Misc.3d at 530.
15. A bill, S2807, to remove the requirement of a "structure distinct from a pattern of criminal activity," was proposed in February 2005 but not acted upon.
16. A bill is pending in the Senate to include Identity Theft related offenses as criminal acts under OCCA. That bill, S7862-2011, sponsored by Sen. José Peralta was referred to the rules committee on Oct. 26, 2012. Perhaps by the time it proceeds to a vote there will be additional criminal acts that the legislature may seek to add-in enacting the crime of aggravated enterprise corruption it appears that §460.10(1) was not amended to add the crime of criminal purchase or disposal of a weapon contained in P.L. 265.17(2) as a designated crimes-disqualifying it from inclusion in a charge of enterprise corruption.
17. Some cynical observers have noted that the legislature did not see fit to include offenses relating to bribery of public servants under Penal Law article 200 or receipt of Bribes and unlawful fees and payments under §§76 and 77 of the state’s Public Officer’s law as designated criminal acts.
18. Early reported decisions found judges dismissing OCCA charges where the crimes committed were not committed in order to participate in or advance the affairs of the enterprise. For instance, in People v. Cantarella, 160 Misc.2d 8 (Sup. Ct. N.Y. Co. 1993) the court found there was "no evidence that the defendant’s possession of the firearm at his home furthered or was intended in any manner to further the affairs of the [enterprise]." The court also dismissed pattern acts related to another defendant’s schemes that were personal in nature to that defendant and not connected to the enterprise.
19. Conigliaro was a gambling operation; People v. Johnson, 32 A.D.3d 761 (1st Dept. 2006) and People v. Montano, 25 A.D.3d 323 (1st Dept. 2006) were sophisticated burglary rings; People v. Basbus, 68 A.D.3d 441 (1st Dept. 2009) and People v. Pustilnik, 14 Misc.3d 1237A (Sup. Ct. N.Y. Co. 2007) were engaged in large scale insurance fraud.
20. Over this past summer, New York County District Attorney Cyrus R. Vance Jr. brought enterprise corruption charges against two dozen individuals for their participation in a city-wide ring that sold illegal weapons, including assault weapons, and motorcycles that they had stolen. http://manhattanda.org/press-release/da-vance-and-commissioner-kelly-announce-indictment-major-motorcycle-and-firearms-traf. In return for this expanded venue, P.L. §460.60(2) & (3) requires that the charging prosecutor obtain the consent of the "affected district attorneys," those who would normally have jurisdiction over the conduct. "The failure to obtain from any district attorney the consent required by subdivision two or three of this section shall not be grounds for dismissal of the accusatory instrument or for any other relief upon motion of a defendant in the criminal action." P.L. 460.60(6).
21. Barone, while not an outlier per se, is certainly a case whose application is arguably limited to its own specific facts or lack thereof as found by Judge James Catterson who wrote the majority opinion—believed to be his last.