Morgenthau v Vinarsky

[*1] Morgenthau v Vinarsky 2008 NY Slip Op 52411(U) [21 Misc 3d 1137(A)] Decided on October 28, 2008 Supreme Court, New York County Shulman, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on October 28, 2008
Supreme Court, New York County

Robert M. Morgenthau, District Attorney, New York County, Plaintiff-Claiming Authority, Plaintiff,

against

Gregory Vinarsky a/k/a Gary Vinarsky ARON GOLDMAN, CHANTAL HILAIRE MATTHEW KESCHNER, YAKOV BLETNITSKIY, YING MU, ROMAN TABAKMAN, NIRMALEE MARRERO, NATALIA NEVEROVA, NIDIA CORADIN, ELEUTERIO SUERO, a/k/a Tim, a/k/a Jose SAINT NICHOLAS AV. MEDICAL CARE, P.C., ORIENT ACUPUNCTURE SERVICE P.C., MATTHEW G. KESCHNER, D.C., P.C., CHIROPRACTIC SPECIALTIES OF NEW YORK, LLC, EAST SIDE NEURO DIAGNOSTICS, P.C., ROMAN MEDICAL SERVICES, P.C., SAINT NICHOLAS AVE. REALTY, INC., REVICK REALTY INC., UPPERSIDE MGT. CO., INC., VIGAR MANAGEMENT CO., INC., Defendants.



400514/08



ADA Suzanne Herbert

NY County District Attorney's Office

Attn: Asset Forfeiture Unit

Attorneys for Plaintiff

1 Hogan Place New York, NY 10013

212.335.9000

Kyle B. Watters, Esq.

Watters & Svetkey, LLP

Attorneys for Defendants

286 Madison Avenue

New York, NY 10017

212.679.8999

Martin Shulman, J.

On June 13, 2008, this court issued its Decision and Order granting Plaintiff's application for a preliminary injunction (CPLR §1333) and order of attachment (CPLR §1316) (the "PI Order") and denied the St. Nich. Group's cross-motion and Goldman's OSC in their entirety.[FN1] The earlier round of motion practice ensued after the District Attorney commenced an Article 13-A forfeiture action against the St. Nich. Group to recover the Forfeiture Sum (i.e., $6,270,980.97) that purportedly represents the proceeds, substitute proceeds and/or instrumentalities of Defendants' criminal activity, to wit, allegedly defrauding no-fault insurance carriers in relation to no-fault insurance claims.

The Vinarsky Entities or non-medical defendants have moved to reargue and/or renew their cross-motion to dismiss the DA's application for a preliminary injunction restraining Vinarsky from having access to, and use of, his money or other assets. Essentially, the Vinarsky Entities contend that the PI Order overlooked two critical factors which they believe formed the basis of the Kohl Decision: (1) the absence of an affidavit from Kohl, the criminal defendant, denying the allegations contained in the indictment; and (2) an indictment supported by sufficient competent and prima facie evidence (Watters Aff. in support of Reargument Motion at ¶ 4), the latter of which was purportedly never proffered in support of the DA OSC for provisional relief. Stated differently, because Supreme Court Criminal Term has yet to rule on the sufficiency of the 84 count indictment against the St. Nich. Group and Vinarsky submitted an affidavit contesting Plaintiff's proof in support of the DA OSC, the court's reliance on the Kohl Decision was misplaced, warranting vacatur of the preliminary injunction/order of attachment. Counsel for the non-medical defendants characterizes the Vinarsky affidavit (Exhibit B to Reargument Motion) as "a detailed factual refutation of each and every charge in the indictment . . ." (Watters Aff. in support of Reargument Motion at ¶ 13).

Non-medical defendants further argue that the court failed to precisely determine the exact sum of money which constitutes the proceeds of criminal activity requiring judicial restraint as the Forfeiture Sum is a "gross distortion of the product of the illegal [*2]enterprise if it existed . . ." (Watters Aff. in support of Reargument Motion at ¶ 21). In this context, and in support of their motion seeking renewal, non-medical defendants rely on a recent U.S. Supreme Court decision, U.S. v. Santos, 128 S. Ct. 2020, 2008 U.S. LEXIS 4699 (2008) (the "Santos Decision"), which ostensibly requires the DA to only target the profits of criminal activity, not its total receipts, that is to say, the underlying expenses in operating a criminal enterprise which defendants claim can never be subject to forfeiture as criminal proceeds. Thus, the Vinarsky Entities contend the court erred in not setting the matter down for a hearing to determine what portion of the Forfeiture Sum is profits rather than expenses as only the former would be subject to judicial restraint.

In opposition, the DA inter alia generally claims non-medical defendants' reargument motion simply recycles arguments made in their earlier cross motion; wrongly infers that the PI Order solely relied on the Kohl Decision to support its ratio decidendi; the underlying 84 count indictment is presumptively valid; uses their reargument motion to continue to bypass criminal proceedings by having this court test the sufficiency of the indictment; the Vinarsky affidavit [FN2] "is a self-serving, hollow document that is obviously of no evidentiary value . . ." (Herbert Opp. Aff. at ¶ 20); the DA is fully complying with all defendants' discovery requests in the parallel criminal action before Supreme Court Criminal Term; and the Santos Decision furnishes a new definition of "proceeds" as to what would be forfeitable under a federal money laundering statute and is inapplicable here because CPLR Article 13-A has its own definition of "proceeds,"[FN3] vitiating non-medical defendants' argument for a more limited restraining order.Discussion

CPLR §2221 states as follows:

Motion affecting prior order.

(a) A motion for leave to renew or to reargue a prior motion, for leave to appeal from, or to stay, vacate or modify, an order shall be made, on notice, to the judge who signed the order, unless he or she is for any reason unable to hear it . . .

A motion for reargument, addressed to the discretion of the court, is designed to afford a party an opportunity to establish that the court overlooked or misapprehended the relevant facts, or misapplied any controlling principle of law. Foley v. Roche, 68 AD2d 558, 418 NYS2d 588 (1st Dept. 1979). Motions for leave to reargue are not [*3]designed to provide an unsuccessful party with successive opportunities to reargue issues previously decided, or to present arguments different from those originally presented. Pro Brokerage, Inc. v. Home Ins. Co., 99 AD2d 971, 472 NYS2d 661

(1st Dept. 1984); see also, William P. Pahl Equipment Corp. v. Kassis, 182 AD2d 22, 588 NYS2d 8 (1st Dept. 1992).

The Vinarsky Entities' underlying cross-motion and their present reargument motion via attorney affirmations challenge the indictment in opposition to Plaintiff's application for provisional relief. In this context, the carefully crafted Vinarsky Affidavit (Exhibit B to Reargument Motion) is instructive for what it does not say (e.g., there is not a single factual statement attesting that every single bill Vinarsky and the relevant Vinarsky Entities submitted as part of its billing and fee collection services for medical services rendered to vehicle accident victims to no-fault insurance carriers during the investigation period were true and correct and fully corroborated by medical records and other relevant competent evidence). The indictment does not charge Vinarsky with practicing medicine without a license. Yet, in ¶¶ 7, 8, 12, 13 and 15 of his sworn affidavit, Vinarsky denies engaging in the diagnosis and treatment of any accident patient and/or St. Nich Group employees (as patients) who presented to co-defendants-health care providers with injuries resulting from motor vehicle accidents. As to credibility, these attested facts collectively comprise a red herring diverting one's attention from the notion that Vinarsky, an alleged mastermind of a criminal enterprise to defraud no-fault insurance carriers, conceivably could have structured a criminal enterprise to foster plausible deniability.

Further, non-medical defendants overstate this court's reliance on the Kohl Decision in issuing the PI Order. Preliminarily, the Kohl Decision primarily addressed the issue of whether a Justice of the Supreme Court Criminal Term was required to comply with an order of a Justice of the Supreme Court Civil Term to turn over Grand Jury minutes to assist the latter in determining the probable success of conviction to warrant civil forfeiture. More importantly, the Vinarsky Entities overlook the fact that it was Justice McLaughlin, sitting in Supreme Court Criminal Term at the time he issued the Kohl Decision, who had appropriately ruled on the sufficiency of the Grand Jury minutes to support a prima facie showing as to each count in the indictment against defendant Kohl. Thus, it is Supreme Court Criminal Term, and not this court, which must ultimately test the sufficiency of the indictment.

Pending that determination, when this court issued the PI Order, it was neither unreasonable, an abuse of discretion nor error for this court to inter alia give adequate weight to:

[a]n [84 count] Indictment regular on its face [which] must be presumed to have been properly returned by the Grand Jury. People v. Smith, 128 NYS2d 90, aff'd 283 A.D. 775, 129 N.Y.S2d 492 [1st Dept., 1954]. Furthermore, Grand Jury proceedings carry a presumption of regularity and to overcome that presumption, there must be a showing by the defendant of a particular need or gross and prejudicial irregularity in the proceedings or some other similarly compelling reason. People v. Lewis, 98 AD2d 853, 470 NYS2d 834 [3rd Dept., 1983] . . . (bracketed matter added).

[*4]See People v. Connolly, 28 Misc 3d 1117A, 856 NYS2d 500 (Sup. Ct., Seneca Co., 2008).

As stated in the PI Order, this indictment, the civil forfeiture complaint and the Guest Aff.[FN4], when read together, contained enough factual allegations about the St. Nich. Group's criminal enterprise to demonstrate a substantial probability that the DA will succeed here and non-medical defendants' counsel's rearguments have not persuaded this court to change its view of the matter. Accordingly, the branch of the Vinarsky Entities' motion for reargment is denied.

The branch of non-medical defendants' motion for renewal rests on the Santos Decision. However, their reliance on same is misplaced. As noted earlier, the U.S. Supreme Court had the occasion to refine the definition of the term "proceeds" to mean profits, rather than expenses generated from a money laundering scheme in violation of federal law. This is well and good under those circumstances. However, in this case, the DA is seeking forfeiture under State law and CPLR Article 13-A defines proceeds of a crime more broadly, viz., "[t]he statute defines proceeds of the crime' as any property obtained through the commission of a felony crime'. There is no requirement that a particular criminal defendant receive the proceeds or receive the benefit of the proceeds. . ." (emphasis added). Kuriansky v. Natural Mold Shoe Corp., 133 Misc 2d 489, 497, 506 NYS2d 940, 947 (Sup. Ct., Westchester Co., 1986). Thus, Kuriansky, supra , concludes that a profit making criminal venture per se is not a determinative factor to obtain forfeiture in New York. If this court were to adopt the Santos Decision's definition of proceeds of a crime, then no forfeiture action would ever lie against a "break-even" criminal enterprise or even one operating at a loss, which would be an absurd result. There is simply no legal basis to conduct any hearing to ascertain what portion of the restrained funds comprising a portion of the "total receipts", i.e., the Forfeiture Sum, are profits and what portion are expenses. Thus, the branch of the Vinarsky Entities' motion for renewal is denied as well.

Finally, without Vinarsky submitting any CPLR §1312(4) affidavit factually detailing hardship and/or the unavailability of other financial assets not subject to the PI Order or complying with the requisite disclosure, Vinarsky has not given this court any grounds to modify the PI Order to release funds needed for reasonable professional [*5]expenses and/or reasonable living expenses.[FN5] Generally, the St. Nich. Group, jointly and severally, are always free to avail themselves of pendente lite relief, if it is truly warranted.

The foregoing constitutes this court's Decision and Order. Courtesy copies of this Decision and Order have been sent to counsel for the Vinarsky Entities and Plaintiff.

Dated: New York, New York

October 28, 2008

Hon. Martin Shulman, J.S.C. Footnotes

Footnote 1: The defined terms used in the PI Order will be used in this Decision and Order.

Footnote 2: Inexplicably, the DA insists on claiming Vinarsky submitted an unsigned/unsworn affidavit in support if his underlying cross-motion. Presumably, the DA's service copy must have contained an unsigned copy of this defendant's affidavit. However, the original documents filed with the court do contain Vinarsky's duly sworn affidavit.

Footnote 3: CPLR §1311(1) allows Plaintiff the right to recover the "property which constitutes the proceeds of a crime, the substituted proceeds of a crime, an instrumentality of a crime or the real property instrumentality of a crime . . ."

Footnote 4: The Guest Aff. in support of the underlying DA OSC for provisional relief relies on information gleaned from defendants' bank and business records, conversations with insurance fraud investigators, undercover police officers and confidential informants, information gleaned from the undercover operation during the investigation period, etc. Indubitably, discovery in the parallel criminal proceeding, even with a protective order in place, will enable defendants ample opportunity to be informed about the evidentiary "muscles, tendons and ligaments" which connect and cover the skeletal frame work of the indictment and discern if the prosecution is truly viable.

Footnote 5: Notably, in ¶¶ 22 and 23 of the Vinarsky Affidavit executed in support of the underlying cross-motion and after this court issued a TRO, Vinarsky attests to taking no "steps to dissipate [his]. . . assets . . .", and that the then TRO imposed an extreme hardship on him and his wife preventing him "from going about [his] . . . daily existence with the ability to meet [his] . . . financial needs . . ." (bracketed matter added). With the prior issuance of the TRO, the credibility of Vinarsky's attested-to willingness to allow his property to be available for forfeiture if he is ultimately convicted of any of the crimes charged in the indictment can never be tested. Further, his conclusory claim of hardship, without more, simply does not comport with the operative statute otherwise allowing for the release of restrained funds.