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Tuesday, April 15, 2008

Forecast – Slushy?

New York City Council President (and presumptive 2009 mayoral candidate) Christine Quinn has retained criminal defense attorney Lee Richards III to represent her in connection with the Council’s budget scandal. The U.S. Attorney for the Southern District of New York claims that the Council set up phony groups to hold and hide money – more than $17 million over the past six years – in so-called slush fund accounts that were later used to cover shortfalls in the city budget.

In an article in Sunday’s New York Post, which broke the story on April 3, a “law enforcement source familiar with the probe” is quoted as saying: “If you pick up a phone and tell someone to do something illegal, that’s wire fraud. If you send a check, that’s mail fraud.”

Not quite. There’s more to making a wire and mail fraud case than a phone call and a check. There must be proof beyond a reasonable doubt that a misrepresentation was made to a person or entity and that an overall scheme to defraud existed. If the purpose of the accounts was to take care of periodic shortfalls in the budget, there was no such scheme. Moreover, it sounds as though everyone on the Council knew about the practice and thought it was perfectly legal. So no one was fooled, and there was no misrepresentation. In fact, there’s an uproar from other Council members that Quinn wants to change things. Quinn may even have sought the advice of counsel before setting up the accounts. This would constitute a complete defense to mail and wire fraud charges, as long as she relied on her lawyer’s advice in good faith.

In any event, Quinn has chosen well by hiring Lee Richards. He is a former federal prosecutor with a reputation for knowing how to negotiate a good result rather than going to war in a courtroom. He will certainly insist that prosecutors produce proper evidence of fraud rather than the kind of flimsy purported elements of offenses that are being leaked to the press. CR

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