New York Scheme to Defraud Charges Explained

New York Scheme to Defraud charges do not apply to episodic or individual acts designed to defraud or obtain property from another, unless these acts are part of a cohesive continuing system or plan. Scheme to Defraud charges are established by a pattern of behavior, rather than multiple victims. The fraudulent acts, which are part of the scheme to defraud do not need to be identical, rather, they need to have the common element of achieving the intended purpose of the scheme to defraud.

Degrees of New York Scheme to Defraud Charges

There are three New York Scheme to Defraud Charges:

  • Scheme to Defraud in the First Degree (Penal Law 190.65)
  • Scheme to Defraud in the Second Degree (Penal Law 190.60)
  • Scheme to Defraud the State By Unlawfully Selling Prescriptions (Penal Law 190.70)

Scheme to Defraud in the Second Degree

Under New York Penal Law Section 190.60, a person is guilty of a Scheme to Defraud in the Second Degree when:

  1. S/he engages in a scheme constituting a systematic ongoing course of conduct, AND
  2. With intent to defraud more than one person or to obtain property from more than one person by false or fraudulent pretenses, representations or promises, AND so obtains property from one or more of such persons.

How is Intent to Defraud Proven for New York Scheme to Defraud?

Intent is the invisible operation of someone’s mind. As it is not something you can see, feel or touch, intent for New York Scheme to Defraud cannot be proven by direct evidence. Rather, intent is something that is established through circumstantial evidence, or evidence from which the intent can be inferred. The required intent for Scheme to Defraud charges in New York is intentional. That means that the actor engaged in conduct that s/he wanted to produce a certain result. Specifically, the following evidence may be used to establish intentional intent:

  • Defendant’s knowledge of deceptive, dishonest or manipulative practice;
  • Preparation, omission, misleading statements to induce the intended victim to participate in the fraudulent scheme;
  • Knowledge of deceptive practices employed by others;
  • Personal profit from the deceptive scheme.

Examples of Cases Where Court Found Intent to Defraud

On these New York Scheme to Defraud cases, the Courts have decided that intent to defraud existed:

  • Theft of 10 million dollars from two corporate clients over the course of two years (In re Arnstein, 960 N.Y.S.2d 640 (2013));
  • Blatantly false statements to investors, proof of establishment of the scheme to defraud is not needed, when willing participation in the scheme is proven (People v. Rosado, 28 A.D.3d 215 (2006)).

Identity of At Least One Victim is Required

For New York schemes to defraud, the prosecutor is required to prove the identity of at least one person from whom the defendant obtained property. However, there is no requirement to prove the identity of any other intended victim. This provision is different from Grand Larceny Prosecutions, where proof of every alleged victim’s identity is required. Thus, Schemes to Defraud Prosecutions are easier to prosecute than Grand Larceny by trick.

Penalties and Sentencing for Scheme to Defraud in the Second Degree

Scheme to Defraud in the Second Degree is a Class A Misdemeanor. As such, this charge is punishable by up to 1 year in prison. This charge can also be punishable by up to 3 years probation. Additionally, a fine of up to $1,000 or twice the wrongful proceeds of the offense can be imposed on the New York Scheme to Defraud in the Second Degree charge.

Scheme to Defraud in the First Degree

Under New York Penal Law Section 190.65, a person is guilty of a Scheme to Defraud in the First Degree when: s/he engages in a scheme constituting a systematic ongoing course of conduct, AND:

  1. With intent to defraud 10 or more persons or to obtain property from 10 or more persons by false or fraudulent pretenses, representations or promises, so obtains property from one or more of such persons; OR
  2. Engages in a scheme constituting a systematic ongoing course of conduct with intent to defraud more than one person or to obtain property from more than one person by false or fraudulent pretenses, representations or promises, and obtains property with a value over $1,000 from one or more such persons; OR
  3. Engages in a scheme constituting a systematic ongoing course of conduct with intent to defraud more than one person, one of whom is a vulnerable elderly person AND so obtains property from one or more such persons by false or fraudulent pretenses, representations or promises.

Proof of Identity of at Least One Victim is Required

Similarly to prosecutions under New York Scheme to Defraud in the First Degree, the prosecutor must prove the identity of at least one victim, but it is not necessary to prove the identity of all victims. Additionally, for prosecutions involving vulnerable victims, the prosecutor must prove the identity of at least one vulnerable elderly person.

Who is A Vulnerable Elderly Person For the Purposes of New York Scheme to Defraud in the First Degree

The legal definition of who is a vulnerable elderly person for the purposes of New York Scheme to Defraud in the First Degree comes from New York Penal Law Section 260.31. The statute provides that a vulnerable elderly person is someone (1) 60 years old or older AND (2) suffering from a disease or infirmity associated with advanced age and manifested by demonstrable physical, mental or emotional dysfunction to the extent that the person is incapable of adequately providing for his or her own health or personal care.

Penalties and Sentencing for Scheme to Defraud in the First Degree

New York Scheme to Defraud in the First Degree is a Class E Non-violent Felony. As such, this charge is punishable by up to 1 1/3 to 4 years in prison or up to 5 years probation. In the alternative, this New York Scheme to Defraud change can be punishable by a conditional discharge. Additionally, there may be a fine up to 5,000 or twice the criminal gains from the offense.

Scheme to Defraud Accessorial Liability

New York Criminal Laws permit Scheme to Defraud prosecutions of individuals for the criminal conduct of another, so long as they were acting with the same culpable mental state. The legal theory of acting in concert applies when an individual “acting with the mental culpability required for the commission of [such conduct], he solicits, requests, commands, importunes, or intentionally aids such person to engage in such conduct.”

Thus, an individual who participates in the scheme to defraud, may be charged for the criminal conduct of another, so long as he has the same culpable mental state as the individual who commits the fraudulent acts. This applies even if the individual who was acting in concert did not commit as many acts as the main wrongdoer, or did not know about all the parts of the criminal scheme.

Scheme to Defraud the State by Unlawfully Selling Prescriptions

New York has a separate criminal charge for Unlawful Sale of Prescriptions with intent to defraud the state. This charge is used rather infrequently, because there are overlapping charges on both the federal and state levels. For example, on the state level, New York has narcotics distribution charges and healthcare fraud charges. Additionally, on the federal level, there are narcotics distribution charges, healthcare fraud charges and wire fraud charges.

Elements of Scheme to Defraud the State by Unlawfully Selling Prescriptions

Under New York Law Section 190.70, a person is guilty of a Scheme to Defraud the State by Unlawfully Selling Prescriptions when:

  1. He or she engages in a scheme constituting a systematic, ongoing course of conduct to make, sell, deliver for sale or offer for sale one or more prescriptions; AND
  2. With intent to defraud the state, AND
  3. So obtains goods or services from the state with a value more than $1,000 OR causes the state to reimburse another more than $1,000 for the delivery of such goods or services.

Penalties and Sentencing for Scheme to Defraud the State By Unlawfully Selling Prescriptions

New York Scheme to Defraud the State by Unlawfully Selling Prescriptions is a Class A misdemeanor. Under New York Penal Law, Class A misdemeanors are punishable by up to 1 year in prison or up to 3 years probation. Additionally, on this New York Scheme to Defraud charge a fine of up to $1,000 or twice the pecuniary gains of the offense can be imposed.

Charges Frequently Charged with New York Scheme to Defraud

Prosecutors often couple up New York Scheme to Defraud Charges with other crimes, such as:

  • Larceny (frequently, under the theory of larceny by false pretense or false promise), AND
  • Falsifying Business Records, AND
  • Criminal Sale of a Controlled Substance (for Unlawful Sale of Prescriptions), AND
  • Narcotics Distribution (for Unlawful Sale of Prescriptions), AND
  • Healthcare Fraud Charges, AND
  • Wire Fraud Charges.

Contact Top Rated New York Scheme to Defraud Defense Attorneys

If you have been arrested or charged with a New York Scheme to Defraud, you need experienced criminal defense attorneys by your side. These charges can leave you with a permanent criminal record and can also result in jail time. Please contact us to schedule a confidential consultation today.