People v. Lessoff & Berger
1994 N.Y. Misc. LEXIS 33, 159 Misc. 2d 1096, 608 N.Y.S.2d 54 (1994)
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Rule of Law:
A partnership, as a legal entity, may be held criminally liable for the fraudulent acts of a single partner committed in the name of and within the scope of the partnership's business, even if the other partners were not involved in or aware of the misconduct.
Facts:
- Lessoff, a partner in a law firm, referred his personal injury clients to a specific radiologist for examinations.
- Lessoff instructed the radiologist to alter MRI reports to remove any information about injuries that existed before the clients' accidents or were not caused by trauma.
- The purpose of altering the reports was to use them as false pretenses to obtain money from insurers and defendants, including the New York City Transit Authority.
- Throughout these events, Lessoff was acting in the name of his law partnership.
- Unbeknownst to Lessoff, the radiologist was cooperating with the District Attorney’s office and acting as an undercover agent.
- The radiologist secretly recorded his telephone conversations with Lessoff regarding the alteration of the reports.
- There was no evidence presented to the Grand Jury that any other partner or employee of the law firm was involved in the alleged crimes.
Procedural Posture:
- A grand jury returned an indictment charging attorney Lessoff and his law partnership with crimes including insurance fraud, falsifying business records, and attempted grand larceny.
- The defendant law partnership filed a motion in the trial court (Supreme Court, Suffolk County) to dismiss the indictment against it, arguing that it could not be held liable for the acts of a single partner.
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Issue:
May a law partnership be criminally indicted for fraud-related offenses when the alleged criminal acts were committed by only one partner acting in the name of the firm?
Opinions:
Majority - Juviler, J.
Yes, a law partnership may be criminally indicted for the acts of a single partner. The court held that the plain language of New York's Penal Law authorizes such an indictment. The law defines a 'person' who can be charged with a crime to include a 'partnership' and a 'firm.' The court found this interpretation consistent with federal precedent holding that a partnership can be liable apart from the individual partners' knowledge. The court analogized this to corporate criminal liability for the acts of a 'high managerial agent' and to civil tort principles where a partnership is responsible for the misconduct of one partner. The court reasoned that this is especially appropriate for law partnerships, which benefit financially from a partner's conduct and are subject to a strong public interest in regulating legal ethics.
Analysis:
This decision solidifies the legal principle that partnerships can be subject to criminal prosecution as distinct entities, similar to corporations. It extends the concept of vicarious liability from the civil context into the criminal sphere for partnerships in New York. The ruling serves as a significant warning to partnerships, particularly professional firms like law and medical practices, that they must have robust oversight mechanisms, as the criminal conduct of a single partner acting within the firm's business can expose the entire entity to criminal charges, fines, and severe reputational harm.
