People v. Jennings

504 N.E.2d 1079 (1986)

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Nature of the Case

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Facts

Sentry Armored Courier Corp.'s (D) warehouse in Bronx County was burglarized and robbed of some $11 million by individuals unconnected to D, who were later apprehended and prosecuted. In the aftermath of the robbery, the Bronx County District Attorney's office focused its attention on D's-own business practices. A series of indictments charging D and its principals with various counts of larceny and misapplication of property ensued. The Repurchase Agreement Plain indictment showed that D had an agreement with its client, Chemical Bank, under which D was to pick up from Chemical's Water Street offices certain 'bulk deposits' that Chemical had received from its commercial customers. D was to 'fine count' this money in its warehouse and then deliver it within 72 hours to Chemical's account at the Federal Reserve Bank in lower Manhattan, reporting any overages or shortages discovered in the counting process. D was able to perform the 'fine counting' task in approximately 24 hours, considerably less time than the 72 hours its agreement with Chemical allowed. D made a deal with Hudson Valley National Bank, for the 'fine counted' money to be delivered to Hudson's account at the Federal Reserve Bank, with the funds to be credited to D's newly created escrow account with Hudson. An employee of D was to call Hudson and specify the amount that was to be used to buy 'repurchase agreements' from that bank. Under these 'repurchase agreements,' Hudson was given the right to invest the money, while D's account was debited in an appropriate amount. The loan was secured by A-rated bonds held in Hudson's Federal Reserve Bank vault. When the money was due, Chemical Hudson would 'repurchase' the bonds from D by crediting D's escrow account with the principal amount plus a portion of the interest Hudson had earned on its investments. Hudson would then wire transfer the principal amount to Chemical's account at the Federal Reserve Bank, leaving D's account enriched by the amount of the interest payment. Chemical had noticed that its funds were being routed through Hudson and demanded an explanation. D was directed to deliver the 'fine counted' money directly to Chemical's account at the Federal Reserve Bank. Despite this admonition, D continued its practice of routing the money through Hudson until Chemical terminated the agreement. D gained a total of nearly $17,000 in interest. Another set of charges arose from a second business arrangement that D had with Chemical Bank. D kept a 'rolling inventory' of Chemical's dollar bills and coins in a segregated area of its money room. This money was to be delivered to various branches of Waldbaum's supermarket, whenever a need for additional cash arose. Ds allegedly took some $100,000 out of this 'rolling inventory' and deposited it in a 'compensatory balance' account at Citibank. This enabled D to obtain a lower interest rate on a refinanced equipment loan it had with Citibank. There were no restrictions on D's use of the 'compensatory balance' account, and D's principals had full access to its funds at all times. An audit revealed substantial shortages in the 'rolling inventory,' and, as a consequence, the chairman of D's board of directors attempted to withdraw the funds in the Citibank account. Citibank refused and instead called in the demand portion of D's equipment loan, freezing the 'compensatory balance' account in an apparent preliminary attempt to set off its claim against D. On January 11, 1983, D returned Chemical's 'rolling inventory' with a shortage of over $122,000. An additional $25,000 in dimes was returned the following day, but Chemical never recovered the remaining $97,000. Ds were charged with second-degree grand larceny and misapplication of property. The indictment was dismissed by Justice Goldfluss but was reinstated on P's appeal to the Appellate Division. Jennings (D1) was also charged, with having committed second-degree larceny by failing to remit insurance proceeds. D's armored car was robbed of more than $231,000 after having made several cash pick-ups. About two months after this robbery, D's insurer sent it a $20,985.54 check in full settlement of its insurance claim. This check represented payment for the losses sustained by three of Sentry's clients. Sentry reimbursed one of those clients, Queensboro Farm Products, for the full amount of its $18,620 loss, but did not distribute the remainder of the insurance proceeds to its other two clients, Amity Westchester and City Hospital Center of Elmhurst, each of which had sustained losses in excess of the $2,365 balance and had submitted proof of loss. D retained the excess proceeds for itself, an act which led to the present second-degree grand larceny charge against D1. The question presented for consideration is whether the indictments' allegations concerning Ds' handling of the money entrusted to their care would, if proven, support convictions for the crimes charged.