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July 2, 1999


The opinion of the court was delivered by: Scheindlin, District Judge.


Brett K. Lurie ("Lurie" or "petitioner") has moved for reconsideration of that portion of the Opinion and Order dated April 26, 1999 ("Opinion and Order") denying habeas relief as to Count 28. Respondents have cross-moved for reconsideration of the entire Opinion and Order. On April 30, 1999, I withdrew the Opinion and Order pending the outcome of these motions. For the following reasons, I deny both motions and now re-instate the April 26, 1999 Opinion and Order.


Petitioner was convicted, in Count 28, of violating section 175.35 of the New York Penal Law by filing a false instrument on November 1 to 3, 1989, to wit, the fourth amendment to the offering plan for the premises at 488 Ocean Parkway (the "Edgewood"). Section 175.35 reads as follows:

  A person is guilty of offering a false instrument for
  filing in the first degree when, knowing that a
  written instrument contains a false statement or
  false information, and with intent to defraud the
  state or any political subdivision, public authority
  or public benefit corporation of the state, he offers
  or presents it to a public office, public servant,
  public authority or public benefit corporation with
  the knowledge or belief that it will be filed with,
  registered or recorded in or otherwise become a part
  of the records of such public office, public servant,
  public authority or public corporation.

N Y Penal Law § 175.35. Petitioner's false statement, in part, is found at the end of the fourth amendment to the Offering Plan, which states: "Except as set forth in this Fourth Amendment and the first three amendments to the plan, there have been no material changes in this plan." See pp. 119-120, infra, for a discussion of materiality. In fact, at the time this amendment was filed, petitioner was in substantial arrears on both the mortgage and maintenance payments.*fn2 See Letter dated May 19, 1999 from Mark M. Baker, Esq., counsel for petitioner ("May 19th letter"), Exh. F, pp. 2285 & 2287. See also id., Exh. D, p. 5 (for comparable language used in the fifth amendment to the Edgewood plan).

Petitioner's Motion for Reconsideration

Petitioner argues that Count 28 should be overturned on the ground that the precluded testimony of Richard Koral, his real estate attorney, would have negated a finding of fraudulent intent. He supports this conclusion by citing to certain changes made to the applicable New York City Regulations which were not disclosed and did not take effect until after November 3, 1989.*fn3 As a result of these changes, amendments must now disclose:

  (vi) A statement as to whether the sponsor or
  holder(s) of unsold shares is current on all
  financial obligations to the cooperative, including,
  but not limited to, payment of maintenance, . . . In
  addition, state whether the sponsor or holder(s) of
  unsold shares is current on payments of underlying
  mortgages and all obligations under financing
  arrangements for which unsold shares have been
  pledged as collateral. . . .

13 N.Y.C.R.R. § 18.5(c)(3)(vi). According to petitioner, once it was announced on December 12, 1989 that these new requirements would soon be implemented, he was advised by Mr. Koral to include the above information in new amendments, which he did in a later filed fifth amendment to the Edgewood plan. See May 19th letter, p. 10 & Exh. D, p. 4.

Petitioner's argument is unavailing for a number of reasons. First and foremost, the requirement to disclose arrears in mortgage and maintenance payments was not newly enacted with the 1990 changes. In fact, 13 N.Y.C.R.R. § 18.5(a)(2), which was part of original Part 18 adopted on June 2, 1982, states that:

  (2) An amendment must include a representation that
  all material changes of facts or circumstances
  affecting the property or the offering are included,
  unless the changes were described in prior
  amendment(s) submitted to but not yet filed with the
  Department of Law.

It is beyond dispute that the failure to make mortgage and maintenance payments is a material change of facts and circumstances. See State v. Rachmani Corp., 71 N.Y.2d 718, 530 N.Y.S.2d 58, 62, 525 N.E.2d 704 (1988) (an omitted fact is material if it would have "significantly altered the `total mix' of information made available" to a reasonable investor) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976)). In addition, Mary DiStephan, an expert witness at trial, made the following statement in her affidavit in Opposition to the Motion to Dismiss:

  Finally, in August, 1990, the Attorney General
  promulgated regulations expanding the disclosures
  which would be required even if there were no
  default, on at least an annual basis, of the
  sponsor's total financial condition even in other
  projects where the sponsor or a principal of the
  sponsor owned in excess of ten percent of the shares
  or units. . . . This requirement to file an updating
  financial disclosure amendment at least annually
  expanded and supplemented the already existing
  requirement (existing almost 30 years) to immediately
  amend the offering plan whenever there is a material
  change of fact or circumstance affecting the

May 19th letter, Exh. A, pp. 5-6 (emphasis added). Therefore, although the 1990 changes delineated the precise financial information to be included in amendments, the duty to disclose sponsor defaults was already well-established.*fn4 Given this clearly delineated duty, it is inconceivable how any testimony from Richard Koral would impact on petitioner's fraudulent intent. Moreover, the evidence that would have been presented by Richard Koral is ambiguous. During the state court proceeding, petitioner's trial attorney told the judge:

  Mr. Koral will come in and testify that, in fact it
  was his interpretation and his advice among other
  attorneys and there will be documents that we will
  submit which will show that it was his belief and Mr.
  Lurie compiled and that when the law changed on
  October 15[sic], Mr. Lurie had to file those
  amendments immediately.

A 951. Arguably, Koral's testimony would only explain why Lurie filed an accurate fifth amendment to the Edgewood Plan. The proffer of Koral's testimony does not include any representation by Koral that the fourth amendment to the Edgewood property was done in accordance with then-existing law based on his advice. Koral's proposed testimony is therefore irrelevant to Count 28. The exclusion of irrelevant evidence cannot support a violation of petitioner's Sixth Amendment right to present a defense. See U.S. ex rel. Ashford v. Director, Illinois Dep't of Corrections, 871 F.2d 680, 686 (7th Cir. 1989), overruled on other grounds by, Tague v. Richards, 3 F.3d 1133, 1140 (7th Cir. 1993) (such a violation occurs when the "testimonial evidence to be presented by the witness `was relevant, material, and vital to the defense, and . . . the exclusion of that evidence was arbitrary'") (quoting Lange v. Young, 869 F.2d 1008, 1011 (7th Cir. 1989)).

Even assuming, arguendo, that Koral addressed the content of the fourth amendment, it is nonetheless irrelevant to Count 28 for other reasons — namely the representations made by Lurie himself. The fourth amendment to the Edgewood property, much like the fifth amendment, contains a "No Material Changes" provision wherein Lurie stated that there have been no material changes in the plan despite the fact he was in default on the mortgage and maintenance payments. Lurie made a similar representation in the certifications filed with respect to the original offering plans, including the offering plan for the Edgewood property. See A 784 (where Mary DiStephan testified that "all of the Lurie plans have this identical certification"). With regard to each property, Lurie certified, in part:

  I am the sponsor and/or the principle [sic] of
  sponsor of the offering to convert the subject
  property to cooperative ownership. I understand that
  I have primary responsibility for compliance with the
  provisions of Article 23-A of the general business
  law, the regulation permigated (ph) by the Attorney

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