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People v. Schonfeld

December 8, 2009

THE PEOPLE OF THE STATE OF NEW YORK, RESPONDENT,
v.
NORMAN SCHONFELD, DEFENDANT-APPELLANT.



Judgment, Supreme Court, New York County (Richard D. Carruthers, J.), rendered October 29, 2004, convicting defendant, after a jury trial, of criminal possession of stolen property in the second degree (five counts), criminal possession of stolen property in the third degree (two counts), grand larceny in the first degree, grand larceny in the second degree (nine counts), grand larceny in the third degree, scheme to defraud in the first degree, perjury in the first degree (three counts), forgery in the second degree (eleven counts), criminal possession of a forged instrument in the second degree (six counts), and sentencing him, as a second felony offender, to an aggregate term of 16 to 32 years and ordering him to pay $5,966,389.61 in restitution, modified, as a matter of discretion in the interest of justice, to reduce the sentence on the count of grand larceny in the first degree to an indeterminate term of from 8 1/2 to 17 years and to direct that the sentences for each of the counts of perjury in the first degree run concurrently with the sentences imposed on all other counts, and otherwise affirmed.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Gonzalez, P.J., Tom, Friedman, McGuire, Acosta, JJ.

3492/02 & 177/03

The court properly imposed restitution without a hearing. No such hearing is required unless a defendant requests one, or the record lacks sufficient evidence to support a restitution finding (Penal Law § 60.27[2]). Since defendant did not request a hearing until more than a month after the court calculated the amount of restitution and imposed sentence, the request was clearly untimely (see People v Seader, 278 AD2d 26 [2000], lv denied 96 NY2d 806 [2001]). Furthermore, the amount of restitution ordered was based upon sufficient evidence of loss, adduced during the trial (see People v Consalvo, 89 NY2d 140, 144 [1996]).

Under the particular circumstances presented herein, we find the sentence excessive to the extent indicated. Among the circumstances warranting a reduction in the sentence are the nonviolent nature of defendant's criminal conduct, defendant's age -- he was 63 at the time of trial -- and the need to ensure that the sentence not be disproportionate to the sentence imposed for similar crimes. In this latter regard, we agree with the dissenter that the "fairness of the criminal justice system requires . . . some measure of equality in the sentences meted out to defendants who commit the same or similar crimes" (People v Pedraza, 25 AD3d 394, 397 [2006, Tom, J., dissenting], lv denied 7 NY3d 760 [2006]). All concur except Tom and Acosta, JJ. who dissent in a memorandum by Tom, J. as follows: TOM, J. (dissenting)

Defendant's sentence was not unduly harsh and was clearly warranted under the circumstances of this case. The majority's rationale for sentence reduction is devoid of the mention of legitimate mitigating factors that warrant leniency and, by failing to enforce a penalty that serves as a means of deterring others who might be similarly tempted, sends the wrong message to an industry in which trust is essential to the everyday conduct of business.

By Wall Street standards, where losses due to fraudulent schemes are measured in the tens of billions of dollars, this one is not large, involving only some $6 million. But the damages sustained by its victims, among whom is defendant's own son, are extensive and reach beyond mere financial loss to include the erosion of trust that is the foundation which underlies the entire system of commerce in diamonds. In a business where millions of dollars are committed on a handshake and where a dealer's inventory can be carried off in the heel of a shoe, a particularly high premium is placed on personal integrity, and the extent to which defendant profited by his deceit is a poor measure of the damage to the reputation of those dealers whose misplaced trust inadvertently injured and threatened the livelihood of many others. The damage inflicted by defendant is compounded by the inappropriately lax penalty imposed as a result of the majority's reduction of his sentence.

Defendant gained an extensive knowledge of the diamond business, beginning work in the industry in 1956 and, in 1974, forming his own company, Norman Schonfeld Inc. The corporation dissolved in 1980, leaving its creditors with losses totaling some $4 million. As a result, defendant was, by his own admission, "a controversial figure in the diamond industry" and resorted to the use of a pseudonym. Adopting the name Norman Baker "for the public," defendant became a co-owner of Sidco Jewelry, a jewelry manufacturing company located on Fifth Avenue in Manhattan in February 1999. Defendant's son, Ariel, then 27 years old, joined the firm as a salesman. Although Ariel had no experience in the diamond business, defendant taught his son how to sell jewelry. Defendant told Ariel that he was obliged to employ a pseudonym because he was reputed to have been involved with "some sort of diamond scam" in the past.

Defendant's capacity to commit fraud is not simply a matter of reputation. On March 31, 2000, he was convicted of third degree grand larceny in a scheme involving fictitious mortgages, in which he promised a business associate a return of 24% on an investment of $200,000. Defendant received a sentence of five years' probation and was ordered to make restitution in the amount of his victim's investment.

Around this time, defendant told Ariel that he was selling his interest in Sidco to his partner, and Ariel was dismissed as a salesman. Defendant then suggested to his son that they develop a business to give Ariel a "future" in the diamond trade. In June 2000, Anaka Design Ltd. was incorporated, with Ariel listed as its president. Defendant ran the company's operations, this time adopting the pseudonym "Norman Miller," and instructed Ariel to refer to him as a "family friend" who was helping Ariel "learn the industry," warning that if his involvement in the business and his family relationship ever became known, "no one would ever do business" with Ariel. Defendant paid Ariel a weekly salary in cash and controlled the business records and bank account statements, which Ariel never reviewed. Defendant obtained what Ariel described as "false references" from persons who purported to have had dealings with Anaka Design that Ariel could provide to diamond brokers to obtain stones on consignment or, in the parlance of the trade, "on memo."

Using a list furnished by defendant designating which diamond suppliers to use (and which to avoid using), Ariel began contacting brokers, providing them with the references defendant had obtained and telling them, as defendant had instructed, that Ariel was seeking diamonds Anaka would fabricate into jewelry for a "very high end clientele." By making payment for diamonds within the time provided under the terms of the various consignment memos, Anaka developed a reputation as an ideal client, which enabled it to purchase ever more valuable stones and extend the time for payment.

In February 2001, defendant sent Ariel to a diamond and jewelry trade show in Orlando, Florida. There, he was approached by one Moshe Rabinowitz, who explained that he operated a company called Flextrade International, which dealt in precious metals. Rabinowitz stated that he was interested in purchasing diamonds and gave Ariel his business card. After returning to New York, Ariel gave the card to defendant. Some time later, defendant informed Ariel that Rabinowitz had placed an order for more than $5 million in large diamonds and produced a list of credit references provided by Rabinowitz which, defendant stated, he had checked out.

Using several lists of diamonds defendant had written out, Ariel collected the stones from various suppliers and brought them to defendant at Anaka's office. When the order was complete, defendant told Ariel to deliver the diamonds to Rabinowitz in London. On May 6, 2001, Ariel took a parcel of diamonds from the safe at Anaka's office, secreted them in his underwear and flew to London. He did not declare the diamonds upon arrival. Two days later, Rabinowitz met Ariel at his hotel and took him to an office with the name "Flextrade" on the door. There, Ariel gave him a package of memos, which Rabinowitz compared with the stones. On defendant's instructions, Ariel left the diamonds with Rabinowitz. Two days later, Rabinowitz delivered to Ariel, at his hotel, signed copies of the memos, a letter of guaranty and nine postdated checks totaling nearly $6.8 million. Upon his return to ...


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