FILED: NEW YORK COUNTY CLERK 02/03/2014 INDEX NO /2014 NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 02/03/2014

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1 FILED: NEW YORK COUNTY CLERK 02/03/2014 INDEX NO /2014 NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 02/03/2014 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x CYRUS R. VANCE, JR. : DISTRICT ATTORNEY OF NEW YORK COUNTY, : : Index No /2014 Plaintiff-Claiming Authority, : IAS Part 1 (Shulman, J.) : - against - : : KEVIN HURLEY, ET AL., : : Criminal Defendants. : x DEFENDANT KEVIN HURLEY S MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFF S APPLICATION FOR PROVISIONAL RELIEF BY ORDER TO SHOW CAUSE THE WEINSTEIN LAW FIRM PLLC 800 Third Avenue, 18 th Fl. New York, NY (212) Attorneys for Defendant Kevin Hurley

2 TABLE OF CONTENTS Table of Authorities... ii PRELIMINARY STATEMENT... 1 INTRODUCTION... 1 ARGUMENT... 3 I. PLAINTIFF S APPLICATION FAILS TO MEET THE REQUIREMENTS OF C.P.L.R. 1312(3)... 3 II. PLAINTIFF S APPLICATION FAILS TO DEMONSTRATE ANY NECESSITY FOR PROVISIONAL RELIEF... 7 A. Plaintiff Entirely Misstates the Applicable Standard it Must Meet to Obtain Injunctive Relief Pursuant to C.P.L.R B. Plaintiff s Allegations Fail to Satisfy Even the Lower Standard Applicable to its Request for Provisional Relief... 9 III. MR. HURLEY JOINS IN THE ARGUMENTS RAISED BY HIS CO-DEFENDANTS IN OPPOSITION TO THE APPLICATION TO THE EXTENT APPLICABLE TO HIM AND NOT INCONSISTENT WITH THE ARGUMENTS RAISED HEREIN CONCLUSION i

3 TABLE OF AUTHORITIES Cases Dillon v. Kim, 158 Misc.2d 711, 601 N.Y.S.2d 405 (Sup. Ct. Nassau Cty. 1993)... 4 Dillon v. Neira, 130 Misc.2d 434, 495 N.Y.S.2d 622 (Cty. Ct. Nassau Cty. 1985)... 4, 7, 10 Morgenthau v. Citisource, 68 N.Y.2d 211, 508 N.Y.S.2d 152 (1986)... 3 Morgenthau v. Clifford, 157 Misc.2d 331, 597 N.Y.S.2d 843 (N.Y. Sup. 1992)... 8, 9, 10 Statutes C.P.L.R C.P.L.R C.P.L.R passim C.P.L.R , 10 C.P.L.R , 7, 8, 10 C.P.L.R , 7 P.L P.L , 4 ii

4 PRELIMINARY STATEMENT Defendant Kevin Hurley ( Mr. Hurley ), by and through his undersigned attorneys, respectfully submits this memorandum of law in opposition to the Request for Provisional Relief By Order to Show Cause of Plaintiff-Claiming Authority, the New York County District Attorney, dated January 3, 2014 (the Application ). INTRODUCTION On December 18, 2014, a grand jury returned an indictment against Mr. Hurley and 105 other defendants based on an alleged scheme to defraud the United States Social Security Administration ( SSA ) out of disability benefits. See Affirmation of Vimi Bhatia in Support of Plaintiff s Request for Provisional Relief Pursuant to CPLR Article 13-A and For an Order to Show Cause ( Bhatia Affirmation ), at Specific to Mr. Hurley, the indictment charges him with (1) a single count of grand larceny in the second degree in violation of New York Penal Law ( P.L. ) (a felony); and (2) a single count of criminal facilitation in the fourth degree in violation of P.L (a misdemeanor). The charges against Mr. Hurley arise from his collection of Social Security Disability Insurance ( SSDI ) benefits in the amount of $224, over a nine year period. Mr. Hurley, a retired NYPD officer, is alleged to have misrepresented his inability to work on an application for disability benefits submitted to the SSA. Mr. Hurley, along with more than 100 other individuals, purportedly made such misrepresentations at the direction or with the assistance of Raymond Lavallee ( Lavallee ), Thomas Hale ( Hale ), Joseph Esposito ( Esposito ), and John 1 Notably, the draft indictment attached as Exhibit C to the Bhatia Affirmation is substantively different from the indictment that was actually returned against the various defendants named therein. Most significantly, there is no conspiracy count in the actual indictment that was returned.

5 Minerva ( Minerva ), individuals who are purportedly well-versed in the process of obtaining SSDI benefits. On January 3, 2014, this Court issued an ex parte Order to Show Cause and Temporary Restraining Order pursuant to Article 13-A of the New York Civil Procedure Law and Rules ( C.P.L.R. ). The Order to Show Cause ( Order to Show Cause ) and Temporary Restraining Order ( TRO ) were issued upon submission of Plaintiff s Application, which seeks provisional relief in the form of (i) an order of attachment pursuant to C.P.L.R and 1316, and (ii) a preliminary injunction pursuant to C.P.L.R. 1312, 1333 and See Order to Show Cause at pgs. 5, 8. For the following reasons, the Court should deny Plaintiff s request for relief in its entirety. First, Plaintiff fails to satisfy the first prong of C.P.L.R. 1312(3)(a), which requires a claiming authority to demonstrate the likelihood of a felony conviction in order to establish that a substantial probability exists that the claiming authority will prevail on the issue of forfeiture. Because the Application asserts only generalized allegations against all 102 defendants without any indication as to what the evidence will (or will not) show with respect to Mr. Hurley in particular, Plaintiff has failed to establish the likelihood that it will secure a felony conviction against this specific defendant. See Point I. Second, Plaintiff misstates the relevant standard for obtaining a preliminary injunction and wholly fails to satisfy the second prong of C.P.L.R. 1312(3)(b), which requires it to demonstrate a specific need for the provisional relief it seeks from this Court. Given Plaintiff s 2 The Application is comprised of the Order to Show Cause and Temporary Restraining Order and the Bhatia Affirmation. The Bhatia Affirmation attaches as exhibits: (i) a Summons dated January 3, 2014 ( Summons ) and Verified Complaint dated January 3, 2014 (the Complaint ) (Ex. A); (ii) Investigator Donato Siciliano s Affirmation in Support of Plaintiff s Application for Provisional Relief dated January 3, 2014 ( Siciliano Affirmation ) (Ex. B); (iii) a draft Indictment (Ex. C); and (iv) transcripts of certain telephone conversations between Hale and Frank Palmeri, Jr.; Esposito and Jacqueline Powell; Esposito and James Matamoros (Ex. D). 2

6 lack of any effort whatsoever to either recognize or satisfy the stringent standard applicable to obtaining injunctive relief, Plaintiff s request for a preliminary injunction must be denied. See Point II(A). Third, given Plaintiff s failure to provide any allegations specific to Mr. Hurley s own proclivity to dissipate assets (as opposed to the other 101 named defendants), the Application lacks any basis from which the Court may find that Mr. Hurley poses a threat to the property sought through forfeiture. Accordingly, the Court should deny all of provisional relief requested by Plaintiff. See Point II(B). ARGUMENT I. PLAINTIFF S APPLICATION FAILS TO MEET THE REQUIREMENTS OF C.P.L.R. 1312(3). Pursuant to C.P.L.R. 1310, [a] civil action may be commenced... against a criminal defendant to recover the property which constitutes the proceeds of a crime, the substitute proceeds of a crime, an instrumentality of a crime... or to recover a money judgment in an amount equivalent in value to the property which constitutes the proceeds.... See Morgenthau v. Citisource, 68 N.Y.2d 211, 218, 508 N.Y.S.2d 152 (1986) (forfeiture limited to proceeds, substituted proceeds or instrumentalities of a crime only). C.P.L.R. 1311(1) further provides that an action relating to a post-conviction crime may be commenced, and a court may grant a provisional remedy provided under [Article 13-A] prior to such conviction. However, no order granting provisional relief may issue unless the Court finds that: (a) there is a substantial probability that the claiming authority will prevail on the issue of forfeiture and that failure to enter the order may result in the property being destroyed, removed from the jurisdiction of the court, or otherwise be unavailable for forfeiture; and 3

7 (b) the need to preserve the availability of the property through the entry of the requested order outweighs the hardship on any party against whom the order may operate. C.P.L.R. 1312(3)(a), (b). See Dillon v. Neira, 130 Misc. 2d 434, 438, 495 N.Y.S.2d 622, 626 (Cty. Ct. Nassau Cty. 1985). As noted above, Mr. Hurley is charged with a single felony count of grand larceny in the second degree in violation of P.L See Bhatia Aff., Ex. C (draft Indictment) at pg. 75. Section provides, in relevant part, that [a] person is guilty of grand larceny in the second degree when he steals property and [ ] when the value of the property exceeds fifty thousand dollars. To show a substantial probability that it will prevail on the issue of forfeiture pursuant to C.P.L.R. 1312(3)(a), a claiming authority must first demonstrate that it will likely obtain a felony conviction against the defendant. See Dillon v. Kim, 158 Misc.2d 711, 713, 601 N.Y.S.2d 405, 406 (Sup. Ct. Nassau Cty. 1993) (denying confirmation of ex parte order of attachment where claiming authority could not demonstrate a substantial probability that the defendants would be found guilty of a felony). In light of the utter absence of specific allegations regarding Mr. Hurley s purported criminal conduct, Plaintiff has failed to establish that Mr. Hurley will likely be convicted of violating P.L or any other felony statute. The Bhatia and Siciliano Affirmations set forth facts generally describing the purported fraudulent criminal conduct of which all defendants are charged in the Indictment. See Bhatia Aff. at 5-7; id., Ex. B (Siciliano Aff.) at 11-20, However, neither affirmation (nor the accompanying Complaint) avers any substantive allegations regarding Mr. Hurley in particular, or describes any evidence pertaining to Mr. Hurley s supposed criminal conduct. 4

8 Based upon the Application, it is therefore impossible for the Court to conclude that Mr. Hurley (as opposed to any of the other 101 named defendants) will likely be convicted of a felony crime. While the Siciliano Affirmation goes to great lengths to describe evidence that pertains to the conduct of Lavallee, Hale, Esposito, and Minerva (see, e.g., Bhatia Aff., Ex. B (Siciliano Aff). at pgs ), it merely lumps together the purported conduct of the defendants; most often qualifying its assertions with language like many of the named defendants or some of these named defendants, without any specific or identifying details to delineate between them or, most significantly, by indicating whether any such evidence relates to Mr. Hurley in particular. For instance, Investigator Siciliano uses such qualifying language when describing intercepted phone conversations as evidence of Lavallee, Esposito, Hale, and Minerva s supposed SSDI scheme. However, there are no facts alleged to identify Mr. Hurley as either a subject or participant in any of the conversations, nor even as one of the some or many defendants referred to in connection with the phone conversations. See, e.g., id. at 31 ( [b]ased on a review of intercepted phone conversations, the evidence reveals that upon meeting ESPOSITO, many of the named defendants ) (emphasis added); id. ( [b]ased on a review of intercepted phone conversations, some of these named defendants initially consulted with MINERVA) (emphasis added); id. at 32 ( intercepted phone conversations reveal... applicants (including many of the named defendants) were referred by ESPOSITO and HALE ) (emphasis added); id. at 33 ( [i]ntercepted phone conversations revealed that after the initial consultation with HALE, applicants (including many of the named defendants) ) (emphasis added). 5

9 Likewise, although Investigator Siciliano avers that he reviewed the SSDI applications at issue in the investigation and that they all appeared to follow a common pattern and phraseology, he again tempers his statements by stating that there are similarities in applications including [those of] many of the named defendants. Again, the Siciliano Application makes no mention of Mr. Hurley s particular application or supposed misrepresentations. See id. at 36-38, 41; see also id. at 39 (addressing patterns in paperwork for SSDI recipients who obtained their award through Lavallee, Hale, Minerva, and Esposito and stating the recipients include many of the named defendants ). This same qualification is included with respect to information received from Special Agent Peter Dowd of the SSA (id. at 40), and information received from intercepted phone conversations regarding the award of SSDI benefits and cash payments purportedly made by applicants. Id. at 42, 43. Similarly, although the Siciliano Affirmation sets forth a litany of other sources of evidence including physical surveillance, examination of a plethora of different records, background checks, criminal history records, examination of Facebook and other internet-based company documents, conversations with other investigators, conversations with victims and witnesses, and evidence obtained from the execution of search warrants (see, e.g., Siciliano Aff. at 4) there is no allegation that any such evidence relates to or implicates Mr. Hurley. At best, the Siciliano Affirmation alleges in blanket form that each of the defendants engaged in fraudulent criminal conduct. See id. at 50. With even less detail, the Bhatia Affirmation relies on the same global assertions of misconduct. See Bhatia Aff. at Because the Application is devoid of any substantive allegations regarding Mr. Hurley in particular, it leaves the Court with nothing to base its substantial probability determination upon other than the indictment itself (which is not 6

10 evidence). Certainly, the prosecutor s good word and the wholesale allegations of Investigator Siciliano are simply insufficient to establish the likelihood of Mr. Hurley s felony conviction. See Neira, 130 Misc. 2d at 437, 495 N.Y.S.2d at 625 (denying provisional relief where [n]either the indictment nor the claiming authority s allegation that the evidence against the defendant indicates he was selling narcotic substances illegally and was in possession of these narcotic substances illegally at the time of his arrest constituted evidence of a crime ). II. PLAINTIFF S APPLICATION FAILS TO DEMONSTRATE ANY NECESSITY FOR PROVISIONAL RELIEF. Plaintiff s Application seeks to hold hostage the assets of Mr. Hurley by means of an order of attachment pursuant to C.P.L.R and 1316, and a preliminary injunction pursuant to C.P.L.R. 1312, 1333 and See Bhatia Aff. at 1; Order to Show Cause at pgs. 5, 8. Because Plaintiff has failed to demonstrate that Mr. Hurley poses any risk to the property it seeks to forfeit in the absence of provisional relief, its Application should be denied in its entirety. A. Plaintiff Entirely Misstates the Applicable Standard it Must Meet to Obtain Injunctive Relief Pursuant to C.P.L.R To obtain an order of attachment pursuant to C.P.L.R. 1316, a plaintiff must satisfy the standard set forth in C.P.L.R. 1312(3)(a). Section 1312(3)(a) provides, in relevant part, that in order to obtain provisional relief, a claiming authority must show that a failure to enter the order may result in the property being destroyed, removed from the jurisdiction of the court, or otherwise be unavailable for forfeiture. (Emphasis added). In comparison, to obtain a preliminary injunction pursuant to C.P.L.R. 1333, a claiming authority must meet a much more stringent standard. Indeed, [i]n addition to the general standards the claiming authority must meet for any provisional remedy under CPLR 1312(3), it 7

11 must also demonstrate that the defendant threatens or is about to do, or is doing or procuring or suffering to be done, an act in violation of the claiming authority's rights respecting the subject of the action, and thereby tending to render a resulting judgment ineffectual. Morgenthau v. Clifford, 157 Misc.2d 331, 340 n.4, 597 N.Y.S.2d 843, 849 n.4 (N.Y. Sup. 1992) (quoting C.P.L.R. 1333) (emphasis added). As the foregoing makes clear, to obtain the separate provisional remedies of attachment and injunctive relief, a claiming authority must satisfy two distinct standards. The Bhatia Affirmation wholly ignores the heightened standard applicable to preliminary injunctions, and claims, incorrectly, that it need meet only the lower general standard for provisional relief generally C.P.L.R. 1312(3)(a) which, in this case, is applicable only to Plaintiff s request for an order of attachment. See id. at 23 and 25 (quoting C.P.L.R. 1312(3)(a) only). While the Bhatia Affirmation makes fleeting reference to C.P.L.R generally, it makes no effort to set forth or discuss the high standard applicable to a request for injunctive relief and, in turn, no attempt to satisfy it. Compare Bhatia Aff. at 1 (stating generally that provisional relief is sought pursuant to C.P.L.R. 1312, 1316, 1333 and 1335); with id. at (discussing standard set forth in C.P.L.R. 1312(3)(a) only). Specifically, the Bhatia Affirmation (and the Application at large) is devoid of a single allegation from which the Court may find that a preliminary injunction is necessary in order to preserve the availability of Mr. Hurley s property. See generally Application. In fact, contrary to the plain language of C.P.L.R. 1333, Plaintiff makes no mention of any overt act or threat by Mr. Hurley to the property sought to be forfeited, nor is it alleged that Mr. Hurley is about to or procuring or suffering to be done any act in violation of Plaintiff s purported rights. Id.; see also C.P.L.R As a result, the requisite standard for obtaining a 8

12 preliminary injunction has not been (and cannot be) established. Plaintiff s request for a preliminary injunction must therefore be denied. See Clifford, 157 Misc.2d at 340 n.4, 597 N.Y.S.2d at 849 n.4 ( In tacit acknowledgment that his papers failed to make this showing [under C.P.L.R. 1333], the plaintiff, after the initial oral argument, withdrew this branch of the relief requested ). B. Plaintiff s Allegations Fail to Satisfy Even the Lower Standard Applicable to its Request for Provisional Relief. Plaintiff makes much of the fact that courts do not require a high degree of proof to demonstrate a need for provisional relief pursuant to C.P.L.R. 1312(3)(a). See Bhatia Aff. at Nonetheless, Plaintiff s still cannot meet the statute s low threshold and thus, its request for an order of attachment (as well as injunctive relief) should be rejected. At the outset, the Application is bereft of facts to suggest that Mr. Hurley s assets (as opposed to the assets of any of the other defendants) may be destroyed, removed from the jurisdiction of the court, or otherwise made unavailable for forfeiture in the absence of such relief. C.P.L.R. 1312(3)(a). For example, it is nowhere alleged that Mr. Hurley has a prior criminal record or that he was ever arrested for any reason prior to the underlying criminal action. See generally Application. In addition, the Application provides no information to suggest that Mr. Hurley has a history of financial transgressions or bankruptcies, or even a weak or suspicious credit history, such that the Court could find Mr. Hurley may purposefully destroy or remove property potentially subject to forfeiture. See id. Rather than provide any particularized showing concerning Mr. Hurley, the Bhatia Affirmation instead relies on boilerplate allegations regarding the conduct of all 102 defendants generally, and resorts to ipse dixit reasoning concerning the supposed propensity of all 102 defendants to dissipate assets. To wit, it is alleged that because all of the defendants were 9

13 indicted for crimes, they all have an increased incentive to hide their assets and to dissipate the money they have obtained from their criminal dealings. See Bhatia Aff. at 26. In this regard, although crimes of deception may be considered in determining whether to grant an order of attachment, such allegations in and of themselves are manifestly insufficient to secure a preliminary injunction. See, e.g., Clifford, 157 Misc. 2d at 340, 597 N.Y.S.2d at 849 (request for a preliminary injunction withdrawn despite evidence concerning the deception underlying defendants actions in criminal bank fraud case; court recognized higher standard applicable to preliminary injunctions). Further, generalized assertions of the ilk contained within the Application, without more, should be deemed inadequate to obtain any of the relief requested. See Neira, 130 Misc.2d at 438 (denying preliminary injunction where affidavit lacked specificity; detective s allegation that defendant would flee to Ecuador was unpersuasive without facts regarding the basis for such knowledge). The lack of specificity in the Bhatia Affirmation cannot be saved by the Siciliano Affirmation as it suffers from the very same deficiencies. Although Investigator Siciliano provides greater detail regarding his means and methods of investigating the purported conduct in the underlying criminal action (see Bhatia Aff., Ex. B (Siciliano Aff. at 4), he too fails to allege any particular facts or information to aid the Court in determining whether Mr. Hurley himself (as opposed to any of the other defendants) may dissipate assets, or whether Mr. Hurley himself has threatened or will soon act in any such manner. See generally id. Without any specific factual showing by Plaintiff regarding Mr. Hurley s proclivity to dissipate assets or any threat to do so, a grant of provisional relief in this case would, in effect, make the rigors of C.P.L.R. 1312(3) and 1333 meaningless; creating, instead, a per se rule 10

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