When you first look at the Martin Act, the law seems like a redundant definition of scheming to defraud as defined in New York Penal Law § 190.05, but in fact, these two crimes are different, in both definition of fraud and the criminal procedures that follow.
The Martin Act is a New York business legislation that gives the New York State Attorney General additional powers and discretion to fighting various forms of business fraud. The Attorney General is given in house subpoena power by the Martin Act, which gives him the power to subpoena witness, compel their attendance, and examine the witness under oath in court.
What is frightening for many defendants, who comply with the Attorney General’s subpoena under the Martin Act, is their denial to the right to counsel. Specifically for securities fraud cases under the Martin Act, the defendant or the witness has no constitutional right to counsel when being questioned during an Attorney General’s investigation. You can arrive with an attorney to answer a subpoena, but you do not have the right to one if you arrived alone.
Who is more likely to be charged under the Martin Act?
Fraud crimes charged under the Martin Act are generally more serious that those charged under the New York Penal Law. The scheme to defraud under the Martin Act must be an ongoing systematic scheme to defraud ten or more people. This crime requires that the prosecutor to prove that the property was actually obtained from one or more persons during the fraud.
Although the Martin Act is business legislation, this does not mean that the act is enforced without teeth; criminal consequences such as fines, and incarceration may follow a conviction under the Martin Act.
And since defendants are denied the right to counsel during an Attorney General’s investigation, defendants and witnesses easily incriminate themselves. What is advised for those who are subpoenaed by the Attorney General is to call a criminal defense attorney before the compliance date is scheduled.
If you have been arrested or charged with securities fraud under the Martin Act in New York City, then call our office at (212) 577-6677 to get professional legal advice.