United States v. Zahavi

Civil Rights

New York Law Journal


Judge J. Paul Oetken

Indictment count four charged defendants with fraudulently diverting funds from the BOA Credit Line to Zahavi's use, and misrepresenting to Bank of America (BofA) the funds' use to buy "personal seat licenses" to influence BofA's reaction to the credit line's default. Count three alleged conspiracy. District court denied the counts' dismissal as unconstitutionally vague, or for failing to state 18 USC §1014's breach. Defendants argued that even if other elements of a §1014 offense were proved, the government could show their purpose was to influence BofA's "action" on a loan, or any change or extension of the same, by renewal, deferment of action, or otherwise, or the acceptance, release or substitution of security for it. The court ruled §1014 gave defendants notice of their conduct's criminality. In addition to finding it unduly artificial to narrow the scope of "action" to the granting of a loan the court—rejecting claims that §1014 must be narrowly construed to avoid criminalizing innocent conduct—found §1014 covered knowingly false statements made to a bank with the intent of influencing the bank's action on a loan even where the relevant bank "action" consisted of post-default foreclosure, liquidation, or sale of a loan note.

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