Falsifying business records

Falsifying business records is a crime in the laws of several U.S. states.

New York law

Elements and punishment

Under New York law, falsifying business records in the second degree is a class A misdemeanor, while falsifying business records in the first degree is a class E felony.[1]

The elements of the crime are set forth by Article 175 of the New York Penal Code.[1] The statute provides that:

A person is guilty of falsifying business records in the second degree when, with intent to defraud, he:

  1. makes or causes a false entry in the business records of an enterprise; or
  2. alters, erases, obliterates, deletes, removes or destroys a true entry in the business records of an enterprise; or
  3. omits to make a true entry in the business records of an enterprise in violation of a duty to do so which he knows to be imposed upon him by law or by the nature of his position; or
  4. prevents the making of a true entry or causes the omission thereof in the business records of an enterprise."[2]

Intent is an element of the offense; under New York law, the defendant's "intent" is his or her "conscious objective or purpose."[3] The law does not require prosecutors to show that the defendant intended to cause a pecuniary or commercial loss (i.e., depriving a victim of money or property).[4]

Falsifying business records is upgraded to a felony if additional factors are present.[3] Specifically, falsifying business records in the first degree is committed when an individual "commits the crime of falsifying business records in the second degree, and when his intent to defraud includes an intent to commit another crime or to aid or conceal the commission thereof."[5]

Under New York law, "in any prosecution for falsifying business records, it is an affirmative defense that the defendant was a clerk, bookkeeper or other employee who, without personal benefit, merely executed the orders of his employer or of a superior officer or employee generally authorized to direct his activities to direct his/her activities."[6]

Prosecutions

The offense of falsifying business records is commonly prosecuted in New York, and it is a frequent part of white-collar crime prosecutions brought by district attorneys' offices.[3][1] For example, the Manhattan District Attorney's Office, from January 2022 through April 2023, brought 117 felony counts of falsifying business records against 29 defendants (some individuals, and others companies).[7] It is sometimes prosecuted in conjunction with separate crimes, such as petit or grand larceny, offering a false instrument, money laundering, or insurance fraud.[1] The crime occurs in different factual contexts: for example, defendants have been prosecuted for falsifying business records as part of a scheme to steal from a company; as part of scheme to fail to report income (and thus evade taxes); for creating or filing fraudulent certificates of liability insurance as part of a wider fraud scheme; or for creating false applications for benefits.[1]

In People v. Smithtown General Hospital (1978), an orthopedic surgeon, a nurse, and a hospital were indicted for allegedly allowing a prosthetic-devices salesman to "participate in a meaningful way" with a total hip arthroplasty, without the surgery patient's consent or knowledge. They were charged with first-degree falsifying business records, the charge being that they "omitted to make true entries in required reports in order to conceal the crimes of unauthorized practice of medicine and assault."[8] The court rejected the defendants' motion to dismiss the indictment.[8] The case is cited in medical and nursing ethics texts discussing criminal liability for certain omissions in medical records.[9][10]

Notable cases

Notable people convicted in New York of falsifying business records include:

Other states

Falsifying business records is also a crime in other states, such as Alabama,[14] Alaska,[15] California,[16] Delaware,[17] Hawaii,[18] Kentucky,[19] and Oregon.[20] In Maine, a similar crime is called falsifying private records.[21]

Notes
  1. Siven Watt, Norman L. Eisen and Ryan Goodman, Survey of Past New York Felony Prosecutions for Falsifying Business Records, Just Security (March 21, 2023).
  2. N.Y. Penal Code § 175.05.
  3. Anatomy of a Falsifying Business Records Case Under New York Law, Lippes Mathias LLP (April 4, 2023).
  4. Ryan Goodman, Norman L. Eisen, Siven Watt, Joshua Kolb and Joshua Stanton, The Broad Scope of "Intent to Defraud" in the New York Crime of Falsifying Business Records, Just Security (April 3, 2023).
  5. N.Y. Penal Code § 175.10.
  6. N.Y. Penal Law § 175.15.
  7. Louis Jacobson & Amy Sherman, Trump's indictment, explained: Falsifying business records, prosecutors' challenges, and what's next, Politifact (April 5, 2023).
  8. People v. Smithtown General Hospital, 93 Misc. 2d 736, 402 N.Y.S.2d 318 (N.Y. Sup. Ct. 1978).
  9. Helen Creighton, Legal Significance of Charting — Part I, Nursing Management, 18(9), pp. 17-25, September 1987.
  10. Frances A. Ciardullo, Alteration of Medical Records: Turning a Winner into a Loser, Dateline, Vol. 15, No. 3 (2016).
  11. Andrew Ross Sorkin, Tyco's Ex-Chief and Top Aide Are Convicted of Grand Larceny, New York Times (June 17, 2005).
  12. Anemona Hartocollis, Clarence Norman Is Guilty of Illegal Campaign Contributions, New York Times (September 27, 2005).
  13. Notorious Landlord Is Sentenced to a Year in Jail, New York Times (October 3, 2017).
  14. Ala. Code § 13A-9-45
  15. Alaska Stat. § 11.46.630,
  16. Keith Paul Bishop, Is Falsifying A Business Record A Crime In California?, Allen Matkins Leck Gamble Mallory & Natsis LLP (April 5, 2023).
  17. Delaware Code, title 11, § 871.
  18. Hawaii Revised Statutes § 708-872.
  19. Ky. Rev. Stat. § 517.050.
  20. Oregon Rev. Stat. § 165.080.
  21. Maine Criminal Code, 17-A, § 707.
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