The clause in question, which applies in cases where an insured maintains concurrent insurance on the same property, provides, in effect, that an insurance carrier is not necessarily liable for the policy limits but only the percentage which such amount bears to the total amount of insurance covering the loss. As aforesaid, this is a standard clause contained in various types of insurance policies, and *823has been sanctioned by the Legislature. (See, e.g., Insurance Law, § 168, subd 3, par [a].) Thus, for example, if the total loss sustained as a result of the burglary had been the same as the limit of liability, as contained in the Travelers policy, to wit, $28,000, the Travelers Insurance Co. would only be responsible for paying approximately $11,500. If this insurance carrier, in such an instance, were unaware of the other insurance coverage and paid the defendant the full amount of such a loss, to wit, $28,000, they would have been defrauded by an amount in excess of $16,000. Article 176 of the Penal Law, which contains the definition of <mask> as well as the different degrees thereof, was part of the Insurance Frauds Prevention Act, which was enacted by chapter 720 of the Laws of 1981. The Governor’s memorandum, upon approving the legislation, states as follows: “The amendments to the Penal Law, particularly the classification of insurance fraud involving pecuniary values in excess of fifteen hundred dollars as class D felonies, track the classifications for larcenies and will be an indication by the Legislature that the State will no longer tolerate crime in the insurance field, and should encourage the prosecution of such crimes by prosecutors.” (McKinney’s Session Laws of NY, 1981, p 2618.) The felony crime of insurance fraud in the first degree, as well as second degree, require a defendant, by his conduct, to attempt or actually take, obtain, or withhold property in excess of a specified value. This, of course, is analogous to the degrees of larceny. Although the misdemeanor crime of insurance fraud in the third degree does not include the theft of property as a necessary element, materiality must nevertheless be established.


In conclusion, the crime of <mask> in the first degree, allegedly committed by defendant, was complete upon the filing, on or about November 4, 1981, of the proof of loss *1014statement. Therefore, the agreement to extend the Statute of Limitations executed on December 11, 1986, was ineffectual because the Statute of Limitations had already expired as of the date of the agreement. (See, letter agreement, supra.)


Section 176.05 of the Penal Law defines <mask> as a presentation of a fraudulent or false statement to an insurer for the issuance of rating of an insurance policy, or for a claim for payment or other benefit. To be guilty, a person must (1) submit the statement or claim knowing that it contains materially false information concerning any fact material thereto, or (2) conceal, for the purpose of misleading, information concerning any facts material thereto. The statute is directed against “fraudulent activities related to the business of insurance.” (See Hechtman, Practice Commentary, McKinney’s Cons Laws of NY, Book 39, 1983-1984 Pocket Part, Penal Law, § 176.00, p 123.) It contemplates fraud in the inducement, either on the issuance of a policy or the payment of a claim. If any malfeas*566anee existed here, it occurred after the payment of the claim was made, and as in the other counts, the Grand Jury testimony lacks the basis for a finding of criminal intent. Unquestionably, the third-party beneficiaries would be entitled to legal redress, but we are not dealing with a civil matter herein.


Taken to its logical conclusion, defendants' position would mean that whenever the district attorney or insurance commissioner takes over an IFPA lawsuit filed by an employee who alleges workers' compensation <mask>, those officials would also be forced to pursue civil penalties before the Workers' Compensation Appeals Board. In addition, defendants' argument would mean that a third party whistleblower who files a qui tam lawsuit on behalf of the People, based on fraud in the grant or denial of workers' compensation benefits, would similarly be required to pursue civil penalties before the board. We are not convinced that the Legislature intended the workers' compensation exclusivity rule to work such mischief.


The indictment before the jury charges the defendant, Paul Novak, for the murder of his estranged wife, arson in connection with the burning of the marital residence, burglary, grand larceny and <mask>. Jury selection for this trial began on August 5, 2013. At some point prior to jury selection, defendant sought out and gave an interview to the reporter for the Record who has been reporting on this case for some time.2 That interview occurred on August 2, 2013. The Times Herald-Record ran a front-page story about the defendant and on the *751interview in the August 4, 2013, Sunday edition of the paper. It also posted a “portion” of the video recorded interview on its website on August 4, 2013. The running of the story and posting of the interview detrimentally affected the jury pool, but the parties were eventually able to seat 12 jurors and eight alternate jurors. Opening statements and testimony commenced the following week, on August 12, 2013.


The classification of chain promotional schemes under article 23-A of the General Business Law, however, indicates that "the Legislature has sought to isolate <mask> from losses at games of chance contingent upon the happening (or not) of some specific event” (Coyle v Richetti, supra, at 605; see also, Highsmith v Smith, supra). General Business Law § 359-fff contains no language abrogating the common-law rule that a party in pari delicto is without remedy at law or equity. Had the Legislature intended to create a comparable right of action to recover money lost at chain distributor schemes, it would have expressly included it, and its omission is an indication that the Legislature intended its exclusion (McKinney’s Cons Laws of NY, Book 1, Statutes § 74). The court thus acted in excess of its authority by expanding the scope of the statute on public policy grounds, so as to provide the plaintiff with a remedy not expressly contained therein. In so doing, the court improperly substituted its judgment for that of the Legislature, by "read[ing] into [the] statute that which the Legislature might have inserted but did not” (McKinney’s Cons Laws of NY, Book 1, Statutes § 73).


The court’s analysis shows that there is no overwhelming reason to deny the application. Professor Wigmore has noted that open proceedings improve the quality of testimony and justice; officers of the court are more conscientious under "public gaze”; there is an "educative effect of public attendance”; and it increases public confidence in judicial remedies. (6 Wigmore, Evidence § 1834 [Chadbourn rev 1976].) Indeed, a case such as the one at bar is the typé of civil proceeding where public exposure will be of great value. The proceeding involves an alleged pyramid scheme. Publicity could encourage others who claim injury to seek redress in the courts; it could also discourage future involvement in <mask>. The court takes no position on the merits of the case but notes that access to the small claims procedure to alleviate alleged wrongs is precisely the type of "significant community therapeutic value” the Supreme Court found in the First Amendment’s right to public trials. (Richmond Newspapers v Virginia, 448 US 555, 570, supra.)


The “gifting board” presents a four-level, three-step, pyramid with a CEO at the top, two presidents beneath the CEO position, four vice-presidents beneath them, and eight newly recruited members at the bottom. When the “gifting” process is complete and the CEO “retires,” the remainder of the pyramid splits, everyone advances up in rank and two new pyramids are formed, each containing a new CEO and six other officers, all of whom then must actively seek eight new recruits so as to enable the process and new pyramid boards to continue ad infinitum to everyone’s monetary benefit, or so everyone is led to believe. What is presented is thus not a singular ever-expanding pyramid, but one which spawns a chain of multiple ongoing pyramids, each of which are linked to its predecessor. The club, however, apparently in an effort to distance itself from chain distributor <mask>, uses the characterization “gifting board,” rather than pyramid, and provides its own self-serving definition of a pyramid.2


In New York, no provision of the law specifically and expressly addresses itself to “<mask>.” However, the Martin Act, which is incorporated in article 23-A of the General Business Law, states that it is “illegal and prohibited for any person * * * to promote, offer or grant participation in a chain distributor scheme.” (General Business Law § 359-fff [1].) The Act, which clearly includes chain-linked pyramid schemes, defines a chain distributor scheme as: “a sales device whereby a person, upon condition that he make an investment, is *857granted a license or right to solicit or recruit for profit or economic gain one or more additional persons who are also granted such license or right upon condition of making an investment and may further perpetuate the chain of persons who are granted such license or right upon such condition.” (General Business Law § 359-fff [2].)


In any event, it is clear that, except for semantical differences, the Network chain recruiting operation appears virtually identical to other <mask> which have consistently been held to violate the General Business Law. (See, e.g., Solon v Meuer, 141 Misc 2d 993 [Civ Ct, NY County 1987]; Cochran v Dellfava, 136 Misc 2d 38 [Rochester City Ct 1987].) In Cochran (supra), the promoters structured a four-leveled pyramid characterized as an “airplane game” in which new recruits would, for the sum of $2,200, become a “passenger” on one of eight seats on an “airplane,” which also has four “flight attendants,” two “copilots” and one “pilot.” When all passenger seats are filled, the pilot “bails out” after receiving $17,200 (i.e., $2,200 from each of the new eight passengers). The airplane would then split into two airplanes; the former eight passengers would now become flight attendants (4 in each new airplane); the former four crew members would become copilots (2 in each airplane); and the former two copilots would each become a pilot on the new airplanes. The new crew and officers of each airplane would then seek to obtain new passengers in order to keep the process continuing and keep the plane from “crashing.” In Cochran, the plane ultimately “crashed” and the plaintiff sued to recover the funds lost. The Cochran court held that the airplane game was clearly a chain distributor scheme which was prohibited by the General Business Law; and that, since the plaintiff was a willing participant in an illegal scheme and in pari delicto with the defendant, she should not be entitled to the exception to the general rule which would allow such cause of action. The court explained that “by entering the so-called ‘airplane game’ as a passenger, one is in fact *863‘promoting’ the game in violation of the General Business Law (e.g., encouraging the pilot to make an illegal profit; encouraging others to enter the game by example; and eventually hoping to make an illegal profit).” (Cochran v Dellfava, supra, at 41.) The court further noted that: “ ‘It is the settled law of this State (and probably of every other State) that a party to an illegal contract cannot ask a court of law to help him [her] carry out his [her] illegal object’ ” (Cochran v Dellfava, supra, at 40 [citations omitted]).


In Ford (supra), the plaintiff sought the return of $1,500 paid to defendants as an entry fee to join and participate in a pyramid scheme. The trial court, following the approach of Solon v Meuer (supra), held that, on public policy grounds, plaintiff was entitled under the General Obligations Law to “recovery of money lost at wagering games.” The Appellate Term of the Supreme Court reversed the lower court, and dismissed the' complaint, stating: “The classification of chain promotional schemes under article 23-A of the General Business Law, however, indicates that ‘the Legislature has sought to isolate <mask> from losses at games of chance contingent upon the happening (or not) of some specific event’ [citations omitted]. General Business Law § 359-fff contains no language abrogating the common-law rule that a party in pari delicto is without remedy at law or equity. Had the Legislature intended to create a comparable right of action to recover money lost at chain distributor schemes, it would have expressly included it, and its omission is an indication that the Legislature intended its exclusion [citation omitted]. The court thus acted in excess of its authority by expanding the scope of the statute on public policy grounds, so as to provide the *864plaintiff with a remedy not expressly contained therein. In so doing, the court improperly substituted its judgment for that of the Legislature, by ‘reading] into [the] statute that which the Legislature might have inserted but did not’ [citation omitted].” (Ford v Henry, at 194.)


Despite the general provisions of General Obligations Law § 5-419, permitting the recovery of sums lost at various illegal betting ventures, the Legislature has sought to isolate <mask> from losses at games of chance contingent upon the happening (or not) of some specific event. Section 359-fff of the General Business Law makes such pyramid schemes misdemeanors punishable by jail or fine, or both, upon conviction.


Even if Federated breached its contract(s) with Alliance by assessing charge-backs, such actions are markedly different from the previously discussed deceptive and misleading practices. General Business Law § 349 “was designed to protect ‘the little guy’ from false advertising, <mask>, bait-and-*307switch sales tactics, and other mischievous machinations by swindlers and scallywags.” (Exxonmobil Inter-Am. Inc. v Advanced Info. Eng’g Servs., Inc., 328 F Supp 2d at 450.) Federated neither made false or misleading statements, nor did its conduct deceive or mislead plaintiff or the public. While plaintiff claims Federated’s policies are unfair and unjustified, defendant’s actions do not constitute a deceptive and misleading practice as contemplated by General Business Law § 349 and as interpreted by relevant case law. Accordingly, defendant is granted partial summary judgment dismissing the second cause of action for deceptive trade practices in violation of General Business Law § 349.


The kinds of trade practices which have been considered as deceptive in the past include false advertising (Eastern Air Lines v New York Air Lines, 559 F Supp 1270; State of New York v Ginzburg, supra), <mask> (State of New York *126v Phase II Sys., 109 Misc 2d 598), deceptive preticketing (Benrus Watch Co. v Federal Trade Commn., 352d 313, cert denied 384 US 939), misrepresentation of the origin, nature or quality of the product (Century Metalcraft Corp. v Federal Trade Commn., 112d 443), false testimonial (Federal Trade Commn. v Colgate Palmolive Co., 380 US 374), deceptive collection efforts against debtors (In re Scrimpsher, 17 Bankr 999), deceptive practices of insurance companies (Sulnar v General Acc. Fire & Life Assur. Corp., 122 Misc 2d 597) and "bait and switch” operations (Electrolux Corp. v Val-Worth, Inc., 6 NY2d 556).


Based on the foregoing the court finds that the plaintiff has asserted the following cognizable causes of action against the defendant: (1) breach of contract; (2) violation of New York State General Business Law § 359-fff (<mask> prohibited); (3) rescission based upon (a) want of consideration, (b) failure of consideration, (c) unconscionability and (d) misrepresentations; and (4) violation of New York State General Business Law § 349 (deceptive and unfair business practices).


New York State General Business Law § 349 prohibits deceptive business practices and applies to <mask> (see, e.g., Teller v Bill Hayes, Ltd., 213 AD2d 141 [2d Dept 1995] [General Business Law § 349 applies to pyramid schemes]; Goldberg v Manhattan Ford Lincoln-Mercury, 129 Misc 2d 123 [1985]; State of New York v Phase II Sys., supra; State of New York v ITM, supra; Kugler v Koscot Interplanetary, supra [New Jersey Consumer Fraud Act applies to cosmetics pyramid scheme]) and to educational contracts (see, e.g., Andre v Pace Univ., supra, 161 Misc 2d, at 623-624; James v SCS Bus. & *509Tech. Inst., supra; Matter of State of New York v Interstate Tractor Trailer Training, 66 Misc 2d 678 [1971] ["The representations * * * have no basis in fact and would clearly tend to deceive or mislead those persons seeking to better themselves in a new field of employment”]).


Courts have traditionally applied General Business Law § 349 in the context of consumer sales transactions. "The typical violation contemplated by the statute involves an individual consumer who falls victim to misrepresentations made by a seller of consumer goods usually by way of false and misleading advertising” (Genesco Entertainment v Koch, 593 F Supp 743, 751, supra). And, "[t]he New York cases where plaintiffs have recovered under section 349 (h) further reflect its consumer orientation since they uniformly involve transactions where the amount in controversy is small” (Genesco Entertainment v Koch, supra, at 752). The court in Goldberg v Manhattan Ford Lincoln-Mercury (129 Misc 2d 123, 125-126) digested some of the relevant case law to provide a sample list of typical transactions cognizable under General Business Law § 349: "The kinds of trade practices which have been considered as deceptive in the past include false advertising (Eastern Air Lines v New York Air Lines, 559 F Supp 1270; State of New York v Ginzburg [104 Misc 2d 292]), <mask> (State of New York v Phase II Sys., 109 Misc 2d 598), deceptive preticketing (Benrus Watch Co. v Federal Trade Commn., 352d 313, cert denied 384 US 939), misrepresentation of the origin, nature or quality of the product (Century Metalcraft Corp. v Federal Trade Commn., 112d 443), false testimonial (Federal Trade Commn. v Colgate Palmolive Co., 380 US 374), deceptive collection efforts against debtors (In re Scrimpsher, 17 Bankr 999), deceptive practices of insurance companies (Sulnar v General Acc. Fire & Life Assur. Corp., 122 Misc 2d 597) and 'bait and switch’ operations (Electrolux Corp. v Val-Worth, Inc., 6 NY2d 556)”.


The Court of Appeals also looked to the legislative intent underlying the Martin Act: "The majority of this court holds that an implied private action is not consistent with the legislative scheme underlying the Martin Act and, specifically, section 352-c; that the specific purpose of the statute was to create a statutory mechanism in which the Attorney-General would have broad regulatory and remedial powers to prevent fraudulent securities practices by investigating and intervening at the first indication of possible <mask> on the public and, thereafter, if appropriate, to commence civil or criminal prosecution; and that consistency of purpose with the *598statute includes consistency with this enforcement mechanism (see, General Business Law §§ 352, 353, 353-a, 354, 358; Kaufman, Practice Commentaries, McKinney’s Cons Laws of NY, Book 19, General Business Law art 23-A, at 19-20).” (CPC Intl. v McKesson Corp., 70 NY2d 268, 276-277, supra.)


There is scant decisional precedent to guide the court on this question. In United States v Chiarella (588d 1358 [2d Cir 1978]), the federal Court of Appeals affirmed the District Court’s ruling that in a <mask> and insider trading case, as a matter of federal law, the apparent state-court privilege embodied in Labor Law § 537 yields to federal rules and precedent. The court noted that Federal Rules of Evidence rule 501 and established precedent show a strong federal policy favoring admissibility of the type of statement which Labor Law § 537 appears to protect. The court specifically declined to decide whether section 537 creates a privilege under New York law, since the court did not need to resolve that question in order to decide its own case.


Barbara Gunther Zambelli, J. Defendant is charged with three misdemeanor counts of <mask> in violation of section 352-c of the General Business Law, also known as the Martin Act. He moves to dismiss the accusatory instrument filed against him on three grounds: (1) the District Attorney lacks authority to prosecute violations of the Martin Act; (2) the District Attorney must be disqualified because of a conflict of interest; and (3) the prosecution is barred by the Statute of Limitations.


“[T]he Securities Act of 1933 (15 U.S.C. 77a et seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), the Sarbanes-Oxley Act of 2002, the Public Utility Holding Company Act of 1935 (15 U.S.C. 79a *211et seq.) . . the Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), the Investment Advisers Act of 1940 (15 U.S.C. 80b et seq.) . . ., and the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.).” (15 USC § 78c [a] [47].) Additionally, “the doctrine of equitable tolling does not apply to the statute of limitations in <mask> cases.” (De la Fuente v DCI Telecom., Inc., supra, 259 F Supp 2d 250, 263 [2003].) Finally, “in applying the Statute of Limitations [courts] look for the reality, and the essence of the action and not its mere name.” (Brick v Cohn-Hall-Marx Co., 276 NY 259, 264 [1937]; Meyer v Shearson Lehman Bros., 211 AD2d 541 [1st Dept 1995]; see also von Bulow by Auersperg v von Bulow, 657 F Supp 1134, 1140 [SD NY 1987] [“(w)hen applying a statute of limitations, courts look at the essence of the stated claim and not the label by which plaintiff chooses to identify it” (internal quotation marks omitted)].) Petitioner argues that all of respondent’s claims arise from petitioners’ investment of her money, are governed by 28 USC § 1658 (b), and under CPLR 7502 (b), require the court to permanently stay the arbitration.


In determining that a failure by FNIC to exercise reasonable supervision over its securities salespeople in a branch office can be a violation of the Martin Act, this court relies upon the following. When passing securities legislation, Congress has always preserved a role for state “blue sky” laws, which predated the federal securities laws of the 1930s, including the Securities Act of 1933 and the Securities Exchange Act of 1934 (see Mihaly and Kaufmann, Introduction and Commentary *999Overview, Securities, Commodities and Other Investments, McKinney’s Cons Laws of NY, Book 19, General Business Law art 23-A, at 11-12; see also Matter of Gardner v Lefkowitz, 97 Misc 2d 806, 812-813 [Sup Ct, NY County 19783). Further, despite FNIC’s allegation that the Martin Act does not specifically address the issue of broker-dealer supervision, section 353 clearly addresses secondary liability for <mask>, providing that the Attorney General may seek relief for fraudulent practices against a perpetrator as well as “any other person or persons theretofore concerned in or in any way participating in or about to participate in such fraudulent practices” (General Business Law § 353 [1] [emphasis supplied]). Here, FNIC hired certain of the other defendants as its representatives and clothed them with the “good name” of a national broker-dealer. If, as alleged by plaintiff, FNIC failed to adequately train or supervise the individuals who operated with FNIC’s express authority in selling other products, FNIC was necessarily “concerned in” the FNIC individual defendants’ fraudulent outside sales practices.


The rules of a private industry self-regulating group cannot deprive a state securities commission of jurisdiction over such an important area of <mask>. Instructive on this point is Jones v Securities & Exch. Commn. (115d 1173 [4th Cir 1997], cert denied 523 US 1072 [1998]), a case cited by FNIC. Jones ruled that res judicata did not bar the SEC from prosecuting an individual defendant after he had already been sanctioned by the NASD for the identical conduct (id. at 1180). The Fourth Circuit reviewed the statutory scheme for supervision of securities salespeople, among other issues:


Charles Edward Ramos, J. This is a declaratory judgment action brought to resolve a controversy regarding insurance coverage for numerous <mask> lawsuits brought by individuals, classes of individuals and regulators against the Xerox Corporation and many of its present and former directors and officers based on their alleged fraudulent reporting of Xerox’s finances from 1997 through 2000.1 In this action, plaintiff National Union Fire Insurance Company of Pittsburgh, Pa. contends that the directors and officers insurance policy it issued to Xerox does not afford coverage to defendants with respect to these lawsuits, and/or that the policy should be rescinded based on the failure to satisfy a condition precedent, fraudulent inducement and/or the doctrine of good faith and fair dealing.


*585By letter dated October 18, 2004, counsel for Wyly wrote to Barry Weprin, Esq. of respondent Milberg Weiss Bershad & Schulman, LLP to request that a motion be filed pursuant to rule 60 (b) of the Federal Rules of Civil Procedure to relieve the settlement class from the final judgment approving the settlement. The request was based on (i) a guilty plea by Steven Woghin, CA’s former general counsel, who admitted that he had impeded the governmental investigation of CA’s accounting practices in 2002, and (ii) the revelation in a September 24, 2004 Wall Street Journal article that CA’s outside counsel had in its possession 23 boxes of previously undisclosed documents that purportedly indicated that CA engaged in <mask>, and that its employees made false statements to lawyers and governmental investigators. The letter also noted that Mr. Weprin had represented that he knew nothing about the 23 boxes of documents until the publication of the Wall Street Journal article.


On August 11, 2004, Strafaci pleaded guilty in the Southern District of New York to one count of criminal <mask>, admitting that he knowingly, willfully and intentionally made untrue statements of material fact in connection with his valuation of the securities contained within the portfolios of Lipper Convertibles and the Series II Fund. At his sentencing on May 20, 2005, the District Court (Swain, J.) observed, “His motive in undertaking this conduct is not clear to me. It was, however, clearly not his motive simply to maximize his own financial gain.” (Transcript at 42.) In 2006, the Securities and Exchange Commission (SEC) charged Lawrence Stoler, the PricewaterhouseCoopers (PwC) partner assigned to the Lipper account, with knowingly, recklessly, and/or negligently ignoring generally accepted auditing standards and generally accepted accounting principles in conducting the 2000 audit. Stoler entered into a consent order in which the SEC found, among other things, that Stoler ignored, discounted, or failed to apprise himself of the substantial audit evidence that Strafaci’s valuations were materially overstated.


“BY SIGNING THIS AGREEMENT YOU AND BEAR STEARNS AGREE, THAT CONTROVERSIES ARISING UNDER OR RELATING TO THIS AGREEMENT OR ANY ACTIVITY BETWEEN YOU AND BEAR STEARNS, . . . SHALL BE DETERMINED BY ARBITRATION. ANY ARBITRATION UNDER THIS AGREEMENT SHALL BE HELD ONLY AT THE FACILITIES OF, BEFORE AN ARBITRATION PANEL APPOINTED BY, AND PURSUANT TO THE RULES OF THE NEW YORK STOCK EXCHANGE, INC., OR THE NATIONAL ASSOCIATION FOR SECURITIES DEALERS, INC.” (Petition 11 3, quoting § 25 [a] of Customer Agreement, annexed as exhibit A thereto.) *609The underlying arbitration arises out of ICMC’s claims that petitioners committed common-law and <mask> in connection with the hedge fund, and that Bear Stearns failed to process and revoked ICMC’s alleged irrevocable redemption of its investment in the hedge fund in October 2006 (see petition 1i 6, exhibit B annexed thereto). In the statement of claim, filed on July 25, 2008, ICMC sought recovery for breach of contract, negligence, promissory estoppel, fraud, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and negligent misrepresentation. It sought, in addition to other damages, reasonable attorneys’ fees, and other costs and expenses (exhibit B to petition, statement of claim 1f 106). Petitioners filed a statement of answer in which they denied all claims and any liability, asserted affirmative defenses, and requested that ICMC be directed to pay costs, fees and expenses, including reasonable attorneys’ fees (exhibit C to petition, statement of answer at 24).


Plaintiff was sued in federal court, in the Southern District of New York, in several actions alleging <mask>, together entitled In Re Forest Labs., Inc. Sec. Litig. (US Dist Ct, SD NY, No. 05-CV-2827-RMB, Berman, J.). The securities action was settled for $65 million, which was paid by plaintiff. Plaintiff claims that considerable unpaid extra claims and defense costs exist, adding several millions of dollars over the $65 million settlement amount.


. The federal courts continue to maintain that the New York common-law fraud standard for claims arising from the sale of securities, including RMBS, includes the element of loss causation. (See Bank of Am,., N.A. v Bear Stearns Asset Mgt., — F Supp 2d —, —, 2013 WL 4734495, *5, 2013 US Dist LEXIS 125700, *14-15 [SD NY, Sept. 3, 2013, No. 08-Civ-9265 (AJN)].) It is important to note that “warranty fraud” cases, where a fraud claim is allowed to proceed with a breach of contract claim, is not the same as a garden variety <mask> claim. Fraud based on breach of a warranty, as in monoline cases (e.g. MBIA Ins. Corp. v Countrywide Home Loans, Inc., 39 Misc 3d 1220[A], 2013 NY Slip Op 50677[U] [Sup Ct, NY County 2013]), have separate legal considerations, such as insurance law, and are guided by unique principles *865that do not affect the normal loss causation standard. (See generally Merrill Lynch & Co. Inc. v Allegheny Energy, Inc., 500d 171, 183-184 [2d Cir 2007]; DDJ Mgt., LLC v Rhone Group L.L.C., 15 NY3d 147 [2010].) As this court has explained, it has long been the law that “the analysis of reliance in a tort action based on fraud or misrepresentation (tort reliance) differs from the analysis of reliance in actions for breach of express contractual warranties (warranty reliance).” (Project Gamma Acquisition Corp. v PPG Indus., Inc., 34 Misc 3d 771, 778 [Sup Ct, NY County 2011]; accord CBS Inc. v Ziff-Davis Publ. Co., 75 NY2d 496 [1990].)


In contrast, in Matter of Schmidt v Roberts (74 NY2d 513, 522 [1989]), the Court of Appeals held that a defendant convicted of the federal crimes of interstate transportation of stolen property (18 USC § 2314), and conspiracy to commit that crime (18 USC § 371), could not be prosecuted in New York for grand larceny in the second degree, former Penal Law § 155.35, now Penal Law § 155.40. The Court concluded that the federal and state crimes were not designed to prevent very different kinds of harm or evil, since “[t]he Federal crime of interstate transportation of stolen property and the State crime of larceny are both designed to punish thieves and to protect property owners from thefts.” (Id.) Similarly, the federal wire fraud statute and New York’s scheme to defraud are both designed to protect the unwary from schemes to deprive them of their property by fraud. Thus, scheme to defraud in the first degree and wire fraud are not, as CPL 40.20 (2) (b) requires, designed to prevent very different kinds of harm or evil. (See also Matter of Kaplan v Ritter, 71 NY2d 222, 230-231 [1987] [“counts in the New York County indictment, which charge petitioners with <mask> and grand larceny, cannot be prosecuted (pursuant to exceptions in CPL 40.20 [2] [b] and [e]) in light of the prior Federal prosecution for RICO violations and fraud”].)


The defendants are charged with 85 counts of <mask>, scheme to defraud, criminal possession of stolen property and grand larceny. The charges arise out of nine alleged fraudulent “pump and dump” penny stock promotion schemes. Defendant Anthony Thompson moves here to suppress approximately 100,000 of his emails recovered in the execution of two search warrants directed to his Internet service providers in 2012.


Similar issues arose in United States v Metter (860 F Supp 2d 205 [ED NY 2012, Irizarry, J.]), a <mask> overseizure case in which the court suppressed computer files recovered from the defendant’s home and business as well as personal email messages which had been obtained from his Internet service providers.19 Fifteen months after the initial seizure, the government had not yet completed its privilege review or determined whether any of the seized material fell outside the scope of the warrants. The court concluded the government’s 15-month delay in isolating responsive communications constituted a search and seizure in violation of the Fourth Amendment because of the unreasonable period of time the government had consumed searching the defendant’s files. The court did not address the third-party doctrine, although part of the materials which were suppressed were email communications seized from ISPs. Thus, the court apparently implicitly recognized that the third-party doctrine was not applicable to those seizures.


“[a]lmost all <mask> complaints will allege that the defendants did what they did in order to benefit themselves in some way. If such an allegation were sufficient to invoke the protections of 4(a) [the personal profit exclusion], the broad coverage for ‘Securities Claims’ provided by the National Union Policy would be rendered valueless by this exclusion . . . and would swallow up the very securities coverage that the National Union policy purports to grant” (see also In re Donald Sheldon & Co., Inc., 186 BR 364). Similarly, accepting the Insurers’ construction that any profit or advantage gained by an insured is sufficient to trigger the exclusion essentially renders the coverage afforded by the policies illusory, as it would exclude most coverage for securities violations that the policies are intended to grant.


While the three Levines were still stockholders, while the plaintiff was still director and subsequent to the commencement of this action, the individual defendants procured the merger of Biddle Sawyer into another Delaware corporation; and, as the Levines held less than 10% of Biddle Sawyer stock, the defendants were enabled to and did divest the Levines of their shares in both the old and new corporations (Delaware Corporation Law, § 253) making the Levines creditors to be paid out at the appraised value of their former shares. (The Levines, as stockholders, have pending in the United States District Court for the Southern District of New York a <mask> action seeking among other relief their reinstatement as stockholders of Biddle Sawyer. An attack on that complaint has been successfully withstood.)


Irving Lang, J. In this habeas corpus proceeding, petitioner contests his rendition to the State of Alabama to answer an indictment for <mask> on two unusual grounds. First, he claims that no date is alleged in the indictment, thereby depriving him of the constitutional and statutory right to resist extradition on the ground that he was not in the demanding State at the time of the commission of the alleged offense. Secondly, he claims that the specific acts of which he is accused do not substantially charge him with a crime under Alabama law. Rather, he asserts the demanding State is attempting to use criminal process to enforce what is a civil obligation. He claims that since the indictment does not "substantially charge the person demanded with having committed a crime under the law” of Alabama, the writ should be granted (CPL 570.08).


Applying these tests to the three counts of the indictment (which contain the requisite specificity), petitioner has not come forward with any law from the State of Alabama indicating that the acts are not criminal.* Count I, which alleges that Lewis diverted the proceeds of securities to his own use, clearly describes actions which suggest intent to perpetrate <mask>.


It was stipulated that defendant Norman Forsyth was served with a subpoena issued by the Attorney-General pursuant to article 23-A of the General Business Law (New York’s “Blue Sky” law) requiring his appearance at the office of the Attorney-General on August 31, 1979. It was *235undisputed that defendant was aware that the purpose of the subpoena was to seek the defendant’s testimony in an investigation of <mask> of which he was the prime suspect. Defendant had, pursuant to earlier subpoenas and upon adjourned dates requested by him, appeared at the office of the Attorney-General. Following his failure to appear on an adjourned date, the subpoena, which is the subject of this indictment, was served upon him.


There are two California cases which are on point. Bradshaw v Pardee (78 Cal App 3d 567) was cited by the defendant and discussed in his brief but, unfortunately, the opinion was deleted from the reporter on the direction of the California Supreme Court for an unstated reason. According to the defendant’s brief, the case concerned a client who pleaded guilty to a criminal charge on the advice of counsel. The client later brought a malpractice action against the attorney, alleging that he was negligently advised to plead guilty. The court dismissed the complaint on the theory that the client’s prison sentence was caused by his guilt and not the lawyer’s alleged negligence. In Weiner v Mitchell, Silberberg & Knupp (114 Cal App 3d 39), a former client who had been convicted of <mask> brought an action charging his former attorneys with malpractice in the criminal case. The California Court of Appeal, Second District, Division 3, noted that the client’s conviction estopped him from relitigating the issue of guilt. The court then unanimously held (p 48) “we must, therefore, accept as the proximate cause of his indictment, and of all the damages which occurred to him by reason of it, his guilt and his guilt alone. This means that all of the various causes of action alleged in tort against defendants in plaintiff’s second amended com*435plaint founder on the complete lack of proximate causation between the torts alleged therein and the injuries plaintiff allegedly suffered thereby. Stated otherwise, without proximate causation between the torts alleged and the damages allegedly suffered, there can be no cause of action in tort.”


The first and second causes of action of plaintiff’s complaint assert State securities law violations, specifically alleging violations of subdivisions 1 and 2 of section 352-c and section 339-a of the General Business Law. However, just as the time-deposit accounts herein are not securities within the meaning of the Federal Securities Act of 1933 (US Code, tit 15, § 77a et seq.) and Securities Exchange Act of 1934 (US Code, tit 15, § 78a et seq.) (Marine Bank v Weaver, 455 US 551), so they are not securities or commodities as defined in section 352 of the General Business Law or within the meaning of section 339-a of the same statute. (See, generally, Matter of Gardner v Lefkowitz, 97 Misc 2d 806, 812.) Inasmuch as plaintiff’s allegations fail to state a cause of action for <mask>, the first and second causes of action of her complaint are insufficient.


In April, 1973, Vall became employed as a salesman for a commodities brokerage firm known as Collins and Day. That firm ceased operations some time in June, 1973, with substantial losses to its clients. Thereafter an investigation was commenced by the Attorney-General. That investigation revealed that neither the firm, its principals nor *1001its salespeople were registered and licensed to sell securities in this State and that Collins and Day was what is colloquially known as a “bucket shop”. The loss to investors was estimated to be in excess of $2,000,000. As a result the Attorney-General obtained indictments against the principals of Collins and Day as well as all of its salespeople. Vail was indicted and charged with 35 counts of grand larceny in the second and third degree; the sale of securities without a license; and <mask> under the Martin Act. Prior to trial Vail entered a plea of guilty to a violation of section 359-e of the General Business Law (failure to register as a salesman), a misdemeanor, and this plea was accepted to cover the entire indictment. Vail received a sentence of incarceration for four successive weekends and was fined $500. The sentencing Judge thereafter granted Vail a certificate of relief from civil disabilities pursuant to section 702 of article 23 of the Correction Law. A civil proceeding pursuant to the Martin Act was then initiated by the Attorney-General to obtain orders permanently enjoining all the defendants in the Collins and Day operation from participating in the purchase and sale of securities. Vail subsequently consented to the entry of judgment and the permanent injunction which he now seeks to dissolve


The regulation of the purchase and sale of securities pursuant to the Martin Act is a creation of the Legislature and the primary purpose of the statute is remedial in character (People v Lexington Sixty-First Assoc., supra; People v Federated Radio Corp., 244 NY 33). As such it is the prerogative of the Legislature to establish the availability and applicability of the remedy and in so doing does *1004not infringe upon the jurisdiction of the court (People ex rel. Durham Realty Corp. v La Fetra, 230 NY 429). Section 359-g is penal in operation (People u Federated Radio Corp., supra) and it is within the authority of the Legislature to punish those convicted of fraud in connection with the purchase and sale of securities (Defiance Milk Prods. Co. v Du Mond, 309 NY 537). In the context of the Martin Act, the Legislature has stated that the remedy of dissolution or modification of the injunction is not available to those convicted of <mask> (NY Legis Ann, 1963, pp 107-108). This is a clear proscription of the jurisdiction of the court and is binding (Thrasher v United States Liab. Ins. Co., supra; People v Darling, supra).


In October 1986, the petitioners filed suit in the United States District Court for the Southern District of New York claiming that Drexel, through one of its agents, had engaged in fraudulent transactions in violation of Federal securities laws and the Racketeer Influenced and Corrupt Organizations Act (RICO) (18 USC § 1961 et seq.) and in breach of its fiduciary duties to the petitioners.2 At the time there was disagreement among the several circuits concerning the arbitrability of. controversies involving securities transactions. However, since this specific issue was before the United States Supreme Court, the District Court (Conner, J.) stayed the action pending the resolution of that case. In Shearson/American Express v McMahon (482 US 220), the Supreme Court held the provisions of the FAA applicable to RICO and <mask> claims. Thereafter, petitioners discontinued the Federal action.


Furthermore, the dealers recognize that Ehrlich-Bober (supra) is a State court doctrine inapplicable in Federal court. Greater governance over the financial markets in New York is provided by Federal law than by State law. And yet, for example, <mask> claims can be brought in any district in the country and, notwithstanding the possibility of nationwide cacophony in judicial rulings, the securities markets function. This suggests that disaster will not befall plaintiffs and the market in Government securities if the Ehrlich-Bober doctrine is not transformed into exclusive New York jurisdiction over cases involving the markets.


The defendants have argued that the June 2,1988 extension of the Citron warrant was not based on probable cause because no evidence of <mask> was uncovered during the execution of the original warrant. Eavesdropping warrants must meet the "probable cause” requirements that are applicable to search warrants. (CPL 700.15 [2], [3]; 700.20; People v Tambe, 71 NY2d 492.) A finding of probable cause requires that facts be presented to the issuing officer sufficient to warrant a prudent person to believe that evidence of a crime will be obtained through the use of electronic surveillance. (United States v Fury, 554d, at 530, supra.) Requests for extension of the warrant must, in addition to the requirement of probable cause, contain a statement setting forth the results thus far obtained.


A partner at First Investors’ primary outside accounting firm states that FICON was not insolvent at the time of The Contested Transactions; that as of December 31, 1989 FICON had "reported stockholders’ equity of approximately $83 million”; that as of December 31, 1990 FICON had "reported stockholders’ equity of approximately $76 million”; that FI-CON was actually worth more than the $83 million book value of its outstanding shares; that contrary to plaintiff’s assertion, and for "several reasons” (e.g., plaintiff’s calculations omit both "net investment income earned” and "gains earned by investors prior to the limited time period 1987 to 1990 used by the State to calculate losses”), First Investors was not liable for a total restitution of $1.6 billion to investors at the time of The Contested Transactions; that at the time of The Contested Transactions as a matter of general accounting practice, no liability attached to First Investors pursuant to the instant suit since (1) it was not "probable” that there would be a loss, and (2) as an independent ground, the amount of any loss could not reasonably be estimated. Defendants note that plaintiffs damage calculations assume that every investor in First Investors was the victim of fraud, whereas a plaintiff in a <mask> suit can only collect net losses which stem from defendant’s fraudulent act(s) (see, Abrahamson v Fleschner, 568d 862, 878 [2d Cir 1977]). Plaintiff rejoins that "a contingent liability * * * must be reduced to its present, or expected, value before a determination can be made whether the firm’s assets exceed its liabilities.” (Matter *218of Xonics Photochemical, 841d 198, 200 [7th Cir 1988] ["(t)o value (a) contingent liability it is necessary to discount it by the probability that the contingency will occur”].)


Milken and Levine have served time for their convictions of felonies and have been fined substantial sums. Their company, the investment brokerage house of Drexel Burnham Lambert, itself ultimately pleaded guilty to mail and <mask> for its part in the crimes on September 1, 1989 and agreed to pay $650 million in criminal and civil penalties. It also settled a complaint filed against it by the Securities and Exchange Commission (SEC).


Levine was indicted in 1986 for <mask> and other crimes to which he pleaded guilty, and he also settled charges against him brought by the SEC, agreeing to disgorge his gains. Drexel notified the insurers on September 4, 1986 that *207Levine had been charged with insider trading and had pleaded guilty to the criminal charges and had settled with the SEC in June, and that as a result claims by third parties against Drexel might thereafter be asserted.


The complaint further alleges that Boesky also pleaded guilty and settled charges of <mask>, implicating Michael Milken, the head of Drexel’s high yield bond division. Michael Milken and other Drexel employees (Lowell Milken, Cary Maultasch, Bruce Newberg, Martin Siegel and Pamela Mouzert) were charged with securities fraud involving the shares of numerous companies from 1984 to 1986 including insider trading, stock parking and manipulation. Milken pleaded guilty in 1990 to six felony counts including conspiracy, securities fraud and mail fraud, agreed to pay $200 million in fines and penalties, and $400 million to defray claims against him.


On January 30, 1990, Moore & Schley filed a petition for reorganization under chapter 11 of the Bankruptcy Code. In March 1990, Moore & Schley submitted written proofs of loss to the defendants based upon the dishonest and fraudulent acts of Militano and Sonneberg. In March 1991, after waiving indictment, Militano pleaded guilty to conspiracy to commit <mask> and making a false statement to a Federal official, and Sonneberg pleaded guilty to conspiracy to commit securities fraud. In April 1991, defendants disclaimed coverage. The SEC’s civil action against Militano and Sonneberg culminated in a judgment against them enjoining them from engaging in securities fraud and requiring them to disgorge their profits.


Movants in their counterclaim allege plaintiffs intentionally and tortiously induced the breach of a settlement agreement entered into on July 12, 1990, of an action then pending in Illinois. Beigel & Sandler, Ltd., the predecessor firm of plaintiffs’ counsel herein, specifically entered into that agreement on its *31clients’ and on its own behalf. The defendants James Haber and Harvey Minors were also defendants in the Illinois action; and the settlement agreement was entered into on their behalf. The claims in the Illinois action which were resolved included claims of <mask> and Racketeer Influenced Corrupt Organizations violations unrelated to this action. Movants allege that plaintiffs, by retaining the Beigel firm to represent them in the instant action, caused the Beigel firm to breach paragraph 10 of the settlement agreement which prohibits the Beigel firm from representing or assisting claimants asserting certain claims against Haber, such as the claims asserted herein.


"It is settled in this State that there are limits upon the power of public officials authorized to issue subpoenas. In the *171leading case of Carlisle v. Bennett (268 N. Y. 212, 217-218) it was stated that the power of the Attorney-General in investigating alleged <mask>, is necessarily limited to a 'proper case’, 'one where the books and papers * * * have some relevancy and materiality to the matter under investigation [citations omitted].’ The court further stated that the statutory authorization to issue subpoenas would not be construed to allow the Attorney-General to embark upon a roving course to pry into the affairs of any person.


been paid in full by the Company more than 60 days previously. In April 2018, plaintiffs commenced an action in federal district court, where, in due course, plaintiffs’ <mask> claims were eventually dismissed on the merits, and plaintiffs’ remaining state law claims were dismissed without prejudice. See Iafrate v Angelo Iafrate, Inc, 827 F Appx 543, 547 (CA 6, 2020). In July 2019, plaintiffs filed their complaint underlying this appeal which primarily concerned defendants’ refusal to honor the expired Warrants. Plaintiffs raised four claims: (1) breach of contract, (2) reformation, (3) unjust enrichment, and (4) fraud.


The trial court dismissed plaintiffs’ fraud claims on the basis of collateral estoppel, holding that the dismissal of plaintiffs’ <mask> claims in federal court precluded plaintiffs’ common law fraud claims. “Collateral estoppel bars relitigation of an issue in a new action arising between the same parties or their privies when the earlier proceeding resulted in a valid final judgment and the issue in question was actually and necessarily determined in that prior proceeding.” Leahy v Orion Twp, 269 Mich App 527, 530; 711 NW2d 438 (2006). Collateral estoppel may bar subsequent litigation in state courts based on issues determined in a prior federal action. Pierson Sand and Gravel, Inc v Keeler Brass Co, 460 Mich 372, 380-381; 596 NW2d 153 (1999). The trial court also held that, in any event, plaintiffs failed to plead the necessary elements of fraud.


Plaintiffs’ fraud claim is based in part on the general contention that Adcock undervalued the Company’s performance, which undermined the value of the stock to be redeemed under the Warrants. Having determined that the Company properly regarded all but Angelo Jr.’s warrants as expired, this claim applies only to Angelo Jr.’s Warrant. Plaintiffs’ <mask> claim in federal court alleged a violation of the Securities Exchange Act, 15 USC § 78j(b), and Securities and Exchange Commission Rule 10b-5, 17 CFR § 240.10b-5, for precisely that reason: that Adcock and the Company had intentionally undervalued the Company’s stock price in an effort to manipulate the value of the Warrants. Iafrate, 827 F Appx at 546-547. Consistent with the allegations in the complaint in this matter, the federal courts observed that Adcock admitted to the undervaluing to Angelo Jr. before Angelo Jr. exercised his Warrant. Id. at 551. In Michigan, as in federal courts, an essential element of fraud is that the plaintiff not only relied on a misrepresentation but did so genuinely and reasonably. Cooper v Auto Club Ins Ass’n, 481 Mich 399, 414-415; 751 NW2d 443 (2008).13 Plaintiffs alleged that Angelo Jr. relied on defendants’ “materially false and misleading statements” and upon an earlier presentation regarding the methodology to be used in calculating the fair market value of the stocks. However, as the Sixth Circuit found, Angelo Jr. actually knew that defendants had manipulated the Company’s stock value and, instead of challenging the valuation or suing for breach of contract immediately, he


The SEC sued Ms. Baylor, the Baylor & Jackson law firm, the Milan Group, Inc., and other individuals as “Principal Defendants” for conducting an alleged <mask> from which victims suffered losses amounting to millions of dollars. See S.E.C. v. Milan Group, 962 F. Supp. 2d 182 (D.D.C. 2013), aff’d in part, vacated in part, 595 Fed. Appx. 2 (D.C. Cir. 2015). Ms. Jackson was named as a “Relief Defendant,” which the District Court described as a “person[] who allegedly received money resulting from the fraudulent activities but who [is] not charged with personally engaging in the fraud.” Milan Group, 962 F. Supp. 2d at 186. During the pendency of the case and trial, the SEC required that Ms. Jackson keep the Baylor & Jackson law firm intact as “a going concern” to preserve the law firm’s accounts and assets that would eventually contribute toward the monetary judgment to satisfy the victims’ monetary losses. The District Court entered summary judgment against Ms. Baylor, the Baylor & Jackson law firm, and other defendants jointly and severally liable for over $2.6 million in ill-gotten profits. Id. at 211. The money judgment was affirmed by the United States Court of Appeals for the District of Columbia Circuit in 2015. Milan Group, 595 Fed. Appx. at 2.


A black box warning is an FDA warning to alert consumers about serious or life-threatening side effects the drug may have. It is the most serious warning given by the FDA. The black box warning here stated that Xyosted “can cause blood pressure increases that can increase the risk for major adverse cardiovascular events (MACE), including non-fatal myocardial infarction, non-fatal stroke and cardiovascular death, with greater risk for MACE in patients with cardiovascular risk factors or established cardiovascular disease.” App. 171. Plaintiff’s first two complaints were similarly dismissed by the District Court for failure to adequality plead <mask>. Each time, Plaintiff was granted leave to file an amended complaint. These statements were made in (1) a press release dated December 21, 2016; and (2) a press release dated February 27, 2017. App. 159–61.


In this instance, that is even more clear as Kinder Morgan, like Comforce, could have purchased errors and omissions coverage but declined to do so. (See, e.g. Bank of the West v. Superior Court, supra, 2 Cal.4th 1254, 1276-1277, 10 Cal.Rptr.2d 538, 833 P.2d 545 [rejecting broad interpretation of " 'advertising injury' " because insureds only reasonably expect such broad coverage by purchasing additional, e.g., errors and omissions, liability coverage]; Allstate Ins. Co. v. Interbank Fin. Servs. (1989) 215 Cal.App.3d 825, 831, 264 Cal.Rptr. 25 [explaining that it was unreasonable for insured to expect CGL policy to cover <mask> and noting that if such coverage had been desired a professional liability policy could have been obtained].) It can be reasonably inferred that, at the outset, Comforce understood that the ACE commercial umbrella policy provided no coverage for claims arising out of its professional services. Just as Comforce did not expect that its policy would cover claims of professional errors, Kinder Morgan could not reasonably expect that such claims would be covered under the policy.


*470Talley v. Valuation Counselors Group, Inc. (2010) 191 Cal.App.4th 132, 119 Cal.Rptr.3d 300 ( Talley ) addresses the nature of "appropriate proceedings" to obtain relief from a later judgment. The plaintiff in Talley sued three individual defendants and two corporate defendants in state court for <mask>. The plaintiff also initiated a related federal court proceeding. The state trial court sustained, without leave to amend, demurrers in favor of the defendants. In Talley v. Miller & Schroeder (Sept. 12, 2007, D048438) [nonpub. opn.], the Court of Appeal had affirmed the judgments in favor of three individual defendants and reversed and remanded for further proceedings the judgments in favor of the two corporate defendants. (Talley, supra , 191 Cal.App.4th at pp. 136-137, 119 Cal.Rptr.3d 300.) On remand, the trial court again sustained, without leave to amend, demurrers by the corporate defendants, and judgment was entered in their favor. ( Id. at p. 137, 119 Cal.Rptr.3d 300.) The plaintiff neither made a direct attack on that judgment by appeal nor obtained a stay order pending the resolution of his related federal court action. ( Ibid. ) After the Court of Appeal's decision became final and the time for California Supreme Court review had passed, the Ninth Circuit issued its decision "analyzing, modifying and narrowing the Bar orders" that had served as the basis for the earlier judgments based on the demurrers. ( Id . at pp. 137, 141, 119 Cal.Rptr.3d 300.)


These consolidated appeals challenge the award of attorney fees to respondents Kim Agasaveeran and Jeffrey Bryant (respondents) under Code of Civil Procedure section 1021.5 ( section 1021.5 ). Respondents specially appeared in an already-settled <mask> action brought by the Commissioner of the Department of Business Oversight (DBO) against real estate investment company Investco Management & Development LLC (Investco M&D) and its promoters, Christopher P. Epsha, Steven G. Thompson, Barry D. LeBendig, and Douglas R. Hanson (the promoters). Respondents-victims of the securities fraud-successfully opposed a motion that would have stayed all individual actions by them and other defrauded investors against these defendants. Respondents also raised several issues concerning the fairness of the settlement, resulting in substantive changes to the stipulated interlocutory judgment *602and special master order in the DBO action.


We conclude the trial court did not abuse its discretion in finding that respondents: were successful parties against the DBO, Investco M&D and the promoters; enforced an important right affecting the public and a large group of <mask> victims; and provided necessary, non-duplicative, and significant benefits to this group of investors, while incurring litigation expenses that were out of proportion to their personal interests. Accordingly, we affirm.


Furthermore, unlike the newspaper's success on the motion to unseal in Savaglio , respondents' success was not "ancillary" or "entirely unrelated to the objective of the lawsuit." ( Savaglio , supra , 149 Cal.App.4th at p. 603, 57 Cal.Rptr.3d 215.) The interlocutory judgment and order setting forth the powers and duties of the special master comprised the core relief negotiated in the DBO action. The trial court sharply criticized this settlement structure in several respects, referring to one of the key terms as "illusory," and respondents were successful in causing substantive changes to be made to the settlement. These successes were related to the objective of the DBO action because, *611in the court's reasonable view, they provided better protections to the victims of the <mask>.


The general purpose of the CSL is to protect the public against the imposition of unsubstantial, unlawful and fraudulent stock and investment schemes and the securities based thereon. ( People v. Rankin (1958) 160 Cal.App.2d 93, 96, 325 P.2d 10 ; see also People v. Martinson (1986) 188 Cal.App.3d 894, 899, 233 Cal.Rptr. 617 [intent behind Corp. Code, § 25530 was to create governmental cause of action to protect investing public].) In its complaint against Investco M&D, the promoters, and the Investco AV LLCs, the DBO stated that it was bringing the action "in the public interest in the name of the People of the State of California." The <mask> scheme at issue targeted the investing public in California and reached hundreds of individual investors, raising approximately $22,725,000. Thus, the statutory rights under the CSL enforced here were important and affected the public interest.


The DBO argues that respondents did not enforce any such rights in relation to the DBO because the only CSL violations at issue were those of the moving defendants. However, as discussed above, the DBO was an "opposing party" in this context because it stood on opposite sides of respondents in the context of the motion to modify. During these proceedings, the trial court took seriously the concerns raised by *615respondents about due process, lack of notice to the investors, and "cutting off their rights to sue," and criticized the settlement terms negotiated by the DBO. Even if these matters did not rise to the level of strict constitutional violations, the trial court reasonably concluded that the efforts of respondents strengthened the settlement in ways that were important to hundreds of victims of <mask>.


Consumer Cause and Karuk Tribe are distinguishable in that they involved procedural successes that did not result in any substantive changes. In Karuk Tribe , the fee claimants simply obtained a court order requiring a regional water quality control board to provide an "augmented explanation" on the same decision it had previously made. ( Karuk Tribe , supra , 183 Cal.App.4th at p. 369, 108 Cal.Rptr.3d 40.) In Consumer Cause , the fee applicant's successful objection to a class action settlement simply "[f]ree [d] [the] putative class members from *465the constraints of a proposed settlement agreement they had the right to disregard by exercising their opt-out right." ( Consumer Cause , supra , 127 Cal.App.4th at p. 404, 25 Cal.Rptr.3d 514.) In contrast, respondents obtained actual, substantive changes to the interlocutory judgment and special master's powers that, in the trial court's reasonable estimation, better protected hundreds of victims of <mask>. The trial court did not abuse its discretion in finding that an important public right was enforced.


After Howard's employment was terminated in 2013, he signed a "Separation Agreement and Release" (the separation agreement). The agreement recited that the parties wished to resolve "any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that [Howard] may have against the Company and any of the Company Releasees as defined below, including, but not limited to, any and all claims arising out of or in any way related to [Howard's] employment with or separation from the Company." As "Consideration," Kaggle agreed to continue paying Howard's base salary and health benefits for four months, and accelerated the vesting date of some of the restricted shares that had not yet been released under the stock agreement. The parties also agreed on how to determine the number of shares in which he was entitled to be vested. Howard agreed to release Kaggle from all claims "relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that [Howard] may possess against any of the Company Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the Effective Date of this Agreement , including, without limitation: [¶] a. any and all claims relating to or arising from [Howard's] employment relationship with the Company and the termination of that relationship; [¶] b. any and all claims relating to, or arising from, [Howard's] right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any rights under an Equity Arrangement dated October 25, 2011 between [Howard] and Anthony Goldbloom, claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under any applicable state corporate law, and <mask> under any state or federal law ..." (Italics added.)


On April 20, 2015, plaintiffs filed a first amended complaint, alleging causes of action for <mask> in violation of the California Corporations Code, fraud, breach of fiduciary duty, constructive fraud, breach of contract, breach of the implied covenant of good faith and fair dealing, declaratory relief, promissory estoppel, rescission for fraud in the inducement, and legal malpractice. They also filed a motion for summary judgment. Also on April 20, defendants filed a second motion to stay the action and compel arbitration, based on the same arbitration provisions in the applicable operating agreements *375they relied on in the first motion to compel arbitration.


Shortly before the Phase I trial, the trial court signed an order aligning Choudhri as the plaintiff and Latif and Mokaram (collectively the "Latif Parties") as the defendants for the Phase I trial. The Phase I trial lasted over two weeks. The trial court submitted questions to the jury concerning Choudhri's claim that Mokaram converted Choudhri's interest in the Lamborghini, and Mokaram's claim that Choudhri committed <mask> in the 2008 transaction, upon which Mokaram sought rescission of the 2008 transaction. The court also submitted the following question concerning the 2010 transaction:


Plaintiff Gordon Ostojic seeks to enforce an agreement purporting to settle a federal <mask> action that he and 54 other plaintiffs (together, the SDNY plaintiffs) commenced in the United States Court for the Southern District of New York against defendants Life Medical Technologies, Inc. and its former CEO and president Carol Fitzgerald, both of whom are the defendants in the action underlying this appeal. Eventually, the parties to the federal action agreed to settle. As a result of the parties' agreement, the federal court granted an order of discontinuance dismissing the action without prejudice, stating that if the matter were not settled within 30 days of the order, the parties were obliged to make a letter application within the 30-day period, requesting that the matter be reinstated. Ostojic alleges that although the parties orally agreed upon a final written settlement agreement that settled all material terms, defendants never signed the agreement. Furthermore, Ostojic alleges, because no party requested that the matter be reinstated, the SDNY lost jurisdiction over the matter. Ostojic maintains that although he performed all conditions and promises required of him by the proposed settlement agreement, defendants failed to make the monetary payments owed to him under the agreement.


for further investigation and possible criminal prosecution. Request Letter at 3. SEC staff contemplates that a significant part of the FST’s investigative efforts would involve contacting individuals suspected of conducting criminal <mask> schemes through e-mail, mail, or telephone. Id. at 3–4. FST investigators would pose as potential investors in the schemes and seek information from the promoters in an attempt to develop evidence to support criminal prosecutions. Id. at 4. A cadre of SEC staff members would be designated to serve on the FST and would be specially trained and separately supervised in connection with their FST activities. Request Letter at 4–5. 2 The FST would under- take an investigation only if its staff had a bona fide basis to believe that the targets were engaged in conduct amounting to a criminal violation of one of the securities laws. Id. at 4. The FST would maintain the infor- mation that it collected in its investigations in a separate system of rec- ords, which would not be utilized for other purposes and would not be generally accessible to Commission staff performing non-FST duties. Id. at 5; E-mail for Matthew D. Roberts, Senior Counsel, OLC, from George S. Canellos, Director, New York Regional Office, SEC (Dec. 22, 2011, 5:02 PM) (“Follow-up E-mail”). Limited, summary information in the FST records system—for example, a description of the general nature of the information that prompted the investigation, the persons or entities contacted, and the other investigative steps taken—would, however, subsequently be recompiled into another SEC records system or systems, which would be more broadly available to Commission staff. Request Letter at 5 & n.9; Follow-up E-mail.


3 In accord with Dun & Bradstreet, lower courts considering credit rating agencies’ First Amendment defenses to claims for defamation, fraud, and various other business torts (as well as breach of contract in at least one instance) have looked in part to whether the reports were distributed to a public audience or tailored to a discrete group of clients. See, e.g., Compuware Corp. v. Moody’s Investors Servs., Inc., 499 F.3d 520, 525–34 (6th Cir. 2007) (affirming grant of summary judgment in favor of credit rating agency defend- ant on defamation and breach of contract claims based on “actual malice” requirement where ratings were made available to the public); Abu Dhabi Commercial Bank v. Morgan Stanley & Co., No. 08-Civ-7508 (SAS), 2009 WL 2828018, *9 (S.D.N.Y. Sept. 2, 2009) (rejecting First Amendment defense to various common law tort claims, including fraud, in part because “plaintiffs have plainly alleged that the . . . ratings were never widely disseminated, but were provided instead in connection with a private placement to a select group of investors”); In re Nat’l Century Fin. Enters., Inc., Inv. Litig., 580 F. Supp. 2d 630, 640 (S.D. Ohio 2008) (rejecting First Amendment defense to <mask> and various common law claims in part because ratings disseminated to a “select class of investors”); In re Enron Corp., 511 F. Supp. 2d 742, 820 (S.D. Tex. 2005) (finding that the First Amendment shielded credit rating agency from negligent misrepresentation claim where the “credit rating reports regarding Enron by national credit rating agencies were not private or confidential, but distributed ‘to the world’ and were related to the creditworthiness of a powerful public corporation that operated internationally”). At least one court of appeals has invoked the same consideration as one of its reasons for ruling that a credit rating agency could not avail itself of a statutory state-law journalist’s privilege to refuse to comply with a subpoena. In re Fitch, Inc., 330 F.3d 104, 109 (2d Cir. 2003) (“Unlike a business newspaper or magazine, which would cover any trans- actions deemed newsworthy, Fitch only ‘covers’ its own clients.”); see also id. at 110 (“Fitch’s information-disseminating activity does not seem to be based on a judgment about newsworthiness, but rather on client needs. We believe this weighs against Fitch being able to assert the privilege for the information at issue.”).


*49On or about July 5, 1994 the respondent was found guilty, after a jury trial in the Supreme Court, New York County, of eight counts of scheme to defraud in the first degree, nine counts of real estate <mask>, three counts of grand larceny in the second degree, three counts of grand larceny in the third degree and one count of offering a false instrument for filing in the first degree. Respondent’s conviction arose out of his participation in the sale of cooperative interests in several different buildings, in connection with which he made false representations and concealed material facts including necessary information about the financial status of the buildings. The Departmental Disciplinary Committee, by petition dated September 20, 1994, has moved for an order striking the respondent’s name from the roll of attorneys pursuant to Judiciary Law § 90 (4) (b) on the ground that the respondent was automatically disbarred upon his conviction of a felony as defined by section 90 (4) (e). Pursuant to Judiciary Law § 90 (4) (a) respondent ceased to be an attorney and counselor-at-law or to be competent to practice as such, upon his conviction of a felony. There is no question that the crimes of scheme to defraud in the first degree, Grand Larceny in the second and third degrees and offering a false instrument for filing in the first degree are all felonies. The facts that the respondent has not yet been sentenced and that there may be a motion to set aside the verdict, do not serve as impediments to the Committee’s petition. For the purposes of disbarment, a conviction occurs at the time of plea or verdict (see, Matter of Kourland, 172 AD2d 77; Matter of David, 145 AD2d 150).


Charge One alleges that the respondent was convicted of a serious crime within the meaning of Judiciary Law § 90 (4) (d) and within the meaning of section 691.7 (b) of the Rules Governing the Conduct of Attorneys within this Department (22 NYCRR). On March 21, 1994, the respondent pleaded guilty before the Honorable Jack Mackston of the Nassau County Court, Trial Term, Part VI, to a charge of intentional real estate <mask>, in violation of General Business Law § 352-c (1) (c) (iv), a class A misdemeanor. The crime of which the respondent was convicted involves false swearing, misrepresentation, or fraud.


On April 18, 1991, respondent was convicted, upon a plea of guilty, in the United States District Court for the District of Nevada, of one count of conspiracy to commit <mask>, in violation of 18 USC § 371 and 15 USC § 77q (a) and § 77x, a felony under the United States Code. On August 25, 1993, respondent was sentenced to one year of "administrative” probation and a $5,000 fine. Respondent’s probation has been completed. Respondent’s conviction resulted from filing a registration statement with the Securities and Exchange Commission (SEC) that failed to disclose that the named officers and directors were mere figureheads and that actual control of the corporations was by third parties and that stated falsely that the nominee officers and directors had purchased stock in the corporation.


Several months after closing on the loan, respondent and his brother continued to deceive the Bi-Coastal investors concerning Larry’s criminal status. The investors claimed that only after they learned about Larry’s guilty plea did they audit GTI’s books and discover its true state of insolvency and serious tax delinquencies. The Bi-Coastal investors sued respondent and his brother for <mask>, inter alia, in Federal District Court in New Jersey in 1988, asserting that misrepresentations and failures to disclose had been material to their making of the loan. During the course of that lawsuit, respondent submitted under oath an allegedly doctored bank statement misrepresenting the status of his account prior to closing on the loan.


Movants were tenants in common of a parcel of land, a portion of which was appropriated by the State of New York for the construction of the Long Island Expressway. The affidavit supporting the motion indicates that (1) the movants retained one Harold William Harrison, a Judge of the Justice Court of Great Neck, to represent them in connection with the State’s appropriation, in April of 1968; (2) thereafter Harrison closed his law offices and abandoned his files and (3) a receiver was appointed to preserve them by the Second Department’s Joint Grievance Committee. It also indicates that during a period from 1970 to 1974, (1) Harrison was charged by the United States with income <mask>, (2) was convicted and *455spent time in jail and (3) not until August of 1974 did he advise the movants to engage other counsel. (A written retainer agreement was entered into on August 30, 1974 by and among movants, movants’ present counsel and Harrison.) When movants’ present counsel undertook the representation they noted in their retainer that the time to file a claim had expired in January, 1974 and that enabling legislation would be required.


Again in People v. Laino (10 N Y 2d 161) the principle of Steuding was reaffirmed. The defendant there was a prospective defendant and he was subpoenaed with his books and records. The Grand Jury was investigating bidding practices in the City of Utica. Defendant appeared, claimed his privileges, was told he was not a defendant, but answered all questions and submitted his books not interposing a privilege. He was indicted for <mask>. The court said, on the record, he was a prospective defendant and held (p. 172): “ The violation of the privilege occurred when the testimony and the records were given under compulsion of subpoena ”. The indictment for a crime not connected with the subject of the investigation was dismissed. Here it appears that the subpoenas duces tecum has the same compelling force as a subpoena ad testificandum and its use constitutes the gathering of testimony in violation of the privilege. In People v. Defore (242 N. Y. 13, 27) Judge Casdozo refers to the words of the court in Haywood v. United States (268 F. 795) “A defendant is ‘ protected from producing his documents * * * for his production of them *448in court would be his voucher of their genuineness.’ There would be ‘ testimonial compulsion ’ ’ ’. Further on in the Laino case (p. 173), the court stated reindictment was possible but only on evidence independent of the evidence, links and leads furnished by the prospective defendant.


Again in People v. Laino (10 N Y 2d 161) the principle was reaffirmed. The defendant then was a prospective defendant and he was subpoenaed with his books and records. The Grand Jury was investigating bidding practices in the City of Utica. Defendant appeared, claimed his privilege, told he was not a defendant, but answered all questions and submitted his books not interposing the privilege. He was indicted for income <mask>. The court said on the record he was a prospective defendant and held (p. 172) “ The violation of the privilege occurred when the testimony and records were given under compulsion of supoena ”. The indictment for a crime not connected with the subject of the investigation was dismissed. Here it appears the subpoena duces tecum has the same compelling force as the subpoena ad testificandum and its use constitutes the gathering of testimony in violation of the privilege.


. The article is laced with such phrases as “carrying on something of a bizarre puppet show”; “[i]n addition to its roles as a document custodian and <mask> broker,” “MERS has become the veiled man wielding the home foreclosure axe”; and “a willingness on the part of courts to let financiers seize homes in whatever manner is most convenient for them.” (78 U Cin L Rev at 1362-1363, 1385.)


“• Section 394.5(a): ‘the conviction of the licensee or any partner, officer, agent or employee of such licensee, of a felony, or of any crime involving violence, dishonesty, deceit, indecency or moral *463turpitude.’ The Department has received information that, on or about July 2008, Yehezkel Elia ‘. . . was convicted of conspiracy, <mask>, and subscribing to false corporate and individual tax returns.’


Respondent opposes the petition and argues that the record supports her determination, as it demonstrates that petitioner was convicted of conspiracy, <mask> and subscribing to false corporate and individual tax returns; accordingly, respondent submits, petitioner’s license was appropriately revoked in accordance with Vehicle and Traffic Law § 394 (5) (a). Respondent contends that “[bjecause the plain language of the applicable statute supports the Commissioner’s decision, the court’s inquiry ends, and the instant petition should be denied.” (Verified answer and objections in point of law 1Í12.) Respondent argues that Elia’s conviction for a crime involving dishonesty or deceit by itself warranted the revocation penalty, but notes that Elia also denied having this conviction on petitioner’s application, which respondent submits, is a material false statement that also on its own supports revocation of petitioner’s license. As to Elia’s claim of difficulty with the English language, respondent notes that Elia received a B.S. degree from Adelphi University in 1977 (AR at 97) and passed a written road test in English to be a driving instructor, which included a section for written responses, which Elia completed in English (AR at 89-93). Accordingly, respondent submits that the petition should be denied.


As an initial matter, it is noted that respondent failed to set forth findings of fact in regard to the imposition of revocation of petitioner’s drivers’ school license as the penalty herein. The statute provides that respondent “may suspend or revoke” a drivers’ school license for any of the causes set forth in the statute (Vehicle and Traffic Law § 394 [5]); thus, the penalty to be imposed is at respondent’s discretion (cf. Matter of Caso v New York State Pub. High School Athletic Assn., 78 AD2d 41, 48 [4th Dept 1980]). Findings of fact which demonstrate actual grounds of a determination are necessary for intelligent judicial review of an administrative determination (Matter of Paloma Homes, Inc. v Petrone, 10 AD3d 612, 613 [2d Dept 2004]; Matter of South Blossom Ventures, LLC v Town of Elma, 46 AD3d 1337, 1338 [4th Dept 2007], lv dismissed 10 NY3d 852 [2008]). Other than the indication in the record that the respondent “prefer[red] to revoke” the license (AR at 7), the record is devoid of any basis for the selection of revocation as the penalty to be imposed against petitioner. While respondent argues in its objections in point of law herein that Elia’s conviction for conspiracy, <mask> and subscribing to false corporate and individual tax returns involved “dishonesty and deceit” which justified respondent’s revocation of petitioner’s license (verified answer 1112), respondent did not invoke this ground (or any other ground, for that matter) as a basis for imposing revocation as a penalty for Elia’s violations of the statute (AR at 211-212).


“ Their attorney, Vincent White, a nephew and former associate of David A. White who represented Walter’s first cousin, Joseph J. Kendzie licensed under Mag. RL-1743 in Lockport after making four other applications, one of them subsequent to Mag. RL-1743, for his premises, and after being originally disapproved by the State Liquor Authority on that application on January 8, 1953 was finally licensed thereunder on March 4, 1954. In the meanwhile, said White appealed the first disapproval of the S. L. A. to the Appellate Division which in a divided vote held that the S. L. A.’s determination of questionable finances had not been supported in the hearing. That was because the S. L. A. introduced the local board’s investigative reports into the record without calling the persons who made them which incidentally was not objected to by said attorney. Instead of appealing as a matter of right or holding a second hearing and conducting it properly, the S. L. A. went ‘ chicken ’ and issued the license. Then, the federal government after a lapse of many, many years during which some of the witnesses died and others were unavailable prosecuted Joseph Kendzie for income <mask> with one of the most incompetent attorneys I ever have seen. No need to narrate the result. The S. L. A. and the government fumbled one of the best cases any one ever had. In fact, a member of the U. S. Attorney’s office told me they had a strong case but he still ‘ blow ’ it.


“the Town states that the request for Ippolito’s financial disclosure forms is ‘unique’ because the documents ‘were the subject of activities by law enforcement agencies.’ Presumably, the Town was making reference to the fact that Ippolito was the subject of a federal indictment (the indictment was unsealed in March 2015) and charged with six *415counts of <mask> based on his receipt, from 2008 through 2013, of over $2 million from Lizza and a principal of Lizza that he failed to report. Ip-polito eventually pleaded guilty to one felony count of tax evasion in January 2016. The Town argues that ‘[a]s materials that are the subject of law enforcement investigations and/or proceedings are generally kept secret ... it would have been improper for the Town to disclose those documents to Newsday, which would have undoubtedly published a story. . . .’ In support of this argument the Town cites to Fed. R. Crim Proc. 6 and CPL § 190.25(4)(a). Both of these provisions relate, among other things, to the secrecy of grand jury proceedings. “The argument of the Town is wholly without merit. The Newsday requests have nothing to do with grand jury proceedings nor any criminal investigation. Instead, they ask for government contracts and financial disclosure forms required to be in the Town’s possession—documents that undoubtedly are proper subjects of a FOIL request. They were not compiled for law enforcement purposes and therefore cannot possibly be subject to the law enforcement [purposes] exemption. Whether the contents of these made-in-the-ordinary-course Town documents reveal or establish nefarious or criminal conduct and as such may be used as evidence in a criminal proceeding is material only to the extent that Newsday, as the public’s representative, is able to bring such conduct to public light—precisely part of Newsday’s mission, as well as that of the FOIL statutes. The Town’s argument to the contrary reveals a misunderstanding (or perhaps contempt) of the purpose of the FOIL statutes, and the materials must be produced.” (2016 NY Slip Op 32749[U], *14-15 [emphasis added].) As noted by the petitioners, the New York Committee on Open Government (hereinafter, the Committee) agrees with this position. However, unlike the court in Matter of Newsday, LLC v Town of Oyster Bay, which fails to mention or cite John Doe Agency, the Committee at least acknowledges its existence. Petitioners cite Committee FOIL-AO-19480 (2016), wherein the Committee responds to a request for information similar to that of the instant request with respect to Percoco. *416The opinion first acknowledges that “FOIL does not contain exactly the same language as the federal FOIA. However, the thrust of the ‘law enforcement purposes’ exception is similar.” (Comm on Open Govt FOIL-AO-19480 [2016].) Additionally, that


The witness, Carmine Lombardozzi, appeared before the Grand ¿Jury on September 16. He was advised of the purpose of the investigation, of his right to consult with counsel, of his right to assert his privilege against self incrimination under the Federal and State Constitutions, and of his right to assert *587such privilege in response to any questions put to him. Questions were put to him which he declined to answer on the ground that it would degrade and incriminate him. He advised the Grand Jury that he would continue to assert the privilege against self incrimination in respect to any and all questions put to him unless he was granted immunity. He thereupon left the room. Upon his return he was advised that in his absence the Grand Jury had voted to grant immunity to him and was explained the meaning of the immunity granted. He then was asked if he knew certain individuals. He replied that he is under charges of assault in Kings County in the State court and under indictment in a Federal court for income <mask> for the years 1961 and 1963. He stated that he was prepared to answer all questions the law required him to answer but challenged the Grand Jury’s power to inquire into his personal finances and business transactions on the ground that they were not material or relevant to the investigation. He also requested a determination by the court as to “what relevancy, if any, his personal business affairs have to do with this investigation and upon what basis he has been selected as a witness, whose commercial and personal financial transactions should be investigated.”


Second, the evidence Hawkinson gave before the Grand Jury. It was a compulsory appearance. Plaintiffs assert the falsity of his testimony with its consequent damage. Defendant claims that both privilege and secrecy attaches to it. The Grand Jury before which Hawkinson appeared returned an indictment against the plaintiffs for income <mask>. It was later dismissed. A District Court Judge signed an order giving plaintiffs a copy of Hawkinson’s testimony, which plaintiffs sought to use on this trial. Defendant presses the point that secrecy prevents such use, since the court’s order *876did not specifically permit its use in this action. But was not the aura of secrecy lost immediately upon legally-permitted disclosure?


Petitioners in their memorandum cite United States v. Roberts (293 F. Supp. 195, 198 [S. D. N. Y., 1968]). In this case the defendant’s case was put on the calendar more than five years after he was indicted for <mask>. They also cite Smith v. Hooey (393 U. S. 374). In this case the defendant was indicted in 1960 for theft and, though he requested numerous times that he be brought to trial, no action was taken by the People for over six years.


An analogy may be drawn to the banking cases wherein the courts have consistently held that a depositor has no right to challenge a subpoena issued against his bank. See United States v Miller (425 US 435), where a depositor was being charged with <mask> and the court held he had no right to challenge a subpoena directed against his bank. This Federal rule has been adopted by New York State in the following cases: Matter of Cappetta (42 NY2d 1066); Shapiro v Chase Manhattan Bank (53 AD2d 542); Cunningham & Earning v Nadjari (53 AD2d 520); Matter of Democratic County Committee of Bronx County v Nadjari (52 AD2d 70).


The tort of injurious falsehood is also an outgrowth of the action on the case; it is grounded in the same policy consideration as prima facie tort, that unjustified harm should be justly compensated. As codified by the Restatement, “One who publishes a false statement harmful to the interests of another is subject to liability for pecuniary loss resulting to the other if (a) he intends for publication of the statement to result in harm to interests of the other having a pecuniary value, or either recognizes or should recognize that it is likely to do so, and (b) he knows that the statement is false or acts in reckless disregard of its truth or falsity.” (Restatement, Torts 2d, § 623A.) Intent to injure is thus equated with the scienter applicable to defamation actions brought by public officials, i.e., actual malice (see New York Times Co. v Sullivan, 376 US 254), based on the familiar concept of the foreseeability of harm. This principle was recognized in Penn-Ohio Steel Corp. v Allis-Chalmers Mfg. Co. (7 AD2d 441), an action having a strikingly similar fact pattern to that at bar. Defendant allegedly furnished the Internal Revenue Service with false and misleading information which suggested that the parties had conducted a fraudulent business transaction. A resulting indictment, charging plaintiff with <mask>, was later dismissed. The court explained: “By its very nature a false statement intentionally made is wrongful. If it inflicts material harm upon another, which was or should have been in the contemplation of the actor, and it *475results in actual damage to the plaintiff’s economic or legal relationships, an action may lie * * * It logically follows that to sustain a complaint, it is not necessary that the pleading must allege that the defendant was solely motivated to injure the plaintiff. It is enough if the falsehoods charged were intentionally uttered and did in fact cause the plaintiff to suffer actual damage in his economic or legal relationships.” (P 444.)


Harold J. Rothwax, J. On October 20, 1983 this court issued a warrant which authorized the search of the premises of a restaurant, Tom’s Shangri-La, owned and operated by Tom’s Associates, Inc., for books and records of the corporation which constituted evidence, inter alia, of sales tax and corporate income <mask>. The search was upheld under the Fourth Amendment (US Const, 4th Arndt) in a separate opinion. Following the return of the warrant, the documents were placed in custody of the District Attorney (CPL *898690.55, subd 2). In November and December, 1983, the New York State Department of Taxation and Finance issued notices of deficiency in regard to personal income tax owed by officers of Tom’s Associates, Inc., individually, for the years 1976 through 1979, and in regard to income tax owed by the corporation for the tax years 1979 and 1980, together with a delinquent sales tax assessment. The New York City Department of Finance has also instituted a proceeding to recover $67,000 in business taxes from the corporation for 1980. The petitioner is president of the corporation. He is before the court under indictment for the alleged bribery of a tax auditor, which in turn led to the issuance of the warrant. The District Attorney concedes that documents seized pursuant to the warrant have been made available to civil tax authorities and that the tax assessments are undoubtedly based, in large part, upon such documents. The petitioner seeks to have the documents or copies of the documents in possession of civil agencies returned to the District Attorney and to preclude these civil agencies from using the documents or copies in any civil litigation or proceeding. The court has previously held, in a related action, that the District Attorney could enlist the assistance of experts within the city or State government to evaluate business records for presentation to a Grand Jury (CPL 190.25, subd 4). To the extent that members of civil tax authorities were given access to the documents upon that basis, the court approved the procedure. The court’s previous order did not, however, contemplate the obtaining by civil authorities from the District Attorney of documents or copies of documents seized pursuant to the search warrant, for use in civil tax proceedings. The propriety of this disclosure is the only issue presently before the court.


On November 2, 1982 the defendant, admitting to schemes and swindles perpetrated against John P. Maguire and Co. and the United States Government, pleaded guilty to mail fraud and <mask> charges in the United States District Court for the Southern District of New *1035York. These charges stemmed from an investigation into the bankruptcy of Candor Diamond Corporation, the sole shareholders of which were defendant and his wife. Among the accusations was that Candor had defrauded creditors of over $5,000,000.


In 1984, legislation was enacted, known as the Tax Omnibus Bill, which called for increased vigilance in the investigation and prosecution of so-called white collar crimes in the area of criminal <mask>. In response thereto, the Department requested the creation of new positions to be known as tax investigators. For reasons not clearly articulated in the submissions before the court, apparently the Department determined that the duties and minimum qualifications of those positions were inadequate to ensure competent performance as envisioned under the new program. It therefore requested the approval of noncompetitive jurisdictional classification of a new series of positions to be known as revenue crimes specialist.


It is petitioner’s contention that since he was a witness and not the subject of the investigation, the questions asked of him related not to his own official duties or fitness, but rather to another’s. Petitioner further contends that the questions asked about his cabin were personal in nature and outside the scope of anything having to do with Officer Centola’s alleged <mask>.


There is ample authority in Evangelista v City of Rochester (580 F Supp 1556, 1559), cited by petitioner as well as respondents, for "a minimal governmental intrusion for a limited and legitimate purpose” (emphasis in original). In that case the United States District Court for the Western District of New York upheld the City of Rochester’s requirement that city employees disclose their ownership of rental property within the city limits. The purpose of such requirement was to ensure that city employees were not receiving preferential treatment with regard to the handling of building code violations not contributing to the generally poor conditions existing in such housing. Surely the governmental interest in investigating citizen complaint concerning alleged <mask> by one of the city’s police officers justifies the minimal intrusion upon petitioner’s privacy for the purpose of clarifying the circumstances surrounding the questionable check.


Petitioner moves pursuant to sections 701 and 702 of the Correction Law granting her relief from civil disabilities incurred as a consequence of her convictions in the United States District Court upon a multicount indictment of the following crimes: conspiracy to commit tax offenses or mail fraud or to defraud the Internal Revenue Service (18 USC § 371); 3 counts of income <mask> (26 USC § 7201); 3 counts of willfully subscribing false personal income tax returns (26 USC § 7206 [1]); 16 counts of aiding and assisting the filing of false corporate and partnership tax returns (26 USC § 7206 [2]); and 10 counts of mail fraud which alleged a scheme to defraud the taxing authority of New York State, based on the mailing of New York State personal income tax returns and corporate tax reports (18 USC § 1341). The petitioner was sentenced upon these convictions to four years’ imprisonment, followed by three years’ probation, with 250 hours of community service during each year of probation, and a $7,152,000 fine. Additionally, she was ordered to pay restitution to the State of New York in the amount of $469,300 (unpaid taxes) plus interest, and to the Federal Government $1,221,900 in unpaid taxes, plus penalties and interest, plus the cost of the prosecution. She is currently free on $25,000,000 bail pending her appeal.


"Industry stated that there was significant liquor <mask> occurring at the importation and retail levels (both off-and on-premises) and the evasion was having an impact on legitir *746mate businesses. After examining the circumstances and discussing this issue with the Advisory Group, this Department was of the opinion that evasion was occurring and that legitimate businesses were being injured by the unlawful activity * * *