The MTA doesn’t “own” possible future fares, so selling MetroCard swipes isn’t “larceny” (it’s still illegal though)

The Court of Appeals decided yesterday that selling swipes of an unlimited MetroCard, “although decidedly criminal in nature,” isn’t larceny. For those of you who’ve never witnessed this “classic subterranean swindle,” the Times explains how it works: “The scam is simple. An enterprising scofflaw invests in an unlimited pass and charges passengers less than the standard fare. After recouping the investment, the rest is pure profit—and the Metropolitan Transportation Authority loses out on legitimate fares.”

The defendant in this case was charged with petit larceny, a class A misdemeanor that’s routinely applied in similar cases, and he was also charged with a class B misdemeanor under the specific statute that prohibits the unauthorized sale of transportation services. He pled guilty to petit larceny in satisfaction of all the charges, but then challenged the validity of the accusatory instrument (a misdemeanor information in this case) on jurisdictional grounds, claiming that it violated the reasonable cause requirement.

The court agreed that the misdemeanor information in this case was defective. Although it provided reasonable cause for the unauthorized sale of transportation services, the court explained, it didn’t support the charge of petit larceny, which is what the defendant was actually convicted of.

Larceny—which is legalese for stealing—requires proof that the stolen property belonged to someone else, and this element simply wasn’t met in this case:

The Authority was not deprived of the unknown amount of money that defendant accepted from the subway rider because it never owned those funds. In People v. Nappo (94 NY2d 564 [2000]), we held that the State was not the “owner” of uncollected taxes within the meaning of the statutory definition of the term because “taxes due were not the property of the State prior to their remittance.” Here, the unknown amount of money paid to the defendant could have been due and owing to the [New York City Transit Authority], but as was the case in Nappo, the NYCTA never acquired a sufficient interest in the money to become an “owner” within the meaning of the [larceny statute].

The court also rejected the prosecution’s argument that the defendant had committed larceny by depriving the authority of its business:

We have held that taking away a portion of a person or entity’s business through extorition constitutes larceny (see People v. Spatarella, 34 NY2d 157 [1974]). However, we decline to extend that reasoning to these facts because here we must assume that the NYCTA voluntarily transferred this valid MetroCard in a manner consistent with its ordinary course of business by selling the card and receiving the price set. By constrast, in Spatarella, the victim was compelled to give up a business customer (who, unlike the uncollected taxes in in Nappo, was already within his “control” and “possession”) to one of the defendants when that defendant threated the victim with physical injury.

Accordingly, in this case, there was no basis for the petit larceny charge in the misdemeanor information, and as a violation of the reasonable cause requirement, there was no jurisdiction to prosecute the defendant.

People v. Hightowner, No. 223 (Dec. 13, 2011).