DA Vance’s “Pre-Arraignment Diversionary Policy” and It’s Adverse Effect on FDIC Employees

Earlier this month, Manhattan District Attorney Cyrus Vance, Jr., announced three new policies to further streamline the criminal justice system and reduce the backlog of cases in New York County’s Criminal Courts. As of February 1, 2018, the Manhattan DA’s Office began declining to prosecute, with certain exceptions, all New York City subway farebeat (“turnstile jump”) and unlicensed general vendor cases. That same date, the Manhattan DA’s office instituted a sweeping desk appearance ticket policy in which first-arrestees who are issued tickets for low-level, non-violent misdemeanor charges are given the option of attending a two to four-hour “pre-arraignment diversion program” in lieu of being formally prosecuted in a court of law. Upon proof of program completion, the Manhattan DA’s Office promises to then decline to prosecute entirely – meaning, no formal charges will be brought. Only those who opt out of the program (or otherwise fail to complete it) will be directed to appear in court to face prosecution. Simply put – first arrestees for low-level offenses will now have the option of going to class instead of court.

While this new policy would appear to be a noble effort on the part of the Manhattan District Attorney to benefit all, this new first-arrest policy will have an unintended but disastrous effect on arrestees who (a) work for FDIC-insured banks or intend to do so in the future, and (b) are charged with petit larceny (or any theft-related offense). Whereas our lawyers normally strive to secure adjournments in contemplation of dismissal (“ACD”) for first-arrestee clients charged with low-level theft-related offenses, these delayed dismissals can have a disastrous effect on current or prospective employees of FDIC-insured institutions.

As we have explained carefully in a previous blog, Section 19 of the Federal Deposit Insurance Act prohibits, without the prior written consent of the Federal Deposit Insurance Corporation, a person convicted of a criminal offense involving dishonesty, breach of trust, money laundering,
or who has entered into a pretrial diversion program, from participating in the affairs of an FDIC-insured institution (emphasis added). Our team is cognizant of the career-ending danger posed by Section 19’s sentence regarding “pre-trial diversion programs.” As discussed in a previous blog, the FDIC has interpreted ACD’s to be pre-trial diversionary programs, meaning the otherwise ideal result can cost an FDIC-insured institution employee his/her job.

Common sense would dictate that the Manhattan DA’s newest policy – the plain language of which falls squarely within the ambit of Section 19 – will be equally devastating to such first-arrestees careers. Our concern is that folks who work in finance and are unaware of the potential dangers in taking an ACD will naturally be tempted to avoid an appearance in Criminal Court, complete the diversionary program and be on their way, all the while triggering Section 19 and scuttling their careers. While each case is different, it is very likely such arrestees will need to opt out of Vance’s diversionary program, and proceed to court where an attorney will need to craft a disposition which preserves both the client’s record and career. This process would entail pre-arraignment preparation and consultation in an effort to secure a result that the client can live with.

If you or someone you know with a career in finance has been charged with a theft-related offense, contact our team of former prosecutors immediately. The seemingly beneficial outcome of the Manhattan DA’s new pre-arraignment diversionary policy may serve to be a complete bar to employment at an FDIC-insured instittuion. Call us and we will discuss your options and formulate a strategy which will preserve your record and your career.