Background
This case arose from a special proceeding brought by the New York Attorney General under Executive Law § 63(12), which authorizes the AG to seek injunctive relief, restitution, and other remedies against persons engaged in repeated fraudulent or illegal acts in the conduct of business. The AG sued Leasing Expenses Company LLC, NLS Equipment Finance LLC, and a group of individual respondents—including Ariel Schachter, Sara Krieger, Jay Cohen, Leonard Mezei, and associated entities—for operating a continuing fraud against small business owners through predatory equipment financing leases.
In an earlier phase of the case, Supreme Court (Engoron, J.) imposed liability and remedies, and the First Department affirmed those findings in a 2021 appeal. The Court of Appeals denied leave to appeal. In the current appeal, the AG moved for an additional money judgment to cover the difference between the restitution amount owed and the funds available in frozen accounts and escrow—a gap of approximately $2.67 million. The court awarded $2,778,478.31 in total (including interest and costs), jointly and severally against all respondents. Respondents challenged both the process and the calculation.
The Court’s Holding
The First Department unanimously affirmed. On procedure, the court noted that Supreme Court’s decision to resolve the motion on written submission after initially scheduling oral argument—and after one respondent requested a delay for a religious observance—was not best practice, but found no due process violation in the court’s exercise of its discretion to decide the motion on submission.
On the merits, the court rejected respondents’ attempt to relitigate liability issues resolved in the 2021 appeal. The CPLR makes clear that a party cannot use an appeal from a final judgment to re-raise non-final issues already reviewed by the same appellate court. The Court of Appeals’ denial of leave to appeal from the 2021 First Department decision did not entitle respondents to a fresh round of the same arguments. The court then sustained the restitution calculation: the People had based the additional judgment on accounting materials that respondents themselves submitted, and the formula used to calculate the net restitution (offsetting the value of leased equipment using consistent per-item valuations from a related proceeding) was reasonable and within the court’s sound discretion. Leonard Mezei’s and Fieldston Capital LLC’s specific objections to the calculations were found speculative.
Key Takeaways
- Under Executive Law § 63(12), the AG’s restitution power is broad and allows courts to fashion reasonable formulas for calculating victim restitution, including using accounting records submitted by the respondents themselves.
- A final judgment appeal does not reopen issues already decided and affirmed in a prior non-final appeal to the same court; the Court of Appeals’ denial of leave to appeal does not entitle a party to relitigate arguments the Appellate Division already rejected.
- Joint and several restitution liability is available in AG fraud enforcement proceedings, and courts retain discretion to grant additional monetary judgments where frozen assets prove insufficient to satisfy the originally ordered restitution amount.
Why It Matters
This decision is important for understanding the scope of the New York Attorney General’s enforcement toolkit under Executive Law § 63(12)—the same provision used in major business fraud cases, including high-profile commercial litigation in New York County. The decision confirms that the AG can return to court to secure additional money judgments when prior asset restraints prove insufficient to cover restitution obligations, reinforcing § 63(12) as a powerful mechanism for recovering full victim compensation. For businesses facing AG investigations, the case also underscores a critical procedural point: arguments that could have been raised in an earlier Appellate Division proceeding are foreclosed in subsequent appeals from the final judgment, even if the Court of Appeals declines to review the earlier decision. Respondents in AG enforcement matters should resolve all viable arguments in the earliest possible appellate round.