United States v. Teitler

Partner Jay Teitler and other attorneys at a law firm (defendants) were charged with defrauding insurance companies by manipulating auto-accident claims. The indictment alleged the attorneys used the law firm as an enterprise that carried out a pattern of racketeering activity in violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act. Allegedly, the firm took advantage of New York’s no-fault law, which allows people seriously injured in auto accidents to bring third-party suits against the other driver’s insurer to recover special damages such as housekeeping expenses. Ninety-five percent of third-party claims settle based on a pre-suit estimate of damages the injured person sustained. The firm allegedly manipulated those numbers and retained part of the moneys recovered. A former paralegal testified that Teitler knew about those practices and encouraged auto-accident clients to see doctors often, obtain reports describing serious injuries, and falsely inflate third-party claims. Teitler sent one client to a doctor who recorded 19 visits and described a knee injury as resulting in partial disability. The client testified that she went to the doctor only five or six times and that her knee was not injured. Teitler also gave the client an affidavit for her mother to sign purportedly as a housekeeper, and the firm kept half the moneys thereby recovered. Teitler was charged with two counts of mail fraud in those transactions as the predicate acts for RICO conspiracy charges. During deliberations, the jury asked whether Teitler could be convicted of conspiracy under RICO if convicted of only one mail-fraud count. The judge answered yes, explaining that the prosecution had to prove only that Teitler agreed to commit two charged predicate crimes, not that Teitler actually committed them. The jury convicted Teitler of one mail-fraud count and conspiracy under RICO. Teitler appealed, arguing the judge incorrectly instructed the jury; the jury could not find he agreed to commit predicate acts unless he committed them; and the predicate acts did not establish a pattern of racketeering.