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ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT).

The Third Department, over a two-justice dissent, determined that the trial court’s finding that an oral agreement concerning the repayment of a $170,000 loan was enforceable, because the loan could have been paid off within a year (re: the statute of frauds). Both plaintiff and defendant were bookmakers who had been convicted of promoting gambling. The fact that plaintiff refused to answer questions about whether he paid income tax on the proceeds, based upon the Fifth Amendment, did not affect the result because there was nothing illegal about the loan agreement itself. The two dissenters argued the parties were engaged in money laundering and the loan agreement should not be enforced as a matter of public policy:

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We are mindful that plaintiff testified that the source of the loan proceeds was cash obtained through his illegal bookmaking activities. Indeed, both plaintiff and defendant were convicted of promoting gambling and required to pay fines in the amount of $100,000 and $50,000, respectively. Although plaintiff asserted his Fifth Amendment right against self-incrimination when asked whether he ever reported the cash as income, we are not persuaded by defendant’s contention that Supreme Court erred in failing to draw a negative inference because the source and/or taxable status of the funds was not probative of the issue presented. According due deference to Supreme Court’s credibility assessments, we find ample evidence to support the determination that plaintiff and defendant agreed to the loan that defendant breached by failing to make all of the payments due… . Contrary to defendant’s argument, because there was nothing prohibiting defendant from repaying the loan within one year, the statute of frauds did not bar enforcement of the oral agreement … .

We also find that defendant waived his right to challenge the loan on the basis of illegality because it was not raised as an affirmative defense … . Were we to consider the issue, we would find that, because neither the agreement nor the performance of the agreement was illegal, the judgment was enforceable … . Centi v McGillin, 2017 NY Slip Op 08430, Third Dept 11-30-17

 

DEBTOR-CREDITOR (ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/CONTRACT LAW (STATUTE OF FRAUDS, DEBTOR-CREDITOR, ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/CRIMINAL LAW (DEBTOR-CREDITOR, MONEY LAUNDERING, ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/MONEY LAUNDERING (DEBTOR-CREDITOR, CONTRACT LAW, (ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))

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