A Warren County judge has found the corporation that owns the New York, New York Cabaret in Franklin not guilty of any criminal liability for felony charges stemming from a local and state investigation that started in December 2016.
After a one-day bench trial on March 21 and the review of briefs from the Warren County Prosecutor’s Office and defense counsel, Common Pleas Judge Timothy Tepe issued his decision late Friday morning.
The judge had to decide if a corporation can be held criminally liable for actions who is not a high-level manager or someone who sets company policy.
Michael Reese, a manager at the club, pleaded guilty to charges of cocaine trafficking, illegally operating a sexually oriented business, possession of cocaine and permitting drug abuse in January 2018. He was placed on three years probation in March 2018.
“The Supreme Court has stated that a Corporation can only be found guilty when the criminal act was implemented or approved by a High Managerial Personnel who make basic corporate polices and have actual or implied authority to implement such criminal activity,” Tepe wrote.
Tepe said Reese made certain decisions, but significant decisions had to be approved by another manager, Adrianna Brock. While Reese made some decisions, it was clear they were not policy decisions that controlled the direction of the defendant. Tepe said that Reese was “responsible for his criminal actions independent of the State’s position that he bound the corporation with criminal liability. “
Tepe found the corporation not guilty on all six charges, which included felony cocaine trafficking and other drug charges. A seventh count for illegally operating a sexually oriented business, a first-degree misdemeanor charge, was dismissed at the March 21 trial.
“We’re extremely happy about the decision,” said Franklin attorney David Chicarelli, who represented N.Y.N.Y. Inc. “We felt all along that this was the fault of a rogue employee who did everything on his own.”
Chicarelli said the corporation knew nothing and was not responsible for his actions.
“The evidence didn’t show he was not a high level employee,” Chicarelli said.
Messages for comment were left for Franklin City Manager Sonny Lewis, Law Director Lynette Dinkler.
“I understand the judge’s decision, but if that’s the direction courts are going, it may be time to look at a legislative change,” Warren County Prosecutor David Fornshell said.
While he said he understands the issue from a corporate perspective, Fornshell thinks if there is substantial criminal activity happening during business hours by a person who is a manager, that maybe there should not be a complete defense for a corporation from criminal liability.
Franklin Mayor Todd Hall said he was “disappointed with the outcome.”
“We have to go with what the court decided,” he said. “We tried to do our best and we’re continuing our case with the (Ohio) liquor board. We’ll see what happens.”
On Friday afternoon, city officials amended Monday’s Franklin City Council agenda by adding an executive session to discuss “pending litigation” regarding the club. No action is expected to made following Monday’s closed session.
The club, located at 1121 E. Second St., remains in operation pending resolution of an objection to its liquor permit renewal filed by the city of Franklin. That objection is still pending with the Ohio Division of Liquor Control.
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The club, two managers and a dancer were indicted in 2017 on 23 felony and misdemeanor counts.
N.Y.N.Y., Inc. was indicted for two counts of trafficking in cocaine and four counts of permitting drug abuse, all fifth-degree felonies, and illegally operating a sexually oriented business, a first-degree misdemeanor. The club was also charged with misdemeanor counts for permitting nude dancing in the establishment after midnight in violation of Ohio law.
The other manager, Courtney Rogers of Springfield, was indicted on the same charges and was granted treatment in lieu of conviction in February 2018.
Two other dancers were charged with misdemeanors and pleaded guilty in Franklin Municipal Court as a result of that investigation.