On December 29, 2015, the First Department issued a decision in B.D. Estate Planning Corp. v. Trachtenberg, 2015 NY Slip Op. 09633, holding that a plaintiff should not be allowed to sue to enforce its rights under a fraudulently-obtained promissory note, explaining:
The record reflects that plaintiff’s sole owner, principal and employee was convicted, after a jury trial, of conspiracy to commit mail and wire fraud, and substantive mail fraud and substantive wire fraud in connection with a scheme to defraud insurance companies. Nevertheless, plaintiff seeks to enforce the provisions of a promissory note providing that it receive 50% of the death benefits payable under a policy on the life of [the defendant’s] late husband. The record indicates that this policy may have been part of the scheme to defraud that resulted in the criminal conviction of plaintiff’s principal.
As the Court of Appeals stated in McConnell v Commonwealth Pictures Corp. (7 NY2d 465, 469 ), Public policy closes the doors of our courts to those who sue to collect the rewards of corruption. The court improperly denied [the defendant] leave to amend her answer to assert the affirmative defenses of bribery and corruption and recovery of fruits of crimes barred. Although the promissory note at issue is not illegal on its face, [the defendant] demonstrated prima facie that there was a direct connection between the scheme to defraud of plaintiff’s principal and the promissory note plaintiff seeks to enforce, and that the scheme was more than a small illegality. Although it appears that [the defendant] may have benefitted from the scheme, the court should not intervene to enable the wrongdoer to obtain additional fruits of its crime.
(Internal quotations and citations omitted).