A Jewish comedian and businessman filed on Friday an appeal against his conviction in a controversial New York Southern District fraud case that is tangled in accusations about Jewish custom, shifting prosecutorial theory, and alleged conflicts of interest.
Facing a year in prison for a payment dispute, Ari Teman appealed to the United States Court of Appeals for the Second Circuit for a new trial and hoped for credit for the 19 months he served under house arrest.
"I cannot see how a crime was committed," Harvard Law Professor Lawrence Lessig, who has been outspoken about Teman's case, told The Jerusalem Post. "I do not understand how this prosecution was allowed.”
Teman was convicted by a jury in 2020 on two counts of bank fraud and two counts of wire fraud after he cashed 27 remotely created checks (RCCs) for $264,000. He said these were contractually required payments for his building intercom security system GateGuard and was allowed to draft the funds after his clients failed to pay him. The prosecution claimed that he drafted funds from his clients' accounts under the false pretense that he had the authority to do so.
"The core allegation against Mr. Teman is that the terms of his service for his product were not sufficiently clear to the alleged victim and that therefore the alleged victim did not understand that he had agreed to have the payment automatically made if he failed to make his payments in a timely fashion," said Lessig.
The Friday appeal argued that the indictment and Judge Paul Englemayer articulated different theories over the course of the hearings. The indictment alleged that Teman deposited counterfeit checks, but the arguments in court became about the authorization of the checks. Teman argued that these are connected but two different issues. The RCCs submitted by Teman were valid checks, according to the appeal.
The initial investigation changed 10 days before hearings began
The initial investigation was about forging traditional checks, said Teman, and this prosecutorial theory was changed 10 days before hearings began.
The defense said that Teman was able to cash the RCCs as detailed in GateGuard terms of service and the contract that the clients signed. The clients said that they were unaware of these contractual charges because they hadn't seen them in the terms of service and contract, which included removal and cancellation fees, and didn't give permission. They also claimed that they didn't receive notice prior to the draft and that the fees were disproportionate to the invoices.
Lessig said major companies with terms of service would be exposed to liability over the failures of customers to understand their contracts.
"Maybe that makes sense when dealing with ordinary consumers. But the idea that a business contracting with another business can be rendered a criminal simply because the other party didn’t read the contract is not the law," said Lessig.
"The idea that a business contracting with another business can be rendered a criminal simply because the other party didn’t read the contract is not the law."Prof. Lawrence Lessig
Teman told the Post that the clients wanted to avoid paying, and thought they could claim that they weren't in business together and get out of the contract by filing police reports. A shareholder in one of the client companies sent a letter to the judge saying that they had been made aware of the contractual obligations that allowed Teman to extract additional charges.
The petition argued that the judge expressed his own opinions as a statement of evidence when he claimed that Teman had intentionally deposited the checks on the eve of Passover, which would prevent Orthodox Jewish clients from preventing withdrawals from their accounts in a timely fashion. In August, 24 rabbis submitted a letter to the court attacking the judge for using Jewish Halacha in the proceedings. They noted that Passover fell on Saturday and Sunday, which are days that banks are closed. They said the judge's statements constituted an abuse of Judaism to convict Teman.
"It's a tragedy that they turned a commercial dispute into a criminal proceeding that ruined a young man's life," said Rabbi Reuben Koolyk, one of the signatories.
Teman also petitioned based on the claim that the judge should have recused himself for an alleged $2 million stake through another company in the Bank that was allegedly defrauded, Bank of America. The rabbis called on the judge to resign over this conduct as well.
In 2020, Teman's supporters appealed to then-president Donald Trump to pardon him. Harvard Law professors Lessig and Alan Dershowitz were among those that called for Teman's pardoning, saying that they had reviewed the case and found no crime or criminal intent and that there were serious concerns about prosecutorial misconduct.
Teman said that the prosecutors had made mistakes in their initial theory, and had changed it over time because they were unwilling to admit that they had been wrong.
"This system is rotten, it only cares about convictions, not about innocence," said Teman.
Dealing with the issues since 2019, Teman said that the legal process and confinement had ruined a romantic relationship and had prevented him from seeing his parents in Israel.
"The process is worse than the punishment, in a way," said Teman. The only thing that kept him fighting was “faith in God.”