So, here’s a little background on that much-loved investigatory tool, the Martin Act, which Eliot Spitzer used in his anti-fraud cases and Andrew Cuomo will use in his probe of Alan Hevesi’s alleged pension scam.
The person who blew the dust off the long-forgotten provision of state law is Eric Dinallo, who worked with Spitzer in the Manhattan DA’s office and is now the superintendent of the New York State Insurance Department. In 1926, a court ruled the Act had broad powers and didn’t require prosecutors to prove “a willful decision to commit misconduct.”
According to Brooke Master’s biography of Spitzer:
“Unlike other applicants, Dinallo had actually read the entire text of New York’s general business law, known as the Martin Act for its long-forgotten Republican sponsor, Louis M. Martin. Though that 1921 statute was considered weak when it was enacted, Dinallo focused on later amendments that had strengthened the act and given the state attorney general unusually broad power to investigate and crack down on those who commit financial fraud. While the Mahattan DA’s Office had been limited to using the Martin Act’s criminal side, the law gave the attorney general a whole range of civil powers: he could subpoena documents, haul brokers and investment bankers in for public questioning, and, unlike his federal counterparts t the SEC and the Justice Department, he didn’t have to specify up front whether he was going to seek criminal charges or file an easier-to-rove civil case. An equally obscure 1926 court case, People v. Federated Radio Corp., had further strengthened the attorney general’s hand by holding that the Martin Act did not require proof that securities sellers made a willful decision to commit misconduct.”
So, if his current investigation turns out to be productive, Cuomo owes one to Dinallo.