                          State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: June 25, 2015                     519954
________________________________

In the Matter of the Claim of
   MICHAEL V. CARDILLO,
                    Appellant.
                                            MEMORANDUM AND ORDER
COMMISSIONER OF LABOR,
                    Respondent.
________________________________


Calendar Date:   May 5, 2015

Before:   Garry, J.P., Rose, Devine and Clark, JJ.

                               __________


     Brian De Vito, Rutherford, New Jersey, for appellant.

      Eric T. Schneiderman, Attorney General, New York City (Gary
Leibowitz of counsel), for respondent.

                               __________


      Appeal from a decision of the Unemployment Insurance Appeal
Board, filed January 2, 2014, which, upon reconsideration,
adhered to its prior decision ruling, among other things, that
claimant was disqualified from receiving unemployment benefits
because he lost his employment as the result of an act
constituting a felony in connection with such employment.

      Claimant worked as a portfolio manager at a hedge fund for
approximately six years. In October 2009, the principal of the
hedge fund and certain individuals who were employed and/or did
business with the fund were arrested and charged with securities
fraud arising from insider trading activities. As a result, the
hedge fund ceased operations and, on November 2, 2009, claimant
was informed that he was no longer employed. Two days later,
members of the Federal Bureau of Investigation sought his
cooperation in its investigation of those individuals thought to
be involved in the insider trading activities. Claimant agreed
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to cooperate in the investigation.

      In January 2010, claimant applied for and received
unemployment insurance benefits totaling $21,375, which consisted
of regular unemployment insurance benefits, emergency
unemployment compensation benefits (see Pub L 110-252, tit IV,
§ 4001 et seq., 122 US Stat 2323) and federal additional
compensation benefits (see 26 USC § 3304). On January 3, 2011,
however, he pleaded guilty to securities fraud and conspiracy to
commit securities fraud in satisfaction of a federal court
criminal information. Thereafter, the Department of Labor issued
initial determinations finding that claimant was disqualified
from receiving benefits under Labor Law § 593 (4) because he lost
his employment as the result of an act constituting a felony, and
it charged him with a recoverable overpayment with respect to
those benefits that he had received. Following extended
proceedings, an Administrative Law Judge sustained the initial
determinations and the Unemployment Insurance Appeal Board
affirmed the Administrative Law Judge's decision. The Board
granted claimant's subsequent application to reopen and adhered
to its prior decision. Claimant now appeals.

      We affirm. Labor Law § 593 (4) provides, in relevant part,
that a claimant who "loses employment as a result of an act
constituting a felony in connection with such employment" shall
be disqualified from receiving unemployment insurance benefits
during the 12-month period following the cessation of such
employment (see Matter of DiMaio [Commissioner of Labor], 12 AD3d
756, 757 [2004]). Claimant argues that the above provision does
not apply because his employment ended due to the closure of the
hedge fund, not his commission of a felony. We are not
persuaded. The Court of Appeals has stated that "a felony is 'in
connection with' employment for purposes of Labor Law § 593 (4)
if it results in breach of a duty, express or implied, [that] the
claimant owes the employer" (Matter of Sinker [Sweeney], 89 NY2d
485, 488 [1997]). Here, by pleading guilty to securities fraud
and conspiracy to commit securities fraud, claimant clearly
violated a duty that he owed to the hedge fund, regardless of the
actions of its principal, to conduct business in a fair and
honest manner. Moreover, the fact that claimant was not actually
convicted until after his employment ended does not render Labor
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Law § 593 (4) inapplicable, given that the allegations of
wrongdoing specified in the federal court information that formed
the basis for his plea clearly involved activities that claimant
engaged in while working for the hedge fund (see Matter of Powers
[Hartnett], 177 AD2d 833, 834 [1991]). Accordingly, we find no
reason to disturb the Board's decision disqualifying claimant
from receiving benefits based upon Labor Law § 593 (4), nor its
resulting imposition of a recoverable overpayment. We have
considered claimant's remaining contentions and find them to be
unavailing.

     Garry, J.P., Rose, Devine and Clark, JJ., concur.



     ORDERED that the decision is affirmed, without costs.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
