Court Opinion

ID: 4178993
Source: CourtListenerOpinion
Date Created: 2017-06-20 14:12:43.49069+00
Date Added: 2024-06-11T14:38:45.435944
License: Public Domain

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                        NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
         parties in the case and its use in other cases is limited. R.1:36-3.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-1838-16T1

STATE OF NEW JERSEY,

        Plaintiff-Appellant,

v.

JOSEPH J. TALAFOUS, JR.,

     Defendant-Respondent.
_____________________________

              Submitted May 23, 2017 – Decided June 13, 2017

              Before Judges Reisner and Mayer.

              On appeal from the Superior Court of New
              Jersey,   Law   Division,  Hudson County,
              Indictment No. 16-05-0072.

              Christopher S. Porrino, Attorney General,
              attorney for appellant (Joseph A. Glyn, of
              counsel and on the brief).

              Miller, Meyerson & Corbo, attorneys for
              respondent (Gerald D. Miller, of counsel and
              on the brief).

PER CURIAM

        By leave granted, the State appeals from an October 13, 2016

order     granting     defendant's     motion    to   dismiss     Count    One     of

Superseding Indictment No. 16-05-0072-S, which charged defendant
with first-degree money laundering, N.J.S.A. 2C:21-25(b)(2)(a),

and from a November 14, 2016 order denying reconsideration.                   We

affirm both orders.

      In    the     nineteen-count    indictment,     the     State   charged

defendant, an attorney, with a litany of offenses arising from his

alleged theft of funds from clients.1               The top count of the

indictment     charged    defendant   with   allegedly      "laundering"     the

stolen     funds,   by   depositing   them   or   directing    that   they    be

deposited into either his attorney trust account or his attorney

business account "knowing that the transactions were designed in

whole or in part to conceal or disguise the nature, location,

source, ownership or control of the said client monies" in an

amount "in excess of $1,500,000."

      Before discussing the Grand Jury evidence, it is helpful to

consider the money laundering statute, and the case law construing

it.   The section with which defendant was charged prohibits a

person from "engag[ing] in a transaction involving property known

1
  The indictment also included multiple counts of second-degree
theft by unlawful taking, N.J.S.A. 2C:20-3; second-degree theft
by failure to make required disposition of property, N.J.S.A.
2C:20-9; second-degree misapplication of entrusted property,
2C:21-15; second-degree theft by deception, N.J.S.A. 2C:20-4; and
third-degree filing a false or fraudulent gross income tax return,
N.J.S.A. 54:52-10. Prior to the indictment, defendant had been
disbarred   by  consent   after   admitting  that   he   knowingly
misappropriated client funds. In re Talafous, 222 N.J. 127 (2015).

                                      2                                A-1838-16T1
. . . to be derived from criminal activity . . . knowing that the

transaction is designed in whole or in part . . . to conceal or

disguise the nature, location, source, ownership or control of the

property    derived    from    criminal      activity[.]"   N.J.S.A.    2C:21-

25(b)(2)(a).

     As    expressed   in     N.J.S.A.    2C:21-23,   the   money   laundering

statute was designed to "stop the conversion of ill-gotten criminal

profits, . . . and punish those who are converting the illegal

profits, those who are providing a method of hiding the true source

of the funds, and those who facilitate such activities."                    The

Legislature emphasized the "need to deter individuals and business

entities from assisting in the 'legitimizing' of proceeds of

illegal activity."      N.J.S.A. 2C:21-23(e).

     The money laundering statute is intended to be construed

broadly to serve its purposes.           State v. Diorio, 216 N.J. 598, 625

(2016).     However, it requires proof of something more than an

underlying crime.       Id. at 622.          "[T]the statute requires two

'transactions,' (1) the underlying criminal activity generating

the property, and (2) the money-laundering transaction where that

property is either (a) used to facilitate or promote criminal

activity, or (b) concealed, or 'washed.'"             State v. Harris, 373

N.J. Super. 253, 266 (App. Div. 2004), certif. denied, 183 N.J.

257 (2005).    The Supreme Court recently reaffirmed that analysis

                                         3                             A-1838-16T1
in Diorio, supra, 216 N.J. at 622 (quoting Harris, supra, 373 N.J.

Super. at 266).

     The   federal   courts   have   interpreted   the   federal     money

laundering statute similarly.    See 18 U.S.C.A. § 1956(a)(1).          The

statute does not prohibit "non-money laundering acts such as a

defendant's depositing the proceeds of unlawful activity in a bank

account in his own name and using the money for personal purposes."

United States v. Conley, 37 F.3d 970, 979 (3d Cir. 1994).

           Money laundering must be a crime distinct from
           the crime by which the money is obtained. The
           money laundering statute is not simply the
           addition of a further penalty to a criminal
           deed; it is a prohibition of processing the
           fruits of a crime or of a completed phase of
           an ongoing offense.

           [United States v. Abuhouran, 162 F.3d 230, 233
           (3d Cir. 1998) (citing Conley, supra, 37 F.3d
           at 980).]

     In this case, the motion judge reasoned that placing the

money in defendant's attorney trust account (ATA) was not a crime,

because ATA money is by definition not the attorney's money and

is held for the client's benefit.         She further reasoned that

defendant's crime was taking the money out of the account and

using it for himself, and the State had not presented evidence of

a subsequent crime.     Hence, she found that the State failed to

present evidence establishing each element of the money laundering

charge.    See State v. Morrison, 188 N.J. 2, 12 (2006) ("A trial

                                     4                             A-1838-16T1
court . . . should not disturb an indictment if there is some

evidence establishing each element of the crime to make out a

prima facie case.").      The judge stated:

            [A]s to the money laundering Count . . . I
            don't see that . . . [some] evidence is there
            . . . analyzing it under Harris, because an
            attorney trust account is where that money
            should have been.     It should have . . .
            remained there until it went for the benefit
            of the beneficiary. But the simple act of
            taking it and misappropriating it, or stealing
            it, . . . [is] a crime for which he is charged
            . . . and he will have to answer to those
            charges. But I just don't see . . . [some]
            evidence for the money laundering.

     Unless the trial court acts under a "misconception of the

law," the   "decision to dismiss an indictment is left to the sound

discretion of the trial court, and will only be overturned upon a

showing of a mistaken exercise of that discretion."                 State v.

Lyons,   417    N.J.   Super.   251,   258   (App.   Div.   2010)   (citation

omitted).      We conclude that the motion judge reached the correct

result and therefore we find no abuse of discretion here.

     We do not necessarily agree with the judge that, in all of

the cases presented to the Grand Jury, placing the money in

defendant's ATA was appropriate. In some of the cases, that

transfer in itself constituted theft or misappropriation, because

defendant had no lawful reason to transfer the money from the

client's accounts to any of his accounts and there was some

                                       5                              A-1838-16T1
evidence of his unlawful purpose in making the transfer.               In other

cases, where defendant initially properly placed funds in his ATA,

we agree with the judge that his subsequent theft of the money

from his ATA was not money laundering.               Most importantly, while

the    State   presented   some     evidence   that     defendant   stole      or

misappropriated his clients' money in all of the cases, the State

failed to present evidence that he laundered the funds in any of

the cases.     A brief review of the State's Grand Jury evidence will

illustrate our conclusion.

       In the first case, the State presented evidence that defendant

held    a   power   of   attorney     (POA)    for    Peter   Pasinosky,       an

incapacitated person, and used the POA to wrongfully transfer

money from Pasinosky's bank accounts into defendant's ATA or

attorney     business    account    (ABA).     After     Pasinosky's     death,

defendant used his position as co-executor of Pasinosky's estate

to misappropriate estate funds, which he placed in his ATA or ABA.

The State did not produce evidence that defendant moved money from

his ATA into his ABA, but only that he took Pasinosky's funds and

put it into one or the other of those accounts and then used the

money for his own purposes.          As in all of the cases, the State

produced no evidence of what those purposes were or what became

of the money after it left defendant's ATA or ABA.

                                       6                                A-1838-16T1
     In answer to a question from one of the Grand Jurors, the

prosecutor told the Grand Jury that "it's not so relevant . . .

that it's the attorney trust account or the attorney business

account.   These were accounts maintained by [defendant] and he had

full control of these accounts." She explained that, for purposes

of the theft charges, what was important was "that money is removed

from [the victim's accounts] and moved to accounts that [defendant]

had control over."    The State presented no evidence that the theft

was concealed (as opposed to committed) through placement of the

money in defendant's accounts.

     The next matter involved the Jared Sharengo Trust, which

contained the proceeds of a settlement for a minor, resulting from

a lawsuit over his father's death.        Defendant controlled the trust

funds and misappropriated some of the money.            However, the State

produced no evidence that any money was moved from defendant's ATA

into his ABA, or that he used either account to "launder" any

funds.   Rather, the State simply produced testimony that defendant

took about $400,000 of the Sherango Trust money and, in the

detective-witness's    conclusory       terms,   used   it   "for   his   own

purposes."   As presented to the Grand Jury, there was no evidence

that defendant committed any crime beyond the initial theft or

misapplication of the entrusted funds, which under the facts

presented, was completed when he transferred the money to his own

                                    7                                A-1838-16T1
accounts without any legal justification and with an unlawful

purpose.

     Similarly, the State presented evidence to the Grand Jury

that defendant stole about $316,000 from the Estate of Mildred

Colavito, while he was the estate executor.              Again, the State

presented   evidence   that   defendant    transferred      money   from   the

Estate into either his ABA or his ATA.            There was no evidence of

any second transaction, between the two accounts or from either

account to a third account belonging to defendant.             There was no

evidence as to how placing the money in either the ABA or ATA

facilitated or concealed the theft of the money from the Estate,

or that defendant committed any further crime which the prior

deposits helped to conceal or facilitate.               To the contrary,

according to the proofs the State presented, transferring the

money   into   those    accounts,       without     legal    justification,

constituted the misapplication or theft of the funds.2

     The State next presented evidence that defendant stole funds

from the Estate of Michael Zaccaria while serving as the estate's

attorney.   Defendant was hired by the decedent's family to collect

2
  The State also presented evidence that defendant committed tax
fraud by telling his accountant that some of the deposited funds
were "loans" from the Estate. However, there was no evidence that
putting the money in the ATA or ABA made that story more plausible
or otherwise facilitated or concealed the tax fraud.

                                    8                                A-1838-16T1
the proceeds of several life insurance policies.           Defendant did

so and deposited some of the proceeds in his ATA. He disbursed

some of the money to the beneficiaries.         However, he moved about

$183,000 of those funds into his ABA, noting on some of the checks

that they represented partial payment for his fees or reimbursement

of   expenses.     However,   he   never   billed   the   estate   or   the

beneficiaries for those amounts.         He also used about $222,000 of

the insurance proceeds, which he had deposited in his ATA, for his

personal use.

      The State produced no testimony or other evidence that it was

wrongful or illegal for defendant to have initially placed the

collected funds in the ATA.        As presented to the Grand Jury, the

crimes he committed consisted of wrongfully taking the money out

of the ATA, either to pay for phantom "fees" which were deducted

and placed in the ABA, or directly taken from the ATA and spent

for defendant's benefit in unspecified ways.

      The State also presented evidence that, while acting as the

attorney for the Estate of Maria Matarazzo, defendant stole money

from her estate.    According to the State's evidence to the Grand

Jury, defendant stole the money by convincing the estate executor

that he needed about $335,000 to pay either his own legal fees or

to pay other fees that he would expend on behalf of the estate.

The Grand Jury testimony was somewhat vague, but construing it

                                     9                             A-1838-16T1
most favorably to the State, it would support inferences that the

estate was involved in litigation over property in New York and

defendant falsely represented to the estate executor that the

"fees" were needed to pay counsel in that litigation.               Instead of

using the money for the New York litigation, defendant used the

money for his own purposes. Again, there was no evidence that

putting the money in his ABA facilitated or concealed defendant's

theft of the money.

      On this appeal, the State acknowledges that N.J.S.A. 2C:21-

25(b) requires proof of two transactions, the initial crime,

followed by the "laundering."           See Harris, supra, 373 N.J. Super.

at   266.   The     State    argues     that   defendant    engaged   in    two

transactions, because when he stole the money from his clients'

estate or trust accounts, he placed the funds in his attorney

trust or business accounts "to give the stolen money an air of

legitimacy."      However, the State produced no evidence before the

Grand Jury to establish that putting money in either account served

to "conceal or disguise the nature, location, source, ownership

or   control   of   the     property    derived   from   criminal   activity."

N.J.S.A. 2C:21-25(b)(2)(a).            In fact, in most of the cases, the

State's evidence, as presented and explained to the Grand Jurors,

was that defendant stole the money when he placed it in his own

                                        10                             A-1838-16T1
accounts rather than leaving it in the clients' trust or estate

accounts.

     Notably, the Grand Jurors twice asked for clarification as

to how defendant's conduct constituted money laundering.     At one

point, a juror asked:     "Can you explain the rationale for the

money laundering?   What's the rationale for the first indictment

[count one]?   It's not very clear."   The prosecutor did not answer

the questions, other than by referring to the statute in general

terms and telling the jurors to read the indictment.

     Because the State did not present some evidence to support

each of the elements of the money laundering charge, the trial

court did not abuse its discretion in dismissing Count One of the

superseding indictment.   See Morrison, supra, 188 N.J. at 12.

     Affirmed.

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