Court Opinion

ID: 4535229
Source: CourtListenerOpinion
Date Created: 2020-05-19 14:09:32.978474+00
Date Added: 2024-06-11T12:35:40.947149
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
              APPROVAL OF THE APPELLATE DIVISION

                                   SUPERIOR COURT OF NEW JERSEY
                                   APPELLATE DIVISION
                                   DOCKET NO. A-2145-19T1

STATE OF NEW JERSEY,

     Plaintiff-Appellant,                 APPROVED FOR PUBLICATION

                                                     May 19, 2020
v.
                                                 APPELLATE DIVISION

IAN W. MARIAS,

     Defendant-Respondent.

           Argued telephonically April 20, 2020 –
           Decided May 19, 2020

           Before Judges Sabatino, Geiger and Natali.

           On appeal from an interlocutory order of the Superior
           Court of New Jersey, Law Division, Essex County,
           Indictment No. 18-12-3840.

           Frank J. Ducoat, Special Deputy Attorney
           General/Acting Assistant Prosecutor, argued the cause
           for appellant (Theodore N. Stephens II, Acting Essex
           County Prosecutor, attorney; Frank J. Ducoat, of
           counsel and on the brief).

           Roy B. Greenman, argued the cause for respondent
           (Budin Greenman & Greenman, attorneys; Roy B.
           Greenman, on the brief).

     The opinion of the court was delivered by

SABATINO, P.J.A.D.
      We granted the State leave to appeal in this pending criminal case to

address the grading aspects of the money laundering statute, N.J.S.A. 2C:21 -23

to -29. The core and unresolved legal question is the meaning of the term

"amount involved" in N.J.S.A. 2C:21-27, which calibrates the severity of the

offense.

      Specifically, N.J.S.A. 2C:21-27(a) prescribes that a defendant commits a

first-degree money laundering offense if the "amount involved" is $500,000 or

more. The crime is a second-degree offense if the "amount involved" is under

$500,000 but equal to or more than $75,000. Lastly, it is a third-degree offense

if the "amount involved" is under $75,000.

      As this opinion explains, we hold that where, as here, a defendant is

charged with engaging in a money laundering transaction prohibited by N.J.S.A.

2C:21-25(b), the "amount involved" is the fair market value of the property

transferred in that transaction and any other transactions conducted as part of

that common scheme. That fair market value is to be determined by the trier of

fact. The value is not necessarily equal to or limited by the sum that the money

launderer received in the illicit transaction(s).

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      Here, the motion judge correctly recognized the "amount involved" in the

alleged money laundering transaction was not equal to or capped by the price of

approximately $63,000 that defendant received in exchange for the stolen goods

he conveyed to a buyer. However, subject to the ultimate trial proofs, we vacate

the judge's preemptive determination that the "amount involved" could not

reasonably be found by a jury to exceed $500,000. Consequently, we modify

the judge's ruling and reinstate defendant's exposure to a possible money

laundering conviction of first-degree severity.

                                          I.

      We summarize the pertinent allegations against defendant, with a caveat

that the State has yet to present its proofs at a trial.

      The State alleges that defendant Ian W. Marias stole merchandise from

the warehouse of his next-door neighbor and employer, who is in the business

of selling doors and door supplies, with the assistance of an accomplice named

Adam Edwards (who later cooperated with the State pursuant to a plea bargain).

The stolen goods had been obtained by the employer at a cost of about $878,000

but were estimated to have a retail value of about $4 million.

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      According to the indictment, Marias sold a portion of the stolen

merchandise for about $63,000 to a buyer in New Hampshire. The buyer paid

that money to a fictitious company created by Marias.           The rest of the

merchandise defendant kept at his grandmother's house.

      Among other offenses, the indictment charged Marias with engaging in a

money laundering transaction prohibited under N.J.S.A. 2C:21-25(b)(2)(a).

That provision, in pertinent part, makes a person guilty of a crime if he or she:

            (b) engages in a transaction involving property known
            or which a reasonable person would believe to be
            derived from criminal activity

                  ....

                  (2)    knowing that the transaction is designed in
                         whole or in part:

                  (a)    to conceal or disguise the nature, location,
                         source, ownership or control of the
                         property derived from criminal activity;

      A conviction for money laundering carries with it a host of significant

penal consequences. For example, a first-degree money laundering conviction

requires the defendant to serve a presumptive term of fifteen years'

imprisonment, including a period of one-third to one-half of the term that is not

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eligible for parole. N.J.S.A. 2C:21-27(a); N.J.S.A. 2C:44-1. The sentences for

the underlying crime and for the money laundering must be served

consecutively.   N.J.S.A. 2C:21-27(c).      A conviction of first-degree money

laundering includes a fine of $500,000, N.J.S.A. 2C:21-27.2(a), whereas the

lesser grades of the offense have lower prescribed fines.1

      The indictment charged Marias with a first-degree money laundering

offense, under a theory that the "amount involved" exceeded $500,000. Marias

moved to amend the indictment to charge only a third-degree offense, arguing

that the $63,000 he received for the merchandise he was able to sell constituted

the "amount involved." The State opposed the motion, arguing that the amount

involved should include the unsold merchandise that was stolen, which it says

was clearly worth more than $500,000.

      The motion judge, sua sponte, conceived of and applied a mathematical

formula to calculate the "amount involved" for grading purposes. The judge

found that, if the State's proofs at trial were believed, the amount defendant had

1
   Under all three grades of the offense, the sentencing judge is authorized to
impose various other monetary sanctions and remedies, which are not at issue at
this time in this interlocutory appeal. See N.J.S.A. 2C:21-27(b); N.J.S.A. 2C:21-
27.1 to -27.6; N.J.S.A. 2C:21-28.
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                                        5
laundered was $283,500. The judge accordingly modified count three of the

indictment from a first-degree to a second-degree money laundering offense.

      The judge arrived at this figure by dividing the claimed retail value of the

goods that defendant stole from the warehouse (approximately $4 million) by

what the owner had paid for those goods ($878,000). By this calculation, the

judge determined that the retail cost was 4.5 times what he regarded as the

"wholesale" cost. The judge then multiplied the amount defendant realized on

the sale of the goods (approximately $63,000) by 4.5 to arrive at a fair market

value of $283,500. That calculated sum would place the "amount involved"

within the second-degree range, above the third-degree cutoff of $75,000 but

below the $500,000 first-degree threshold.

      On appeal, the State contends the trial court's method calculated the

maximum amount involved too low, while defendant argues the court set the

maximum too high.

                                       II.

                                       A.

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      In State v. Harris, 373 N.J. Super. 253, 263 (App. Div. 2004), we

explained that our money laundering statute in N.J.S.A. 2C:21-25 essentially

criminalizes three distinct types of activities.

      First, N.J.S.A. 2C:21-25(a) criminalizes the possession or transportation

of property that a reasonable person would believe to be derived from criminal

activity. Defendant in this case was not indicted under this provision.

      Next, N.J.S.A. 2C:21-25(b) criminalizes two types of transactions

involving property known to be derived from criminal activity. N.J.S.A. 2C:21-

25(b)(1) prohibits transactions intended to facilitate or promote the criminal

activity. N.J.S.A. 2C:21-25(b)(2), meanwhile, bars transactions that attempt to

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

property derived from criminal activity.

      "Promoting" the money laundering activity under subsection (b)(1) occurs

when the funds derived from the criminal activity are plowed back into the

criminal enterprise. By comparison, "concealing" occurs when the transaction

involves hiding the proceeds acquired in the criminal enterprise. Harris, 373

N.J. Super. at 264-65. Thus, to convict a defendant under N.J.S.A. 2C:21-25(b),

there must be two transactions: the underlying criminal activity and the

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transaction where the property is either used for promotion or concealment. Id.

at 266.

      For grading purposes, our State's money laundering statute uses the term

"amount[s] involved" but does not define that term within its text. N.J.S.A.

2C:21-27. The four definitional provisions expressed in the statute at N.J.S.A.

2C:21-242 do not include it. The statute does instruct at N.J.S.A. 2C:21-27(a)

that "[a]mounts involved in transactions conducted pursuant to one scheme or

course of conduct may be aggregated" to determine the degree of the offense

(emphasis added). Apart from that aggregation principle, the statute is otherwise

silent about the term's meaning.

      The legislative history does not enlighten us as to what the New Jersey

Legislature exactly meant by the term "amount[s] involved." The legislative

findings and declarations associated with the Act and codified in N.J.S.A.

2C:21-23 are uninformative in this regard. 3

2
   Defining, respectively, the terms "Attorney General," "derived from,"
"person", and "property." N.J.S.A. 2C:21-24.
3
  Among other things, the legislative findings declare that:

            In order to safeguard the public interest and stop the
            conversion of ill-gotten criminal profits, effective

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                                       8
      Some guidance of a more generic nature is supplied by N.J.S.A. 2C:1-14.

Those general definitional provisions cover all portions of our Criminal Code,

unless a different meaning is prescribed by a particular statute. Within those

general definitions, subsection (m) of N.J.S.A. 2C:1-14 instructs:

            m. "Amount involved," "benefit," and other terms of
            value. Where it is necessary in this act to determine
            value, for purposes of fixing the degree of an offense,
            that value shall be the fair market value at the time and
            place of the operative act.

            [(Emphasis added).]

      We applied this general definitional provision in State v. Cetnar, 341 N.J.

Super. 257, 263 (App. Div. 2001), in the context of the embezzlement statute,

N.J.S.A. 2C:20-2. We held in Cetnar that N.J.S.A. 2C:1-14(m) requires an

assessment of the value of the property involved at the time of the wrongdoing.

            criminal and civil sanctions are needed to deter 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. It is in the public interest to make such
            conduct subject to strict criminal and civil penalties
            because of a 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).]
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                                       9
Hence, the defendant's conduct in Cetnar in returning the funds he had

embezzled did not limit the "amount involved" to the interest he could have

earned on the funds while he possessed them. Id. at 263-64. Rather, the amount

involved consisted of the value of the funds at the time they were stolen. Id. at

263.

       The Model Criminal Jury Charge for money laundering includes the same

principles. The charge instructs that "property means anything of value . . .

[and] includes any benefit or interest without reduction for expenses incurred

. . . . Value means the fair market value of the property at the time and place of

the alleged operative act . . . . Amounts involved in transactions conducted

pursuant to one scheme or course of conduct may be aggregated in determining

the amount involved." Model Jury Charges (Criminal), "Financial Facilitation

of Criminal Activity (Money Laundering) (N.J.S.A. 2C:21-25(b)(2))" (approved

June 2009) (emphasis added). However, the model charge does not instruct how

a jury is to calculate the amount(s) involved in such transactions.

       The New Jersey statute is largely, but not identically, modeled on the

federal money laundering statute set forth in 18 U.S.C. § 1956. Harris, 373 N.J.

Super. at 267-69. Our own statute has been described as more powerful than its

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federal counterpart. See James B. Johnston, An Examination of New Jersey's

Money Laundering Statutes, 30 Seton Hall Legis. J. 1, 11–13 (2005). For

example, under the federal scheme, a money launderer must be involved in a

specific underlying crime, whereas our own statute only requires proof that the

illicit funds were "known to be derived from criminal activity." Ibid. Also, our

New Jersey statute uses the terms "property" and "amount involved," i nstead of

the term "proceeds of specified unlawful activity" found in the federal statute. 4

      We are cognizant the term "amount involved" happens to be used in the

federal Money Laundering Control Act of 1986, 18 U.S.C. §§ 981-982, which

addresses forfeiture of property involved in money laundering.         Under that

federal forfeiture statute, property "involved in" a transaction that violates the

money laundering statutes is defined as property with a "substantial connection"

to the alleged unlawful activity. See, e.g., United States v. $3,000 in Cash, 906

F. Supp. 1061, 1065 (E.D. Va. 1995); see also George Chamberlin,

Annotation, What is Considered Property "Involved In" Money Laundering

4
  After the decision in United States v. Santos, 553 U.S. 507 (2008), Congress
amended the Act to clarify that "proceeds" includes "gross receipts" and not just
profits. See, e.g., United States v. Stoddard, 892 F.3d 1203, 1214 n.2 (D.C. Cir.
2018).
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Offense, and thus Subject to Civil or Criminal Forfeiture, for Purposes of Money

Laundering Control Act (18 U.S.C.A. § 981(a)(1)(A) and 982(a)(1)), 135 A.L.R.

Fed. 367 (1996). But we have no express indication that the New Jersey

Legislature intended to adopt such a definition when enacting our own State's

money laundering statute.

      Comparatively, the money laundering statutes of several other states we

have located do not use the term "amounts involved" for grading the offense,

but instead employ other terms.5 We have been unable to find other states that

use the precise terminology used for grading money laundering in N.J.S.A.

2C:21-27.

                                         B.

      Having considered these authorities and conceptual principles, we agree

with the State that the trial court erred in amending the indictment from a first-

degree to a second-degree money laundering offense. However, in reaching that

determination, we do not adopt the State's argument that the "amount involved"

5
   See, e.g., (Illinois) "property of a value not exceeding," 720 Ill. Comp. Stat.
Ann. 5/29B-1 (2020); (Indiana) "if the value of the proceeds or funds is at least,"
Ind. Code Ann. § 35-45-15-5 (West); (California) "value of the transaction or
transactions exceeds," Cal. Penal Code § 186.10 (West); and (Texas) "if the
value of the funds is," Tex. Penal Code Ann. § 34.02 (West).
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                                       12
should include the fair market value of the unsold stolen goods that Marias was

keeping in his grandmother's garage.

        Notably, Marias was indicted under the "transactional" provision of the

money       laundering        statute,   N.J.S.A.   2C:21-25(b),      not        the

"transportation/possession" portion, N.J.S.A. 2C:21-25(a).         We do not

understand why the indictment was framed in that limited way. Be that as it

may, we do not reach here the hypothetical question of what the "amount

involved" would be if defendant had been charged with a "subsection (a)"

offense under N.J.S.A. 2C:21-25 rather than, or in addition to, the "subsection

(b)" transactional offense.

        We do not conceive of the "transaction" under subsection (b) to

encompass the mere holding or movement of goods with an intent to launder

them.      If we were to do so, it would impermissibly render the

transportation/possession language within subsection (a) redundant and

superfluous. See Harris, 373 N.J. Super. at 263 (holding that N.J.S.A. 2C:21-

25 "criminalizes three distinct types of conduct"). We must construe the statute

in a manner that imbues meaning to all of its terms. See State v. Regis, 208 N.J.

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                                         13
439, 449-50 (reiterating the well-established principle that statutes should be

construed to give "meaning to all of the statute's language").

      We recognize that in State v. Diorio, 216 N.J. 598, 625 (2014), our

Supreme Court held that the money laundering statute is a continuing offense

for purposes of the statute of limitations when a defendant's successive actions

bespeak a common scheme to defraud. But unlike the present indictment's

description of Marias's conduct interacting with one buyer, the defendant in

Diorio undertook a series of transactions, bank deposits, and withdrawals, and

the fabrication of company records, all in an effort to perpetuate and disguise

his continuing scheme. Id. at 603-07.

      As best as we can tell from the limited record here, the only "transaction"

committed by Marias was his sale of a portion of the stolen goods. Had he been

charged under subsection (a) with illegally possessing the remainder of the

stolen goods in his grandmother's garage, the "amount involved" arguably may

have been greater. Again, we need not resolve that question in the abstract here.

      Hence, on the money laundering count, Marias is culpable under

subsection (b) of N.J.S.A. 2C:21-25 for what he transacted, not for what he

otherwise possessed or transported. By comparison, the separate count in the

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                                        14
indictment for theft under N.J.S.A. 2C:20-3 more broadly covers all of the

goods, including the goods Marias stole but did not sell.

      That said, subject to the ultimate proofs at trial, there are reasonable

grounds here for a jury to decide that the fair market value of the goods that

Marias was able to sell exceeded the $500,000 first-degree threshold. The

present record indicates the owner of the warehouse stated that the total

replacement cost of the entire stolen inventory was $1.946 million. Investigators

noted that the replacement cost of the items remaining in the garage was

approximately $1.4 million. The victim has apparently stated that Marias sold

the goods for "pennies on the dollar" because the fair value of the items far

exceeded what Marias charged for them.

      Thus, although the amount Marias realized on the sale was only roughly

$63,000, it is reasonably conceivable that the State will persuade the jury that

the replacement cost of the items Marias sold was as much as $546,000 (i.e.,

$1.946 million minus $1.4 million). Moreover, a jury reasonably could find that

the fair market value of the goods sold exceeded their replacement cost.

      Also, the motion judge's premise that the $63,000 sale price was the fair-

market equivalent of "wholesale" cost might rationally be rejected by the jury.

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For example, the jury might conclude the $63,000 price was an exceptionally

discounted bargain below wholesale cost. There appears to be some indication

that the defendant portrayed the goods to the buyer as such by allegedly

suggesting he was liquidating his grandfather's business.

      Although we appreciate the judge's creativity, the assumptions underlying

his formula might not be adopted by the jurors. As N.J.S.A. 2C:21-27 instructs,

the "amount involved . . . shall be determined by the trier of fact." The judge

was correct, however, in rejecting defense counsel's own claim that the "amount

involved" must be equal to or capped at the $63,000 sale price. The jury is

entitled to arrive at a higher (or, for that matter, lower) figure, so long as it has

reasonable support in the trial evidence.

      For these reasons, we affirm the trial court in its denial of defendant's

motion but modify its ruling to reinstate the first-degree charge.

      Modified and remanded. We do not retain jurisdiction.

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