Court Opinion

ID: 9902436
Source: CourtListenerOpinion
Date Created: 2023-11-27 15:06:47.109385+00
Date Added: 2024-06-11T09:21:51.354289
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                                NOT FOR PUBLICATION WITHOUT THE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-2958-21

STATE OF NEW JERSEY,

         Plaintiff-Appellant,

v.

STEVEN H. SALAMI,

     Defendant-Respondent.
_________________________

                   Argued January 11, 2023 – Decided November 27, 2023

                   Before Judges Accurso, Firko and Natali.

                   On appeal from an interlocutory order of the Superior
                   Court of New Jersey, Law Division, Monmouth
                   County, Indictment No. 21-07-0696.

                   Melinda A. Harrigan, Assistant Prosecutor, argued the
                   cause for appellant (Raymond S. Santiago, Monmouth
                   County Prosecutor, attorney; Melinda A. Harrigan, of
                   counsel and on the brief).

                   Steven E. Nelson argued the cause for respondent
                   (Nelson, Fromer, Crocco & Jordan, attorneys; Steven
                   E. Nelson, on the brief).
            Greenbaum, Rowe, Smith & Davis LLP, attorneys for
            amicus curiae Association of Criminal Defense
            Lawyers of New Jersey (Christopher D. Adams, of
            counsel and on the brief; Marjan Moussavian, on the
            brief).

      The opinion of the court was delivered by

ACCURSO, P.J.A.D.

      A Monmouth County grand jury returned an indictment against disbarred

attorney, defendant Steven H. Salami, alleging he'd misappropriated client

funds in a series of real estate transactions. The sixty-three-count indictment

consisted of fifty-eight counts of third-degree misapplication of entrusted

property, N.J.S.A. 2C:21-15, two counts of second-degree misapplication of

entrusted property, N.J.S.A. 2C:21-15, one count of second-degree theft by

failure to make required disposition of property, N.J.S.A. 2C:20-9, and two

counts of first-degree financial facilitation of criminal activity, N.J.S.A.

2C:21-25(a) and (c), colloquially referred to as money laundering.

      The trial court granted defendant's motion to dismiss the two financial

facilitation counts. Relying on State v. Harris, 373 N.J. Super. 253 (App. Div.

2004), the trial court held "that evidence of two improper transactions is

necessary to indict a defendant for money laundering" in accord "with the clear

intent of the legislature to use the money laundering statute to punish

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organized crime rather than every individual, who commits a theft ." The judge

found the only transaction in this case was defendant's wrongful transfer of

client funds from his attorney trust account into his business account.

Perceiving "no logical difference between this defendant placing those funds in

his operating account and the act of a common thief placing stolen money into

his pocket," the court found the evidence, viewed most favorably to the State,

did not establish the elements of money laundering under N.J.S.A. 2C:21-25(a)

or (c).

      We granted the State's motion for leave to appeal and now reverse. 1 As

our Supreme Court has noted, New Jersey's money laundering statute has a

"broad scope." State v. Diorio, 216 N.J. 598, 625 (2014). How broad we need

not determine here, as we are satisfied the State's presentation of evidence to

the grand jury that defendant took funds from new real estate clients to

complete real estate transactions for existing clients whose funds he'd

misappropriated established a prima facie case of financial facilitation under

N.J.S.A. 2C:21-25(a) and (c).

1
 We granted the motion of the Association of Criminal Defense Lawyers of
New Jersey to appear as amicus curiae limited to the submission of a brief .
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      The facts leading to defendant's indictment are easily summarized. In

September 2019, a client of defendant's complained to the Monmouth County

Prosecutor's Office's that she'd retained defendant two months earlier to

represent her in the purchase of a townhouse, providing him $30,000 to be held

in escrow. The closing never occurred, and defendant failed to return the

escrowed funds.

      When a detective reached out to the New Jersey Lawyer's Fund for

Client Protection, he learned three other clients had made similar complaints

about defendant. On interviewing those individuals, the detective learned one

claimed she'd retained defendant in April 2019 to represent her in a real estate

transaction. The deal never closed, however, because defendant failed to

transfer the $47,000 she'd wired to his trust account and never returned her

money.

      Another client claimed he'd hired defendant in August 2019 to represent

him in his home purchase. After he'd wired $178,000 to defendant's trust

account, defendant stopped answering his calls. Defendant never transferred

the money to the seller, resulting in the client losing both the house and his

$178,000. The third client claimed she'd retained defendant to represent her in

two real estate transactions in the summer of 2019. She claimed she'd wired

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$10,000 to defendant's trust account for a business deal in which she was to

purchase two homes in Plainfield. After the closing fell through for reasons

unrelated to defendant, he failed to return her money. The same client claimed

defendant had represented her in the sale of a condominium, in which the

buyer had wired an $18,000 deposit to defendant's trust account. The client

claimed defendant failed to show up to represent her at the closing, and

although the sale went through, defendant never provided her the $18,000 he

was holding in escrow.

      The Monmouth County Prosecutor filed a complaint-warrant against

defendant alleging multiple counts of misappropriation of entrusted property in

violation of N.J.S.A. 2C:21-15 in an aggregate amount of $75,000. After the

prosecutor's office issued a press release announcing defendant's arrest, the

office received "hundreds of phone calls" from other clients alleging defendant

had stolen funds from them too. The prosecutor alleges defendant swindled

sixty clients of a total of $1,179,990.59.

      Specifically, the investigation conducted by the prosecutor's office

revealed defendant used primarily one trust account and one operating account

between January 1 and April 1, 2019, and another set of trust and operating

accounts from April through the time of his arrest in October 2019. Defendant

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was the sole signatory on all four accounts. Defendant apparently charged

between $750 and $950 per real estate transaction, with the fees being

deposited into his operating accounts.

      From an analysis of defendant's attorney bank records, the prosecutor's

office calculated defendant transferred $612,920 from his first trust account to

his first operating account between January and October 2019. Defendant

transferred $137,370 of that sum back to his trust account for the benefit of his

clients. He also appears to have taken $118,280.05 from his operating account

for the benefit of clients. Leaving aside the $38.17 remaining in his first

operating account at the time of his arrest, which was seized by the Office of

Attorney Ethics, the prosecutor calculated defendant transferred $357,231.78

out of his first trust account between January and October for his personal use.

      The prosecutor's office also discovered $245,861.96 in transfers from

defendant's second trust account to the second operating account between

April through October 2019. Investigators found one transfer of $14,911.75

back to that trust account, which was not used for the benefit of any client.

Accounting for the $195.59 remaining in the second operating account seized

by the Office of Attorney Ethics, the prosecutor's office determined defendant

transferred $230,754.62 from his second trust account into his second

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operating account, which he subsequently spent for his personal benefit. All

told, the prosecutor's office alleged defendant improperly transferred

$587,986.40 from his trust accounts into his operating accounts, which he then

used for his personal benefit. 2

      Asked by an assistant prosecutor before the grand jury about the

difference between the $587,986.40 the detective alleged supported the money

laundering charges and the more than $1.1 million he earlier testified was

stolen by defendant from sixty identified victims, the detective explained "the

other funds" went towards payments to other clients "not . . . these sixty

victims." In other words, defendant was "taking these funds from his newer

clients to complete real estate transactions for previous clients." According to

the detective, "those previous clients never came forward as potential victims"

because their transactions closed, and they'd not suffered any loss. 3

2
  As noted by the trial court, defendant's counsel averred defendant had a
serious substance abuse and gambling problem for several years, and by 2018
"was essentially neglecting and ignoring his law practice despite continuing to
accept new real estate clients."
3
  The detective's spreadsheet of victims numbered sixty-one. The detective
testified he'd included the name of one client, "as a witness, essentially," who
gave a formal statement about his negative experience with defendant,
although the client was ultimately made whole and suffered no financial loss.
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      Defendant moved to dismiss the two financial facilitation counts of the

indictment, arguing the State's instructions to the grand jury were defective,

preventing jurors from making an informed decision, that the State failed to

establish defendant's alleged financial facilitation constituted a single scheme

or course of conduct, and that the evidence presented to the grand jury was

insufficient to charge defendant with money laundering. The State countered

"that its testifying detective presented evidence to the grand jury that

defendant used some of the stolen funds for payments for prior clients ra ther

than personal purchases, and therefore was essentially running a Ponzi scheme

with his practice."

      The trial court addressed each of defendant's arguments in a thorough

and thoughtful thirty-nine-page written opinion. The court rejected

defendant's claim that the prosecutor's instructions to the grand jury were

flawed for his failure to define "one scheme" or "course of conduct," terms not

defined in the Code or the model jury charges. The court found "the

prosecutor was only required to ensure the grand jury understood that amounts

involved in financial facilitation can be aggregated if they were part of one

scheme or course of conduct for grading purposes only," and was satisfied the

prosecutor "explain[ed] this concept to the grand jury in plain language."

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      The court also rejected defendant's claim that the grand jurors, "viewing

the evidence in the light most favorable to the State, . . . could not have

reasonably believed that defendant's misappropriation of funds from his clients

were part of a single scheme or course of conduct." Relying on the Supreme

Court's holding in Diorio, that "money laundering is a continuing offense for

the purposes of the statute of limitations . . . when the record contains evidence

of successive acts that facilitate and promote the common scheme to defraud ,"

216 N.J. at 625, the trial court found the grand jury was "presented with some

evidence that defendant's earlier thefts were used to facilitate later

misappropriations."

      Specifically, the court noted the "testimony before the grand jury that

defendant was taking funds from newer clients to complete real estate

transactions for previous clients," thereby ensuring those "earlier clients did

not raise claims against defendant." The court found "[d]efendant's clients

were placed in a continuous risk of harm, which varied depending on how

successful defendant was in obtaining funds from prospective clients. Any

client from whom defendant misappropriated escrow funds did not have their

fate determined at the moment of taking," that is, when defendant moved their

funds from his trust account to his operating account. Instead, the court found

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"the outcomes were dependent on whether defendant could continue to solicit

future business." The court found those circumstances presented the grand

jury with "sufficient evidence of a continuous offense to aggregate the amount

stolen" and provided no basis to dismiss the two financial facilitation counts of

the indictment.

      Notwithstanding those findings, the court nevertheless dismissed the

financial facilitation counts, finding it "apparent from the context of the money

laundering statute that the legislation was designed to combat enterprises such

as organized crime and drug trafficking operations." Although acknowledging

the statute could "be construed to punish certain other conduct," the court

found "it was clearly not intended to charge all persons who commit theft with

the crime of money laundering." Noting "consistent with the plain language of

the statute in the absence of context," that even "a pickpocket who steals

money from a pedestrian's pocket and thereby possesses the property known to

be derived from criminal activity" could be charged with money laundering,

the court found that "not a logical or sensible interpretation of the legislature's

intent."

      The court found based on "the statute's related provisions and the

legislature's explanations for its codification, it is clear that it was not intended

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to punish individuals guilty of theft through a single criminal transaction, i.e.,

taking someone else's money and then spending it." Although acknowledging

our holding in Harris that the money laundering 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,'" 373 N.J.

Super. at 266, was limited to subsection (b)(1) and (2), N.J.S.A. 2C:21-

25(b)(1) and (2), the trial court found "evidence of two separate and distinct

improper transactions" is required "in order to establish guilt under sections (a)

and (c)" of the statute as well.

      Reasoning that defendant acquired the funds initially placed in his trust

accounts for the lawful purpose of facilitating his clients' real estate

transactions, the trial court found defendant committed only one crime by

moving his clients' money from his trust accounts into his operating accounts ,

and not "two separate and distinct improper transactions" as in Harris. The

court concluded "there is no logical difference between this defendant placing,

those funds in his operating account and the act of a common thief placing

stolen money into his pocket," and thus "[t]he evidence against defendant,

even when viewed in a light most favorable to the State, does not establish that

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his actions satisfied the requisite elements of money laundering under N.J.S.A.

2C:21-25(a) or (c)." Determining the allegations of money laundering in the

indictment relied on "an unfairly overbroad interpretation of N.J.S.A. 20: 21-

25(a) and (c)," the court dismissed those counts on defendant's motion.

      The Supreme Court has instructed a trial "court should dismiss an

indictment 'only on the clearest and plainest ground, and only when the

indictment is manifestly deficient or palpably defective.'" State v. Twiggs, 233

N.J. 513, 531-32 (2018) (quoting State v. Hogan, 144 N.J. 216, 228-29

(1996)). The State survives a motion to dismiss an indictment so long as it

"presents 'some evidence establishing each element of the crime to make out a

prima facie case.'" State v. Feliciano, 224 N.J. 351, 380 (2016) (quoting State

v. Saavedra, 222 N.J. 39, 57 (2015)).

      Applying those precepts here, we agree with the State that the trial court

erred in dismissing the two financial facilitation counts of the indictment.

       N.J.S.A. 2C:21-25 provides in pertinent part that:

            A person is guilty of a crime if the person:

            a. transports or possesses property known or which a
            reasonable person would believe to be derived from
            criminal activity; or

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

             (1) with the intent to facilitate or promote the criminal
             activity; or

             (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; or

             (b) to avoid a transaction reporting requirement under
             the laws of this State or any other state or of the
             United States; or

             c. directs, organizes, finances, plans, manages,
             supervises, or controls the transportation of or
             transactions in property known or which a reasonable
             person would believe to be derived from criminal
             activity.

             d. For the purposes of this act, property is known to be
             derived from criminal activity if the person knows that
             the property involved represents proceeds from some
             form, though not necessarily which form, of criminal
             activity. . . .

      As we explained in Harris, "[t]he text of N.J.S.A. 2C:21-25 makes clear

by use of the designations (a) or (b) or (c) that it criminalizes three distinct

types of conduct." 373 N.J. Super. 253, 263-264. Subsection (a) makes it a

crime to "transport[] or possess[] property known . . . to be derived from a

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criminal activity." Subsection (b) makes it a crime to "engage[] in a

transaction involving property known . . . to be derived from criminal activity"

either "(1) with the intent to facilitate or promote the criminal activity; or

(2) knowing that the transaction is designed in whole or in part" (a) to conceal

or disguise the source of the property or (b) to avoid any transaction reporting

requirement. Subsection (c) makes it a crime to direct, organize, finance, plan,

manage, supervise, or control "the transportation of or transactions in property

known or which a reasonable person would believe to be derived from criminal

activity."

      We find no basis to extend Harris's two-transaction requirement under

subsection (b) of the money laundering statute to subsection (a) or (c), neither

of which requires, as subsection (b) does, that a defendant "engage[] in a

transaction involving property known . . . to be derived from criminal

activity."4 See State v. Marias, 463 N.J. Super. 526, 536-537 (App. Div. 2020)

4
   In James B. Johnston, An Examination of New Jersey's Money Laundering
Statutes, 30 Seton Hall. Legis. J. 1, 25 (2005), the author posits that subsection
(c), "the director/organizer prong," was likely "designed to target the leaders of
money laundering enterprises," but its wording is broad enough to snare those
"at the highest tier of a crime ring or the lowest tier." Ibid. Although
subsection (c) makes it a crime to direct, organize, finance, plan, manage,
supervise, or control "the transportation of or transactions in property known
. . . to be derived from criminal activity," it doesn't require a transaction as
subsection (b) does.
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                                        14
(explaining "the 'transaction' under subsection (b) [does not] encompass the

mere holding or movement of goods with an intent to launder them," under

subsection (a), because to so hold "would impermissibly render the

transportation/possession language within subsection (a) redundant and

superfluous"). See also Amaya v. New Jersey, 766 F. Supp. 2d 533, 540

(D.N.J.) (noting to the extent New Jersey's financial facilitation statute

"criminalize[s] the knowing transportation of funds that are derived from

criminal activity, they go little beyond the federal money laundering statutes

and are clearly constitutionally proper") aff'd sub nom. Kress v. New Jersey,

455 Fed. Appx. 266 (3rd. Cir. 2011). There is simply no anchor in the text for

the trial court's extension of the two-transaction requirement of subsection (b)

to subsection (a) and (c). See Marias, 463 N.J. Super. at 537 ("We must

construe the statute in a manner that imbues meaning to all of its terms").

      In our view, the trial court inexplicably abandoned the rationale it

properly employed to reject defendant's arguments that the prosecutor had

misadvised the grand jury that amounts involved in financial facilitation can be

aggregated if they were part of one scheme or course of conduct and failed to

present a prima facie case of aggregation — that is, that defendant's

misappropriation of funds from separate clients at different times were part of

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a single scheme or course of conduct to defraud — in considering whether

defendant could be properly charged with money laundering here. Because it

is clear to us the prosecutor presented "some evidence" that defendant was

managing, controlling and supervising the possession and transport of funds

entrusted to him by "newer clients to complete real estate transactions" for

previously retained clients, thereby concealing his prior misappropriations and

allowing his continuing thefts to go undetected, we are satisfied defendant was

properly charged with money laundering under N.J.S.A. 2C:21-25(a) and (c).

      We, again, emphasize the scope of New Jersey's financial facilitation

statute is broader than the federal money laundering act, 18 USC § 1956, on

which subsection (b) was modeled, see James B. Johnston, An Examination of

New Jersey's Money Laundering Statutes, 30 Seton Hall Legis. J. 1, 11-13

(2005) (noting that although the provisions of the federal money laundering act

are similar to New Jersey's statute, New Jersey's "statute is more powerful"),

and broad enough to reach well beyond the targets of the legislation identified

by the trial court — "those involved in organized crime and other large-scale

criminal undertakings, such as drug trafficking, whose objective was to

conceal or legitimize the proceeds of illegal activity," see Assembly Judiciary,

Law and Public Safety Committee statement, Senate No. 889 — L.1994 c.121

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("This committee substitute would provide the law enforcement community

with new tools to combat the knowing financial facilitation of criminal

activity, also known as money laundering. This committee substitute is

designed to confront this problem by prohibiting money laundering conduct

in any form") (emphasis added).

      While we need not consider whether the statute is broad enough to

envelop the trial court's hypothetical example of "a pickpocket who steals

money from a pedestrian's pocket and thereby possesses the property known to

be derived from criminal activity," we are confident defendant's conduct in

"essentially running a Ponzi scheme with his [law] practice" qualifies as

financial facilitation.

      Because we are convinced the State presented sufficient evidence before

the grand jury to support the charges of financial facilitation in accordance

with N.J.S.A. 2C:21-25(a) and (c), we reverse the dismissal of those counts of

the indictment and remand for their reinstatement. We do not retain

jurisdiction.

      Reversed.

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