State v. Joseph Diorio (069597) , 216 N.J. 598 ( 2014 )

SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)
State v. Joseph Diorio (A-110-11) (069597)
Argued May 13, 2013 -- Decided February 12, 2014
CUFF, P.J.A.D. (temporarily assigned), writing for a unanimous Court.
In this appeal, the Court considers whether the State brought indictments for money laundering and theft by
deception prior to expiration of the five-year statute of limitations and determines whether the two offenses are
continuing offenses.
In March 1999, defendant Joseph Diorio started a wholesale produce company with David Menadier and
Michael Fava. Menadier, who had no prior experience in the industry, was listed as the company’s president,
director and sole shareholder. Diorio and Menadier formed a C-corporation, trading as Packed Fresh Produce, Inc.
(PFP), opened a bank account, and obtained the required license from the USDA. Diorio provided start-up funds
from his personal business accounts. In June 1999, Diorio or Fava contacted the Produce Reporting Company
(PRC), which issues the Blue Book, a directory of produce companies and their credit ratings, and told it that PFP
possessed financial assets almost $100,000 higher than its actual assets. Based in part on this information, the
October 1999 Blue Book listed PFP with a favorable rating. In accordance with customary industry practice, PFP
then began ordering small amounts of produce from various suppliers on credit.
Although Diorio and Fava mixed PFP’s operations and finances with their separate businesses, PFP
initially made prompt payments and paid over the average price for produce, thereby quickly improving its credit
rating and reputation. As companies increased their credit line with PFP, it increased the cost and volume of its
orders. PFP then began to miss payments and write bad checks. On January 12, 2000, PFP placed its last order, and
its bank account was closed in January 2000 due to uncollected funds. Diorio and Menadier opened a new account
at another bank and made deposits until February 4, 2001. Around that time, PFP entered into settlement
negotiations with several creditors. In March 2000, Diorio gave Menadier $45,000 to satisfy one of the debts. On
March 17, Menadier deposited the cash in his personal checking account and obtained a cashier’s check for the
settlement payment. By April 2000, the USDA had suspended PFP’s license for failure to pay its suppliers, and
several creditors had filed a civil suit in federal district court.
On February 1, 2005, a Monmouth County Grand Jury returned an indictment charging Diorio and Fava
with numerous crimes. Diorio moved to dismiss the indictment, arguing that several of the charges, including
second-degree theft by deception and first-degree money laundering, were barred by the statute of limitations.
N.J.S.A. 2C:1-6(c). Relying in part on the fact that N.J.S.A. 2C:20-2(b)(4) expressly authorizes the aggregation of
separate losses to grade the offense, the trial court determined that theft by deception may be classified as a
continuing offense when multiple acts of theft are part of a common scheme. The court also concluded that money
laundering is a continuing offense, noting that N.J.S.A. 2C:21-27 also permits aggregation. It determined that PFP’s
final act of business occurred when funds derived from the scheme were used in the March 2000 settlement. Diorio
was found guilty and sentenced to a seven-year prison term for theft by deception and a consecutive fifteen-year
term for money laundering, with a five-year period of parole ineligibility.
Diorio appealed, arguing that his prosecution for theft by deception was barred because the five-year
limitations period on the theft by deception charge commenced on January 12, 2000. He also contended that the
trial court erroneously relied on transactions that do not constitute money laundering. In a published opinion, State
v. Diorio, 422 N.J. Super. 445 (App. Div. 2011), the Appellate Division affirmed the conviction, concluding that the
last theft was not completed until sometime in February 2000, when PFP breached its contractual agreement to pay
for the produce it purchased in January. The panel also determined that the post-February 1, 2000, transactions
involving PFP’s bank accounts were part of the overall money laundering scheme and that the settlement money was
evidence of it. The Court granted certification. 210 N.J. 217 (2012).
1
HELD: For purposes of the statute of limitations, when a defendant engages in a scheme to obtain the property of
another by deception, theft by deception is a continuing offense. If the scheme involves the promise to pay at a later
date, the limitations period does not commence until the day after payment is due. Money laundering is a
continuous offense only when there is evidence of successive acts that facilitate the common scheme to defraud.
Applying these principles here, the statute of limitations on the theft by deception charge expired prior to return of
the indictment, thereby barring Diorio’s prosecution for that offense. In contrast, the money laundering charge was
timely since the relevant transactions occurred within five years before the indictment was filed.
1. The criminal statute of limitations, which is an absolute bar to prosecution, balances the right of the public to
have those who commit crimes charged, tried and sanctioned with the right of the defendant to a prompt
prosecution. With certain exceptions, prosecution for an offense must commence within five years after
commission. N.J.S.A. 2C:1-6(b)(1). An offense is committed once every element of the crime occurs or when the
criminal course of conduct ceases, and the limitations time period commences on the day after commission of the
offense. N.J.S.A. 2C:1-6(c). (pp. 18-19)
2. Continuing offenses involve conduct spanning an extended period of time and generating harm that continues
uninterrupted until the course of conduct ceases. Unless the Legislature explicitly declares an offense continuous,
there is a presumption against it. However, when an offense involves a common scheme of ongoing conduct and,
under the relevant statute, the amounts involved can be aggregated to form a single offense, the Legislature
generally considers the offense continuous. (pp. 19-23)
3. Although the theft by deception statute permits aggregation to determine the grade of the offense, the Legislature
has not expressly declared theft by deception a continuing offense. Nevertheless, it has been found to be a
continuing offense when the defendant is engaged in a scheme to obtain funds by deception. Here, Diorio
implemented a scheme that was dependent on a series of actions designed to create the impression that PFP was a
legitimate business. When, like Diorio, a defendant engages in a scheme to obtain the property of another by
deception, that conduct is a continuous offense for purposes of the statute of limitations. Although a majority of
jurisdictions have held that the statute of limitations for comparable theft offenses begins to run at the time of the
receipt of property, when the scheme involves the purchase and delivery of a product followed by payment at a later
date, the last act of theft by deception occurred when the obligation to pay was breached. Thus, the limitations
period begins to run on the day following the date payment is due. (pp. 23-32)
4. The offense of money laundering involves an underlying criminal activity that generates property which is then
either used to facilitate criminal activity or is “washed.” As with theft by deception, the amounts involved in money
laundering transactions conducted pursuant to one scheme may be aggregated to determine the degree of the offense.
Federal law is split on whether money laundering is a continuing offense, but the broad scope of the New Jersey
statute, N.J.S.A. 2C:21-25, supports the conclusion that money laundering is a continuous offense only when the
record contains evidence of successive acts that facilitate and promote a common scheme to defraud. (pp. 32-37)
5. With respect to the question of whether the indictment against Diorio was filed within five years of commission
of the last element of each offense, the Court agrees with the Appellate Division that the last act of theft occurred
when PFP breached its contractual agreement to pay. Since there was no evidence establishing payment terms for
the produce shipped on January 12, 2000, the Court assumes that, in accordance with federal regulations, payment
was due ten days after receipt and acceptance. Allowing five days for transit, payment was due on January 27,
2000, rendering that the date of the last constituent theft. The limitations period began to run on January 28 and
expired before the indictment was returned on February 1, 2005. Therefore, Diorio’s prosecution for theft by
deception is barred. As for the money laundering offense, the evidence reveals an on-going scheme to defraud
creditors and hide the proceeds. The Court concludes that the $45,000 cash transaction in March 2000 between
Diorio and Menadier facilitated that criminal activity because it enabled Diorio to retain a portion of the profits from
the scheme. Since the transaction occurred within five years before the indictment was filed, the money laundering
charge was timely. (pp. 37-42)
The judgment of the Appellate Division is AFFIRMED IN PART and REVERSED IN PART.
2
CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, ALBIN, and PATTERSON; and JUDGE
RODRÍGUEZ (temporarily assigned) join in JUDGE CUFF’s opinion.
3
SUPREME COURT OF NEW JERSEY
A-110 September Term 2011
069597
STATE OF NEW JERSEY,
Plaintiff-Respondent,
v.
JOSEPH DIORIO,
Defendant-Appellant.
Argued May 13, 2013 – Decided February 12, 2014
On certification to the Superior Court,
Appellate Division, whose opinion is
reported at 422 N.J. Super. 455 (2011).
Anil K. Arora argued the cause for appellant
(Mr. Arora, attorney; Mr. Arora and Jeffrey
M. Zajac, on the briefs).
Frank J. Ducoat argued the cause for
respondent (Jeffrey S. Chiesa, Attorney
General of New Jersey, attorney).
JUDGE CUFF (temporarily assigned) delivered the opinion of
the Court.
In 1999, Joseph Diorio and two others conceived and
executed a “bust-out” financial scheme by creating a business
for the purpose of defrauding creditors. In a bust-out scheme,
a company is formed and establishes a credit line presenting
itself to the business community as a reputable company.
Initially, it places small orders with suppliers. As it
establishes a favorable payment history, the company’s credit
1
limit is increased. Once the company’s suppliers are satisfied
that the company has established a reputation for prompt
payment, the volume of orders increases in size and cost. Once
the goods are received, the company sells them but does not pay
the supplier. The company stalls suppliers as long as possible
before it declares bankruptcy or simply disappears, leaving
suppliers unpaid.
Diorio and two others formed a corporation to distribute
fresh produce. Defendant leased warehouse space with no
refrigeration, obtained a license from the United States
Department of Agriculture (USDA), and submitted information to
obtain a credit rating. Then the business placed its first
orders. Consistent with the basic parameters of a bust-out
scheme, small orders were placed for fresh produce, and payment
was made promptly. Once the business established its
reliability with suppliers, the size of the orders increased,
and payments to suppliers slowed and then stopped altogether.
Meanwhile, every shipment of produce immediately left the
company’s warehouse and was transported to one of the warehouses
operated by defendant and a co-defendant, who commingled the
produce with their stock and sold it to their customers.
The scheme organized and implemented by defendant placed
its first order in late August 1999 and its last order in mid-
January 2000. An indictment was returned on February 1, 2005.
2
The statute of limitations for the charged offenses is five
years.
This appeal concerns whether the State returned the
indictment on the money laundering and theft by deception
charges before expiration of the five-year statute of
limitations. Central to this issue is whether these offenses
are continuing offenses because the statute of limitations on
such an offense does not begin to run until the prohibited
conduct ceases. We must also determine whether the limitations
period for the theft by deception charge runs from receipt and
acceptance of the last shipment of goods or the date on which
payment was due.
We hold that both offenses are continuing offenses. We
also hold that when property has been obtained by a deceptive
transaction that includes the extension of credit, the crime of
theft by deception is not complete until payment has not been
made in accordance with the agreement. Here, payment for the
final shipment was not made in accordance with the purchase
agreement, more than five years before return of the indictment,
thus barring the indictment for theft by deception. We,
therefore, affirm in part and reverse in part the judgment of
the Appellate Division.
I.
3
Defendant Joseph Diorio owned several food industry
companies in New Jersey, including Paterson Vending and
Catering, Inc. and Victorian Coffee Systems. In March 1999,
defendant approached a friend, David Menadier, and a business
acquaintance, Michael Fava, about starting a wholesale produce
company. Although Menadier had no prior experience in the
produce industry, defendant proposed that Menadier be listed as
the company’s president, director and sole shareholder because
defendant had previously sold a produce company and was bound by
a non-compete provision. Defendant proposed that Fava would be
a silent partner responsible for brokerage of the produce
because Fava had over thirty years of experience in the produce
industry and owned two produce companies, Knowles Brokerage Inc.
(KBI) and M. Fava, Inc. (M. Fava). Defendant informed Menadier
and Fava that he would act as a “silent partner” and a
“financial backer.” Menadier and Fava agreed to defendant’s
business proposal and the three began to take steps to establish
the produce business.
Using the proceeds from defendant’s other business bank
accounts, defendant provided funds to Menadier to incorporate
the produce company. In April 1999, defendant selected a non-
refrigerated warehouse in Lodi to receive produce and instructed
Menadier to sign a one-year lease. Defendant also advised and
assisted Menadier in taking other steps to establish a wholesale
4
produce business, such as forming a C-corporation with the State
of New Jersey under the name All Statewide Produce, Inc.,
trading as Packed Fresh Produce, Inc. (PFP), obtaining a
Perishable Agricultural Commodities Act (PACA) license, as
required by 7 U.S.C.A. § 499c, from the USDA, and opening a
mailbox account and a PFP business bank account. Menadier also
changed the address on his driver’s license to match the mailbox
address.
In June 1999, a person representing himself as Menadier
contacted the Produce Reporting Company (PRC), which issues the
Blue Book, a directory and reference guide on produce companies
and their credit ratings. The Blue Book is a vital publication
in the produce industry, so much so that it is referred to as
“the Bible” by industry insiders. Either Fava or defendant,
posing as Menadier, repeatedly provided PRC false information
about PFP’s operations and finances, including that PFP operated
a refrigerated warehouse, sold approximately 250 truckloads of
produce per year to chain stores and to other wholesale markets,
and possessed financial assets nearly $100,000 higher than its
actual assets. Defendant also submitted fabricated financial
statements to PRC, purportedly prepared by an accounting firm.
Based upon this false information, the October 1999 edition of
the Blue Book listed PFP with a favorable credit rating.
5
Supported by a favorable Blue Book credit rating, PFP began
to order small amounts of produce from various suppliers on
credit, as is customary for wholesalers in the produce industry.
From the inception of PFP, the corporation’s operations and
finances were commingled with Fava’s and defendant’s separate
businesses. Fava mixed PFP’s produce with produce from his
family produce companies, sold the produce as a product of his
family companies and received checks payable to his family
companies in payment for the commingled produce. Fava endorsed
some of these checks to be made payable to defendant’s separate
businesses. Defendant then deposited the checks into his
separate company accounts and withdrew some of the cash to be
deposited into PFP’s bank account.
Due to its initial prompt payments and willingness to pay
more than the average price of produce, PFP quickly improved its
credit rating and gained a favorable reputation in the produce
industry. As companies increased their credit line with PFP, it
dramatically increased the total cost and volume of its orders.
Almost immediately after its credit line increased, PFP began to
miss payments to its suppliers and wrote several checks that
were returned for insufficient funds.
By January 2000, six suppliers were still shipping produce
to PFP. Representatives of two of the suppliers, Tanimura &
Antle, Inc. (Tanimura & Antle) and Tanimura Distributing
6
(Tanimura), testified at trial. Carolyn Silva, the credit
manager for Tanimura & Antle, testified that she imposed a
payment term of ten days when she first authorized credit in
October 1999. Initially, PFP paid within fifteen days. In
December 1999, PFP increased the number and volume of its orders
significantly and Silva began to notice slower and slower
payments. Silva testified that PFP payments were “kind of
sliding to 20 or 22 days.” She also received checks that were
returned for insufficient funds. The last shipment from
Tanimura & Antle to PFP was on January 5. The payment term,
however, remained ten days from receipt of the produce. The
invoice for the January shipment provided that payment was due
from PFP ten days after receipt of the produce. Allowing five
days for shipment, payment was due on or before January 20,
2000. PFP did not pay this invoice and Tanimura & Antle
rebuffed PFP’s further orders. At that time, PFP owed Tanimura
and Antle $496,818.60 for produce shipped to it.
Christopher Tagami, a sales manager for Tanimura, testified
that his company sold produce to PFP between October 1999 and
January 4, 2000. For the first month that Tanimura did business
with PFP, the payment term was thirty days. PFP met this term
and started to increase the number and volume of orders. When
payment slowed, Tagami reduced the payment period from thirty
days to fourteen days from the date of receipt of the produce.
7
The last invoice to PFP from Tanimura was dated January 4, 2000,
but Tagami testified that payment was due on January 18, 2000
because the product had shipped before the date of the invoice.
PFP did not pay this invoice, Tanimura placed a hold on its
account, and the company rebuffed further attempts by PFP to
order produce.
An exhibit marked in evidence, S-4, lists two orders from
PFP on January 11, 2000, and January 12, 2000, to Andrew Smith
Company and Pacific Gold Farms, Inc., respectively.1 According
to industry norms, payment was due within ten days of receipt, 7
C.F.R. § 46.2(aa)(5). Allowing for five days for delivery,
payment was due to Andrew Smith Company on or before January 26,
2000, and to Pacific Gold Farms on or before January 27, 2000.
The spring 2000 issue of the Blue Book gave PFP the lowest
possible credit rating. Additionally, PFP’s business account
with the Bank of New York was closed in January 2000 due to
uncollected funds. Defendant and Menadier immediately opened a
new PFP business account at Fleet Bank, which named Menadier as
the corporate president. Menadier transferred funds from the
Bank of New York account and made deposits into the Fleet Bank
account until February 4, 2001.
1
Fava testified that a cash deposit into the PFP business
account occurred on January 18, 2000, and PFP ordered produce
after that date. He was unable to identify any order after that
date. Exhibit S-4, which lists PFP suppliers and dates of
orders, reveals no order after January 12, 2000.
8
Fava, who pled guilty to one count of money laundering and
one count of witness tampering, explained the disposition of the
produce ordered by PFP and of the proceeds from the sale of PFP
produce. He dispatched one of his employees to run the Lodi
warehouse and transferred a forklift from either M. Fava or KBI,
the two produce companies with which he was involved. On
delivery to the Lodi warehouse, PFP produce was commingled with
shipments of produce from M. Fava or KBI to their customers.
When the M. Fava or KBI customers paid, Fava deposited the
checks in the M. Fava or KBI accounts or sent checks to
defendant. Some of the checks sent to defendant were endorsed
by him to a company owned and operated by him. Occasionally,
Fava performed a rough estimate of the amount of PFP produce
sold to his customers through M. Fava or KBI, withdrew enough
cash from those accounts to pay some PFP expenses, and deposited
cash in the PFP business account. Fava further testified that
defendant also made cash deposits into the PFP business account.
The last deposit of cash into the PFP business account occurred
on January 18, 2000, although M. Fava or KBI received at least
one payment from a customer in early March 2000.
As payments to the suppliers slowed or stopped, suppliers
filed suit to collect the sums due. PFP, represented by Fava’s
attorney, entered into negotiations to settle its debts with
several creditors. Of particular relevance to this appeal is a
9
debt settlement with creditor H.R. Bushman and Son (Bushman), in
which defendant gave Menadier $45,000 in cash to satisfy an
$85,279.35 debt. On March 17, 2000, Menadier deposited the cash
into his personal checking account, obtained a cashier’s check
for the same amount payable to the attorney’s trust account, and
gave the check to the attorney.
The USDA began investigating reparation complaints against
PFP and, by April 2000, suspended PFP’s PACA license for failure
to pay its produce suppliers. In addition, several of PFP’s
creditors filed a civil suit against PFP in federal district
court in New Jersey, seeking a preliminary injunction to freeze
PFP’s assets and claiming a loss of $1,701,438.80 among fourteen
creditors. See Tanimura & Antle, Inc. v. Packed Fresh Produce,
Inc., 222 F.3d 132, 140-41 (3d Cir. 2000) (directing entry of
preliminary injunction to halt dissipation of trust assets).
In response to one of the pending civil actions, Fava
fabricated a corporate ledger of invoices, packing slips, and
credit balances, and both defendant and Fava prepared Menadier
for depositions. Defendant and Fava aggressively instructed
Menadier to keep their names out of the litigation.
Accordingly, Menadier made untruthful statements at depositions
in July 2000 and November 2001. In January 2001, Menadier,
representing PFP, entered into a civil consent judgment for $1.7
10
million with Menadier assuming personal responsibility for half
of the judgment amount.
II.
Following an investigation by several federal agencies,
including the Federal Bureau of Investigation and the United
States Postal Inspection Service, Menadier entered a plea of
guilty to money laundering and perjury. Then, on February 1,
2005, a Monmouth County Grand Jury returned a six-count
indictment charging defendant and co-defendant Fava with first-
degree conspiracy to promote or facilitate the crimes of theft
by deception, money laundering, misconduct by a corporate
official, and witness tampering, N.J.S.A. 2C:5-2, N.J.S.A.
2C:20-4, N.J.S.A. 2C:21-25, N.J.S.A. 2C:21-9, and N.J.S.A.
2C:28-5 (count one); second-degree theft by deception, N.J.S.A.
2C:20-1, N.J.S.A. 2C:20-2b(4), and N.J.S.A. 2C:2-6 (count two);
first-degree money laundering, N.J.S.A. 2C:21-25b, N.J.S.A.
2C:21-8.1b, and N.J.S.A. 2C:2-6 (count three); second-degree
misconduct by a corporate official, N.J.S.A. 2C:21-9c and
N.J.S.A. 2C:2-6 (count four); and second-degree witness
tampering, N.J.S.A. 2C:28-5a(1) and N.J.S.A. 2C:2-6 (count six).2
Menadier was not named in the indictment as a co-conspirator.
After the indictment, Fava pled guilty to first-degree
money laundering and third-degree witness tampering. Both
2
Only Fava was charged in count five with witness tampering.
11
Menadier and Fava agreed to testify at defendant’s trial, which
occurred between January 15 and February 21, 2008.
Following the return of the indictment and the entry of a
guilty plea by co-defendant Fava, defendant filed a motion to
dismiss the indictment. Defendant argued that the conspiracy,
theft by deception, money laundering, and misconduct by a
corporate official charges were barred by the statute of
limitations. The trial judge held that the indictment had been
returned within the five-year limitations period imposed by
N.J.S.A. 2C:1-6c. The judge concluded that theft by deception
may be classified as a continuing offense when multiple acts of
theft are part of a common scheme. Furthermore, the trial court
reasoned that N.J.S.A. 2C:20-2b(4) supported classification of
theft by deception as a continuing offense by expressly
authorizing the aggregation of the separate losses to grade the
offense. Finally, the trial judge determined that the scheme
commenced in summer 1999 and continued through spring 2000 as
defendants made several attempts to disguise their fraudulent
activities.
Addressing the money laundering charge, the trial judge
also concluded that the offense should be considered a
continuing offense. Once again, he relied on the statutory
authority to aggregate the amounts of separate transactions to
determine the grade of the offense, see N.J.S.A. 2C:21-27. The
12
trial judge also determined that the business operations of PFP
continued after receipt of the last produce shipment on January
12, 2000. The trial judge specifically identified the use of
funds derived from the scheme in March 2000 to fund the
settlement of a civil action filed against PFP.
Defendant renewed this motion at the close of the State’s
case. The trial court denied the motion.3 The jury found
defendant guilty of the remaining charges. On June 6, 2008, the
trial court denied defendant’s motion for a judgment of
acquittal on count three (first-degree money laundering) and a
new trial on the remaining counts of the indictment. The trial
court also denied the State’s motion to sentence defendant to an
extended term as a persistent offender. The trial court merged
count one with counts two, three, and four, and imposed a seven-
year prison term for second-degree theft by deception (count
two); a consecutive fifteen-year term with five years of parole
ineligibility for first-degree money laundering (count three);
and a concurrent seven-year term for second-degree misconduct by
a corporate official (count four). Appropriate statutory
penalties and assessments were also imposed, and defendant was
ordered to pay restitution in the amount of $1,983,281.60.
III.
3
The trial court granted defendant’s motion to dismiss the
conspiracy to promote or facilitate the witness tampering charge
in count one and the witness tampering charge in count six.
13
Defendant appealed to the Appellate Division. He argued
that the theft by deception charge was barred by the five-year
statute of limitations because PFP received the last shipment of
produce on January 12, 2000, more than five years prior to the
February 1, 2005 indictment. Defendant further argued that the
money laundering charge was barred by the five-year statute of
limitations because the court improperly relied on transactions
that do not constitute money laundering.4
In a published opinion, the Appellate Division affirmed
defendant’s conviction. State v. Diorio, 422 N.J. Super. 445
(App. Div. 2011). The appellate panel rejected defendant’s
argument that the theft by deception charge was barred by the
statute of limitations. Id. at 458-59. The panel relied on the
dissent in Ex parte Rosborough, 909 So. 2d 772, 776 (Ala. 2004)
(Nabers, C.J., dissenting) and determined that the last theft
was not completed until sometime in February 2000, when PFP
breached its contractual agreement to pay for the produce it
4
Defendant also maintained that the State refused to honor his
oral plea agreement, thereby violating his right to due process.
Defendant also contended the trial court erred in not holding a
hearing to reconstruct the proffer sessions, the trial court
erred in denying his motion for a new trial because the jury
instructions violated Rule 3:7-2, and that the trial court erred
in denying his motion for an acquittal on the money laundering
charge. The panel determined that no plea agreement was entered
into in this case, sufficient credible evidence supported the
trial court’s decision to deny the motion to reconstruct the
proffer sessions, and that defendant’s remaining arguments were
without merit. This appeal is limited to whether the indictment
was returned within the statute of limitations.
14
purchased in January. Diorio, supra, 422 N.J. Super. at 458-59.
The panel also rejected defendant’s argument that the money
laundering charge was barred by the five-year statute of
limitations, finding that the transactions in PFP’s bank
accounts after February 1, 2000, facilitated or promoted the
bust-out scheme; and further that the $45,000 in cash that
defendant paid to Menadier to settle the Bushman lawsuit in
March 2000 was evidence of money laundering occurring within the
statute of limitations. Id. at 459. This Court granted
defendant’s petition for certification. 210 N.J. 217 (2012).
IV.
A.
Defendant contends that a finding by this Court that theft
by deception, N.J.S.A. 2C:20-4, is a continuing offense “would
do violence” to the legislative purposes behind the statute.
Applying the two-part test identified in Toussie v. United
States, 397 U.S. 112, 115, 90 S. Ct. 858, 860, 25 L. Ed. 2d 156,
161 (1970) to identify a continuing offense, defendant argues
that the offense does not qualify as a continuing offense
because the Legislature has not expressly stated that theft by
deception is a continuing offense and the nature of the offense
focuses on single acts rather than a scheme.
Defendant further argues that, if this Court were to hold
that the continuing offense doctrine applies, the statute of
15
limitations began to run as of January 12, 2000, when PFP
received the last shipment of produce, and receipt of the
produce was the last act constituting a theft. According to
defendant, any deceptive act after January 12, 2000, is
irrelevant because PFP did not obtain any further property after
this date.
Defendant next contends that money laundering is not a
continuing offense because neither the language, meaning, nor
legislative history of N.J.S.A. 2C:21-25 reveals it to be a
continuing offense, and nothing inherent in the statute itself
makes the conduct continuing in nature. Defendant asserts that
a deposit made by Menadier in March 2000 into his personal bank
account represents money that had been illegally acquired months
earlier and does not extend the statute of limitations.
Defendant further argues that this deposit does not constitute
an act of money laundering because it did not involve a deposit
into a PFP bank account.
B.
The State responds that the language of the theft by
deception statute, N.J.S.A. 2C:20-4, manifests a legislative
intent to prohibit continuing conduct because two elements of
the crime, deception and exercise of control over property of
another, involve conduct that can extend beyond isolated events.
The State emphasizes that the authority to aggregate the amounts
16
obtained from separate thefts provides further evidence of
legislative intent.
The State next argues that if this Court holds that
N.J.S.A. 2C:20-4 is a continuing offense, the indictment was
timely filed. The State asserts that defendant’s deceptive
course of conduct continued until January 2001, almost four
years before the return of the indictment. The State refers to
the transfer of funds for two debt settlements: (1) the $45,000
cash transfer from defendant to Menadier’s personal bank account
in March 2000 for the Bushman settlement; and (2) a January 2001
cashier’s check to a law firm as part of a separate debt
settlement. The State also asserts that the Appellate Division
correctly determined the last theft was not completed until
sometime in February 2000 when PFP breached its contractual
agreement to pay for the produce it purchased in January.
As to the money laundering offense, the State contends that
given the broad reach of the statute, N.J.S.A. 2C:21-25b(1), as
well as the ability to aggregate the amounts involved in the
transactions conducted pursuant to a scheme or course of
conduct, a legislative purpose exists to prohibit a continuing
course of conduct. The State asserts that two money laundering
transactions occurred within the five-year statute of
limitations period. The State highlights the March 17, 2000
deposit of $45,000 in Menadier’s personal account for the
17
Bushman settlement and the February 4, 2000 deposit of $5,639.81
into PFP’s Fleet Bank account which was later transferred to an
attorney trust account to settle other PFP debts.
V.
A criminal statute of limitations is designed to protect
individuals from charges when the basic facts have become
obscured by time. Toussie, supra, 397 U.S. at 114-15, 90 S. Ct.
at 858, 25 L. Ed. 2d at 161; State v. Zarinsky, 75 N.J. 101, 106
(1977). A statute of limitations balances the right of the
public to have persons who commit criminal offenses charged,
tried and sanctioned with the right of the defendant to a prompt
prosecution. Zarinsky, supra, 75 N.J. at 106-07.
The Legislature has determined that some offenses are so
heinous and the effect on society so severe that the offender
may be charged at any time. To that end, the Legislature has
declared that prosecution for murder, N.J.S.A. 2C:11-3;
manslaughter, N.J.S.A. 2C:11-4; and sexual assault, N.J.S.A.
2C:38-1 to -5, may be commenced at any time. Except for
bribery, N.J.S.A. 2C:27-2; compounding, N.J.S.A. 2C:29-4;
official misconduct, N.J.S.A. 2C:20-2; and speculating or
wagering on official action or information, N.J.S.A. 2C:30-3; or
the conspiracy to commit any of these offenses, all of which
must be commenced within seven years after the commission of the
offense, N.J.S.A. 2C:1-6b(3), a prosecution for a crime must be
18
commenced within five years after it is committed, N.J.S.A.
2C:1-6b(1). An offense is committed when every element of the
offense occurs or “at the time when the course of conduct or the
defendant’s complicity therein was terminated [when it] plainly
appears” that the Legislature intended to prohibit a continuing
course of conduct. N.J.S.A. 2C:1-6c. The time commences to run
on the day after the offense is committed, except in
circumstances not implicated in this appeal. Ibid.
The statute of limitations for a criminal offense is an
absolute bar to prosecution. State v. Short, 131 N.J. 47, 55
(1993). Therefore, if the charges are not filed within five
years from the day after the offense is committed, any
prosecution is barred. See Zarinsky, supra, 75 N.J. at 107.
In this appeal, we must determine whether the indictment
was filed within five years of the commission of the charged
offenses: theft by deception and money laundering. According to
the record, defendant ordered produce, diverted the produce to
another distributor, sold the produce but failed to pay the
suppliers. Although preparatory steps commenced in March 1999,
the many instances of receipt and acceptance of produce and
failure to pay commenced in October 1999 and continued through
January 2000. Fava and defendant deposited cash into the PFP
account in March 2000 and defendant provided $45,000 in cash to
Menadier to settle a lawsuit on March 17, 2000. The indictment
19
was returned on February 1, 2005. Our determination whether the
indictment was timely requires us to consider whether the
charged offenses are continuing offenses and, if so, when the
last act of the continuing offense occurred.
A criminal offense is often classified as either a discrete
act or a continuing offense. “A discrete act” is one that
occurs at a single point in time. State v. Williams, 129 N.J.
Super. 84, 86 (App. Div. 1974), rev’d on other grounds, 68 N.J.
54 (1975). Robbery is such an offense. A continuing offense
involves conduct spanning an extended period of time and
generates harm that continues uninterrupted until the course of
conduct ceases. State v. Ireland, 126 N.J.L. 444, 445 (Sup. Ct.
1941), appeal dismissed, 127 N.J.L. 558 (E. & A. 1942). For
example, possession of a controlled substance is considered a
continuous offense. No New Jersey case holds that separate days
of continuous criminal possession will support separate
convictions. Cannel, New Jersey Criminal Code Annotated,
comment 8 on N.J.S.A. 2C:1-8 (2013); see also United States v.
Fleischli, 305 F.3d 643, 658 (7th Cir. 2002) (holding that
possession of firearm is considered continuing offense which
ceases only when possession stops), cert. denied, 538 U.S. 1001,
123 S. Ct. 1923, 155 L. Ed. 2d 828 (2003). On the other hand,
separate instances of possession of a banned substance are
discrete acts. Williams, supra, 129 N.J. Super. at 86.
20
Kidnapping is considered a continuing offense because the risk
of harm to the victim persists until safe release. United
States v. Garcia, 854 F.2d 340, 343-44 (9th Cir. 1988), cert.
denied, 490 U.S. 1094, 109 S. Ct. 2439, 104 L. Ed. 2d 995
(1989).
In Toussie, supra, 397 U.S. at 114-16, 90 S. Ct. at 860-61,
25 L. Ed. 2d at 161-62, the Supreme Court declared that the
doctrine of continuing offenses should be applied only in
limited circumstances. An offense should not be considered a
continuing offense “unless the explicit language of the
substantive offense compels such a conclusion, or the nature of
the crime involved is such that Congress must assuredly have
intended that it be treated as a continuing one.” Ibid.
The New Jersey Code of Criminal Justice (Code) “establishes
a presumption against finding that an offense is a continuous
one.” II The New Jersey Penal Code, Final Report of the N.J.
Criminal Law Revision Commission § 2C:1-6 commentary 2 at 15
(1971) (hereinafter Final Report). However, the Code expressly
recognizes the existence of continuing offenses, N.J.S.A. 2C:1-
6c, and the Law Revision Commission declared that “[t]o the
extent that a given offense does in fact proscribe a continuing
course of conduct, no violence is done to the statute of
limitations.” Id. at 16.
21
This Court has addressed continuing offenses in the context
of an official misconduct charge and an attempted extortion
charge. State v. Weleck, 10 N.J. 355 (1952). Weleck pre-dates
not only the Code but also Toussie, but remains relevant to our
inquiry because it is the only opinion by this Court addressing
continuing offenses. Moreover, although Toussie is persuasive
authority and widely accepted, it is not binding authority as it
governs only federal criminal prosecutions based on federal law.
In Weleck, the Court recognized that “[a]n indictment for
misconduct in office may allege a series of acts spread across a
considerable period of time . . . . If any of the acts fall
within the two years next preceding the return of the
indictment, prosecution is not barred by the statute of
limitations.” Id. at 374 (citations omitted). Therefore, when
the borough attorney demanded money and entered into an illegal
agreement with a private citizen, those acts “constituted a
breach of [the defendant’s] duties [as borough attorney] and the
breach continued so long as the defendant held office and
persisted in his efforts to obtain the money from [the private
citizen].” Ibid.
On the other hand, the Court held that the charges of
attempted extortion and extortion cannot be considered
continuing offenses. Id. at 374. Rather, the offense of
extortion is complete with the taking and the offense of
22
attempted extortion is complete with the demand for payment not
due to the defendant. Id. at 375. Each demand for payment not
due to the public official is a separate offense. Ibid.
Consistent with Toussie, Weleck, and N.J.S.A. 2C:1-6c, our task
then is to determine whether the Legislature explicitly declared
these offenses as continuing offenses or the nature of either
offense is one that the Legislature must have intended that it
be treated in this manner.
A.
We first assess whether N.J.S.A. 2C:20-4 is a continuing
offense for the purpose of the statute of limitations.
A person is guilty of theft if he purposely
obtains property of another by deception. A
person deceives if he purposely:
a. Creates or reinforces a false impression,
including false impressions as to law,
value, intention or other state of mind, and
including, but not limited to, a false
impression that the person is soliciting or
collecting funds for a charitable purpose;
but deception as to a person’s intention to
perform a promise shall not be inferred from
the fact alone that he did not subsequently
perform the promise;
b. Prevents another from acquiring
information which would affect his judgment
of a transaction; or
c. Fails to correct a false impression which
the deceiver previously created or
reinforced, or which the deceiver knows to
be influencing another to whom he stands in
a fiduciary or confidential relationship.
23
[N.J.S.A. 2C:20-4.]
“Amounts involved in thefts . . . committed pursuant to one
scheme or course of conduct, whether from the same person or
several persons, may be aggregated in determining the grade of
offense.” N.J.S.A. 2C:20-2b(4) (emphasis added). See Cannel,
supra, comment 3 on N.J.S.A. 2C:20-4 (noting that aggregation
premised on continuing nature of illegal conduct).
This Court has never addressed whether theft by deception
is a continuing offense so that the statute of limitations
commences to run only when the course of conduct is complete.
In State v. Childs, 242 N.J. Super. 121, 134 (App. Div.),
certif. denied, 127 N.J. 321 (1990), and State v. Jurcsek, 247
N.J. Super. 102, 110 (App. Div.), certif. denied, 126 N.J. 333
(1991), the Appellate Division determined that theft by
deception is a continuing offense for purposes of the statute of
limitations when the defendant is engaged in a continuing scheme
or course of behavior to obtain funds by deception. In Childs,
supra, the defendant raised cash for his corporation by making
false representations to induce investors to lend money in
exchange for unsecured corporate notes that had no value. 242
N.J. Super. at 125-27. In Jurcsek, supra, the defendant
implemented a fraudulent scheme to obtain bank funds in the form
of student loans on a recurring basis. 247 N.J. Super. at 110;
accord State v. Tyson, 200 N.J. Super. 137, 139 (Law Div. 1984)
24
(receipt of three forms of public financial assistance based on
periodic certifications over nine years is continuing offense).
Based on these cases, the Appellate Division recently concluded
that our “[c]ourts have found a plain appearance that the
Legislature intended to prohibit a continuing course of conduct
in situations involving a common scheme of ongoing conduct and
where, by the terms of the statute prohibiting the conduct, the
amounts involved can be aggregated to form a single offense.”
State v. Coven, 405 N.J. Super. 266, 276 (App. Div. 2009).
In the typical case, the offense is complete as soon as
every element of the offense occurs. Several discrete acts of
theft by deception would not be a continuing offense because the
harm caused by each theft would cease upon completion of each
offense. On the other hand, if “the crime is not exhausted for
purposes of the statute of limitations[,] as long as the
proscribed course of conduct continues,” it is a continuing
offense. Toussie, supra, 397 U.S. at 124, 90 S. Ct. at 865, 25
L. Ed. 2d at 167 (White, J., dissenting). Thus, the offense of
official misconduct premised on an agreement between a borough
attorney and a private citizen for the attorney to use his
influence to guide legislative action for the benefit of the
private citizen is a continuing offense. Weleck, supra, 10 N.J.
at 374. This is so because the public official can influence
the legislative business of the borough for the benefit of a
25
party other than the public entity as long as he is in office
and the matter is before the governing body. By contrast, the
offense of extortion is complete when money is demanded and
taken. Id. at 375.
We discern from these cases the need to scrutinize the
statute to determine the conduct that is prohibited. We do so
because the Legislature has not expressly stated that theft by
deception is a continuing offense as it has done in N.J.S.A.
2C:20-8c (connecting or causing to be connected a device to
obtain gas, electric or water without payment) or N.J.S.A.
2C:20-8d (tampers with devices that record electric usage).5
N.J.S.A. 2C:20-4 also does not contain language describing the
circumstances when a litany of single offenses might constitute
a continuing offense. Furthermore, the Legislature has declared
that the various theft offenses addressed in Chapter 20,
N.J.S.A. 2C:20-1 to -38 are generally single offenses. N.J.S.A.
2C:20-2a. Nevertheless, the Legislature has declared that the
amounts involved in thefts may be aggregated to determine the
grade of the offense when the thefts are part of “one scheme or
course of conduct, whether from the same person or several
persons.” N.J.S.A. 2C:20-2b(4). This approach undoubtedly
5
The Legislature amended each statute in 1985 to expressly
provide that each was a continuing offense, L. 1985, c. 20, § 1,
following an Appellate Division opinion holding to the contrary.
State v. Insabella, 190 N.J. Super. 544, 553-54 (App. Div.
1983).
26
reflects recognition by the Legislature that theft by deception
is not always an isolated event but may actually be a complex
scheme involving many persons or businesses and play out over
the course of many days, weeks, months, or even years.
We hold that the scheme devised and implemented by
defendant comprised a continuing offense. In reaching this
conclusion, we are mindful that a continuing offense is not the
norm. Although most theft by deception offenses are not
continuing offenses, here, the scheme developed and implemented
by defendant never contemplated a single act of theft by
deception. Rather, the scheme depended on a series of actions
to create the impression that PFP was a legitimate business
engaged in the wholesale distribution of fresh produce and had
the ability to pay its financial obligations in a timely manner
as required by federal law. Having created the impression of a
legitimate and financially responsible produce business, it
initiated a course of conduct that did not cease until suppliers
refused to provide any more produce. It placed multiple orders
from fourteen wholesalers. Those wholesalers shipped produce
under the impression, carefully cultivated by defendant, that
they would be paid. Rather, defendant shipped the produce from
the PFP warehouse to produce businesses he and co-defendant Fava
controlled almost as fast as it arrived. Defendant commingled
and sold the produce ordered by PFP with the produce purchased
27
by companies owned or controlled by co-defendant Fava. Little
of the sums realized from the sale of PFP-acquired produce was
ever returned to PFP’s accounts and ultimately to the fourteen
produce suppliers. Their losses exceeded $1.7 million.
Here, defendant devised and orchestrated a single scheme to
defraud several businesses. The evidence adduced at trial
demonstrates that every act taken by defendant and his business
associates was to further the single scheme that produced on-
going harm to a targeted group of victims. We, therefore, hold
that when a defendant engages in a course of conduct or single
scheme to obtain property of another by deception from one or
several persons, that conduct is a continuous offense for
purposes of the statute of limitations.
Having determined that the conduct devised by defendant
qualifies as a continuing offense, we must determine when the
last constituent act occurred. That inquiry in this case
requires us to determine whether the last act is the receipt and
acceptance of the produce or the failure to pay for the produce.
A person cannot be convicted of theft by deception unless
he has obtained the property of another by purposely creating a
false impression. N.J.S.A. 2C:20-4; see also State v. Mejia,
141 N.J. 475, 495 (1995) (holding that for act to constitute
theft, stolen property must “belong to another”), overruled on
other grounds by State v. Cooper, 151 N.J. 326, 378 (1997). The
28
term “obtain” is defined as a transfer of a legal interest in
the property. N.J.S.A. 2C:20-1f. The term “property” and
“property of another” are defined broadly to include “anything
of value.” N.J.S.A. 2C:20-1h. Thus, a builder who induced
lenders to give him money based on false impressions which the
builder created was guilty of theft by deception and the offense
was complete when he received the funds which would not have
been advanced but for his falsification of documents. State v.
Rodgers, 230 N.J. Super. 593, 601-02 (App. Div.), certif.
denied, 117 N.J. 54 (1989). Based on these principles,
defendant contends he obtained the property of another when he
received the produce for suppliers on credit, and the last
shipment arrived on January 12, 2000. Therefore, the indictment
is not timely. The State responds that the last act occurred
when PFP failed to pay for the produce in accordance with the
purchase agreement for the last shipments and that the record
reveals that payment for the final shipments was not due until
after February 1, 2000.
The majority of jurisdictions that have addressed this
issue have held that the statute of limitations for comparable
theft offenses begins to run at the time of the receipt of
property. William A. Harrington, When statute of limitations
begins to run against criminal prosecution for embezzlement,
fraud, false pretenses, or similar crimes, 77 A.L.R. 3d 689, 694
29
(2009) (noting that in most cases involving prosecutions for
crimes of theft involving fraud, “the limitation period was held
to begin when the misappropriation or misuse of funds or
property by the accused took place”). Although a minority of
jurisdictions hold that the statute of limitations begins to run
when the victim becomes aware of the fraud, see Harrington,
supra, 77 A.L.R.3d at 712 (discussing cases “holding that
statute begins to run on occurrence of event after
misappropriation of funds or property”), this theory is
inconsistent with our Code. Our “Code is drafted on the theory
that it is ordinarily desirable to start the running of the
period of limitation at the time when a crime is committed
rather than at the time the offense is detected or the offender
discovered.” Final Report, supra, § 2C:1-6 commentary 2 at 14.
Here, the Appellate Division held that the last act
occurred when PFP breached its contractual obligation to pay for
the produce. Diorio, supra, 422 N.J. Super. at 459. The
appellate court relied on a dissent in Rosborough, supra, 909
So. 2d at 776-78. Ibid. In Rosborough, the Supreme Court of
Alabama held that any deceptive acts subsequent to the taking of
the property did not constitute theft by deception, id. at 775-
76, and concluded that the limitation period began to run when
Rosborough obtained funds for an investment that contemplated
30
monthly interest payments and a return of principal after five
years, id. at 776.
In his dissenting opinion,6 Chief Justice Nabers agreed with
the majority that a deception must logically precede obtainment
of the property in a theft by deception offense. Id. at 776-77
(Nabers, C.J., dissenting). However, the justice noted that the
case involved “a theft conceived and carried out through a
contract, which by its terms continued beyond the theft and
provided cover for Rosborough’s deception.” Id. at 779.
Focusing on the terms of the contract, Chief Justice Nabers
noted:
I would hold that in a theft-by-deception
case where property is obtained pursuant to
a continuing and deceptive scheme set forth
in a contract crafted to effectuate the
transfer of the property and to cover up the
theft through means [statutorily] defined as
“deception[,]” . . . the statute of
limitations does not begin to run until the
thief has completed his “final act” of
performance under the contract.
[Ibid. (internal citations omitted).]
Applying this “final act” theory, Chief Justice Nabers concluded
that the statute of limitations began to run when Rosborough
made his last deceptive payment. Ibid.
6
Three other justices also dissented writing separate opinions.
Each agreed that the last act that triggered the statute of
limitations was the failure to make an interest payment as
prescribed in the agreement. Id. at 779-82.
31
The reasoning of the Rosborough dissent is sound when the
scheme involves the purchase and delivery of a product followed
by payment at a later date. In other words, the property
supplied on credit has not been stolen until a defendant does
not pay for it in accordance with the terms of the credit
agreement. We hold, therefore, that when property is
transferred from one to another on a promise to pay at a
designated later date, the person supplying that product has not
been harmed until the date for payment has passed. The statute
of limitations commences to run the day following the date
payment is due.
B.
We next consider whether N.J.S.A. 2C:21-25b is a continuing
offense for the purposes of the statute of limitations.
The money laundering statute provides that a person is
guilty of the crime if he:
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
32
(b) to avoid a transaction reporting
requirement under the laws of this State or
any other state or of the United States.
[N.J.S.A. 2C:21-25b.]
For a transaction to constitute an act of money laundering, the
property involved in the transaction must have been derived from
criminal activity. Cannel, supra, comment on N.J.S.A. 2C:21-23
(noting that money laundering statute is intended to “punish[]
any possession of property known to be derived from criminal
activity”). “Thus, 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).
Similar to the theft by deception offense, the “[a]mounts
involved in transactions conducted pursuant to one scheme or
course of conduct may be aggregated in determining the degree of
the offense.” N.J.S.A. 2C:21-27(a). As we noted previously,
offenses that allow for aggregation of amounts in determining
the degree of the offense are considered continuing offenses.
See Coven, supra, 405 N.J. Super. at 276.
We note that federal law appears divided on whether money
laundering under 18 U.S.C.A. § 1956 is a continuing offense.
The United States Court of Appeals for the Second Circuit adopts
33
a presumption that “criminal charges may aggregate multiple
individual actions that otherwise could be charged as discrete
offenses as long as all of the actions are part of a ‘single
scheme.’” United States v. Moloney, 287 F.3d 236, 240 (2d
Cir.), cert. denied, 537 U.S. 951, 123 S. Ct. 416, 154 L. Ed. 2d
297 (2002). Other federal courts have held that money
laundering is not a continuing offense and that each money
laundering transaction is a separate violation of the money
laundering statute. See, e.g., United States v. Majors, 196
F.3d 1206, 1212 n.14 (11th Cir. 1999) (rejecting presumption in
favor of allowing common scheme to be treated as part of single
offense), cert. denied, 529 U.S. 1137, 120 S. Ct. 2022, 146 L.
Ed. 2d 969 (2000); United States v. Kramer, 73 F.3d 1067, 1072
(11th Cir. 1996) (finding that statutory language and
legislative history of 18 U.S.C.A. § 1956(a)(2) indicates each
transaction constitutes separate offense). A federal district
court judge in New Jersey has also held that “[e]ach money
laundering transaction constitutes a separate violation” of the
federal money laundering statute. United States v. Blackwell,
954 F. Supp. 944, 956 (D.N.J. 1997).
The New Jersey money laundering statute, N.J.S.A. 2C:21-
25b, has been read broadly. In Harris, supra, the Appellate
Division, as a matter of first impression, considered whether
stolen funds that were not laundered so as to disguise the
34
illicit source could be considered an act of money laundering.
373 N.J. Super. at 256. The defendant argued “that illegitimate
money cannot be considered laundered unless it is generated in a
distinct transaction separate from the laundering transaction.”
Id. at 261. The court, noting the broad scope of the money
laundering statute, rejected this argument and held that money
laundering encompasses “any possession of property known to be
derived from criminal activity with the intention to promote
further criminal activity.” Id. at 256. In its analysis, the
court noted the Legislature’s intent to dissuade and prohibit
“‘money laundering conduct in any form.’” Id. at 264 (quoting
Assembly Judiciary, Law and Public Safety Committee, Statement
to Assembly Bill No. 889 (June 13, 1994) (hereinafter Assembly
Statement No. 889)). The court noted that N.J.S.A. 2C:21-25 is
not narrowly confined to the sanitization of illicit funds but
that the statute also contains a “facilitation or promotion
prong.” Id. at 266. The appellate court then reviewed the
evidence that revealed the defendant’s active participation in
the fraudulent scheme and her receipt of the fraudulent gains.
Id. at 266-67. Specifically, the appellate panel found that the
defendant used the illicit funds to purchase property, secure
fraudulent mortgages, and write checks. Ibid.
The Appellate Division also rejected the defendant’s
argument that a specific crime must underlie the money
35
laundering offense. Id. at 267. The panel noted that the “New
Jersey statute does not require that a particular crime be set
in motion. Any ‘criminal activity’ will suffice.” Ibid.
(citing State v. One 1994 Ford Thunderbird, 349 N.J. Super. 352,
373 (App. Div. 2002)). Thus, the court held that an
“independent predicate offense is not necessary to the
prosecution of the promotion prong of New Jersey’s money
laundering statute. Proceeds of a criminal activity may be
derived from an already completed offense or a completed phase
of an ongoing offense.” Ibid. (citing United States v. Conley,
37 F.3d 970, 980 (3d Cir. 1994)). Finally, the court noted that
the proceeds from the earlier fraud do not have to promote the
subsequent fraud in order to constitute money laundering. Id.
at 269 (citing United States v. Paramo, 998 F.2d 1212, 1215-16
(3d Cir. 1993) (holding that “past, future or ongoing fraud” may
all “suffice as the unlawful activity promoted”), cert. denied,
510 U.S. 1121, 114 S. Ct. 1076, 127 L. Ed. 2d 393 (1994)).
The broad scope of the money laundering statute, as well as
the legislative intent to “stop the conversion of ill-gotten
criminal profits” and to impose criminal sanctions “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,” N.J.S.A. 2C:21-23e
(discussing public policy of money laundering statute), has been
36
noted. The Assembly Judiciary, Law and Public Safety Committee
also noted the broad reach of the statute as it is “designed to
confront the [financial facilitation of criminal activity] by
prohibiting money laundering conduct in any form [and]
increasing criminal penalties by allowing treble damages to be
assessed by a sentencing court.” Assembly Statement No. 889,
supra. Commentators have further acknowledged the broad scope
of the money laundering statute. See James B. Johnston,
Article: An Examination of New Jersey’s Money Laundering
Statutes, 30 Seton Hall Legis. J. 1, 20 (2005). The broad scope
of the statute supports the proposition that money laundering
may be a continuing offense when there are successive acts that
promote, facilitate, and further a common scheme to disguise the
illicit source of funds. We, therefore, conclude that the
charge of money laundering is a continuing offense for the
purposes of the statute of limitations but only when the record
contains evidence of successive acts that facilitate and promote
the common scheme to defraud.
VI.
Applying these principles, we now turn to the specific
charges against defendant: theft by deception and money
laundering. We must determine whether the indictment was
returned within five years of commission of the last element of
each offense.
37
A.
To determine whether the theft by deception charge was
timely filed, we must establish the date of the last constituent
theft that was committed as part of defendant’s bust-out scheme.
The parties and the Appellate Division disagree as to when the
last theft occurred for the purposes of the statute of
limitations. Defendant argues that the last theft occurred on
January 12, 2000, when PFP received its last produce shipment.7
The State argues that the theft continued so long as defendant
engaged in deceptive conduct that allowed defendant to retain
control over PFP’s profits, which continued until January 2001.
The appellate panel rejected both of these arguments and
determined that the last act of theft occurred in February 2000,
when defendant breached his contractual agreement to pay PFP’s
creditors within thirty days of receipt of the produce ordered
in January 2000. Diorio, supra, 422 N.J. Super. at 458-59
(citing Rosborough, supra, 909 So. 2d at 776).
In resolving the timeliness of the indictment, we must
recognize that the interstate purchase and shipment of produce
is highly regulated. Those who engage in the interstate sale of
fresh produce as a commission merchant, dealer or broker are
required not only to obtain a license, 7 U.S.C.A. § 499c(a), but
7
Defendant implicitly, if not explicitly, has rejected Fava’s
testimony that PFP ordered produce after January 18, 2000, the
date he deposited some cash in the PFP business account.
38
also to refrain from unfair conduct, including the failure or
refusal to “make full payment promptly” for any transaction, 7
U.S.C.A. § 499b(4). Failure to make full payment promptly by a
broker is defined as failure to pay within ten days of
acceptance of the produce, 7 C.F.R. § 46.2(aa)(5), unless the
parties have agreed in writing in advance of the transaction to
different payment terms, 7 C.F.R. § 46.2(aa)(11).
The Appellate Division correctly determined that the last
act of theft occurred when defendant breached his contractual
agreement to pay creditors in accordance with the agreed payment
terms for produce received. The evidence adduced at trial
reveals that the scheme implemented by defendant ceased when
suppliers refused to accept orders due to the non-payment of
their accounts. The appellate panel identified thirty days as
the time within which payment was due for the last shipment of
produce. The record, however, does not support that payment
term. Rather, one supplier testified that its payment terms
were ten days; another testified its payment terms were fourteen
days. The State did not establish the payment terms for the
produce shipped on January 11 or 12, 2000. Having no evidence
of a written agreement varying the prescribed payment term, we
must assume that payment was due from PFP ten days after receipt
and acceptance of the produce. 7 C.F.R. § 46.2(aa)(5). The
39
record contains evidence that produce shipments normally took
four to five days to reach PFP.
Our review of the record indicates that the last shipment
from a supplier to PFP occurred on January 12, 2000. Assuming
five days transit, payment was due on January 27, 2000. PFP did
not make this payment. For purposes of the statute of
limitations, the failure to pay for the final shipment by
January 27, 2000, is the last constituent theft. We therefore
conclude that the statute of limitations on the theft by
deception offense expired before the indictment was returned on
February 1, 2005, and that the prosecution of defendant for that
offense is accordingly barred.
B.
We next consider whether the money laundering charge was
timely filed. The State presented evidence of two transactions
that occurred after February 1, 2000: (1) a deposit of $5,639.81
into PFP’s Fleet Bank account on February 4, 2000; and (2) the
transfer of $45,000 in cash in March 2000 from defendant to
Menadier’s personal bank account for the Bushman settlement.
Defendant contends that neither of these transactions
facilitated or promoted the criminal activity of theft by
deception because the last theft occurred in January 2000.
Defendant argues that a transaction facilitating a theft must
logically occur prior to the actual theft. The State responds
40
that both transactions constitute an act of money laundering
because they promoted defendant’s criminal enterprise by
settling the debts incurred from the bust-out scheme.
We conclude that the $45,000 cash transaction in March 2000
between defendant and Menadier is a transaction facilitating or
promoting the criminal activity. N.J.S.A. 2C:21-25b(1). This
cash transaction, deposited into Menadier’s personal bank
account and then subsequently withdrawn in order to obtain a
cashier’s check to pay a settlement to satisfy an $85,279.35
debt to Bushman, enabled defendant to retain a portion of the
profits from the bust-out scheme. Finally, we reject
defendant’s argument that each transaction must involve monies
derived from a predicate offense that has already occurred.
Harris, supra, 373 N.J. Super. at 267. Here, the evidence
reveals a unitary and on-going scheme to defraud creditors and
to hide the proceeds of the scheme. Because these transactions
occurred within five years before the indictment was filed, the
money laundering charge was timely filed.
VII.
We need not dwell long on defendant’s final argument: that
his motion for a new trial should have been granted because the
trial judge violated Rule 3:7-3 and denied defendant’s right to
procedural due process when the judge identified Menadier in the
jury instructions as the previously unnamed co-conspirator. The
41
testimony adduced at trial established that the bust-out scheme
had three participants, defendant, Fava, and Menadier. In
addition, Menadier testified at trial and was subject to
extensive cross-examination by defendant. Defendant could have
suffered no prejudice from this portion of the jury instruction.
VIII.
The judgment of the Appellate Division is affirmed in part,
and reversed in part.
CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, ALBIN, and
PATTERSON; and JUDGE RODRÍGUEZ (temporarily assigned) join in
JUDGE CUFF’s opinion.
42
SUPREME COURT OF NEW JERSEY
NO. A-110 SEPTEMBER TERM 2011
ON CERTIFICATION TO Appellate Division, Superior Court
STATE OF NEW JERSEY,
Plaintiff-Respondent,
v.
JOSEPH DIORIO,
Defendant-Appellant.
DECIDED February 12, 2014
Chief Justice Rabner PRESIDING
OPINION BY Judge Cuff (temporarily assigned)
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY
AFFIRM IN
CHECKLIST PART/REVERSE IN
PART
CHIEF JUSTICE RABNER X
JUSTICE LaVECCHIA X
JUSTICE ALBIN X
JUSTICE PATTERSON X
JUDGE RODRÍGUEZ (t/a) X
JUDGE CUFF (t/a) X
TOTALS 6
1