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State v. Barrett

Decided: February 28, 1978.


Conford, Michels and Pressler. The opinion of the court was delivered by Michels, J.A.D.


Pursuant to leave of this court, the State appeals from an order granting defendant admission to the Mercer County Pretrial Intervention Program over the objection of the Attorney General of New Jersey who prosecuted the matter.

The State Grand Jury returned an indictment charging defendant, in six counts, with acting as an unregistered securities broker in violation of N.J.S.A. 49:3-56(a) and N.J.S.A. 49:3-70(a), and with making false statements in connection with the sale of securities in violation of N.J.S.A. 49:3-52(b) and N.J.S.A. 49:3-70(a). The indictment contained 51 other counts and dealt with four other codefendants. All parties were involved in the affairs of Anchor Finance Company (Anchor Finance). Additionally,

three of these codefendants were charged with conspiracy, although defendant was not.

Defendant was president of Anchor Finance from January 1970 until May 1973. He resigned as a member of the board of directors in August 1973. Anchor Finance was solvent when defendant assumed the presidency, and it became insolvent during his tenure of office. He was also a stockholder of the company from its inception in 1962 until December 1974 when the Division of Criminal Justice began its investigation after Anchor was placed in receivership. Anchor Finance is alleged to have sold securities without registering them with the Bureau of Securities in violation of N.J.S.A. 49:3-60. Furthermore, these securities were sold through individuals who were not duly registered as brokers or agents in violation of N.J.S.A. 49:3-56(a) and N.J.S.A. 49:3-56(b). In March 1975 the State, as part of its investigation, sent questionnaires to Anchor Finance investors and 12% of those responding stated that defendant was involved in their purchase of Anchor Finance securities. Thereafter, the State Grand Jury returned the indictment against defendant and the four others.

Following the decision of the Supreme Court in State v. Leonardis , 71 N.J. 85 (1976) (Leonardis I), defendant applied for admission into the Mercer County Pretrial Intervention Program. The application was denied by the Program Director based upon the Attorney General's objection. The Attorney General opposed defendant's admission to the program for the following reasons:

1. Mr. Barrett's involvement with the Anchor Finance Company was part of an organized criminal activity. More specifically, Mr. Barrett is charged with acting in the capacity of a registered securities agent, broker, dealer or investment advisor contrary to N.J.S. 49:3-56(a) for a three year period beginning January 1, 1971, and ending January 1, 1974. During this period it is alleged that Mr. Barrett engaged in deceptive practice involving the sale of Anchor Finance Company securities to members of the public. It would appear that Mr. Barrett's alleged criminal

activities were the product of deliberation as opposed to a solitary incident of unreflected spontaneity. See PTI Guideline 3(i)(1).

2. For the same reasons as stated above, it appears that Mr. Barrett's actions were but part of a continuing criminal business or enterprise. See PTI Guideline 3(i)(2). The overall indictment naming five (5) separate defendants show that the Anchor Finance Company, its principals and operative continued to defraud the public for the period of several years.

3. For years, the Anchor Finance Company held itself out as being licensed by the New Jersey Bureau of Securities. Due to this misrepresentation as to State governmental supervision, at least in part, the Anchor Finance Company debenture bond holders were influenced to reinvest their funds.

4. In that Mr. Barrett had been the President of the Anchor Finance Company for approximately two (2) years, his admission to the program can conceivably effect those trials concerning the other four (4) named defendants. The files indicate that the individual who succeeded Barrett to the position of President already claims that Barrett was the individual responsible for the poor financial condition of the Anchor Finance Company. The successor maintains that he was merely trying to correct the adverse position of that ...

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