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State v. Kobrin Securities Inc.

Decided: October 20, 1986.

STATE OF NEW JERSEY AND JAMES MCLELLAND SMITH, CHIEF, BUREAU OF SECURITIES, PLAINTIFFS-RESPONDENTS,
v.
KOBRIN SECURITIES, INC., ARMAND DEANGELIS, ET AL., DEFENDANT-APPELLANT



On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County.

King, Havey and Muir. The opinion of the court was delivered by Michael Patrick King, P.J.A.D.

King

[213 NJSuper Page 162] This case involves the problem of waiver of the privilege against self-incrimination by testifying in a civil action. We granted leave to appeal to consider the appropriate scope of any waiver of the privilege. R. 2:2-4. We conclude that in this circumstance the appellant DeAngelis gave up his privilege against self-incrimination only to the extent of his prior voluntary disclosures made in this civil proceeding and the need for

effective cross-examination about them. He did not make a blanket waiver of the privilege, as the Law Division judge appears to have concluded.

This case was instituted in the Chancery Division by the Bureau of Securities against the defendants Kobrin Securities, Inc. and its former officers and employees, including appellant Armand DeAngelis, alleging violations of the Uniform Securities Law (1967), N.J.S.A. 49:3-47 et seq. On July 2, 1985 the State moved for injunctive relief seeking, among other things, the appointment of a receiver for DeAngelis and an order barring him from earning his livelihood as a broker and freezing his assets. The affidavit of Rick Barry, the Bureau's chief investigator, stated that DeAngelis was selling his condominium residence at the Admiralty in Monmouth Beach and also referred to a certification of Gregg McAulay, the Sales Manager of the Admiralty, who had advised Barry that DeAngelis had made a remark about moving to "one of the islands." On July 8 the Law Division judge entered an order requiring the defendants to show cause why a preliminary injunction should not be entered against them. On that same day, DeAngelis submitted a short responsive affidavit in which he stated that he "recognized that it was not the appropriate time to address specific factual allegations against him" but that he was "most concerned" with the State's effort to freeze his assets. He explained the reasons for his considering the sale of his condominium at the Admiralty and his statement to McAulay. He further said that his condominium, at that time, had been taken off of the market. The Bureau next submitted the certification of Maxine Rauch, attempting to rebut DeAngelis' statement that his condominium was no longer listed for sale. DeAngelis responded with a short, four-paragraph supplemental certification, dated July 16, 1985, explaining Rauch's misunderstanding and specifying his prior request to the real estate agent to take the condominium off the market.

On August 1, 1985 Judge Skillman (then assigned to this case) ruled on plaintiff's application for preliminary relief.

Judge Skillman expressly found that there was "voluminous evidence" that Kobrin Securities and its former employees, including DeAngelis, had violated the Uniform Securities Law, and that there was a substantial probability that the State would ultimately succeed on the merits of its claims against certain defendants, including DeAngelis. Those claims included allegations that DeAngelis had engaged in various practices that were designed to and did in fact defraud investors of substantial amounts of money.

In his decision of August 1, 1985 Judge Skillman noted that the State had sought an order freezing the assets of the defendants. He decided, based on the information before him, that there had not been a sufficient showing of immediate and irreparable harm to prevent the defendants from continuing to control their assets. But he stated

At the same time I am very concerned by at least indications that Mr. DeAngelis may be laying the groundwork, for leaving this State and therefore on my own motion I am going to permit the plaintiff State to take the deposition of Mr. DeAngelis and other persons with respect to Mr. DeAngelis' assets as well as his plans with respect to the sale and disposition of those assets. And if that deposition, . . . should provide some more substantial indications of the danger of flight, hence, immediate and irreparable injury, I would expect the State to renew this application.

During this hearing the State had raised the subject of the sale a second condominium DeAngelis' owned in East Brunswick. On August 23, 1985 Judge Skillman executed the order authorizing the plaintiffs "to take the deposition of Armand DeAngelis regarding his assets and the sale or disposition of those assets, for the time period January 1, 1984 to the present, together with any other person having knowledge of same."

DeAngelis then moved for reconsideration of the prior decision permitting the State to depose him with respect to the sale and disposition of his assets. DeAngelis also filed a second supplemental certification dated August 27, 1985 which explained that the East Brunswick condominium was an investment property which he always had intended to sell from the time he purchased it in August 1984. The remainder of DeAngelis'

August 27, 1985 certification set forth in summary fashion his ties to the State of New Jersey and reaffirmed his intent to be present and defend the matters in this case and to respond to any judgments and directions of the court. Counsel for DeAngelis was not then on notice of a grand jury investigation into Kobrin Securities' affairs being conducted by the New Jersey Attorney General's Office, Division of Criminal Justice.

The State again moved for an order compelling DeAngelis to submit to a deposition regarding his assets, for an order appointing a receiver for his assets, and for an immediate accounting of those assets. The motions were heard on September 10, 1985. The judge ruled that he had the authority to freeze the assets of DeAngelis as ...


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