On appeal from the Superior Court of New Jersey, Law Division, Bergen County.
J.h. Coleman, Shebell and Conley. The opinion of the court was delivered by Shebell, J.A.D.
Defendant, Stuart Modell, appeals from his jury convictions on two counts of third-degree theft by failure to make required Disposition of property received (counts one and four) (N.J.S.A. 2C:20-9); three counts of second degree theft by failure to make required Disposition of property received (counts six, eight and ten) (N.J.S.A. 2C:20-9); two counts of third-degree misapplication of entrusted property (counts two and five) (N.J.S.A. 2C:21-15); three counts of second-degree misapplication of entrusted property (counts seven, nine and eleven) (N.J.S.A. 2C:21-15); and one count of third-degree theft by deception (count twelve) (N.J.S.A. 2C:20-4). He also appeals from the aggregate sentence imposed of seven years with three and one-half years of parole ineligibility.
At the commencement of defendant's first trial, count three was dismissed on the State's motion because the victim was unable to testify as a result of Alzheimer's disease. Defendant's first trial began on June 25, 1990 but ended when the trial Judge sua sponte declared a mistrial as to all remaining
counts. After the State rested its case in the first trial, defendant moved for dismissal of the counts concerning misapplication of entrusted property on the basis that defendant derived no benefit from the alleged misapplications. The court denied this motion. The defendant also renewed a pretrial motion to dismiss counts four and five because of the statute of limitations. The court found that the elements constituting this crime were completed on August 13, 1984 and that, therefore, the five-year statute of limitations had not yet run when the indictment was returned on August 2, 1989.
On July 2, 1990, as defense counsel was called upon to begin his case, he expressed concern that the alleged victim of counts one through five who had appeared on behalf of the State would fail to appear for defendant's case with certain records, even though he had been served with two subpoenas. The Judge stated that he considered striking the testimony of the witness as presented on the State's case, which would have necessitated dismissal of counts one, two, four and five, but instead the Judge declared a mistrial sua sponte.
After the first trial, defendant moved to dismiss the indictment on double jeopardy grounds. The motion was denied by the trial Judge on October 5, 1990. In denying the motion, the Judge recited his reasons for finding that "manifest necessity" existed for declaration of a mistrial sua sponte. On October 9, 1990, defendant applied to this court for emergent relief from the order denying his motion to dismiss on the grounds of double jeopardy. We denied leave to appeal. Defendant then moved to dismiss counts four and five as barred by the statute of limitations. This motion was denied on December 6, 1990. Defendant again sought leave to appeal which we denied.
Defense also moved to sever counts six through twelve from counts one, two, four, and five, and to sever counts eight and nine from counts six, seven, ten, eleven, and twelve. The motion was denied at the time of commencement of the second trial. Defendant's second trial commenced on February 4,
1991. He was convicted by a jury of all eleven counts of the indictment. Defendant filed a motion for a judgment of acquittal after the verdict of guilty and a motion for a new trial, which were denied.
In this appeal defendant raises the following legal arguments:
POINT I: JEOPARDY ATTACHED IN THE FIRST TRIAL.
POINT II: THE SUA SPONTE MISTRIAL WAS AN IMPROPER TERMINATION OF THE FIRST TRIAL.
A. JUDGE KUECHENMEISTER'S SOLICITUDE FOR PERCEIVED UNFAIRNESS TO STUART MODELL IS IRRELEVANT IN DETERMINING WHETHER TO DECLARE A MISTRIAL SUA SPONTE.
B. THE TRIAL COURT'S FINDING OF MANIFEST NECESSITY TO DECLARE A MISTRIAL IS COMPLETELY UNSUPPORTED BY THE RECORD CONTAINING NO ARGUMENT OR DELIBERATION REFLECTING AN URGENT NEED TO DISCONTINUE THE TRIAL. SIMPLY, THE MISTRIAL WAS AN ARBITRARY, UNLIMITED AND UNCERTAIN EXERCISE OF JUDICIAL DISCRETION.
C. THERE WAS NO LEGAL REASON TO DECLARE A MISTRIAL.
POINT III: THE REPROSECUTION OF MR. MODELL IS BARRED BY THE UNITED STATES CONSTITUTIONAL PRINCIPLE OF DOUBLE JEOPARDY.
POINT IV: THE REPROSECUTION OF MR. MODELL IS BARRED BY THE NEW JERSEY CONSTITUTION.
POINT V: THE CONVICTIONS ON COUNTS VI THROUGH XII SHOULD BE OVERTURNED ON GROUNDS OF DOUBLE JEOPARDY BECAUSE THERE WAS ABSOLUTELY NO LEGAL REASON TO MISTRY THESE COUNTS AT THE CONCLUSION OF THE FIRST TRIAL.
POINT VI: STUART MODELL WAS PREJUDICED BECAUSE THE SECOND TRIAL SHOULD HAVE BEEN SEVERED TO PRODUCE NO FEWER THAN THREE INDEPENDENT TRIALS.
POINT VII: THE HEARSAY TESTIMONY OF THOMAS HEATH, COUPLED WITH THE PREJUDICE ARISING FROM THE DENIAL OF OUR SEVERANCE MOTION WAS ANYTHING BUT HARMLESS AND CONSTITUTES REVERSIBLE ERROR.
POINT VIII: THERE WAS NO EVIDENCE THAT STUART MODELL BENEFITTED FROM THESE TRANSACTIONS.
POINT IX: PROSECUTION OF COUNTS FOUR AND FIVE SHOULD HAVE BEEN PRECLUDED BECAUSE ALL OF THE ELEMENTS EXISTED PRIOR TO AUGUST 2, 1984, MORE THAN FIVE YEARS BEFORE THE AUGUST 2, 1989 INDICTMENT.
A. THE OFFENSE CHARGED IN COUNTS FOUR AND FIVE ARE NOT CONTINUING.
B. OFFICERS AND EMPLOYEES OF FINANCIAL INSTITUTIONS VIOLATE N.J.S.A. 2C:20-9, EVEN IF THEY DO NOT DEAL WITH ANOTHER'S PROPERTY AS THEIR OWN.
C. IF A SHOWING OF BENEFIT IS NOT REQUIRED TO VIOLATE N.J.S.A. 2C:21-5 THEN COUNT FIVE IS BARRED BY THE STATUTE OF LIMITATIONS.
POINT X: PAROLE INELIGIBILITY TERMS CANNOT BE ATTACHED AS A MATTER OF COURSE.
The facts reflect that in 1983, defendant was hired by an insurance agency in Glen Rock as an agent. In the spring of 1984, it was decided that the defendant would establish a plan to sell 401k retirement plans. Defendant supervised other agents and conducted seminars involved with the 401k plans. He was introduced at these seminars as the president of Pension Employee Benefit, Inc., a consulting firm that defendant had started. The new firm shared offices with the insurance agency, but had no other connections to the parent insurance company.
Several checking accounts were established for the new firm, all of which were associated with defendant in some way. A checking account of the agency was used to pay the expenses of the 401k program; however, the account was not to be used as a depository for funds provided by clients for investments. Funds received for investments had to be remitted directly to Equitable, the parent insurance company. This requirement was included in defendant's agent-contract and was in the handbook given to all agents by the insurance company.
The defendant and his wife were responsible for managing the agency's 401k expense checking account. Both were authorized to write checks from the account and both maintained the receipts and disbursements account journal for the 401k program. This account was established for the specific purpose of paying the expenses involved with the 401k program. Defendant and his wife received a salary or a draw against future commissions from this account. The 401k program incurred substantial expenses at the beginning of the operation.
Edward Karalanian, the alleged victim of counts one, two, four, and five, manufactured jewelry in New York City. He first consulted with the defendant in November 1983 about establishing a pension plan. Karalanian had $75,000 invested with Merrill Lynch. Defendant took the steps necessary to establish a defined benefit plan for Karalanian. Eventually, a check was sent from Merrill Lynch to the insurance agency in the amount of $42,554.20. On August 13, 1984, defendant endorsed the check and deposited it into his personal account at Valley National Bank. Defendant sent a letter to Merrill Lynch confirming that the amount transferred had "opened a Defined Benefit Keough Plan with the Equitable Life." On September 14, 1984, defendant wrote to Karalanian confirming that Merrill Lynch had transferred the funds. Karalanian testified that he never signed a contract with the defendant and, despite requests, never received any account statements for the defined benefit plan.
Karalanian also had money invested with Charter Security Life Insurance Company (Charter) for his son's education. Defendant advised Karalanian that Charter was experiencing financial difficulties and convinced him to deposit that money with the Equitable. Two checks were issued by Charter on August 13, 1984 in the total amount of $23,850.70. Karalanian and defendant endorsed the checks, which defendant deposited into his personal bank account on September 12 and 14, 1984.
On December 26, 1984, defendant sent a letter to Karalanian stating that $22,633 was deposited with the Equitable to establish a Life Variable Account for Karalanian's son. Karalanian testified that he never received any documentation of this account. In February 1985, Karalanian instructed defendant to terminate the above account and return the money to him. It was refunded in three increments: (1) $7,500 on November 19, 1985, (2) $7,500 on November 27, 1985, and (3) $15,000 on December 4, 1985. Karalanian also testified that in 1986, he and his attorney confronted defendant about the money that was supposed to be invested in the defined benefit plan. Karalanian
eventually received a check for the money he had invested plus interest.
The second set of transactions involved members of the Pugliese family and Swimming Pool Equipment and Construction Company, Inc. (SPECS). Thomas Heath, Anthony Pugliese's son-in-law, was the president of SPECS. Both Mr. Pugliese and his spouse, Jennifer, testified at the first trial; however, neither testified at the second trial as Mr. Pugliese was severely ill and resided in Florida with his wife.
Heath met defendant in November 1983 and decided to establish a defined benefit plan for SPECS. Heath testified that he and Anthony Pugliese also met with defendant and that any decisions were made by both of them. Two checks were issued to defendant from the SPECS corporate account. One was issued on October 24, 1984 for $11,000. The second check was issued on November 2, 1984 for $7,500. Heath testified that the checks were made out to defendant personally because defendant represented that he had taken his own personal money and invested it for SPECS. The checks were deposited in defendant's personal account on October 25 and November 2, 1984, and were eventually transferred to the agency expense account. In December 1984, Heath wrote four checks to defendant totaling $70,000 for the SPECS plan. These checks were deposited in the agency expense account.
Anthony and Jenny Pugliese also decided to fund personal retirement plans in the amounts of $50,000 each at an interest rate of 13.25%. The money was given to defendant in various increments between November 1984 and January 1985. Defendant verified the transfer of $100,000 cash in writing as follows: on November 15 ($18,000), November 21 ($18,000), November 27 ($18,000), November 27 ($28,000), and January 10 ($18,000). During this time, cash deposits in the amount of $88,400 were made to defendant's personal account, his wife's personal account, and the agency expense account.
At defendant's suggestion, Mr. Pugliese also agreed to invest in a six-month certificate of deposit from Equitable with an interest rate of 13.25%. Equitable, however, does not deal with any transactions involving certificates of deposit. Heath wrote a check to defendant for $50,000 which was signed by Pugliese on March 22, 1985. The check was turned over to defendant. Defendant wrote to Pugliese verifying that the $50,000 check had been deposited with the Equitable Financial Services at 13.25% interest. This check was deposited into the agency expense account.
The Puglieses and SPECS demanded documentation of the company's pension plan. On July 10, 1985, a letter was written by defendant stating that the Equitable office in Glen Rock had received a total of $150,000 for the retirement plans and for the certificate of deposit. On July 12, 1985, defendant executed a promissory note for $150,000 with 13.25% interest payable to Mr. Pugliese. Defendant delivered a Contribution Statement reflecting the amount remitted to the SPECS pension plan of $88,755.15, and on July 31 and August 15, 1985, Equitable sent letters confirming the SPECS account.
On July 12, 1985, Heath discussed the SPECS pension fund with another Equitable agent who agreed to look into the matter. After receiving the documents purportedly issued by Equitable, the agent began an investigation. Eventually, as a result of the investigation, an auditor contacted both Heath and Pugliese. During this time, the transactions giving rise to the additional counts of the indictment occurred. Media Buying Services, Inc. (Media) had become unhappy with the company handling its 401k plan. Kenneth Vernon, a partner at Media, attended a seminar presented by defendant. Defendant informed him that the Equitable 401k plan would better meet the needs of Media.
On July 16, 1985, Vernon obtained a check for $44,235.88 from the company that had been servicing Media's 401k plan. Defendant traveled to Media's office in New York City and
picked up the check. On August 7, 1985, Vernon received a second check for $44,519.25 which was also given to defendant. Both checks were deposited into the agency expense account. On July 29 and August 14, 1985, defendant wired the same amount of money to Equitable, but he caused it to be deposited into the SPECS account.
After Equitable completed its investigation, a meeting was held on September 24, 1985 to discuss the matter. Defendant and the owner of the agency were at the meeting, along with defendant's wife and several Equitable officers. After defendant was informed that an investigation had revealed that no insurance policies had been purchased for the Puglieses, that no accounts for either Karalanian or his son had been established, and that no account for Media existed, he admitted using the funds for business expenses pertaining to the 401k program.
Defendant testified at his trial. He admitted that he had diverted the funds given to him by Karalanian and the Puglieses and that he had used the Media funds to establish the SPECS pension plan. However, he asserted that these funds had been loaned to him to finance Pension Employee Benefit, Inc. Defendant contended that Anthony Pugliese gave him a loan with the understanding that defendant would pay the current interest rate on certificates of deposit. Defendant confirmed that he used the SPECS and Pugliese funds to cover the expenses of the 401k plan, and used Media's funds to repay SPECS.
Defendant asserts that the trial Judge erred by declaring a mistrial sua sponte and that his reprosecution is barred on the grounds of double jeopardy. He claims there was no "manifest necessity" and that the trial Judge declared a mistrial without considering other alternatives.
The Double Jeopardy Clause of the United States Constitution provides -- "nor shall any person be subject for the same
offence to be twice put in jeopardy of life or limb." U.S. Const. amend. V. The federal constitutional protection of the Double Jeopardy Clause is made applicable to the states through the Fourteenth Amendment. Benton v. Maryland, 395 U.S. 784, 89 S. Ct. 2056, 23 L. Ed. 2d 707 (1969). The New Jersey Constitution provides that "[n]o person shall, after acquittal, be tried for the same offense." N.J. Const. art. 1, para. 11. Our New Jersey courts have held that the federal and state constitutional provisions are coextensive. State v. Dively, 92 N.J. 573, 583-84, ...