On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Indictment No. 04-02-0034-S.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 17, 2007
Before Judges Weissbard and S.L. Reisner.
Defendant Henry Bazarte appeals from his conviction for second-degree theft by deception, N.J.S.A. 2C:20-4a; third-degree theft by deception, N.J.S.A. 2C:20-4a, fourth-degree falsifying records, N.J.S.A. 2C:21-4a, third-degree misapplication of entrusted property, N.J.S.A. 2C:21-15 and third-degree failure to file New Jersey income tax returns, N.J.S.A. 54:52-8.*fn1 We affirm the conviction.
These are the most pertinent facts.*fn2 The events surrounding this case took place between 1999 and April 15, 2002. During this time period, there was first a booming market for stocks of internet communications or "dot.com" companies, followed by a sharp drop in the values of those stocks. Day trading and other high-risk stock investments were relatively common while the stock market was booming.
Defendant was a self-employed financial consultant and stock trader, with many years of experience in the business. He was also a respected elder of a Jehovah's Witness congregation. The State charged defendant with swindling friends and acquaintances from the congregation through a number of schemes.
First, the State alleged that defendant induced several of his friends to let him invest money for them, by guaranteeing them that their investments would produce high rates of return with little or no risk. He then proceeded to invest the money in speculative, risky investments, and, when the market dropped, he concealed losses from the investors by various fraudulent means. Defendant allegedly gave investor Frank Schembre falsified account statements to convince him that his account was profitable when it was not. Defendant also paid investor Bruce Keller monies from Keller's principal and monies from other investors, in order to convince Keller that his investment was earning "profits" when in fact it was losing most of its value.
The State also contended that defendant stole money from the account of one of his friends and clients, Christopher Mazzei. Defendant induced Mazzei to add defendant's name to a joint bank account, which account contained Mazzei's investment funds. The State alleged that defendant, without Mazzei's permission or knowledge, wire transferred $4486 of Mazzei's investment funds to an account defendant held in his own name.
Defendant was also charged with inducing several of his clients to buy purported stock shares in an internet company called TSI Broadband, which defendant represented was about to make an initial public offering of its stock. However, the State produced undisputed evidence that TSI Broadband was actually a closely-held company that was in financial difficulties and was attempting to obtain private financing. At the time defendant advised some of his clients to invest in TSI Broadband, the company was in the process of laying off most of its employees. Defendant obtained over $54,000 from the clients. He used some of these funds for his own expenses, and he transmitted some to Keller to keep Keller believing that his investments were paying "profits" when in fact the investments were losing money.
Finally, defendant was charged with failing to file State tax returns for 1999, 2000 and 2001. The State contended that defendant intentionally failed to file the returns in order to avoid paying State taxes on his income, much of which was derived from his illegal stock schemes.
The State produced voluminous testimonial and documentary evidence to support its case. The State's case included testimony from numerous witnesses whom defendant induced to make investments that proved to be unprofitable.
Bruce Keller, a member of defendant's congregation, was disabled and struggling to meet his mortgage payments, when defendant convinced him to take out a further mortgage on his house and let defendant invest the money in what defendant promised would be conservative investments. Thus in November 1999, Keller gave defendant $330,000 to invest for him, telling defendant to make sure that the investments made with the money were "safe, something . . . like Government bonds, something that was very secure, that there was not going to be speculation done with the money because it was all the money we had."
According to Keller, soon after he invested the money he began receiving monthly checks, which he assumed were profits. The checks were from TR Associates and NRG Associates. At some point, when Keller asked for information to help prepare his taxes, defendant told him that the money was tax free; Keller understood that the investment was in government securities. Defendant never revealed to Keller that the investments were unprofitable. At some point in 2000 or 2001, Keller finally learned from others in the congregation that his money had all been lost. At no time did defendant reveal to Keller that the "profits" he was receiving actually came from other investors' money.
The State introduced evidence that contrary to his representations to Keller, defendant had invested Keller's money in highly risky and speculative stocks. Moreover, defendant did not place the money into an account in Keller's name; instead he first placed the money into an account in the name of defendant and Christopher Mazzei. Defendant then moved the money into an account in defendant's sole name. When these investments began losing money, defendant sent Keller checks from Keller's own principal to make it appear that the investments were still profitable. Later, defendant wrote Keller checks which the State's accounting expert, James Blong, traced back to funds defendant obtained from other investors. These investors included Frank Schembre and "investors who purchased TSI Broadband shares." Further, according to Blong, at least $10,000 of Keller's money was transferred to defendant's bank accounts and was never returned to Keller.*fn3
Frank Schembre, a member of defendant's congregation, testified that in March or April of 2000, he asked defendant to help him invest between $100,000 and $200,000 in conservative, secure investments. Defendant told Schembre he could obtain returns of "16 percent to 25 percent." Schembre emphatically told defendant that he only wanted to make conservative investments and "to have a secure return." In deciding to invest with defendant, Schembre was influenced by discussions with Keller, who had already invested money with defendant and "was quite satisfied with the performance." In fact, Keller "was receiving his monthly stipend like clockwork. I think it was about $5,000."
In August 2000, Schembre gave defendant $200,000 to invest for him in NRG Capital Management, a fund to be managed by "TR Associates, Inc." Unknown to Schembre, TR Associates was not a stock manager, but rather was a company defendant had set up years earlier with a friend, Thorpe Richardson, to produce a baseball pitching machine. Once that venture was over, defendant kept the TR Associates bank account active and without Richardson's knowledge, used it for his investment schemes. Defendant's name was not on the account; it was opened using Richardson's name and social security number.
According to Schembre, defendant did not give him any documents describing the investments. Defendant gave him two pages to sign and said he would send the rest later. Schembre first gave defendant a check made payable to TR Associates, but then, at defendant's request, gave him a blank check for $200,000 which defendant filled in as payable to the Dreyfus Brokerage Fund. A memo on the check noted ...