February 23, 2010
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
RACHEL MARSHALL, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Indictment No. 09-01-0178.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 27, 2010
Before Judges Graves and Sabatino.
On leave granted, we review the trial court's denial of defendant Rachel Marshall's motion to dismiss, as time-barred, the four discrete counts of the instant indictment that charge her individually with crimes. For reasons explained in this opinion, we reverse the trial court as to the three counts accusing defendant of substantive crimes, which are factually based on her alleged conduct outside of the five-year criminal statute of limitations, established at N.J.S.A. 2C:1-6b(1). However, with respect to the other count--charging defendant with participation in a conspiracy to engage in illegal racketeering activity--we reject her contention of untimeliness, but do so without prejudice to the trial judge's reconsideration of that contention after further development of the factual record. In particular, the trial court shall re-examine the timeliness of the racketeering conspiracy charges against defendant after relevant proofs are potentially adduced at trial concerning such issues as: the duration of the alleged conspiracy, the timing of overt acts by co-conspirators, and whether or not defendant withdrew, or attempted to withdraw, from the conspiracy more than five years before the indictment against her was issued.
Because defendant's appeal arose out of a ruling on a pretrial motion and we granted her request for interlocutory review, the factual record is limited. Even so, the record is adequate to resolve many of the issues before us.
Defendant is an attorney. At the times relevant to the indictment, she was admitted to the practice of law in New Jersey. She maintained offices in Newark and Jersey City, practicing under the business designation, The Marshall Law Practice, LLC.
The indictment consists of thirty-eight counts. It names sixteen individuals, including defendant, as participants in an alleged racketeering enterprise in violation of N.J.S.A. 2C:41-2d. As described in the indictment, the alleged enterprise "was engaged in distributing cocaine in an amount in excess of five ounces, contrary to N.J.S.A. 2C:35-5b(1), and the financial facilitation of criminal activity, in an amount in excess of $500,000, contrary to N.J.S.A. 2C:21-25."
The indictment contends that the co-conspirators laundered the proceeds of illegal drug distribution activities. They allegedly did so by, among other things, "converting cash to money orders in order to avoid federal and state reporting requirements that banks in the United States would require;" "depositing checks and money orders in a structured manner in an effort to avoid [f]ederal and [s]tate reporting requirements in the United States;" and "using nominees to purchase real properties, luxury vehicles, and other items in an eff[or]t to further conceal and disguise the true source of funds[.]" The indictment identifies the first-named defendant, Vicente Esteves, as "the leader of this narcotic[s] network."
Defendant's inclusion in the indictment stems from her alleged involvement in representing a buyer, defendant Leonardo Hernandez, an alleged nominee of Esteves, in the purchase of a residence in Manalapan, New Jersey. Defendant also apparently represented Hernandez in a separate transaction involving a liquor license. Hernandez eventually conveyed the Manalapan property to Esteves for $1.00.
With respect to the real estate transaction, the indictment essentially alleges that defendant facilitated the racketeering enterprise by structuring bank deposits into her attorney escrow account in sums under $10,000, so as to evade bank reporting requirements. Defendant is charged with failing to file the appropriate IRS Forms 8300 reporting currency transactions over $10,000. Defendant's wrongful alleged involvement in the alleged liquor license transaction for Hernandez is less clear from the face of the indictment.
Defendant is accused of crimes in four counts of the indictment. In Count One, she is charged, along with all of the other defendants, with conspiracy to engage in racketeering activities, in violation of N.J.S.A. 2C:5-2 and N.J.S.A. 2C:41-2d. Count One alleges that defendants' pattern of racketeering activity, as defined in N.J.S.A. 2C:41-1d, "consisted of at least two instances of racketeering conduct, including the possession of controlled dangerous substances with intent to distribute, in violation of N.J.S.A. 2C:35-5, and/or the financial facilitation of criminal activity in violation of N.J.S.A. 2C:21-25 . . . [.]" Count One further alleges that the conspiracy "occurred on about divers dates between May 2, 2000 and May 30, 2008," in New Jersey and in numerous other states.
The three other counts of the indictment mentioning defendant charge her with substantive crimes. Those specific charges particularly arise from defendant's handling of the Manalapan real estate closing in 2001 and certain bank deposits made into her attorney escrow account between October and December 2001 in connection with that realty transaction.
In particular, Count Twelve of the indictment charges defendant and Hernandez with third-degree financial facilitation of criminal activity, in violation of N.J.S.A. 2C:21-25, N.J.S.A. 2C:21-26 and N.J.S.A. 2C:2-6. This count alleges that defendant and Hernandez illegally failed to file IRS Form 8300; caused financial institutions to not file Financial Crimes Enforcement Network Form 104 ("Currency Transaction Reports") and/or Financial Crimes Enforcement Network Form 109 ("Suspicious Activity Reports by Money Services Business"); structured or assisted in structuring transactions, "with the purpose to evade a transaction reporting requirement of this State or of 31 U.S.C. § 5311 et seq., or 31 C.F.R. § 103 et seq., or any rules or regulations adopted under those chapters and sections[.]" Count Twelve further alleges that defendant and Hernandez "caus[ed] or attempted to cause a financial institution to fail to file a report regarding currency transactions or suspicious transactions, and/or caus[ed] or attempt[ed] to cause [such an institution] to file a report that contains a material omission or misstatement of fact[.]" Echoing the general time frame of the conspiracy in Count One, Count Twelve recites that these illegal acts occurred "on or about divers dates between October 24, 2001 and May 30, 2008."
Count Twenty-Six of the indictment charges defendant singularly with third-degree misconduct by a corporate official, in violation of N.J.S.A. 2C:21-9c. It alleges that, "on or about divers dates between October 24, 2001 and May 30, 2008" defendant committed this offense "by purposely or knowingly using, controlling or operating a corporation, to wit[,] the Marshall Law Practice, L.L.C., for the furtherance or promotion of a criminal object, and deriving a benefit in excess of $1,000 . . . [.]"
The last count concerning defendant, Count Thirty-One, charges her individually with deceptive business practices, in violation of N.J.S.A. 2C:21-7. In particular, this count accuses defendant "as the owner of The Marshall Law Practice, L.L.C.," with "knowingly making false or misleading written statements for the purpose of obtaining property or credit . . . [.]" County Thirty-One does not specify exactly when these allegedly false statements were made, other than alluding to "divers dates between October 24, 2001 and May 30, 2008."
The grand jury proceedings in this matter consisted of four days of testimony and the presentation of exhibits, commencing on November 17, 2008 and concluding on December 29, 2008. Defendant was not mentioned in the first three days of the grand jury proceedings. Her alleged involvement in these crimes was raised in the fourth and final day of the grand jury presentation on December 29, 2008. The State's proofs on that day included testimony that Hernandez lacked the income that could have supported his cash deposits into defendant's escrow account, and that Hernandez provided defendant with a series of cash payments totaling $57,000.
The grand jury testimony further alleges that defendant deposited those cash sums into her attorney escrow accounts on October 24, 2001 (twice that day), November 6, 8 (twice), 14, 21, 28 and 30, and December 19, 2001. The State's witnesses further contend that defendant deliberately structured all but one of those cash deposits to be in increments of less than $10,000, so that the depository bank would not be prompted to file the appropriate cash transaction reports.
The grand jury exhibits include, among other things, a deposit slip into defendant's escrow account dated November 8, 2001, in which a total deposit amount of $10,020 is allegedly scratched out*fn1 and is re-entered as two separate deposits of $5,000 and $5,020. The exhibits also include a handwritten ledger for the escrow account in which two respective deposits of $5,000 and $5,020 are shown for that November 8, 2001 date.
Additionally, the evidence before the grand jury further indicated that the final cash deposit on the real estate transaction was for $12,390, a sum exceeding the $10,000 reporting trigger, and that defendant did not file a Form 8300 or report the cash transaction to the authorities. The grand jury testimony also briefly refers to defendant receiving cash sums from Hernandez for the purchase of a liquor license from "an individual named Kevin Brown."
The indictment was returned on January 26, 2009. Defendant entered a plea of not guilty. In May 2009, defendant filed a motion to dismiss the indictment. She argued that the prosecution is time-barred under N.J.S.A. 2C:1-6 as to her because neither the indictment nor the grand jury transcripts identify any specific criminal acts on her part committed within five years prior to January 26, 2009. The State opposed defendant's motion, initially contending that all four counts charging her with offenses are timely.
After hearing oral argument and considering the parties' briefs and the grand jury transcripts, the trial court denied defendant's motion to dismiss. In an oral ruling, the trial court held that a ten-year statute of limitations should apply to the racketeering conspiracy charges in Count One. Such a ten-year time period preceding January 26, 2009 would clearly incorporate defendant's alleged defalcations in 2001 concerning the real estate and liquor license transactions and the associated bank deposits. The trial court also found that the same ten-year statute of limitations it deemed applicable to the racketeering conspiracy charge in Count One should also be applied to the underlying substantive charges in Counts Twelve, Twenty-Six and Thirty-One.
Defendant moved for leave to appeal the trial court's rulings on the statute of limitations. We granted leave to appeal, and the parties thereafter furnished us with additional merits briefs and appendices.
Defendant on appeal renews her arguments that all four counts of the indictment as to her are time-barred. Defendant further argues that the trial court erroneously confused the ten-year interval of proximity for defining "predicate acts" that may constitute a racketeering enterprise under N.J.S.A. 2C:41-1d(1) with the five-year statute of limitations governing the timeliness of a prosecution under N.J.S.A. 2C:1-6b(1).
In response, the State argues that the trial court properly denied defendant's motion to dismiss the conspiracy charges in Count One, albeit based upon a somewhat different analysis than the one adopted by the motion judge. The State argues that the grand jury was presented with sufficient evidence to find that defendant was a participant in a racketeering conspiracy. It further contends that there is ample factual evidence that the conspiracy was ongoing within the applicable statute of limitations, and that there are qualifying overt acts by one or more members of that conspiracy that occurred during that period. The State also argues that defendant has engaged in a continuing wrong in furtherance of the conspiracy, by failing to file the required financial reporting forms from the dates of the transactions in 2001 through the time that she closed her law firm in 2008. The State further contends that defendant did not withdraw from the conspiracy. At a minimum, the State argues, these issues of timeliness required factual development at trial, and therefore defendant's motion to dismiss Count One is, at best, premature.
With respect to the substantive offenses in Counts Twelve, Twenty-Six and Thirty-One, the State takes no position on appeal as to the timeliness of those charges against defendant. The State simply "defers to this [c]court's determination" as to those three remaining counts.
We begin our analysis by acknowledging that an indictment should be dismissed "'only on the clearest and plainest ground,'" and "only when the indictment is manifestly deficient or palpably defective." State v. Hogan, 144 N.J. 216, 228-29 (1996) (quoting State v. Perry, 124 N.J. 128, 168 (1991)). Although we ordinarily defer to the trial court's exercise of discretion in ruling on such dismissal motions, see State v. Warmbrun, 277 N.J. Super. 51, 59 (App. Div. 1994), certif. denied, 140 N.J. 277 (1995), such deference is not required here, insofar as we are asked to review the trial court's legal decision identifying the appropriate statutes of limitations that should apply to the four pertinent counts of the indictment. See Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995) (noting that a trial court's interpretation of the law and of the legal consequences flowing from the application of the law to the facts is "not entitled to any special deference").
The statute of limitations generally applicable to criminal actions in our State is set forth at N.J.S.A. 2C:1-6. Subsection b(1) of that statute provides that, unless some other codified exception pertains, "[a] prosecution for a crime must be commenced within five years after it is committed[.]" N.J.S.A. 2C:1-6b(1). The racketeering conspiracy charged in Count One of the indictment, as well as the three substantive offenses charged against defendant in Counts Twelve, Twenty-Six and Thirty-One, do not fall within any of the enumerated exceptions to the five-year limitations period.
"A criminal statute of limitations is designed to protect individuals from charges when the basic facts have become obscured by time." State v. Zarinsky, 75 N.J. 101, 106 (1977). That objective is balanced, of course, against the public's right to have criminals brought to justice. Id. at 106-07. Where, however, the criminal statute of limitations has passed without action by the State, "there is an absolute bar to prosecution[.]" Id. at 107. "The statute of limitations on criminal prosecutions is more than merely an affirmative defense to be asserted by a defendant, and the court cannot unilaterally nullify that protection." State v. Short, 131 N.J. 47, 55 (1993).
With these principles in mind, we turn to the four specific counts of the indictment containing allegations against defendant.
We first consider Count One, the racketeering conspiracy charges. In State v. Cagno, 409 N.J. Super. 552, 581 (App. Div.), certif. granted, ____ N.J. ____ (2009), we recently clarified that "[i]n New Jersey the statute of limitations for a RICO [racketeering] conspiracy is five years after its commission." Ibid. (citing N.J.S.A. 2C:1-6b(1)). We further observed in Cagno that "'[a]n offense is committed either when every element occurs' or 'when the course of conduct or defendant's complicity therein is terminated.'" Ibid. (quoting N.J.S.A. 2C:1-6c).
In Cagno, we considered, among other issues, the timeliness of an indictment and the propriety of a jury charge arising out of the defendant's conviction for his participation in a racketeering conspiracy under N.J.S.A. 2C:41-2d. Defendant was alleged by the State to be a member of an organized crime family. He was indicted in New Jersey in February 2000 for his participation in a racketeering conspiracy, that, among other things, included the 1993 murder of an individual named James V. Randazzo. Id. at 560-61. The State alleged that the conspiracy continued for many years after Randazzo's murder and that it was still ongoing as of February 1995, five years before the indictment was initially returned. The State also contended that there were several overt acts by other members of the conspiracy occurring after February 1995. Id. at 561. These acts included a co-conspirator's refusals to answer certain questions before a federal grand jury investigating the crime family in 1998 and at a deposition that same year, and a subsequent incident at which the co-conspirator made certain statements and gestures of encouragement to defendant after testimony in court. Id. at 574-76.
We held in Cagno that these overt acts by the defendant's co-conspirator "could properly have been considered acts of concealment in furtherance of the overall . . . conspiracy to which defendant [and others had] pledged their lives." Id. at 584. We further recognized that "'where a conspiracy contemplates a continuity of purpose and a continued performance of acts, it is presumed to exist until there has been an affirmative showing that it has terminated." Id. at 585 (quoting United States v. Coia, 719 F.2d 1120, 1125 (11th Cir. 1983), cert. denied, 466 U.S. 973, 104 S.Ct. 2349, 80 L.Ed. 2d 822 (1984)) (internal citations omitted). Furthermore, "'[t]he conspiracy may be deemed to continue as long as its purposes have neither been abandoned nor accomplished.'" Ibid. (quoting Coia, supra, 719 F.2d at 1124).
"Conspiracy is a continuing course of conduct which terminates when the crime or crimes which are its object are committed or the agreement that they be committed is abandoned by the defendant and by those with whom he conspired[.]" N.J.S.A. 2C:5-2f(1). A defendant's continued criminal responsibility for the ongoing acts of his or her co-conspirators may be terminated upon sufficient proof that he or she has withdrawn from, or abandoned, the conspiratorial enterprise. Under N.J.S.A. 2C:5-2f, with respect to an offense graded below a first or second degree crime, "[s]uch abandonment is presumed . . . if neither the defendant nor anyone with whom he conspired does any overt act in pursuance of the conspiracy during the applicable period of limitation[.]" N.J.S.A. 2C:5-2f(2).
Here, defendant is charged in Count One, along with her co-defendants, with a second-degree racketeering conspiracy offense, so the presumption of abandonment under N.J.S.A. 2C:5-2f(2) does not apply. Thus subsection (3) of N.J.S.A. 2C:5-2f instead applies. Cagno, supra, 409 N.J. Super. at 593. Subsection (3) provides that "[i]f an individual abandons the [conspiratorial] agreement, the conspiracy is terminated as to [her] only if and when [s]he advises those with whom [s]he conspired of [her] abandonment or [s]he informs the law enforcement authorities of the existence of the conspiracy and of [her] participation therein." N.J.S.A. 2C:5-2f(3) (emphasis added).
We amplified these affirmative-withdrawal concepts in Cagno, noting that "'[m]ere cessation of activity in furtherance of an illegal conspiracy does not necessarily constitute withdrawal.'" Cagno, supra, 409 N.J. Super. at 586 (quoting United States v. Steele, 685 F.2d 793, 803-04 (3d Cir.), cert. denied sub nom. Mothon v. United States, 459 U.S. 908, 103 S.Ct. 213, 74 L.Ed. 2d 170 (1982)). Instead, "'[t]he defendant must present evidence of some affirmative act of withdrawal on his part, typically either a full confession to the authorities or communication to his co-conspirators that he has abandoned the enterprise and its goals.'" Ibid.
In the present case, the trial court erred in declaring that a ten-year limitations statute applies to this indictment rather than the five-year ordinary limitations period under N.J.S.A. 2C:1-6b(1). The ten-year interval described in the definitional portion of the racketeering statute, N.J.S.A. 2C:41-1d(1),*fn2 is not a statute of limitations. Rather, it is a proximity measure that is part of the definition of an actionable "pattern of racketeering activity," requiring at least two acts in furtherance of the conspiracy to be committed within a ten-year time span. See State v. Ball, 141 N.J. 142, 166-69 (1995). Thus, the regular limitations period under N.J.S.A. 2C:1-6b(1) controls. Consequently, a five-year limitations period, rather than a ten-year period, governs this indictment.
The question then arises whether Count One has been timely asserted against defendant. The indictment was issued on January 26, 2009, thereby requiring at least one overt act in furtherance of the conspiracy on or after January 26, 2004. The State contends that such overt acts did occur after January 26, 2004, and, as the indictment avers, through as late as May 30, 2008. The grand jury transcripts suggest that evidence of such further overt acts by defendant's co-conspirators were, in fact, performed after January 2004, as the alleged drug and money laundering enterprise continued.
Defendant maintains that her involvement, if any, with the co-defendants ceased by December 2001 when the Manalapan real estate transaction closed and the associated bank deposits were made. She further suggests that even if, for the sake of argument, she at one time was a participant in a conspiracy, she had abandoned the conspiracy at least five years before the indictment issued in January 2009. The State contends that no such abandonment has been demonstrated, and that defendant's continuing failure to file the required bank forms contradicts her claim of disengagement from the conspiracy.
These factual issues of timing and abandonment cannot be decided on the present record. A fair and full assessment of defendant's statute-of-limitations defense as to Count One must await the development of the facts at trial. Once those proofs are adduced, and are subjected to cross-examination, the trial court shall re-evaluate the circumstances in light of the applicable law, as has been clarified in this opinion.*fn3
We reach a different conclusion as to the three substantive counts of the indictment. As we noted in Cagno, the elements of a conspiracy offense under N.J.S.A. 2C:41-2d are distinct from those for a substantive violation. Cagno, supra, 409 N.J. Super. at 598-99. We discern no reason why the normal limitations principles governing substantive crimes should not pertain here. Under those principles, as enumerated in N.J.S.A. 2C:1-6b(1), defendant cannot be charged with substantive crimes more than five years after their alleged occurrence, absent a tolling argument or some other exception not invoked by the State here. Consequently, we dismiss the charges against defendant in Counts Twelve, Twenty-Six and Thirty-One as time-barred. Those allegations, in essence, hearken back to defendant's actions in 2001 and do not allege on her part any new acts within the five-year statutory period.
For these various reasons, we affirm, without prejudice, the trial court's denial of defendant's motion to dismiss Count One; reverse the trial court's application of a ten-year statute of limitations; and reverse the denial of defendant's motion to dismiss Counts Twelve, Twenty-Six and Thirty-One. We remand for further proceedings consistent with this opinion, and do not retain jurisdiction.