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Moshe Meisels, Chanie Meisels, Right Match, Ltd., Monroe Estates v. Eli Weinstein

October 21, 2011

MOSHE MEISELS, CHANIE MEISELS, RIGHT MATCH, LTD., MONROE ESTATES, LTD., CITY POINT PROPERTIES, LTD., GILDA ESTATES, LTD., SIMON TOV PROPERTIES, LTD., AND PREMIER ESTATES NY, INC., PLAINTIFFS-APPELLANTS,
v.
ELI WEINSTEIN, SIMCHA SHAIN, SANDRA BROWN, PINE PROJECTS, LLC, PINE PROJECTS MANAGEMENT, LLC, BENJAMIN HAGER, ESQ., MALLOW, KONSTAM & HAGER, P.C., HDW 2005, LLC, VLADIMIR SIFOROV, SIF TRANSPORTATION, INC., YOSEF KROHN, MEIR TAOUZER, MICHAEL I. BERSTEIN, ESQ., MICHAEL I. BERNSTEIN, P.S., ISREAL POLLAK A/K/A YISROEL POLLAK, ALAN POLLAK A/K/A YEHUDA POLLAK, GOLDSTEIN CHARITY FUND, INC., AND NEW HEMPSTEAD TERRACE LLC, DEFENDANTS-RESPONDENTS. ELI WEINSTEIN AND PINE PROJECTS, LLC, THIRD-PARTY PLAINTIFFS,
v.
BERISH MEISELS, THIRD-PARTY DEFENDANT.



Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 19, 2011

Before Judges Parrillo and Grall.

By leave granted, plaintiffs*fn1 appeal from a December 17, 2010 order of the General Equity Part staying their civil fraud action against defendant Eli Weinstein and co-defendants Benjamin Hager and Mallow, Konstam & Hager, P.C. (sometimes collectively the Hager defendants) pending disposition of federal criminal charges against Weinstein. For the following reasons, we reverse.

By way of background, on January 23, 2009, plaintiffs filed a complaint against Weinstein, the Hager defendants, and others alleging that commencing in May 2007, they engaged in an investment fraud scheme and defrauded plaintiffs of at least $25 million. Specifically, plaintiffs claim that they transferred $24,726,594.10 to the attorney trust account of Mallow, Konstam & Hager, P.C. pursuant to agreements with Weinstein that the money would be used to purchase certain properties. Rather than purchase those properties, plaintiffs allege Hager and Weinstein conspired to misappropriate the money for other purposes and falsely represented to plaintiffs that they received an ownership interest therein.

Defendants answered and in addition Weinstein filed a counterclaim against plaintiffs and a third-party complaint against Berish Meisels,*fn2 son of plaintiff Moshe Meisels. Weinstein's affirmative claims are based on the allegations that he provided plaintiffs and third-party defendant with certain replacement assets, valued at about $25 million, to sell with the understanding that once sold, any proceeds of sale in excess of the amount of money that plaintiffs provided to Weinstein for the original properties would be returned to Weinstein; however, plaintiffs never sold these assets and instead allowed their value to dissipate.

On March 20, 2009, the General Equity judge ordered that Weinstein and the Hager defendants provide an accounting of the disposition of the money that was sent by plaintiffs to the attorney trust account of the defendant law firm. The accounting subsequently revealed that the law firm was still holding in its escrow account $53,094.73 of the funds it had received from plaintiffs to purchase the original properties. Plaintiffs thereafter filed a motion for return of the money, which Weinstein opposed, arguing that his counterclaim gave him an interest in the escrowed funds. The judge denied plaintiffs' motion but ordered the funds transferred to a separate interest bearing account.

On August 12, 2010, Weinstein was arrested on a federal criminal complaint charging him with two counts of fraud related to a real estate investment scheme commenced in September 2005, in which Weinstein falsely represented to certain members of the Orthodox Jewish community, of which he is a part, that he either owns, controls or could purchase a particular parcel of real property in Brooklyn. He thereafter exploited his victims, a Chicago based financial institution and a real estate investor from England identified as M.F., to acquire art, jewelry and Judaica. To date, no indictment has been returned against Weinstein.

On November 27, 2010, Weinstein moved to stay the civil action pending resolution of the criminal charges against him.

The Hager defendants joined in this motion. Following argument, the judge stayed the civil action, reasoning:

Here's the way I see it. I do believe that a fair amount of the allegations that are raised against Mr. Weinstein are duplicated in the allegations that are raised against him in the criminal proceedings and there is an enormous problem with the issue of coming forward and testifying and the like regarding the matter.

Without further explication, and acknowledging that there is no constitutional right to a stay in a civil matter, the judge concluded: "I have a very difficult time forcing this to go forward on discovery because of the Fifth Amendment right which is paramount to our judicial system and the right of an accused under the circumstances."

We granted plaintiffs leave to appeal and now reverse.

The decision whether to stay a civil action during a tandem criminal case is not constitutionally required but rather rests in the sound discretion of the trial court. State v. Kobrin Sec., Inc., 111 N.J. 307, 314 (1988). See also United States v. Kordel, 397 U.S. 1, 12 n.27, 90 S. Ct. 763, 770, 25 L. Ed. 2d 1, 10-11 (1970); People v. Coleman, 533 P.2d 1024, 1039 (Cal. 1975). It is not a violation of the Fifth Amendment or Due Process to require a defendant to make the choice to testify, even though giving testimony at a civil proceeding may help criminal prosecutors, as opposed to invoking his Fifth Amendment rights and suffering any adverse civil consequences which flow therefrom. Kobrin, supra, 111 N.J. at 312-13. "[W]hatever the difficulties of invoking the fifth-amendment privilege, there is no constitutional inhibition that a defendant in a criminal case not 'be put to the difficult choice of having to assert the privilege in a related civil case . . . .'" Id. at 313 (quoting DeVita v. Sills, 422 F.2d 1172, 1178 (3d Cir. 1970)). See also Ott v. Bd. of Educ., 160 N.J. Super. 333, 337-38 (App. Div. 1978). In other words, as long as a defendant has the right to invoke his Fifth Amendment privilege in ...


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