April 16, 2018
appeal from Superior Court of New Jersey, Law Division,
Morris County, Indictment No. 16-02-0014.
R. Clark, Deputy Attorney General, argued the cause for
appellant (Gurbir S. Grewal, Attorney General, attorney;
Thomas R. Clark, of counsel and on the briefs).
A. Azzarello argued the cause for respondents (Whipple
Azzarello, LLC, attorneys; John A. Azzarello, of counsel on
the briefs; William J. Munoz, on the briefs).
Judges Messano, O'Connor and Vernoia.
leave granted, the State appeals from an order dismissing the
first four counts of a six-count indictment against
defendants Strategic Environmental Partners, LLC (SEP) and
its director and managing member, Richard W. Bernardi, Sr.
Having considered the record and the parties' arguments
in light of the applicable law, we reverse the court's
dismissal of counts one, two and three, and affirm the
dismissal of count four.
record before the motion court showed that in
2011 SEP purchased property in Roxbury from Sussex &
Warren Holding Corp. (Sussex) that included a sanitary
landfill, known as the Fenimore Landfill, which ceased
operations thirty years earlier. The landfill has numerous
environmental issues, has never been formally closed or
declared environmentally safe by the New Jersey Department of
Environmental Protection (NJDEP), and is in need of
early as 2006, defendants had discussions with the NJDEP
about a proposal to purchase and develop the property. During
2010 and 2011, defendants proposed to the NJDEP a plan to
remediate the site and place solar power generation equipment
on it. During negotiations over the proposal, the NJDEP had
concerns about defendants' financial ability to complete
the required remediation.
NJDEP twice requested that defendants provide a performance
bond securing their performance of the proposed remediation,
but defendants were unable to do so. In lieu of a performance
bond, defendants agreed to deposit portions of "tipping
fees" earned from its acceptance of materials at the
landfill, and revenues from solar power generated at the
site, into an escrow account from which the NJDEP would
approve payments to third parties for the required
represented they would deposit $2, 300, 000 in the escrow
account during 2011 through 2013 from a solar power
developer. Defendants further represented they would provide
the NJDEP with a signed contract from the developer within
sixty days of the parties' entry into an Administrative
Consent Order (ACO).
October 6, 2011, defendants and the NJDEP entered into an ACO
"to effectuate the necessary closure of the
landfill." The ACO states the NJDEP agreed to its terms
based on its analysis of the facts relevant to the landfill
and "its review of financial information presented by
SEP." The ACO expressly provides the NJDEP and
defendants "AGREED" to its terms, including
defendants' obligations to deposit funds in the escrow
account. The ACO also states that it "represents the
complete and integrated agreement" of the NJDEP and
defendants. Defendants and the NJDEP "warrant[ed] that
they are authorized to sign [the] ACO and bind themselves . .
. to comply with [the] terms and provisions of [the]
ACO." The ACO was executed by Bernardi and on behalf of
SEP and the NJDEP.
State alleges that following the execution of the ACO,
Bernardi disclosed for the first time that SEP had
outstanding debt in excess of $2, 500, 000 when the ACO was
executed. Defendants' debts included an undisclosed $950,
000 mortgage loan to Sussex that was executed eight months
before the ACO.
execution of the ACO, Bernardi claimed SEP could not honor
the ACO's escrow requirements because of defendants'
obligations to their creditors. By July 2013, defendants
earned $5, 500, 000 in revenue from their operation of the
landfill, but deposited no more than $250 into the escrow
account. The evidence presented to the grand jury showed $1,
500, 000 of the revenue was paid to Bernardi family members
and one of their attorneys between 2 013 and 2 014.
evidence before the grand jury also showed that following
execution of the ACO, defendants' engineering firm
requested that defendants be released from their obligation
to provide a signed contract from a solar power developer.
The letter revealed that defendants never had an agreement
with a solar power developer, and the State alleged that
defendants' representations prior to the ACO that they
had an agreement with a solar power developer and would
deposit $2, 30 0, 000 from the developer in the escrow
account were false.
evidence presented to the grand jury also showed that when
defendants purchased the property in 2011, they represented
they would construct a solar power generation facility on the
property, thereby providing a source of revenue for payment
of the $950, 000 loan from Sussex that was secured by a
mortgage. The evidence further showed defendants'
presentation supporting the issuance of the loan and mortgage
was false because defendants did not have a contract with a
solar power provider, and did not yet have permission from
Roxbury or the NJDEP to install solar power panels on the
property. The State alleged defendants misrepresented that
solar power generation revenues would provide the monies
necessary to repay the loan amount secured by the mortgage.
were charged in an indictment with: second-degree false
representations for a government contract, N.J.S.A.
2C:21-34(b) (count one); second-degree theft by deception
from the NJDEP, N.J.S.A. 2C:20-4(a) (count two); first-degree
financial facilitation of criminal activity, N.J.S.A.
2C:21-25(b)(2)(a) (count three); second-degree theft by
deception from Sussex,  N.J.S.A. 2C:20-4(a) (count four); and
second-degree theft of services, N.J.S.A. 2C:20-8(a) and
N.J.S.A. 2C:20-2(b)(1)(a) (count five). Bernardi was also
charged with second-degree misconduct by a corporate
official, N.J.S.A. 2C:21-9(c) and N.J.S.A. 2C:2-6 (count
moved to dismiss the indictment. Following argument, the
court dismissed counts one through four. In its oral
decision, the court determined that count one, which alleged
defendants made false representations to the NJDEP in
connection with the negotiation and entry into the ACO, could
not be sustained as a matter of law because the ACO did not
constitute a "government contract" within the
meaning of N.J.S.A. 2C:21-34(b). Although the court found
that "certainly the ACO is an agreement between the
parties," and "has many features of events that
lined up . . . in contracts," it reasoned that because
N.J.S.A. 2C:21-34(b) provided for grading of the offense
based on the contract amount, a "government
contract" under the statute is limited to "a
contract for a private person or corporation to provide goods
or services to a government entity and to be paid for the
same." The court found the ACO was not a contract
requiring the NJDEP to pay defendants "in return for
goods and services," and therefore defendants'
alleged false misrepresentations in negotiating and entering
into the ACO could not constitute a violation of N.J.S.A.
court also dismissed count two, which alleged defendants
committed a theft in violation of N.J.S.A. 2C:20-4(a) by
using deception to obtain the ACO. The court determined the
ACO did not have a value for purposes of grading the offense,
and therefore it did "not fit" that the theft of
the ACO could support the charged theft by deception offense.
court dismissed count four, which alleged defendants
committed theft by deception in their procurement of the
$950, 000 mortgage from Sussex. The court reasoned that count
four charged theft of a mortgage, an instrument creating a
lien, and theft of a lien on property defendants owned did
not constitute theft of the property of another.
the court dismissed count three, alleging financial
facilitation of the criminal activity alleged in counts one
and two. The court determined that because it dismissed
counts one and two, there was no criminal activity supporting
the financial facilitation alleged in count three.
granted the State's motion for leave to appeal the
court's dismissal of counts one through four. The State
presents the following arguments for our consideration:
THE ADMINISTRATIVE CONSENT ORDER WAS A GOVERNMENT CONTRACT
THAT PROPERLY SERVED AS THE BASIS FOR PROSECUTION UNDER