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In re Helmer

Supreme Court of New Jersey

March 6, 2019

In the Matter of Yaron Helmer, an Attorney at Law.

          Argued October 10, 2018

         On an Order to show cause why respondent should not be disciplined.

          Steven J. Zweig, Deputy Ethics Counsel, argued the cause on behalf of the Office of Attorney Ethics.

          Patricia B. Quelch argued the cause for respondent (Helmer, Conley & Kasselman, attorneys).

          RABNER, C.J., writing for the Court.

         This disciplinary matter involves serious allegations that a private attorney engaged in unethical conduct and improperly influenced the prosecution of two individuals by the Cumberland County Prosecutor's Office (CCPO). Certain aspects of the alleged behavior --if proven -- would constitute conduct prejudicial to the administration of justice and violate Rule of Professional Conduct (RPC) 8.4(d). The prosecutor's office, of course, has a preeminent role in the enforcement of criminal laws. Prosecutors, not private counsel, have significant discretionary authority about whether to pursue criminal charges and how to proceed. As a result, the Court must examine not only whether the allegations are supported but also who bore responsibility for certain conduct in question.

         National Freight, Inc. (NFI), was the victim of an alleged fraudulent scheme carried out by Trident, LLC. In March and April 2008, Trident passed NFI five bad checks that totaled $168, 000. Trident went out of business in May 2008. Days later, NFI filed a civil lawsuit against Trident and its corporate principals. Several other creditors forced Trident into bankruptcy. The bankruptcy proceeding preempted the civil suit, which was dismissed.

         In June 2008, NFI's security manager, James Matlock, signed criminal complaints against Trident's principals. An assistant prosecutor reviewed the matter and declined to pursue charges. NFI then retained Helmer to act as a "middleman" between the company and the CCPO and persuade the office to prosecute. Helmer worked in the CCPO from 1985 through 1989 and served as the First Assistant Prosecutor in 1988 and 1989.

         Helmer contacted Assistant Prosecutor David Branco, then chief of the major crimes and organized crime bureau for the CCPO. The two had previously worked together at the Prosecutor's Office and had become good friends. Branco discussed the NFI/Trident matter with Helmer, and Helmer urged Branco to pursue criminal charges.

         Branco assigned the case to G. Harrison Walters, a line prosecutor who had been with the office for three years and had little prior experience handling white collar cases. On May 27, 2009, Branco met with Helmer, Matlock, and NFI's general counsel. Branco called Walters into the meeting while it was underway. Branco and Helmer ran and "dominated" the meeting, according to Walters. The following plan was agreed on: the CCPO would seek a sealed indictment against Trident's principals; arrest them in New Jersey by surprise; request high bail amounts; allege that the bail money represented the proceeds of a crime at a bail source inquiry; and arrange for the bail monies to be used as restitution for NFI. Had the plan worked, NFI, an unsecured creditor in the bankruptcy proceeding, might have received payment for its losses outside of the bankruptcy process.

         Walters conducted no independent investigation of NFI's allegations against Trident. In an email to Walters, Helmer sketched out ten criminal charges for an indictment, and Walters directed his secretary to draft a ten-count indictment that followed Helmer's outline. Walters presented the case to the grand jury with Helmer as the sole witness. The grand jury indicted Trident and its principals on all ten proposed counts. The following day, a Superior Court Judge signed arrest warrants against the principals, which listed bail at "$150, 000 Full Cash." Branco admitted that a higher-than-standard bail amount was sought, among other reasons, "to get as close to the restitution amount as possible."

         The plan fell apart when CCPO detectives refused to carry out the arrests. The trial court later dismissed the indictment with prejudice. The CCPO did not appeal. After an internal investigation, the CCPO fired Branco and suspended Walters for six weeks without pay. The CCPO also referred Helmer and Branco to the Office of the Attorney General and made a referral to the Office of Attorney Ethics (OAE) about Helmer, Branco, and Walters.

         The OAE filed a disciplinary complaint against Helmer. A special master concluded that the OAE failed to prove by clear and convincing evidence that Helmer violated the RPCs charged. A majority of the Disciplinary Review Board agreed with the dismissal of the RPC 3.4(g) charge but found that Helmer violated RPCs 8.4(a) and (d).

         The Court granted Helmer's petition for review. ___ N.J. ___ (2018).

         HELD: In this case, because the record lacks clear and convincing evidence that respondent orchestrated the alleged misconduct, the OAE's complaint must be dismissed. That said, the record highlights a series of troublesome practices and leaves a number of questions unanswered. The Court briefly addresses some of those areas to offer guidance to private practitioners and prosecutors.

         1. Pursuant to RPC 8.4(d), "[i]t is professional misconduct for a lawyer to engage in conduct that is prejudicial to the administration of justice." The broad language of the rule passes "constitutional muster" when narrowed "to particularly egregious conduct." In re Hinds, 90 N.J. 604, 632 (1982). When the rule is "the sole basis for discipline," it applies only to conduct that "flagrantly violat[es] . . . accepted professional norms." Ibid. (pp. 17-18)

         2. Victims can pursue restitution in both the civil and criminal arenas. One challenge practitioners face is to refrain from presenting or threatening "to present criminal charges to obtain an improper advantage in a civil matter." RPC 3.4(g). Heightened care is needed to navigate potential pitfalls in that area. In this case, though, the core issue is not whether private counsel could pursue restitution through the criminal process but rather the manner in which he sought to do so. Helmer's conduct here pushed the envelope. Although he actively encouraged a criminal prosecution and advocated for restitution for his client, to place primary responsibility on Helmer for what occurred overlooks the role and decision-making authority of the prosecution team. (pp. 18-19)

         3. The OAE faults Helmer at the outset for using special access to the CCPO to ask it to reconsider its initial decision to decline prosecution. After six months, unless the lawyer "participated personally and substantially" in the matter or "had substantial responsibility" over the matter as a public officer, it is not inappropriate for an attorney in private practice to make a presentation to his or her former office on behalf of a client. RPC 1.11(a)(1)-(2). The hearing also explored Helmer's relationship with Branco. The Attorney General and county prosecutors can and do impose internal codes of ethics to govern such situations. Here, there is no evidence in the record that Helmer knew Branco had been told to recuse himself from Helmer's cases. The Court stresses that half measures in this area can invite second-guessing and possible ethical challenges. (pp. 19-21)

         4. Much of the hearing focused on Helmer's role in the charging decision, grand jury process, and the question of bail. As to the plan to charge and arrest two businessmen, the ultimate decisions rested with the prosecutors. It is not at all inappropriate for private counsel to make a presentation to the prosecutor's office on behalf of a victim. The prosecutor represents the public and should independently assess the allegations presented. In this case, however, a line prosecutor conducted no follow-up investigation. The CCPO later disavowed what took place for good reason. Helmer made detailed recommendations in writing about what he thought the indictment should allege. The line prosecutor relied heavily on those suggestions to structure and draft the indictment. The Court cannot conclude from the record that Helmer improperly induced the line prosecutor to act. It is highly unusual for a victim's attorney to appear as the sole witness before a grand jury. But the prosecutor, not private counsel, ultimately made the unorthodox decision to proceed in that way here. On the issue of bail, even if Helmer argued to the prosecutors that bail be set at an inappropriately high amount, for an inappropriate reason, the prosecution made that recommendation to the court, and the court ultimately accepted it. Woven into a number of the above allegations is the claim that Helmer manipulated an inexperienced line prosecutor. The advantage that comes with experience does not implicate ethical questions as long as counsel on both sides abide by the canons of professional responsibility. (pp. 21-26)

         5. The burden of proof in disciplinary matters is clear and convincing evidence. R. 2:15-15(a). In addition, when a violation of RPC 8.4(d) is the sole basis for discipline, a particularly high level of proof is required. The proceedings in this matter did not follow best practices and were troubling in a number of respects. Nonetheless, the Court does not find clear and convincing evidence that Helmer's conduct violated RPC 8.4(d). (pp. 26-27)

         The disciplinary charges are DISMISSED.

          JUSTICES LaVECCHIA, ALBIN, PATTERSON, FERNANDEZ-VINA, and TIMPONE join in CHIEF JUSTICE RABNER's opinion. JUSTICE SOLOMON did not participate.

          OPINION

          RABNER CHIEF JUSTICE.

         This disciplinary matter involves serious allegations that a private attorney engaged in unethical conduct and improperly influenced the prosecution of two individuals by the Cumberland County Prosecutor's Office. Certain aspects of the alleged behavior -- if proven -- would constitute conduct prejudicial to the administration of justice and violate Rule of Professional Conduct (RPC) 8.4(d).

         Among other things, the Office of Attorney Ethics (OAE) asserts that the private attorney improperly influenced the criminal justice process when he helped draft the indictment, testified before the grand jury, and tried to manipulate the bail and arrest processes so that a high amount of bail would be posted and later paid as restitution to his client.

         The prosecutor's office, of course, has a preeminent role in the enforcement of criminal laws. Prosecutors, not private counsel, have significant discretionary authority about whether to pursue criminal charges and how to proceed. As a result, we must examine not only whether the allegations are supported but also who bore responsibility for certain conduct in question.

         In this case, because the record lacks clear and convincing evidence that respondent orchestrated the alleged misconduct, the OAE's complaint must be dismissed. That said, the record highlights a series of troublesome practices and leaves a number of questions unanswered. We briefly address some of those areas to offer guidance to private practitioners and prosecutors.

         I.

         The decision of the Disciplinary Review Board (DRB) ably reviewed the facts at length. At its core, this disciplinary matter involved the following issues.

         In 2008, respondent Yaron Helmer, an attorney in private practice who had previously served in the Cumberland County Prosecutor's Office (CCPO), was hired to represent National Freight, Inc. (NFI), a distribution company.

         NFI was the victim of an alleged fraudulent scheme carried out by Trident, LLC, a bottled water company. Trident's corporate principals included James Land, Jr., its chief executive officer, and Michael Pessiki, its president.

         In 2007, Trident and NFI executed a contract under which NFI agreed to deliver bottled water for Trident. Trident paid NFI more than $887, 000 for distribution services but, in March 2008, a $100, 000 check from Trident to NFI bounced. Afterward, the parties agreed that Trident would make daily payments of $17, 000 for continued distribution services. NFI knew at the time that Trident was struggling financially. Under the new arrangement, most of Trident's daily checks cleared. In April 2008, four more checks, totaling $68, 000, bounced. Collectively, the five bad checks that Trident passed totaled $168, 000.

         Trident went out of business in May 2008. Days later, NFI filed a civil lawsuit against Trident, Land, and Pessiki. The complaint, as amended, alleged that NFI suffered $3 million in damages through breach of contract, unjust enrichment, fraud, and conspiracy to commit fraud. The suit claimed that Trident was a shell company created to protect the assets of another entity, and that Land and Pessiki had conspired to defraud Trident's creditors as the defendants tried to sell off other assets at a profit.

         On May 16, 2008, NFI's vice president of security, who was not an attorney, warned Trident that NFI would pursue a criminal prosecution if Trident did not make NFI whole within twenty days. Several other creditors forced Trident into involuntary bankruptcy on September 3, 2008. In both the civil lawsuit and the bankruptcy proceedings, NFI sought to pierce the corporate veil and pursue Land's and Pessiki's personal assets based on their allegedly fraudulent acts. Because the bankruptcy proceeding preempted the civil suit, the civil action was dismissed in May 2011. The bankruptcy was settled in July 2012, and NFI received $89, 223.15 -- roughly 3.5 percent of its unsecured claim.

         In June 2008, NFI's security manager, James Matlock, visited the Vineland Police Department and reported that Land and Pessiki had given NFI five checks that the bank returned for insufficient funds. Matlock also signed criminal complaints against Land and Pessiki. An assistant prosecutor at the CCPO reviewed the matter and declined to pursue criminal charges because the dispute "appear[ed] to be a civil matter between two companies."

         NFI then retained Helmer to act as a "middleman" between the company and the Prosecutor's Office and persuade the office to prosecute Land and Pessiki for issuing bad checks. The retainer agreement, dated December 8, 2008, noted that NFI hired Helmer because of his "unique background and contacts in [Cumberland] County." Helmer worked in the CCPO from 1985 through 1989 and served as the First Assistant Prosecutor in 1988 and 1989.

         Under the agreement, NFI promised to pay Helmer a one-time fee of $10, 000 and a percentage of any restitution payments made: "20% of the first $500, 000.00 . . . plus 15% of any money in excess of $500, 000.00 collected as ...


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