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NJ continues crackdown on mortgage industry July 15, 2009

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I’ve said it before and I’ll say it again: the mortgage industry is under assault here in New Jersey and anyone associated with it must be very careful.  The NJ AG announced today that her office has filed two more law suits against 10 defendants charging them with mortgage related fraud.

These defendants allegedly promised to help modify mortgages for people struggling to keep their homes. However, they allegedly pocketed the fees paid by homeowners instead of providing the assistance.

The first lawsuit was filed in Mercer County against Best Interest Rate Mortgage Company which is located in Haddon Township.  They allegedly solicited distressed homeowners in the mail, sending a form that appeared government authorized.

The second lawsuit was filed in Essex County against nine defendants, including Newark attorney Ejike Uzor and Stephen Pasch of Green Brook Township. Seven corporate and nonprofit entities, including New Day Financial Solutions in Newark were also charged.

The attorneys here face  a massive risk here as their ability to practice  law is in jeaporday.  If this case is going to settle, and most of them do, they should settle before the discovery gets too far.  Otherwise, they are going to get locked into a statement which could be used against them in the future.

Story is here.

Dr. Khashayar Salartash charged with $8.5 Million Fraud Against Medicare, Medicaid & Private Insurers July 14, 2009

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This is the type of case that requires so much attention from an attorney in such a short amount of time, that it would literally shut down a small practice for a while.  I represent doctors, but $8.5 million in fraud doesn’t come around every day.  To do this right, you need at least two attorneys putting in at least 30 hours per week into this case.  Of course, in some weeks, it will be more like 40 hours plus each week.  As a result, there is no room for new cases unless you have a third attorney.  But even then, you would have little room to take anything that big for a while.

An edited version of the press release is below:

Attorney General Anne Milgram and Criminal Justice Director Deborah L. Gramiccioni announced that an Atlantic County surgeon, his office manager, and the treatment center he owned were indicted on charges they defrauded Medicare, Medicaid and private insurance carriers of more than $8.5 million.

According to Acting Insurance Fraud Prosecutor Riza Dagli, Dr. Khashayar Salartash, 42, of Linwood; his office manager, Farah Iranipour Houtan, 51, of Egg Harbor Township; and the treatment center owned by Salartash, The Center for Lymphatic Disorders LLC, were variously charged in a state grand jury indictment returned yesterday with second-degree conspiracy, three counts of second-degree health care claims fraud, and two counts of third-degree Medicaid fraud. Salartash and Houtan were also charged with second-degree misconduct by a corporate official.

According to Gramiccioni, the indictment alleges that between August 2002 and June 2007, Salartash and Houtan billed Medicare, Medicaid and private insurers for services that were not provided as claimed.

“We charge that these defendants collected $8.5 million through false billing, including nearly $5 million from Medicare and half a million dollars from Medicaid,” said Attorney General Milgram. “It’s outrageous that a doctor would fraudulently take millions of dollars from programs that pay for medical care for the elderly and those who can’t afford health insurance. In addition, by defrauding private insurers, he contributed to the high cost of health insurance.”

The Center for Lymphatic Disorders was opened by Salartash on Central Avenue in Egg Harbor Township in August 2002 to treat patients with lymphedema, which is blockage of the lymph vessels that causes accumulation of fluid and swelling of the arms or legs, and occasionally other parts of the body. Before it closed in 2006, the center opened four additional offices in Atlantic City, Manahawkin, Haddon Heights, and Galloway Township.

As a result of alleged fraudulent billing, the Center for Lymphatic Disorders was paid approximately $8,564,622, including $593,363 by Medicaid, $4,703,935 by Medicare, and $3,267,324 by private carriers.

The defendants allegedly submitted claims as though Salartash had either personally provided services or directly supervised licensed personnel who rendered services. In fact, services were performed by a physical therapist, a licenced practical nurse or a massage therapist, with essentially no supervision.

In addition, Salartash and Houtan allegedly billed for surgery when only physical therapy services were rendered. Salartash allegedly represented in some claims that services were performed in an outpatient hospital facility, when the procedures were performed in a doctor’s office.

In order to support the claims, Salartash certified that the services provided were medically necessary, even though the services were provided for a time period far in excess of what is normal and customary for lymphedema therapy. A normal course of treatment for lymphedema is four weeks, or in very complex cases, eight to 12 weeks. However, an auditor for the Medicaid program determined that most patients of the Center for Lymphatic Disorders were treated for between 1 ½ years and nearly 3 years.

Salartash and Houtan allegedly used inappropriate modifiers to billing codes to bill for multiple procedures within a short amount of time, and made written and verbal misrepresentations to Medicare, Medicaid and private insurance carriers in order to support claims for payment.

The joint investigation into this matter was conducted by the Medicaid Fraud Control Unit of the Office of Insurance Fraud Prosecutor, the Office of Inspector General of the U.S. Department of Health and Human Services, and the Federal Bureau of Investigation. The investigation started after analysts contracted by Medicare to monitor billing identified unusual billing by Salartash.

“When doctors commit fraud it is particularly disturbing, because the integrity of the health care claims process depends on the trustworthiness of the licensed professionals involved,” said Acting Insurance Fraud Prosecutor Dagli. “The Office of Insurance Fraud Prosecutor will continue to vigorously investigate and prosecute this type of criminal activity.”

Second-degree crimes carry a maximum sentence of 10 years in state prison and a $150,000 fine, while third-degree crimes carry a maximum sentence of five years in prison and a $15,000 fine. Third-degree Medicaid fraud carries a sentence of up to three years in prison and a $10,000 fine.

The indictment is merely an accusation and the defendants are presumed innocent until proven guilty.  The indictment was handed up to Superior Court Judge Maria Marinari Sypek in Mercer County, who assigned the case to Atlantic County, where the defendants will be ordered to appear in court at a later date to answer the charges.

The Medicaid Program is funded by the state and federal governments. The State of New Jersey administers the Medicaid Program through the Division of Medical Assistance and Health Services and through the Office of Insurance Fraud Prosecutor’s Medicaid Fraud Control Unit, which investigates both criminal and civil Medicaid fraud and abuse in that program.

Two New Jersey brothers charged with movie piracy July 13, 2009

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Bridgewater residents Paul Epifan, 23, and his brother, Timothy Epifan, 21, have been charged with third-degree theft by deception and fourth-degree piracy in connection with their efforts to allegedly record movies and sell them online.  The case started with investigators from the Motion Picture Association of America contacting the Somerset County Prosecutor’s Major Crimes Squad with information about two individuals pirating movies by  video taping new releases in movie theaters and selling them over the Internet.

When arrested at a movie theater, police found a high-end video camera on their possession.  A subsequent search of their house revealed computer, pirated DVD movies and equipment.  The monetary value allegedly stolen is unknown so the third degree charges could be upgraded.

The real bad news for these guys?  The case is in Somerset County.  Chances are, this case is going to trial.  No way these guys are getting a break as the MPAA is going to want to make an example out of these guys.  Hopefully they get an attorney that actually know which way is up when it comes to these cases.

Story is here.

Reputed Bloods members go hi-tech in alleged white collar fraud scheme July 7, 2009

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This is a rather amazing story.  Anyone following NJ crime news over the past few years already knows that gang crime is exploding.  Most of these crimes involve drugs and violence.  However, a set of indictments revealed today allege that various alleged members of the Bloods street gang have enganged in a two year fraud scheme involving banks across New Jersey.

From a news perspective, it is interesting to see the development of gangs much like the mafia switched from breaking legs to trading stocks and other financial schemes.  However, from a defense perspective, it is interesting to see how these cases will be handled by the court and the State.

Normally, white collar defendants have it easy compared with your average criminal defendant.  It is often fairly easy to drum up several mitigating factors to avoid a harsh sentence or to get a jury to think that the case belongs in civil case instead of criminal court.

However, in these cases, the State will likely argue that the scheme was used not for personal financial gain, but for the profit of the enterprise which primarily engages in violent offenses.  Thus, this is more akin to a mafia prosecution than anything else.

Two issues jump out to me right away.  The first is that most of the “smaller fish” will flip on the “bigger fish”.  It is one thing to deal with one or two people that made a deal, but a half-dozen or more could be difficult, especially where there is other evidence of guilt.  The client should know who may or may not flip right away especially if they are all locked up together.  

Second, 404(b) or other  crimes evidence will be a big issue here.  Normally, the State cannot allege that each defendant is in a gang but with the racketeering charge, the jury will hear that all of the defendants are engaged in a criminal enterprise.  Thus, the issue will be how much they hear.  That’ll be a big battle in and of itself.

This could be a fun case for a defense attorney if the case breaks the right way. 

Press release:

TRENTON – Attorney General Anne Milgram announced that 31 defendants have been indicted in connection with bank fraud schemes orchestrated by members and associates of the Bloods street gang involving more than $654,000 in counterfeit checks, which resulted in the theft of more than $341,000 from eight banks.

The charges stem from “Operation Bloodbank,” an investigation by the New Jersey State Police, the Division of Criminal Justice and the Monmouth County Prosecutor’s Office. Milgram made the announcement with Division of Criminal Justice Director Deborah L. Gramiccioni, State Police Deputy Superintendent of Investigations Lt. Col. Christopher Andreychak and Monmouth County Prosecutor Luis A. Valentin.

The investigation stemmed from a prior investigation by the State Police and Division of Criminal Justice that led to the indictment in June 2007 of 46 members of the Nine Trey Gangsters set of the Bloods street gang, including its top leaders, on various charges including first-degree racketeering, murder, leading a narcotics trafficking network and money laundering.

In the latest investigation, the eight leaders of the criminal enterprise – six charged in today’s indictment and two who pleaded guilty last year – are alleged to be members or associates of the Nine Trey Gangsters set of the Bloods. They recruited people who were not associated with the gang to participate in the bank frauds.

“The Bloods are a plague on our communities, trafficking in drugs and guns and inflicting horrific violence,” said Attorney General Milgram. “This investigation reveals the Bloods on new turf, defrauding banks of hundreds of thousands of dollars using counterfeit checks. Just as we have targeted the financial crimes of traditional organized crime through the years, we will crush any inroads by street gangs into these activities, which could bankroll more drug dealing and death.”

“Through painstaking investigation, we have brought down an elaborate racketeering enterprise built on forgeries and counterfeiting, and we have dried up another source of funding for criminal street gangs,” Director Gramiccioni said.


“The Nine Trey Bloods wouldn’t survive long if they were only about weapons and violence,” said Lt. Col. Andreychak. “We have learned not to underestimate the sophistication of street gangs and their criminal enterprises.”

Monmouth County Prosecutor Valentin said, “The investigation revealed that members of the Bloods are participating in criminal activities beyond those schemes typically associated with criminal street gangs. Law enforcement must be vigilant in adapting our tactics to the ever changing methods used by members of street gangs to victimize our communities and reap illicit benefits from criminal behavior.”

A state grand jury indictment charging the 12 leaders of the conspiracy with racketeering and other charges was obtained on June 30 by the Division of Criminal Justice Gangs & Organized Crime Bureau. It was sealed until today, when a second indictment was obtained charging 19 more participants in the conspiracy.

According to Director Gramiccioni, the multi-agency investigation revealed a conspiracy organized and led by members and associates of the Nine Trey Gangsters set of the Bloods street gang, whose purpose was to defraud banking institutions of large amounts of money through several schemes. The alleged conduct occurred between 2005 and 2007.

Members of the conspiracy would recruit employees of legitimate businesses throughout New Jersey to allow them to copy or scan payroll checks from their employers or personal checks for old personal checking accounts, which they would use in the scheme.

Copying these checks gave them the format of the check, the names on the account, and the corresponding check routing numbers for the accounts. These employees or account holders would be paid money for the information. The information was then used by members of the scheme to forge payroll checks or to issue bad checks drawn on the personal accounts.

The managers of this criminal enterprise utilized laptop computers and portable electronic equipment, such as digital cameras, to create and print counterfeit payroll checks and personal checks payable to other members of the conspiracy.

Members of the scheme would then recruit other participants to assist them in obtaining cash using the counterfeited checks. Two basic schemes were used to obtain money utilizing the forged payroll checks or personal checks:

1. In the first method, the recruiter would recruit an accomplice to cash a check. The recruiter would get a forged check payable to the accomplice. The check would then be taken to a branch of the bank on which the check was drawn. The check would be cashed, and the cash would be split between the recruiter and the co-conspirator.

2. The second method consisted of recruiting individuals with bank accounts in various banking institutions. The account holders provided ATM or debit cards to the recruiters who deposited fraudulent checks into the accounts. The account holder or recruiter would then withdraw money from the accounts when the bank made the funds available, but before the check was determined to be counterfeit. The money obtained from the bank was divided among the account holder, the recruiter and the individual providing the counterfeit check. Account holders were instructed to report to their banks or to the police that they were victims of identity theft.

The investigation has established that this criminal enterprise operated throughout New Jersey, including the counties of Monmouth, Bergen, Burlington, Camden, Essex, Hudson, Hunterdon, Middlesex, Ocean, Passaic, Somerset, Union and Morris.

In all, members of the criminal enterprise were involved in passing approximately $654,000 worth of counterfeit checks between June 2005 and March 2007, and stealing approximately $341,000 from eight banks: Bank of America, PNC Bank, Valley National Bank, JP Morgan Chase Bank, Commerce Bank, Wachovia Bank, Bank of New York, and Sovereign Bank.

Checks ranged in value from $400 to $9,000. The difference in the total value of the checks counterfeited and the money stolen is due to the fact that in a number of instances, the banks discovered the checks were bad and stopped payment or froze accounts.

The case was presented to the state grand jury by Supervising Deputy Attorney General Andrew M. Butchko, deputy chief of the Division of Criminal Justice Gangs & Organized Crime Bureau, and Assistant Prosecutor James Jones of the Monmouth County Prosecutor’s Office, who was deputized as a special deputy attorney general to prosecute the case with Butchko.

The investigation was led by Detective Sgt. Ronald Hampton and Detectives Christopher Stafyleras, Daniel Bergin and Matthew Broderick of the New Jersey State Police Street Gang North Unit; Supervising Deputy Attorney General Butchko of the Division of Criminal Justice Gangs & Organized Crime Bureau; and Assistant Prosecutor Jones of the Monmouth County Prosecutor’s Office.

The first indictment returned on June 30 charges the following six defendants as managers of the bank fraud schemes. Each of these managers has been identified as an alleged member or associate of the Nine Trey Gangsters set of the Bloods street gang.

  • Ernst Francois, 36, of Irvington;
  • Albens Victor, 27, of Irvington;
  • Kenneth Tione Roberts, 34, of East Orange;
  • Woody Armand, 33, of East Orange;
  • Roosevelt Thelusma, 24, of Newark; and
  • Jeffery Dieurilus, 25, of Newark.

Victor is in state prison in New Jersey serving a prior sentence in connection with an unrelated check fraud scheme, and Armand is in federal prison in connection with a US Postal Service case involving postal money orders. Thelusma was arrested after the indictment was returned and is in jail with bail set at $150,000. Arrest warrants were issued for Francois, Roberts and Dieurilus, who remain fugitives.

As a result of the investigation, two other defendants who were members of the Nine Trey Gangsters set of the Bloods pleaded guilty to second-degree racketeering in 2008 for their leadership roles in the bank frauds. Andre Armand, 38, of Irvington, who is Woody Armand’s brother, and Jean Leneus, 26, of East Orange, were each sentenced to six years in state prison.

The first indictment also charges the following six people. It is alleged that they assisted in cashing counterfeit checks, allowed their bank accounts and ATM cards to be used in the scheme, and acted as recruiters, recruiting other account holders to participate in the scheme.

  • Bertha B. Cajuste, 32, of Newark;
  • Quanise R. Freeman, 25, of Paterson;
  • Shamira Janay Champagne, 22, of Clifton;
  • Ashley Chante Brown, 25, of Irvington;
  • Vanessa L. Brown, 21, of Newark; and
  • Ritha Saluste, 31, of Irvington.

All 12 defendants in the first indictment are charged with second-degree racketeering and one or more counts of second- or third-degree theft by deception. All 12 are also charged with one or more counts of third-degree uttering a forged instrument. Nine of the defendants in the first indictment are charged with one or more counts of third-degree attempted theft by deception.

The second indictment, which was returned today, charges the following 19 additional defendants, who allegedly participated in the scheme by cashing counterfeit checks and allowing their bank accounts and ATM cards to be utilized in the scheme:

  • Jacinth Alese Buchanan, 23, of Paterson;
  • Marcus Dwayne Harris, 46, of Newark;
  • Al-Khabir Kwaan Diggs, 29, of Newark;
  • Keith F. Chipepo, 26, of Montclair;
  • Charles Palmer, 31, of Irvington;
  • Matthew Handel Richards, 25, of Plainfield;
  • Sakinah Ann Eure, 33, of Perth Amboy;
  • Sharelle Patrice Belton, 22, of Paterson;
  • Michelle Lynn Horton, 27, of Paterson;
  • Linda Jules, 21, of Irvington;
  • Gregory S. Salters, 31, of Newark;
  • Janina M. Bolden-McCall, 30, of Irvington;
  • Linda Robinson, 30, of Bridgeton;
  • Dianna D. Huggins, 27, of Jersey City;
  • Kelly A. Montes, 27, of Morris Plains;
  • Javaira Naimaha Jihad, 22, of Newark;
  • Tamika Snowden, 22, of East Orange;
  • Jamie J. Tate, 33, of Irvington; and
  • Carlton Eugene Brown, 22, of West Orange.

All 19 of the defendants named in the second indictment were charged with second-degree racketeering. Each of the 19 defendants was also charged with one or more counts of third-degree theft by deception or attempted theft by deception, as well as third-degree uttering a forged instrument.

Second-degree crimes carry a maximum sentence of 10 years in state prison and a $150,000 fine, while third-degree crimes carry a maximum sentence of five years in prison and a $15,000 fine. Fourth-degree crimes carry a maximum sentence of 18 months in prison and a $10,000 fine.

The indictments are merely accusations and the defendants are presumed innocent until proven guilty.

The indictments were handed up to Superior Court Judge Linda Feinberg in Mercer County, who assigned them to Monmouth County.

Goldman Sachs programmer with trade-secret theft July 6, 2009

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Sergey Aleynikov, a former software designer for Goldman Sachs is charged with downloading propriety software from his former employer and sending secret codes to a web account in Germany.  However, what this German account was is  unknown.

The FBI alleges that the downloads contained a program that uses sophisticated mathematical formulas to place automated trades in the market.  An internal review by Goldman Sachs alleges that Aleynikov’s work desktop was used at least four times after hours between June 1 and June 5 to transfer company information.  

When arrested, Aleynikov reportedly told the FBI that he had copied and encrypted files from his former employer.  However, he said that he only intended to collected open source files on which he had worked.  He later realized he obtained more files than he intended.  He further claims that he abided by the confidentiality agreement he signed with Goldman Sachs and did not distribute any of the propriety software.

This is a very interesting case for a number of reasons.  It seems like this guy makes a good amount of money, but if he didn’t, I would probably reduce my fee to help him out because I find these cases a lot of fun.

This is also a fairly easy case as there are several “facts beyond change” that really help to narrow the issues in dispute.  With his statement, his actions are not at issue here.  Instead, only his intent will be at issue here which really makes this case ripe of jury nullification.

Do you really think that a jury is going to get upset that this guy copied some files and then, did nothing with them?  More importantly, I don’t have the law in front of me at the moment but I’m sure there is a criminal intent element here that the Government would need to prove.  I don’t see how they  could do it. 

Much of this case will turn on his statement.  The Government will need to try to support its case that he was going to profit from this information.  The Defense will need to show that he did nothing else with it.  Since nothing would just jump at out you, as a defense attorney, you need to get very creative to come up with as much evidence to tear apart the Government’s case.  Again, I find such cases a lot of fun as it really puts your skills as an attorney to the test.

Story is here.

Major case that every computer crime attorney should read July 2, 2009

Posted by jefhenningeresq in Unpublished Cases.
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If you are an attorney that will ever even think about taking a child porn case, you need to have this case in your tool box.  For years, prosecutors have resisted turning over images to defense and their experts.  Finally, a court wakes up and has some sense.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3682-08T4

STATE OF NEW JERSEY,

Plaintiff-Appellant,

v.

NEIL COHEN,

Defendant-Respondent.

_______________________________________________________________

Argued June 1, 2009 – Decided

Before Judges Carchman, R. B. Coleman

and Sabatino.

On appeal from the Superior Court of New

Jersey, Law Division, Mercer County,

Indictment No. SGJ568-08-5.

Anthony A. Picione, Deputy Attorney General,

argued the cause for appellant (Anne Milgram,

Attorney General, attorney; Mr. Picione and

Robert C. Rowbotham, II, Deputy Attorney

Generals, of counsel; Johanna Barba Jones,

Deputy Attorney General, on the brief).

Mark H. Tuohey, III (Vinson & Elkins) of the District

of Columbia bar, admitted pro hac vice, argued the

cause for respondent (Rogut McCarthy and Mr. Tuohey,

attorneys; Mr. Tuohey, Andrea L. Surratt (Vinson &

Elkins) of the District of Columbia bar, admitted pro

hac vice, Daniel J. McCarthy and Colleen E. Patterson,

of counsel and on the brief).

Gibbons P.C., attorneys for amicus curiae Association

of Criminal Defense Lawyers of New Jersey (Lawrence S.

Lustberg, on the brief).

July 2, 2009

2

A-3682-08T4

PER CURIAM

This appeal requires us to balance the competing interests

of a criminal defendant who seeks discovery of materials that go

to the essence of the underlying charged offenses, with the

public interest in prohibiting the dissemination of the same

materials — contraband child pornography. The trial judge

fashioned a protective order that, by its terms, provided for

defendant’s discovery of the relevant materials but established

strict guidelines that limited access and use of the materials.

We conclude that while the State of New Jersey’s concerns focus

on the possibility of misuse of the materials, the judge’s order

recognizes these concerns and establishes procedures to minimize

such eventuality. Accordingly, we conclude that defendant is

entitled to discovery under the terms of the protective order

and affirm.

By leave granted, the State appeals from the protective

order permitting defendant Neil Cohen discovery of the alleged

child pornography that provides the underpinnings for the

criminal charges lodged against him. While the State does not

dispute that defendant is entitled to discovery of such

evidence, it challenges the manner and methodology of

transmission and examination of the purported evidence.

3

A-3682-08T4

In the carefully crafted protective order of March 23,

2009, Judge Council balanced the protected rights of a defendant

to discovery under Rule 3:13-3 with the legitimate policy of

minimizing the dissemination of child pornography to ensure that

the victims of such unlawful conduct are not re-victimized

through court-sanctioned access. Since both the State and

defendant agree that the defense is entitled to inspection and

testing of the discoverable materials, the sole issue in dispute

is which party maintains control of the discovery while it is

being reviewed and tested by the defense. The State is willing

to make the materials available to defendant but asserts that it

must retain ultimate control, even during the discovery process,

to minimize the possible improper dissemination of child

pornography. Defendant claims that the order addressed the

State’s concerns and the defense should control the discovery

during the pendency of the case.

We briefly set forth the relevant facts informing our

consideration of the issues. In July 2008, New Jersey State

Police began investigating allegations that defendant, a former

State Assemblyman, had used his office computer to view child

pornography. Within a month, the police seized suspected

pornographic matter, including eleven computers from defendant’s

legislative office, and commenced a forensic examination of the

4

A-3682-08T4

contents of the computer hard drives. The investigation and

examination sought to determine whether defendant had been

visiting child pornography sites. As part of their

investigation, officers entered web sites for child pornography

that had been accessed through the confiscated computers. The

investigation continued, and sixty-two images were transmitted

to and reviewed by the State’s expert, Dr. Robert L. Johnson.

On December 17, 2008, defendant was indicted by the State

Grand Jury for second-degree official misconduct, N.J.S.A.

2C:30-2; second-degree endangering the welfare of a child

(reproducing child pornography), N.J.S.A. 2C:24-4(b)(4); seconddegree

endangering the welfare of a child (disseminating child

pornography), N.J.S.A. 2C:24-4(b)(5)(a); and fourth-degree

endangering the welfare of a child (possessing child

pornography), N.J.S.A. 2C:24-4(b)(5)(b).

Discovery commenced, and on March 10, 2009, the judge

ordered the State to produce copies of all the computer images

and data obtained during the investigation. The State moved for

reconsideration and for a stay. On March 23, 2009, the judge

denied the State’s motions, but granted an extension for

production of the images until April 2, 2009. The judge also

entered a protective order, which included detailed provisions

and safeguards for the defense’s handling of the computer images

5

A-3682-08T4

and data. Included were limitations on those having access to

the materials and further provisions regarding access during the

discovery process.

The order contains thirteen decretal paragraphs.

summarize, the order requires the State to provide two copies of

the computer images and data to defense counsel and that such

material not be “copied, reproduced, distributed, disseminated,

electronically stored and/or electronically uploaded or

downloaded” or used for any purpose other than the prosecution

or defense of this action. The defense must use a dedicated,

non-networked computer to view the materials and keep the

materials and the computer locked and secure when not in use.

The materials must be conveyed to and among defense counsel and

defense experts by hand-to-hand delivery, and at the conclusion

of the matter, the materials be transferred back to the State in

the same manner. Anyone viewing the materials on behalf of the

defense would be subject to and furnished with the order, and

any retainer agreement between defense counsel and their experts

would include a provision certifying that the expert

acknowledges the terms of the order. Defendant would not be

permitted to view the materials outside the presence of defense

counsel. Finally, at the conclusion of the matter, the parties

1 To

1

6

A copy of the order is attached to this opinion as Appendix A.A-3682-08T4

are to agree on specific procedures to ensure that the materials

are completely and irretrievably deleted from any computers on

which the materials were viewed.

The State, thereafter, moved for leave to appeal and for a

stay pending the outcome of the interlocutory appeal. We

granted both motions and ordered the appeal accelerated. On

April 23, 2009, while the appeal was pending, the State offered

to have

a representative bring the contraband to

defense counsel and/or their representatives

to view at their offices, but on a Stateowned

computer that could be sanitized

afterward. Both the images and the computer

would be retained by the State except when

being actually viewed.

That offer remains extant.

On appeal, the State raises two issues

err by ordering the State to reproduce and deliver the evidence

of child pornography to defendant; and 2) was the court’s

protective order sufficient to ensure that the child pornography

would not be disseminated.

I.

As we noted, the focus of the State’s primary argument is

that the court erred by ordering it to deliver images of child

2: 1) did the court

2

granting leave to appeal and the stay.

7

The State raised two other points that are rendered moot by ourA-3682-08T4

pornography to the defense. The argument is premised on the

theory that if the images are released to the defense, the State

can no longer be assured that the images will not be illegally

reproduced and disseminated, which would cause harm to any child

depicted in the pornography.

Rule 3:13-3(c) provides in part:

Discovery by the Defendant. The prosecutor

shall permit defendant to inspect and copy

or photograph the following relevant

material if not given as part of the

discovery package under section (b):

(1) books, tangible objects, papers or

documents obtained from or belonging to the

defendant;

. . . .

(3) results or reports of physical or mental

examinations and of scientific tests or

experiments made in connection with the

matter or copies thereof, which are within

the possession, custody, or control of the

prosecutor;

. . . .

(5) books, papers, documents, or copies

thereof, or tangible objects, buildings or

places which are within the possession,

custody or control of the prosecutor;

Rule 3:13-3(f) permits the court to issue a protective order,

which denies, restricts or defers inspection of certain evidence

so as to protect witnesses and others from harm or threats of

harm. Rule 3:13-3 does not contain a specific restriction for

8

A-3682-08T4

disclosure of child pornography; however, the comment to Rule

3:13-3(f) provides examples of when discovery may be restricted,

including: the identity of confidential informants;

surveillance sites; parole records; school records; and even, to

certain extents, instances when a claim of privilege will be

waived at trial. Pressler, Current N.J. Court Rules, comment 6

on R. 3:13-3(f) (2009).

We have invoked the protective provisions of Rule 3:13-

3(f), when circumstances warrant such limitation on discovery.

In State v. Cusick, 219 N.J. Super. 452, 455-59 (App. Div.),

certif. denied, 109 N.J. 54 (1987), we affirmed the denial of

release of confidential DYFS records of a child victim of sexual

abuse, which the defendant claimed he needed to prepare a

defense. The trial court found that the records were

confidential, that disclosure was not necessary for resolution

of any issue in the case and that most of the information was

available from other sources. Id. at 457. We balanced the

defendant’s discovery needs against the public policy of keeping

DYFS records confidential and found that disclosure was not

necessary. Id. at 459.

Similarly, in State v. Krivacska, 341 N.J. Super. 1, 35

(App. Div.), certif. denied, 170 N.J. 206 (2001), cert. denied,

535 U.S. 1012, 122 S. Ct. 1594, 152 L. Ed. 2d 510 (2002), we

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restricted access of the defendant to the school records of a

child victim of sexual abuse, stating that it was sufficient for

the judge to view the records in camera. We noted that when

restricting discovery, a court must perform a balancing test to

determine whether the needs of the defendant to prepare a

defense outweigh the victim’s right to privacy. Ibid.

Two critical distinctions are apparent in Krivacska and

Cusick. In those cases, the defendants were denied discovery of

confidential material, whereas here, the State agreed to provide

access to the evidence so long as it is viewed while under the

control of the State. More important, however, the restricted

discovery in Krivacska and Cusick did not form the basis of the

complaint against the defendants and were not proofs anticipated

to be presented by the State at trial. Here, the discoverable

material sought by defendant is the critical evidence supporting

the allegations of the criminal charges.

The Court has demonstrated a keen sensitivity to protect

child victims involved in court proceedings. For example, in

preserving the anonymity of children who testified regarding

sexual abuse, our Supreme Court recognized that “protection of

the children’s physical and psychological welfare constitutes a

compelling state interest.” Application of VV Pub. Corp., 120

N.J. 508, 512-13 (1990) (internal quotations omitted); see also

10

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N.J.S.A. 2A:82-46. A similar state interest is present here,

and no one can legitimately question the long-term detrimental

effects of child pornography on the victims. New York v.

Ferber, 458 U.S. 747, 760 n.10, 102 S. Ct. 3348, 3356 n.10, 73

L. Ed. 2d 1113, 1125 n.10 (1982) (stating that the threat to a

victim of child pornography is even greater than the threat of

sexual abuse or prostitution, because the “child’s actions are

reduced to a recording” and the child “must go through life

knowing that the recording is circulating within the mass

distribution system for child pornography”).

Relying on this unassailable premise, the State argues that

child pornography is contraband, and any dissemination of it,

even in discovery, is presumptively illegal. Recognizing that

there must be an accommodation for discovery, the State contends

that the court should only provide access to the images at a

State facility or on a State-issued computer, where the State

would maintain control over the pornography and eliminate any

risk that the images would be disseminated to unauthorized third

parties or to the public.

Defendant responds that his ability to prepare a defense

will be severely impeded by not having total access to the

materials. He asserts that there are numerous CDs, DVDs and

hard drives containing a voluminous amount of material created

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by government agents in the discovery phase of this litigation.

He argues that the defense must have unfettered access to the

images in order to evaluate them and resolve such questions as

who created the images, when were they accessed, whether they

are in fact pornography and whether the images are of real

children, as opposed to virtual images or adults dressed as

children. Defendant explains that the process by which an

expert analyzes and evaluates the images requires equipment,

software and an entire forensics laboratory, which would be

impractical for defendant to import to a State facility.

Defendant also contends that his counsel and experts need

continuous access to discovery in preparing for trial and during

the trial itself. Moreover, defendant represents that the

expert he has chosen is out-of-state and cannot be required to

come to New Jersey each time it is necessary to view the images.

3

No reported New Jersey authority has considered the issue

of the discovery of child pornography, but other jurisdictions,

including the federal courts and Congress, have addressed the

question.

3

extend to an out-of-state expert in his or her office, or to

defendant’s out-of-state counsel. At oral argument, defendant

suggested that he is considering retention of a local expert.

12

It is unclear whether the State’s offer of a computer wouldA-3682-08T4

In 2006, Congress enacted the Adam Walsh Child Protection

and Safety Act of 2006, (the Act), Pub. L. No. 109-248, §

501(1)(B), 120 Stat. 587, 623 (2006). The purpose of section

504 of the Act is to amend 18 U.S.C.A. § 3509 by adding

subsection (m), which prevents the unauthorized release and

redistribution of child pornography that the government has

gathered for use in a criminal trial. 18 U.S.C.A. § 3509(m)

provides:

Prohibition on reproduction of child

pornography.

(1) In any criminal proceeding, any property

or material that constitutes child

pornography . . . shall remain in the care,

custody, and control of either the

Government or the court.

(2)(A) Notwithstanding Rule 16 of the

Federal Rules of Criminal Procedure, a court

shall deny, in any criminal proceeding, any

request by the defendant to copy,

photograph, duplicate, or otherwise

reproduce any property or material that

constitutes child pornography . . . so long

as the Government makes the property or

material reasonably available to the

defendant.

(B) For the purposes of subparagraph (A),

property or material shall be deemed to be

reasonably available to the defendant if the

Government provides ample opportunity for

inspection, viewing, and examination at a

Government facility of the property or

material by the defendant, his or her

attorney, and any individual the defendant

may seek to qualify to furnish expert

testimony at trial.

13

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The constitutionality of the Act has been upheld in United

States v. Shrake, 515 F.3d 743, 745-46 (7th Cir. 2008), and

United States v. Johnson, 456 F. Supp. 2d 1016, 1019 (N.D. Iowa

2006) (holding that the Act is constitutional, because it

restricts who may control the images but not what the defendant

may introduce at trial). However, courts have been indulgent in

permitting defendants access to materials when restrictions also

preclude or significantly burden a defendant’s ability to mount

a defense. In at least one federal case, the court has

interpreted the “ample opportunity” requirement of the Act to

permit disclosure of the evidence when a defendant established

that analysis of the material at a government facility would

compromise the expert’s effectiveness. See United States v.

Knellinger, 471 F. Supp. 2d 640, 647 (E.D. Va. 2007).

The State’s expressed concern about the propriety of

dissemination of the alleged child pornography to defendant,

citing the limitations expressed in the Act, warrants further

discussion. We first note that the Act is not authoritative for

state criminal proceedings. State ex rel. Tuller v. Crawford,

211 S.W.3d 676, 679 (Mo. Ct. App. 2007) (noting that 18 U.S.C.A.

§ 3509(m) is a procedural provision solely applicable to

proceedings in the federal court). Moreover, when the question

has arisen in state courts as to whether the defense counsel,

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when possessing child pornography in connection with preparing a

defense, could be prosecuted for violation of the Act, the

courts have held that the Act did not permit such prosecution.

State v. Allen, No. E2007-01018-CCA-R3-CD, 2009 Tenn. Crim. App.

LEXIS 114 at 17-18 (Tenn. Crim. App. Feb. 12, 2009)

Brady, 894 N.E.2d 671, 679 (Ohio 2008) (holding that the Act

allowed for ample opportunity for inspection by a defense

expert), cert. denied, 2009 U.S. LEXIS 3564, 77 U.S.L.W. 3633

(U.S. May 18, 2009) (No. 08-9139). We agree that the exercise

of rights of discovery, critical rights afforded to a criminal

defendant, see State v. Broom-Smith, 406 N.J. Super. 228, 239

(App. Div. 2009); State v. Gilchrest, 381 N.J. Super. 138, 146-

47 (App. Div. 2005), cannot give rise to a criminal offense of

improper possession when appropriate use of the materials is

sanctioned by court rule or an order of a court.

Prior to passage of the Act, some federal courts had

already denied defendants copies of child pornography evidence,

stating that it was contraband. In United States v. Kimbrough,

69 F.3d 723, 731 (5th Cir. 1995), cert. denied, 517 U.S. 1157,

116 S. Ct. 1547, 134 L. Ed. 2d 650 (1996), the court held that

child pornography is “illegal contraband,” which should not be

4; State v.

4

purposes only. R. 1:36-3.

15

This decision is unpublished and we cite it for informationalA-3682-08T4

copied or distributed in discovery. Moreover, the defendant’s

ability to inspect the evidence at government offices was

sufficient to protect his rights. Ibid. The Fifth Circuit

Court of Appeals rejected the defendant’s argument that the

quantity of material, and the defendant’s not having a copy of

it, prejudiced his ability to make an adequate defense. The

court stated that the defendant’s need for substantial time to

view the material was irrelevant and did not establish

prejudice. Ibid.

The Eighth Circuit Court of Appeals, in United States v.

Horn, 187 F.3d 781, 792 (8th Cir. 1999), cert. denied, 529 U.S.

1029, 120 S. Ct. 1442, 146 L. Ed. 2d 330 (2000), affirmed the

district court’s denial of a copy of a videotape to the

defendant, because it was “prima facie contraband.” On appeal,

however, the defendant argued for the first time that he needed

the copy so that the publisher of the film could ascertain the

ages of the children. The court stated that had defendant

advanced that argument at trial, the court might have been

required to grant the defendant’s motion for the material to be

copied. Id. at 792-93.

In United States v. Husband, 246 F. Supp. 2d 467, 468-69

(E.D. Va. 2003), the court relied on Kimbrough and Horn in

finding that a videotape was contraband and therefore did not

16

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require that copies be made. However, Husband involved only one

videotape as opposed to potentially thousands of images that

might exist in a case involving computer digital images.

Notwithstanding the Act and the limited federal decisions

restricting discovery, the majority of state courts that have

addressed this issue have required the prosecution to reproduce

the materials for defendant’s use and control.

In Westerfield v. Superior Court, 121 Cal. Rptr. 2d 402,

403 (Cal. Ct. App. 2002), the prosecution restricted discovery

by permitting the defendant to view the images only in the

presence of law enforcement officers in the FBI’s offices and

had refused to make copies of the child pornography. The

defendant moved to permit copying of the images so that his

attorneys could view them privately, to speak confidentially

about them and to submit them for examination by experts. The

trial court denied the defendant’s motion, noting that the

prosecution permitted defense counsel’s unfettered access to the

images and removal of law enforcement from the room while the

images were being examined. On appeal, the court stated that

nothing in the child pornography statute supported the view that

the California Legislature intended that use of the images to

prepare a defense would qualify as disseminating the material in

violation of the law. Id. at 404.

17

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The Westerfield court also found that the prosecution’s

interpretation of the statute not only “exalts absurdity over

common sense, but it is also logically flawed.” Ibid.

Requiring defense counsel to view thousands of images and commit

them to memory impeded the effective assistance of counsel. Id.

at 405.

In Cervantes v. Arizona, 76 P.3d 449, 454-55 (Ariz. Ct.

App. 2003), review denied, 2004 Ariz. LEXIS 32 (Ariz. Mar. 16,

2004), the Arizona Court of Appeals rejected a restriction on

alleged child pornography images being viewed only at a state

facility. Instead, it ordered their release to the defendant

because the discovery rules did not contain an exception when

the evidence sought was contraband, and the State had not

demonstrated why the court should impose a restriction. If a

court decided to restrict viewing of evidence, the Arizona rules

required imposing the “less restrictive alternative.” The court

stated that a protective order would have been less restrictive

than requiring defense counsel to view the evidence at the state

facility. Id. at 456. The Arizona court distinguished Horn,

Kimbrough and Husband, as those cases involved a determination

as to whether any error that occurred had been harmless, and in

at least one instance, the State had permitted the defense

counsel to view the material in his office. The court opined

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that by holding that contraband could not be distributed for

purposes of preparing a defense, those courts had misstated the

rule. Id. at 455-56. The court concluded that where there was

no evidence that defense counsel would use the materials

improperly, the materials must be reproduced. Id. at 457.

In Washington v. Boyd, 158 P.3d 54, 59 (Wash. 2007), the

Washington Supreme Court clarified that

the burden is on the State to establish, not

merely claim or allege, the need for

appropriate restrictions. The defendant

does not have to establish that effective

representation merits a copy of the very

evidence supporting the crime charged.

In Boyd, the court advocated the use of protective orders

to safeguard the interests of the victims. Id. at 62. Some of

the limitations the court addressed to protect the victims were:

that the defendant may only view the material under defense

counsel’s supervision; that defense counsel is obligated to be

personally and professionally responsible for any unauthorized

distributions of or access to the evidence; that access by noncounsel

should be preceded by court order; that evidence must be

secured and inaccessible to anyone other than defense counsel;

that evidence has to be promptly returned at the end of the

criminal proceeding; that access to the material may only be for

purposes of defending the action; that a “firewall” must be

erected between the Internet and any computer used to access the

19

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materials; and that the computer should be cleared of evidence

or its traces before being made accessible for other purposes.

Ibid.

The court in Boyd noted that allowing the defendant copies

of the evidence made sense, because the materials would “be

presented in open court, referenced in the examination and

testimony of witnesses, and discussed in opening and closing

statements.” Ibid. The court stated that “[e]ven if the right

to a fair trial could be satisfied while denying copies only to

the defense, the cost to justice [under such a scheme] would be

disproportionate to the benefit.” Id. at 63. But see

State v. Ross, 792 So. 2d 699, 702 (Fla. Dist. Ct. App. 2001)

(relying on Kimbrough and finding no prejudice to defendant to

review the materials at a state facility).

The State urges that we adopt the principles enunciated in

the Act to inform our determination of whether to require that

the images be copied for defendant. The State contends that it

is not seeking to compromise defendant’s ability to formulate a

defense, but rather is requesting a protective order that

maintains the images in the custody of the State.

Defendant argues that the requirement that defendant’s

experts view the images at a State facility impinges upon

defendant’s right to utilize a defense expert whose identity is

20

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not yet disclosed to the State. In support of this, defendant

cites State v. Mingo, 77 N.J. 576, 584-87 (1978), wherein the

Court observed that communication with an expert is an essential

aspect of the preparation of a defense and is protected by the

attorney-client and work-product privileges. Disclosure of the

identity of an expert should not be compelled unless that expert

is going to be a trial witness. Id. at 587; see R. 3:13-

3(d)(3).

We are of the view that requiring a defense expert to

appear at the State facility would interfere with defendant’s

privilege, because, even if safeguards are employed, there is a

substantial probability that the identity of the expert will

prematurely become known to the State. Even the State’s belated

offer of a computer raises similar concerns if the State

representative is required to bring the computer to the expert’s

laboratory.

We find compelling defendant’s argument that his defense

would be impeded by having to “import” the expert’s laboratory

to the government facility. The State contends that only sixtytwo

images have been forwarded to the State’s expert for

analysis. However, defendant correctly counters that thousands

of images were viewed from websites accessed by law enforcement

agents as part of the discovery in this litigation. In

21

A-3682-08T4

addition, there is apparently no clarity regarding the ages of

the individuals in the images or whether the images were virtual

or depicted real people. The expert may have to perform a

lengthy analysis to determine whether the images are child

pornography and when the images were viewed. Such a process

could be cumbersome, if not impossible, for defendant’s expert,

if required to perform this analysis at the State facility.

Further, the State’s offer to provide a computer at the office

of “defense counsel and/or their representatives” does not solve

the problem but raises new ones.

The reasoning in Boyd is persuasive. Because ultimately

the materials will be presented in court

preclude defendant from having copies of them to aid his counsel

and experts in preparing his defense. Significantly, the expert

analysis may prove to be ongoing, as the pretrial and final

phases of this matter develop, and particularly as video and

images and contested issues become a matter of adversarial

judicial focus. Although the State has offered to supply access

to the images on an “as-needed” basis, that is too cumbersome.

In addition, the State itself will have continuous and

5, it is unfair to

5

other materials would be required at trial. We do not decide

here the issue of the manner and procedures to be utilized for

display or use of the materials at trial.

22

At oral argument, the State acknowledged that the images andA-3682-08T4

unfettered access to the materials. Under our rules, the

defense is entitled to equivalent access as well. In balancing

the rights of a defendant to prepare a defense against the need

to protect a child victim from further dissemination of the

materials, a protective order can be fashioned to safeguard the

victim without impeding the rights of defendant. That balance

was achieved here.

II.

In its second argument, the State contends that the

protective order is insufficient to ensure that the child

pornography will not be disseminated.

Judge Council painstakingly addressed the terms of the

protective order with the parties and ultimately entered an

order requiring the State to produce two copies of the “images

and data” for defendant, provided: the materials could not be

copied or reproduced; the materials could only be used in the

preparation of this case; the materials could not be disclosed

to any other person except defendant, his counsel and his

experts; defendant could only view the materials in the presence

of counsel; the order binds all parties involved in the

investigation, prosecution and defense of the matter; the

materials were hand-delivered; any computer that was used to

view the materials should not be connected to the Internet, a

23

A-3682-08T4

network or a printer; the materials must be maintained by the

defense in a locked file; the materials should be returned at

the conclusion of the matter; the parties must destroy all

images and data from the computers; and the computers should be

overwritten in a manner to make the images irretrievable in the

future.

Paragraph 2 of the protective order provided as follows:

(2) IT IS FURTHER ORDERED that pursuant to

R. 3:13-3(f), any and all images and data

turned over to defense counsel by the State

are not to be copied, reproduced,

distributed, disseminated, electronically

stored and/or electronically uploaded or

downloaded to any computer and/or electronic

storage device in any way, other than files

created by the computer(s) beyond the

control of the user to permit defense

counsel to view the images on the two (2)

dedicated computers under defense counsel’s

control.

Paragraphs 11 and 12 provided as follows:

(11) IT IS FURTHER ORDERED that at the

conclusion of this matter, the parties shall

meet, agree upon and execute the specific

procedures which will result in the nonrecoverable

destruction of all images and

data provided under this order, and on all

computers and computer components used to

examine the materials . . . .

(12) IT IS FURTHER ORDERED that any and all

images and data remaining on any and all

computers and computer components utilized

to examine the materials provided under this

order shall be deleted and overwritten in a

manner rendering the images and data

completely irretrievable in the future.

24

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As noted, in developing a protective order pursuant to Rule

3:13-3(f), the court must balance the rights of the defendant

against the needs of any person requiring protection.

Krivacska, supra, 341 N.J. Super. at 35.

The State objects to the protective order because:

paragraph 1 authorizes the manufacture and release of copies of

the images; paragraph 2 contains a tacit acknowledgement that

copies would be made on defense computers; no person was

expressly bound by the agreement other than defense counsel;

defense counsel did not assume professional responsibility for

the potential failure of their agents to adhere to the order and

did not agree to provide a final report on the manner in which

the terms of the order were respected; and law enforcement was

not permitted to confirm that all inadvertently duplicated data

was destroyed. The State requests that, at a minimum, the

protective order be revised to conform to the standards in Boyd.

Paragraph 2 does not present a replication problem, because

paragraphs 11 and 12 ensure that even if files are inadvertently

copied by the computer within the hard drive, they would be

destroyed at the end of the proceedings. Moreover, defense

experts are bound by the order because paragraphs 3 and 6 make

the order applicable to “any expert.” The judge correctly

acknowledged that defense counsel are professionals deserving of

25

A-3682-08T4

the expectation that they will comply with the terms of the

protective order and treat the evidence with the utmost care.

An attorney “owes the duty of good faith and honorable dealing

to the judicial tribunals before whom he practices his

profession.” In re Turner, 83 N.J. 536, 539 (1980) (internal

citation omitted). See also RPC 3.4(c) (prohibiting a lawyer

from knowingly violating a court order).

There need not be additional references in the order to

defense experts, a report detailing how defense counsel complied

with the terms of the order or for law enforcement to ensure

compliance with the terms of the order. The order is

sufficiently protective of child victims because: the evidence

will only be used by defense counsel to prepare a defense; will

be on two dedicated computers that will not be connected to the

Internet, a network or a printer; will be kept in a locked file;

and will be returned to the State at the conclusion of the

proceedings. Non-compliance with this order exposes counsel to

both professional and judicial sanctions. We do not agree that

the protective order need track all of the provisions identified

in Boyd. The protective order here is reasonable and

accomplishes the goal, which is to ensure that the child

pornography is not disseminated.

26

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During colloquy, the court suggested that the problems

would be solved if the State provided the defense with a

computer for viewing the materials, but the State rejected this

possibility. Subsequently, by letter dated April 23, 2009, the

State agreed to have a representative bring the images to

“defense counsel and/or their representatives,” to view at their

offices on a state-owned computer that would be retained by the

State except when the images were actually being viewed.

While the State’s offer resolves some of the issues, it

still leaves the discovery under the control of the State. The

need for defense counsel to have unfettered access to the images

and the need for defense experts to maintain anonymity will be

compromised by the presence of the State representative who

controls the computer.

The essence of the State’s position is premised on what

might occur if defense counsel did not carefully maintain the

discovery or if someone violated the order or inadvertently

failed to appropriately care for the discovery materials.

Hypothetical examples of misdeeds or human error abound on

either side of the issue, but the carefully crafted protective

order spells out the parameters of conduct. That should be

sufficient to guide the future course of discovery.

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The competing interests that have been identified require a

careful balance. Neither side of this dispute has advanced a

position that represents anything less than a good faith effort

to respect and protect their stated interests. But we are

satisfied that the order in place provides a reasonable

accommodation of these interests, will ensure that defendant

receives appropriate discovery and will minimize the State’s

concern about dissemination and protection of the victims of

child pornography.

Affirmed.

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President of the Cedar Bridge Military Academy faces child porn charges July 1, 2009

Posted by jefhenningeresq in News.
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Steven T. Baryla, 227, president of the Cedar Bridge Military Academy, an Ocean County-based, military adventure camp has been charged with possessing and distributing child pornography.   The investigation started when an concerned citizen who had allegedly been in contact with Baryla through e-mail contacted Beachwood police. 

The Ocean County Prosecutor’s Office seached the academy’s offices and it seems like they found something.  This can be both good and bad for him.  I first want to know who this concerned citizen was and how this person would know that Baryla allegedly had child porn on the computer.  Next, I want to know who else had access to this computer.

The fact that this computer was at the academy is bad because it could be really tough to file a motion to suppress if they didn’t have a warrant.  However, it could be good for them because if more people had access to it, the more likely it could have been someone else that downloaded this child porn.

An attorney should be able to get an idea from the client as to what defenses are possible but will not know everything for a few months.

Story is here.

NJ AG’s office charges six people in three separate, unrelated mortgage fraud cases June 30, 2009

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Mortgage fraud cases continue to heat up in New Jersey.  I have predicted this and I predict that it will continue.  Anyone associated with the mortgage business that even thinks that they may be a target should contact an attorney ASAP. 

Since it is a press release and rather detailed, I figured I’d just copy the whole thing.

TRENTON – Attorney General Anne Milgram announced today the indictment of six people charged in three separate, unrelated mortgage fraud cases, including two women charged with spearheading a conspiracy to use stolen identities to obtain more than $1 million in unauthorized mortgages, lines of credit and credit cards.

“The conduct charged in these indictments is unconscionable. It is the kind of greed-driven fraud that is harmful not only to those who were directly victimized but, ultimately, to consumers and legitimate businesses throughout the industry. We are committed to identifying, investigating and prosecuting this type of crime,” said Milgram.

Charged in a 17-count State grand jury indictment with conspiracy, eight counts of theft by deception, seven counts of identity theft and one count of money laundering are Yi Feng Reid, 48, of Closter, Bergen county, and Yu Jane Chen, 42, whose last known address was Philadelphia.

Charged in the same indictment with one count each of conspiracy, theft by deception and identity theft are George Liu, 33, and Ji Gang Chen, 53. Both men once lived in New York, and now reside in China.

According to Division of Criminal Justice Director Deborah Gramiccioni, defendants Reid and Yu Jane Chen both were involved in the mortgage and small business loan industry in the Bergen County area, and unlawfully used the identities of other people to obtain mortgages, other types of loans and unauthorized credit card accounts from 2004 through mid-2007.

Gramiccioni said some victims of the alleged identity theft gave Reid and Yu Jane Chen their personal and financial information in the process of seeking, and ultimately obtaining, a loan. In other cases, victims provided their personal information while beginning the loan process, then changed their minds and elected not to seek a loan.

Those who provided Reid and Yu Jane Chen with identifying information later learned their names had been used to secure unauthorized mortgages, loans and credit cards.

Reid and Yu Jane Chen are accused of being the principal co-conspirators. With their help, co-defendant George Liu allegedly obtained two mortgages on a family member’s house totaling $314,000 by using that relative’s identity, along with false tax returns and phony employment information. Co-defendant Ji Gang Chen, also assisted by Reid and Yu Jane Chen, allegedly obtained four mortgages on a family member’s house totaling $446,000 by using the family member’s identity, as well as false employment and wage information.

In all, the four defendants are charged with obtaining seven mortgages totaling $850,000 by using stolen identities and false information. In addition, 13 bank-approved loans and credit accounts worth a total of more than $300,000 were opened using stolen identities. Numerous banks in Pennsylvania, New Jersey and New York were defrauded.

Among other things, Reid and Yu Jane Chen allegedly used checks, credit card transactions and cash proceeds from their unlawfully-obtained accounts to make ATM withdrawals, and to buy goods at supermarkets, gas stations, toy stores, jewelry stores and other retail outlets. Other credit and cash proceeds were allegedly used to pay for ponies to entertain Reid’s child, to pay Reid’s nanny, to pay for the EZ Pass account of a Reid family member and to pay the expenses of Reid-operated businesses.

Yu Jane Chen allegedly used credit and cash proceeds to make a variety of jewelry purchases, and to pay the expenses of several businesses in which she was involved. Thousands of dollars also went to pay a spiritual adviser shared by both Reid and Yu Jane Chen. In some cases, proceeds from the unauthorized loans were used to make payments on other fraudulently-obtained credit accounts.

Most offenses charged in the Reid/Yu Jane Chen indictment are second-degree.

In an unrelated indictment, commercial loan broker Ramon Coscolluela, 30, of Union, was charged by a State grand jury with one count each of theft by deception (second degree) and attempted theft by deception (second degree).

Coscolluela, owner of Templar Group LLC of Newark, allegedly falsified five loan applications submitted to Commerce Bank in 2007 and 2008 on behalf clients who paid him fees ranging from $1,000 to $6,000.

Four of the loan applications were rejected, but a fifth loan request for $100,000 was granted. When the borrower defaulted on the loan, it prompted a bank review of the other four applications Coscolluela had submitted.

Each of the applications was allegedly found to contain inflated or false information not supplied by Coscolluela’s clients. Applications submitted by Coscolluela on behalf of his clients typically contained false information about the liquid assets they possessed, the value of their homes and/or the net worth of their businesses.

Coscolluela’s clients were never refunded the fees he charged them.

In a third mortgage-fraud indictment, Terrance Givens, 32, of East Orange, was charged with one count of theft by deception (second degree.)

According to Criminal Justice Director Grammicioni, Givens lied about his employment history on a mortgage application in 2005. Specifically, he falsely listed his employer as Wall Designs, Inc. of Newark, a business founded by a relative that, for all intents and purposes, never existed.

In addition to misrepresenting his employment history to the New Century Mortgage Company, Givens allegedly submitted false W-2 forms for the years 2002, 2003 and 2004 showing annual wages of between $67,000 and $72,000.

On the basis of the false information he provided, Givens was approved for, and received, a $200,000 mortgage loan which subsequently went into foreclosure.

An indictment is merely an accusation. All defendants are presumed innocent until proven guilty. Second-degree crimes carry a penalty of between five-and-10 years in prison and fines ranging from $150,000-to-$500,000 per offense.

Madoff gets 150 years but I’m still confused June 29, 2009

Posted by jefhenningeresq in News.
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I’m still shocked by the whole Madoff situation.  I really don’t understand why he didn’t fight this.   I’m hoping someone can explain to me how this makes sense.  At his age, just about any sentence would have been a life sentence.  Due to his age, his life expectancy would be much shorter in prison.  I know his lawyer said 13 years so they were hoping for 12, but I don’t think that he would have survived a 12 year sentence. 

 There have been some studies published on how prison rapidly ages everyone, especially an elderly convict but most lawyers don’t make this argument.  As a result, most judges are reluctant to except it.  However, in this case, I guess it doesn’t matter.

As an attorney, I also fail to understand 100+ year sentences.  Just for fun, I would file an appeal and ask for 120 years.  Why not a million years? It is all such a bunch of nonsense.

The other nonsense part of this is that the sentence was so high so it will deter others.  This is another thing that has no rationale basis behind it but it is a cornerstone of just about every sentencing scheme.  

In my opinion, the only person this will deter is someone else who thinks about taking a plea instead of rolling the dice at trial.  But again, that is the big thing that totally confuses me on this.  At his age, why plea out?  Why not drag this out for every last second so that you can stay out of prison as long as possible?  

I try to let my clients do what they want even if it is against my advice as long as they understand it.  However, unless Madoff has a great reason for throwing his life away, I would get his head examined before I would even allow him to do this.

Anyone have any thoughts?

Fake attorney needs a real one June 25, 2009

Posted by jefhenningeresq in News.
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The Monmouth County Prosecutor alleges that Laurie Rieger of Chester, NJ formed a bogus company named PSL Consultation Group, LLC in the spring of 2005 and began accepting retainers. Even though she lived in Chester, her office was in Matawan.  If you are going to pretend to be an attorney, why would you give yourself a big commute?

She is also alleged to have identified herself as an attorney in private meetings and in court documents. She is also alleged to have appeared on behalf of clients in at least one municipal court in Monmouth County and at a child support hearing in the Monmouth County Superior Court in Freehold. 

She was arrested and charged with practicing law without a license,  a fourth-degree crime and theft by deception charge, a third degree crime.  I really don’t buy the theft charge right now.  I would have to see more information. 

Story is here.