STATE OF NEW JERSEY VS. STEPHANIE HAND (14-02-0007, ESSEX COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0516-17T2
STATE OF NEW JERSEY,
Plaintiff-Respondent,
v.
STEPHANIE HAND,
Defendant-Appellant.
_____________________________
Argued October 11, 2018 – Decided August 14, 2019
Before Judges Simonelli, Whipple and DeAlmeida.
On appeal from the Superior Court of New Jersey, Law
Division, Essex County, Indictment No. 14-02-0007.
Hilary L. Brunell argued the cause for appellant
(Mandelbaum and Salsburg, attorneys; Vincent J.
Nuzzi, of counsel; Hilary L. Brunell, on the briefs).
Sarah Lichter, Deputy Attorney General argued the
cause for respondent (Gurbir S. Grewal, Attorney
General, attorney; Sarah Lichter, of counsel and on the
brief).
PER CURIAM
Defendant Stephanie Hand appeals from a September 19, 2017 judgment
of conviction of conspiracy, financial facilitation of criminal activity (money
laundering), and theft by deception. We reverse defendant's money laundering
conviction, affirm her remaining convictions, and remand for resentencing.
I.
The following facts are derived from the record. At the time of the
offenses, defendant was an attorney licensed to practice law in this State. She
participated in a mortgage fraud scheme with co-defendants Thomas D'Anna
and Julio Concepcion centered on the fraudulent sale of two properties owned
by D'Anna to straw purchasers.
Concepcion obtained the stolen identities of people in Puerto Rico to use
as straw purchasers. He created false identification documents, driver's licenses,
social security numbers, bank accounts, wage statements, and tax information
using the stolen identities.
D'Anna obtained mortgages in the names of the straw purchasers, using
the fake documents and financial information created by Concepcion. He
completed mortgage applications in the names of the straw purchasers, which
he submitted to a mortgage broker, and created fake sales contracts listing the
straw purchasers as the buyers of the properties. The mortgage broker, relying
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on the false documentation created by D'Anna and Concepcion, deemed the
applications complete and turned them over to a lender.
Relying on the falsified documents, the lender verified the purchasers'
bank accounts had sufficient funds to cover the loan payments. In addition, the
lender verified the buyers' tax returns reported sufficient income to qualify for
the loans and bore social security numbers matching those on the loan
applications. The lender approved the mortgage loans. Both loans were
conditioned on the purchasers making a cash down payment of ten percent of
the purchase price.
Defendant served as the closing agent for both transactions, purportedly
representing the purchasers. Another attorney represented D'Anna as the seller,
but did not appear at the closings. According to defendant, prior to the first
transaction someone claiming to be the purchaser appeared at her office, signed
the closing documents, and left before D'Anna arrived. The "purchaser" did not
bring a check for the ten percent down payment and said he would give the down
payment check to D'Anna within twenty-four hours. After defendant relayed
this information to D'Anna, she allowed the closing to go forward.
Defendant completed a Department of Housing and Urban Development
(HUD) closing statement falsely certifying that she received the ten percent
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down payment from the purchaser. According to the lender's closing
instructions, the settlement agent was required to obtain the down payment
check, place the check in an escrow account, and certify that the HUD closing
statement contained a true and accurate statement of all funds received and
disbursed. Defendant falsely certified that she complied with the instructions
and allowed the loan to close under these false pretenses. A representative of
the lender testified the lender would not have issued the loan proceeds had it
known that the ten percent down payment was not actually received by
defendant.
Based on defendant's false statements, the lender released the loan
proceeds to defendant's attorney trust account. In addition to paying various
fees associated with the transaction, defendant made the following
disbursements from her attorney trust account: (1) she paid two existing
mortgages D'Anna had taken on the property; (2) she issued a check to a
company controlled by Concepcion, purportedly to satisfy an outstanding
invoice for remodeling work at the property that was never performed; and (3 )
issued the remaining funds to D'Anna, although the amount he received was less
than was listed on the HUD statement because defendant had not collected the
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down payment. Defendant was paid attorney's fees for her participation in the
closing.
Concepcion was in control of the bank account opened in the name of the
straw purchaser. He made three payments on the mortgage following the closing
before halting payments. The lender ultimately was compelled to foreclose on
the property. 1
The closing for the second property took place a few weeks later. The
"purchaser" never appeared at defendant's office and defendant knew that no
check for the ten percent down payment had been given to D'Anna. Once again,
defendant allowed the closing to go forward and completed a HUD closing
statement falsely stating that the purchaser had made the down payment. She
again falsely certified that she complied with the lender instructions requiring
her to place the purchaser's down payment in an escrow account. As was the
case with the first transaction, had the lender been made aware that the buyer
had not made the down payment, the lender would not have issued the loan.
Based on defendant's false statements, the lender released the loan
proceeds to defendant's attorney trust account. In addition to paying various
1
Testimony at trial suggested Concepcion made the mortgage payments in order
to avoid the suspicion that may have been triggered if the loan immediately went
into default.
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fees associated with the transaction, defendant made the following
disbursements from her attorney trust account: (1) she paid an existing mortgage
D'Anna had taken on the property; (2) she issued a check to a company
controlled by Concepcion, purportedly to satisfy an outstanding invoice for
remodeling work at the property that was never performed; and (3) issued the
remaining funds to D'Anna, although the amount he received was less than was
listed on the HUD statement because defendant had not collected the down
payment. Defendant was paid attorney's fees for her participation in the second
closing.
As was the case with the first property, Concepcion was in control of the
bank account opened in the name of the straw purchaser. He made a few
payments on the mortgage following the closing before halting payments. The
lender ultimately was compelled to foreclose on the property.
A grand jury indicted defendant, D'Anna, and Concepcion, charging them
with: (1) first-degree conspiracy to commit money laundering and/or theft by
deception, N.J.S.A. 2C:5-2, N.J.S.A. 2C:21-25(b)(2)(a), and N.J.S.A. 2C:20-
4(a) (count one); first-degree money laundering, N.J.S.A. 2C:21-25(b)(2)(a)
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(count two); and second-degree theft by deception, N.J.S.A. 2C:20-4(a) (count
three).2
Defendant was tried separately. She denied having engaged in a
conspiracy with D'Anna and Concepcion and testified that she was hired to
represent the "purchasers" in the two real estate transactions unaware of the
underlying scheme. D'Anna entered a guilty plea to second-degree conspiracy.
He testified at trial and denied knowing that Concepcion had obtained stolen
identifications and created fake identification documents and financial
information. He admitted, however, that he and defendant entered into an
agreement to lie on the HUD closing statements regarding the receipt of down
payments from the purchasers in order to secure issuance of the two loans and
complete the closings. In exchange for his testimony, the State recommended
D'Anna receive a probationary sentence.
The trial court declined defense counsel's request to cross-examine
D'Anna with respect to the third fraudulent transaction not involving defendant
alleged in the indictment. The court held that evidence regarding the third
transaction was not relevant to the charges before the jury.
2
The indictment also charged D'Anna, Concepcion, and two other defendants
with respect to a third alleged fraudulent sale of property. The State did not
allege that defendant was involved in the third sale.
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In addition, defense counsel sought to cross-examine D'Anna with respect
to the sentencing exposure he faced when he entered into his plea agreement.
Defense counsel sought to question D'Anna with respect to a twenty-year
maximum potential sentence on the charges in the indictment, including the third
transaction that did not involve defendant.3 The court, however, limited cross-
examination to questions regarding the seven-year sentence offered to D'Anna
in the State's first plea offer. In addition, the court noted that D'Anna, as a first-
time offender, was unlikely to receive the maximum sentence on all charges if
convicted after trial. The court determined that reference to the potential
twenty-year sentence did not reflect the reality of D'Anna's sentencing exposure
and could, therefore, mislead the jury. Defense counsel was permitted to explore
all other aspects of D'Anna's plea agreement with the State, including that his
counsel negotiated the initial seven-year offer down to a probationary sentence.
Concepcion also testified at trial. He admitted his involvement in the
mortgage fraud and stated that D'Anna was a full-fledged co-conspirator from
the inception of the scheme. Concepcion testified that he did not know
defendant, had not conspired with her, and never met her.
3
Although the court referred to D'Anna's potential exposure as twenty years,
defendant's brief states that his potential exposure was fifty years. Our analysis
is the same under either potential term of imprisonment.
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At the close of the State's case, defendant moved for a judgment of
acquittal on the money laundering charges. The court denied the motion,
concluding the record contained sufficient evidence on which a jury could find
defendant guilty of money laundering. The jury thereafter found defendant
guilty of second-degree conspiracy on count one, second-degree money
laundering on count two, and second-degree theft by deception on count three.
Defendant moved for a new trial, arguing the court's limitation on her
counsel's cross-examination of D'Anna and errors in the court's jury instructions
on money laundering resulted in a miscarriage of justice. On September 15,
2017, the court denied defendant's motion in an oral opinion.
On the same day, the court sentenced defendant as a third-degree offender.
According to the State's merits brief, the court sentenced defendant to an
aggregate term of four years imprisonment. Defendant's merits brief states that
the court sentenced her to two consecutive four-year terms, an aggregate term
of eight years. The judgment of conviction contains conflicting information
with respect to defendant's sentence. According to the judgment of conviction,
the court merged count one into count two and sentenced defendant on count
two to a four-year term of imprisonment. In addition, the judgment of
conviction states that on count three the court sentenced defendant to a four-year
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term of imprisonment to run consecutive to the sentence on count two. This
would constitute an aggregate eight-year term of imprisonment. However, the
judgment of conviction also states "004 Years" under "Total Custodial Term."
The transcript of the sentencing hearing indicates that the court intended to
impose consecutive sentences for an aggregate eight-year term. The court also
imposed an anti-money laundering profiteering penalty of $250,000, N.J.S.A.
2C:21-27.2, along with other statutory fees.
This appeal followed. Defendant makes the following arguments for our
consideration:
POINT I
THE JURY INSTRUCTIONS ON MONEY
LAUNDERING, COUPLED WITH THE STATE'S
MISLEADING CLOSING ARGUMENTS, LED TO
AN UNFAIR TRIAL. (Raised as Plain Error).
A. The Crime of Money Laundering Requires
Proof of both an underlying Criminal Act and
Concealment.
B. The State's Discussion of Money
Laundering Invited the Jury to Convict without
Finding a Separate Act of Concealment.
C. The Court's Instructions Did Not
Adequately Define the Statutory Element of
Concealment and Were, Therefore, Plain Error.
POINT II
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THE DEFENDANT'S SIXTH AMENDMENT
RIGHTS WERE PREJUDICED WHEN THE TRIAL
COURT PRECLUDED THE DEFENSE FROM
FULLY CROSS-EXAMINING THE STATE'S
COOPERATING WITNESS ON THE BENEFIT HE
RECEIVED IN EXCHANGE FOR HIS TESTIMONY.
A. It Was Prejudicial Error to Prohibit
Defense Counsel from Questioning the State's
Witness about His Full Sentencing Exposure
Prior to the Plea Deal.
POINT III
THE STATE'S PROOFS, AT THE CLOSE OF [] ITS
CASE, WERE INSUFFICIENT TO ESTABLISH THE
CRIME OF MONEY LAUNDERING. THE
DEFENDANT WAS THEREFORE ENTITLED TO A
JUDGMENT OF ACQUITTAL ON THOSE
CHARGES RELATING TO THE MONEY
LAUNDERING OFFENSES.
A. The Defendant Was Entitled to a Judgment
of Acquittal on the Money Laundering Offenses
at the Close of the State's Case.
II.
We use the same standard as the trial judge in reviewing a motion for
judgment of acquittal at the close of the State's case. State v. Bunch, 180 N.J.
534, 548-49 (2004). We must determine
whether, viewing the State's evidence in its entirety, be
that evidence direct or circumstantial, and giving the State
the benefit of all its favorable testimony as well as all of
the favorable inferences which reasonably could be drawn
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therefrom, a reasonable jury could find guilt of the charge
beyond a reasonable doubt.
[State v. Reyes, 50 N.J. 454, 459 (1967).]
Under Rule 3:18-1, the court "is not concerned with the worth, nature or
extent (beyond a scintilla) of the evidence, but only with its existence, viewed
most favorably to the State.'" State v. Muniz, 150 N.J. Super. 436, 440 (App.
Div. 1977). "If the evidence satisfies that standard, the motion must be denied."
State v. Spivey, 179 N.J. 229, 236 (2004).
We are satisfied that the evidence in this case, viewed in its entirety and
giving the State all favorable inferences therefrom, was insufficient to allow a
reasonable jury to find defendant guilty of money laundering beyond a
reasonable doubt.
N.J.S.A. 2C:21-25(b)(2)(a), the "concealment" provision of the money
laundering statute, under which defendant was charged, states:
A person is guilty of a crime if the person:
....
b. engages in a transaction involving property
known or which a reasonable person would believe to
be derived from criminal activity
....
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(2) knowing that the transaction is designed in whole
or in part:
(a) to conceal or disguise the nature, location,
source, ownership or control of the property derived
from criminal activity . . . .
A conviction under N.J.S.A. 2C:21-25(b)(2)(a) requires two elements: (1)
the underlying criminal activity that generates the property; and (2) the money-
laundering transaction where the nature, location, source, ownership or control
of that property is concealed or disguised. State v. Harris, 373 N.J. Super. 253,
266 (App. Div. 2004). This interpretation of the statute comports with its
purpose: to "stop the conversion of ill-gotten criminal profits, . . . and punish
those who are converting the illegal profits, those who are providing a method
of hiding the true source of the funds, and those who facilitate such activities."
State v. Diorio, 216 N.J. 598, 625 (2014) (quoting N.J.S.A. 2C:21-23(e)).
The federal courts have interpreted the federal money laundering statute
similarly. See 18 U.S.C. § 1956(a)(1). The statute does not prohibit "non-
money laundering acts such as a defendant's depositing the proceeds of unlawful
activity in a bank account in his own name and using the money for person
purposes." United States v. Conley, 37 F.3d 970, 979 (3d Cir. 1994).
Money laundering must be a crime distinct from the
crime by which the money is obtained. The money
laundering statute is not simply the addition of a further
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penalty to a criminal deed; it is a prohibition of
processing the fruits of a crime or of a completed phase
of an ongoing offense.
[United States v. Abuhouran, 162 F.3d 230, 233 (3d
Cir. 1998) (citation omitted).]
Even when viewing the evidence in the light most favorable to the State,
the record contains evidence of only defendant's criminal acts of conspiracy and
theft by deception and not a subsequent transaction by defendant designed to
conceal or disguise the nature, location, source, ownership, or control of the
property obtained through her criminal activity. Defendant was charged with
conspiring with D'Anna and Concepcion to commit a theft by deception by
perpetrating a mortgage fraud. The mortgage fraud was carried out by obtaining
two mortgage loans based on fraudulent loan applications and fake financial and
identification documents. Defendant's role in the fraud was to submit falsified
HUD closing statements, to receive loan proceeds issued based on those false
statements, and to distribute the proceeds in accordance with the falsified
statements. She completed her criminal activity when she distributed the loan
proceeds to satisfy D'Anna's outstanding mortgages, paid Concepcion for
fraudulent remodeling invoices, paid herself attorney's fees, satisfied other fees,
and distributed the remainder to D'Anna.
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The record contains no evidence of any subsequent transaction by
defendant to conceal or disguise the nature, location, source, ownership or
control of the loan proceeds. We reject the State's argument that defendant's
distribution of a portion of the loan proceeds to entities controlled by
Concepcion to satisfy fraudulent remodeling invoices constituted money
laundering. While those distributions were intended to hide Concepcion's
involvement in the scheme, they were part and parcel of the underlying criminal
activity and constituted his share of the proceeds of that activity. The State
attempts to draw too fine a line by characterizing this element of the underlying
criminal offense as a separate instance of money laundering. Defendant's
conviction on count two is, therefore, reversed. In light of our decision reversing
defendant's money laundering conviction, we need not decide her other
arguments regarding that charge.
III.
Defendant's argument regarding the limitations the court imposed on the
cross-examination of D'Anna concern her remaining convictions. Both the Sixth
Amendment to the United States Constitution and Article I, Paragraph 10 of the
New Jersey Constitution provide in a criminal trial the accused has the right "to
be confronted with the witnesses against him[.]" U.S. Const. amend. VI; N.J.
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Const. art. I, ¶ 10. "Our legal system has long recognized that cross-examination
is the 'greatest legal engine ever invented for the discovery of truth.'" State v.
Basil, 202 N.J. 570, 591 (2010) (quoting California v. Green, 399 U.S. 149, 158
(1970)). "[T]he exposure of a witness'[s] motivation in testifying is a proper
and important function of the constitutionally protected right of cross -
examination." State v. Bass, 224 N.J. 285, 301 (2016) (quoting Delaware v. Van
Arsdall, 475 U.S. 673, 678-79 (1986)). "[A] defendant must be afforded the
opportunity through effective cross-examination to show bias on the part of
adverse state witnesses." State v. Sugar, 100 N.J. 214, 230 (1985); see also State
v. Parsons, 341 N.J. Super. 448, 458 (App. Div. 2001) (holding "a defendant has
a right to explore evidence tending to show that the State may have a 'hold' of
some kind over a witness, the mere existence of which might prompt the
individual to color his testimony in favor of the prosecution") (quoting State v.
Holmes, 290 N.J. Super. 302, 312 (App. Div. 1996)). "A . . . claim that there is
an inference of bias is particularly compelling when the witness is under
investigation, or charges are pending against the witness, at the time that he or
she testifies." Bass, 224 N.J. at 303.
"In an appropriate case the right of confrontation will yield to other
‘legitimate interests in the criminal trial process, such as established rules of
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evidence and procedure designed to ensure the fairness and reliability of
criminal trials.'" State v. Castagna, 187 N.J. 293, 309 (2006) (quoting State v.
Garron, 177 N.J. 147, 169 (2003)). "That the credibility of a witness may be
impeached on cross-examination is well settled" however "[t]he scope of cross-
examination is a matter resting in the broad discretion of the trial court ." State
v. Martini, 131 N.J. 176, 255 (1993), rev'd on other grounds, State v. Fortin, 178
N.J. 540 (2004). "A trial judge may bar inquiry into a witness's potential bias,
without offending the Confrontation Clause, because of concerns about
'harassment, prejudice, confusion of the issues, the witness' safety, or
interrogation that is repetitive or only marginally relevant.'" Bass, 224 N.J. at
303 (quoting Van Arsdall, 475 U.S. at 679). Pursuant to Rule 403 "relevant
evidence may be excluded if its probative value is substantially outweighed by
the risk of . . . undue prejudice[.]" N.J.R.E. 403.
Our review of the record in light of these precedents leads us to affirm the
court's decision. The court permitted defendant's counsel to cross-examine
D'Anna at length about his plea agreement, the degree of the crimes with which
he was charged, the fact that he was offered a seven-year term of imprisonment
by the State in exchange for his testimony, and that his counsel negotiated an
agreement in which the State recommended he receive only a probationary term.
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The court balanced defendant's right to confront the witness on his expectation
of favorable treatment from the State in return for his testimony with the State's
right to be free from prejudicial and potential confusing evidence regarding the
maximum exposure on the charges D'Anna originally faced. As the court
concluded, D'Anna did not realistically face a twenty-year sentence. The State
initiated plea negotiations by offering him a recommended seven-year term. In
addition, as a first-time offender defendant was unlikely to receive the maximum
sentence on each of the counts were he to have been found guilty at trial. The
limitation imposed by the court did not prevent defendant from using cross-
examination for the desired purpose of questioning D'Anna's credibility by
suggesting the State may have influenced his testimony through favorable
resolution of his pending criminal charges.
We also agree with the court's conclusion that cross-examination
questions regarding the third alleged fraudulent transaction in which defendant
was not involved would have elicited irrelevant evidence, likely to cause jury
confusion. Moreover, evidence regarding the third transaction would have
risked prejudice for defendant, given that the State did not allege she was
involved in that fraudulent land sale.
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Defendant's conviction of money laundering is reversed. Her conviction
of conspiracy included both a conspiracy to engage in money laundering and a
conspiracy to engage in theft by deception. D'Anna's testimony that he and
defendant agreed to submit false HUD statements in order to entice the lender
to release the mortgage loans was sufficient for the jury to convict defendant of
conspiracy to engage in theft by deception. We therefore affirm defendant's
conspiracy conviction to the extent it is based on a conspiracy to commit theft
by deception. Her remaining conviction is also affirmed. The matter is
remanded for resentencing. We do not retain jurisdiction.
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