A disbarred New Jersey lawyer accused of helping himself to large sums of client funds has succeeded in defeating one of the most serious charges against him—and in the process prompted an appeals court to shed some light on how the money laundering statute applies to attorney account misuse.
The Appellate Division said evidence that Joseph Talafous Jr. used his trust and business accounts to facilitate the alleged thefts by itself didn’t support the charge of money laundering—the only first-degree offense among the 19 counts with which he is charged.
“The State presented no evidence that the theft was concealed (as opposed to committed) through placement of the money in defendant’s accounts,” the Appellate Division said Tuesday in State v. Talafous.
“The money laundering statute is intended to be construed broadly to serve its purposes,” the court added. “However, it requires proof of something more than an underlying crime.”
Though unpublished, “I think it’s an important case in the development of money laundering [law],” said Talafous’ lawyer, Gerald Miller of Miller, Meyerson & Corbo in Jersey City.
“I think it’s important in that area of law when you’re dealing with trust accounts,” Miller added, noting that attorney trust account misuse commonly leads to a money laundering charge.
Representing the state was Deputy Attorney General Joseph Glyn. Office spokesman Peter Aseltine said in a statement: “We’re considering our options with respect to the dismissed charge, which was one of 19 counts against Talafous in the indictment. Ultimately, we’re prepared to move forward with our major theft case against Talafous.”
Talafous, 55, is accused of stealing six-digit sums from numerous clients. He was a Jersey City solo before his disbarment by consent in 2015—based on a charge of knowing misappropriation of client funds. He has disputed the allegations in the criminal case, however.
Talafous was indicted last year. In addition to money laundering, he was charged with second-degree theft charges, among others, according to the court’s decision Tuesday.
Talafous pleaded not guilty; the matter proceeded through discovery and motion practice, and efforts to have other counts dismissed were unsuccessful, according to Miller.
But Hudson County Superior Court Judge Mitzy Galis-Menendez granted Talafous’ motion to dismiss the money laundering charge, holding that there was no subsequent crime to theft when Talafous allegedly put client funds in his accounts and later withdrew them for his own use. The state appealed.
In the ruling, Appellate Division Judges Susan Reisner and Jessica Mayer said some of the alleged transfers to Talafous’ trust account were inappropriate, or amounted to theft, but prosecutors “failed to present evidence that he laundered the funds in any of the cases.”
In one case, Talafous is charged with using a power of attorney in connection with an incapacitated client to improperly transfer funds to his trust or business account, then using them for himself. He’s also charged with taking $400,000 from a minor’s settlement proceeds, and $316,000 from a client estate, and, again, transferring those to his trust and business accounts, and later using the money for himself.
“The State argues that defendant engaged in two transactions, because when he stole the money from his clients’ estate or trust accounts, he placed the funds in his attorney trust or business accounts ‘to give the stolen money an air of legitimacy,’” the appeals court said in the per curiam decision.
“However, the State produced no evidence before the Grand Jury to establish that putting money in either account served to ‘conceal or disguise the nature, location, source, ownership or control of the property derived from criminal activity,’” the panel added, quoting language from the money laundering statute.
The court noted that members of the grand jury asked two clarifying questions on the money laundering charge, and “the prosecutor did not answer the questions, other than by referring to the statute in general terms and telling the jurors to read the indictment.”
The allegedly stolen sums cited in the opinion add up to $1.46 million.
Miller said he expects a trial date to be set soon.
Asked about the allegations themselves, Miller said of Talafous: “He denies it, and we’re ready to go to trial.”