The Third Circuit has upheld the conviction and 70-month sentence of a former Cozen O’Connor attorney who was found guilty of diverting fees from the law firm and not paying taxes on that unreported income.
In a nonprecedential opinion filed Friday, the U.S. Court of Appeals for the Third Circuit denied ex-attorney Charles Naselsky’s argument that there was not enough evidence to support he intended to defraud Cozen O’Connor by keeping certain fees for himself because the firm’s policy for professional fees for outside services was ambiguous. Naselsky was challenging the portion of his conviction related to three wire-fraud counts.
Naselsky argued the $290,000 he was paid related to two real estate transactions was simply a finder’s fee for introducing the buyers and the seller. Because the introductions were done in a “virtual instant,” they did not draw upon Cozen O’Connor’s time or resources to the point the firm would have ownership of the fees, Naselsky argued, according to the opinion by Judge Thomas I. Vanaskie.
“Assuming that Naselsky’s position is a plausible view of the facts presented at trial, it does not follow that the evidence was insufficient to support the view apparently adopted by the jury, i.e., that the funds were due to Cozen O’Connor under the 2001 Cozen policy because they stemmed from deal-making inseparable from Naselsky’s operations as a practiced real-estate attorney,” Vanaskie said. “Stated otherwise, the jury finding of intent to defraud Cozen O’Connor does not ‘fall below the threshold of bare rationality.’”
Vanaskie said the jury was capable of determining from the record that Naselsky used the same relationships and legal expertise for which he was paid by Cozen O’Connor in brokering the two real estate deals.
“Even without relying on the interpretation of the 2001 Cozen policy supplied by the firm’s chairperson, we conclude that a rational trier of fact could find that the payments obtained by Naselsky … constituted ‘professional fees’ due to Cozen O’Connor, and that Naselsky possessed a specific intent to defraud the firm with respect to those fees,” Vanaskie said.
The court further dismissed Naselsky’s argument that failing to comply with a contractual condition of employment can’t rise to the level of fraud, but at best is a breach of contract. Vanaskie said Naselsky told the parties to the real estate transactions that Cozen O’Connor had approved the fees being made to him. The judge also noted that Naselsky wrote several emails trying to establish the fees were loans rather than fees owed either to Cozen O’Connor or to Blank Rome, which Naselsky joined in 2006 before any investigation of him began.
As to his 70-month sentence, Naselsky argued the court inappropriately applied a two-level enhancement to the sentencing guidelines range for an abuse of his position of power and another two-level enhancement for the use of a special skill.
Vanaskie said both enhancements were appropriate. Naselsky had argued there was no use of his skill as a real estate lawyer in introducing the buyers and seller and depositing a check for the fee. Vanaskie disagreed, noting Naselsky used his skill to get the deal done and be in a position to ask for the fees.
“Indeed, the record reveals that the wrongdoing at issue was enabled predominantly, if not exclusively, by Naselsky’s application of his abilities as an experienced real-estate lawyer,” Vanaskie said.
Judge Kent A. Jordan and Senior Judge Morton I. Greenberg joined Vanaskie in the opinion.
Naselsky began serving his sentence in November 2012. He was represented on appeal by Robert Welsh of Welsh & Recker, who wasn’t immediately available for comment.
First Assistant U.S. Attorney Louis Lappen said the office was “pleased with the outcome.”
(Copies of the 13-page opinion in United States v. Naselsky, PICS No. 14-0417, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •