Lawyer’s ‘Money Laundering’ Charges Upheld by New Jersey Court

Shuffling client cash around firm accounts can be criminal money laundering, a New Jersey appeals court ruled Monday in a decision expanding penalties for crooked lawyers.

Steven H. Salami’s theft of client real estate closing funds, which he used in a Ponzi-like scheme to pay other clients and himself, qualified for indictment under New Jersey’s financial transaction crime statute the Superior Court of New Jersey Appellate Division ruled unanimously. Salami had convinced the trial court that his conduct didn’t fit the crime, but the appeals court reversed.

“Because it is clear to us the prosecutor presented ‘some evidence’ that defendant was managing, controlling and supervising the possession and transport of funds entrusted to him by ‘newer clients to complete real estate transactions’ for previously retained clients, thereby concealing his prior misappropriations and allowing his continuing thefts to go undetected, we are satisfied defendant was properly charged with money laundering,” Judge Allison E. Accurso wrote for the panel.

Salami has been suspended from practicing law in New Jersey since 2019.

Dozens of clients gave Salami cash for home sale closings that never happened. Prosecutors accused him of shifting around more than $1 million in client funds in his scheme, and bilking dozens of clients of nearly $600,000. But a back-and-forth shifting of funds from his trust fund and operating funds didn’t meet a “two-transactions” common law test for financial crimes, the trial court ruled dismissing two counts under Salami’s indictment. Based on the state’s broad reading of the law, the trial court reasoned that even a pickpocket could be charged with money laundering.

While New Jersey’s money laundering statute is broader than its federal cousin, the trial court decision was a misreading of the law, Accurso said. Though the federal statute is designed to tackle organized crime and those involved with large-scale criminal undertakings, the state statute can go so far as to criminalize one lawyer fudging the books, so long as the prosecutors can show financial facilitation: the knowing transportation of funds that are derived from criminal activity.

“While we need not consider whether the statute is broad enough to envelop the trial court’s hypothetical example of ‘a pickpocket who steals money from a pedestrian’s pocket and thereby possesses the property known to be derived from criminal activity,’ we are confident defendant’s conduct in ‘essentially running a Ponzi scheme with his [law] practice’ qualifies as financial facilitation,” Accurso said.

The case is New Jersey v. Salami, N.J. Super. Ct. App. Div., No. A-2958-21, 11/27/23.