STATE OF NEW JERSEY v. HENRY BAZARTE

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1157-05T11157-05T1

STATE OF NEW JERSEY,

Plaintiff-Respondent,

v.

HENRY BAZARTE,

Defendant-Appellant.

__________________________

 

Argued September 17, 2007 - Decided

Before Judges Weissbard and S.L. Reisner.

On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Indictment No. 04-02-0034-S.

William H. Buckman argued the cause for appellant (William H. Buckman, attorney; Mr. Buckman, Justin Loughry and Alison Perrone, on the brief).

Johanna Barba Jones, Deputy Attorney General, argued the cause for respondent (Anne Milgram, Attorney General, attorney; Karen Fiorelli, Deputy Attorney General, on the brief).

PER CURIAM

Defendant Henry Bazarte appeals from his conviction for second-degree theft by deception, N.J.S.A. 2C:20-4a; third-degree theft by deception, N.J.S.A. 2C:20-4a, fourth-degree falsifying records, N.J.S.A. 2C:21-4a, third-degree misapplication of entrusted property, N.J.S.A. 2C:21-15 and third-degree failure to file New Jersey income tax returns, N.J.S.A. 54:52-8. We affirm the conviction.

I

These are the most pertinent facts. The events surrounding this case took place between 1999 and April 15, 2002. During this time period, there was first a booming market for stocks of internet communications or "dot.com" companies, followed by a sharp drop in the values of those stocks. Day trading and other high-risk stock investments were relatively common while the stock market was booming.

Defendant was a self-employed financial consultant and stock trader, with many years of experience in the business. He was also a respected elder of a Jehovah's Witness congregation. The State charged defendant with swindling friends and acquaintances from the congregation through a number of schemes.

First, the State alleged that defendant induced several of his friends to let him invest money for them, by guaranteeing them that their investments would produce high rates of return with little or no risk. He then proceeded to invest the money in speculative, risky investments, and, when the market dropped, he concealed losses from the investors by various fraudulent means. Defendant allegedly gave investor Frank Schembre falsified account statements to convince him that his account was profitable when it was not. Defendant also paid investor Bruce Keller monies from Keller's principal and monies from other investors, in order to convince Keller that his investment was earning "profits" when in fact it was losing most of its value.

The State also contended that defendant stole money from the account of one of his friends and clients, Christopher Mazzei. Defendant induced Mazzei to add defendant's name to a joint bank account, which account contained Mazzei's investment funds. The State alleged that defendant, without Mazzei's permission or knowledge, wire transferred $4486 of Mazzei's investment funds to an account defendant held in his own name.

Defendant was also charged with inducing several of his clients to buy purported stock shares in an internet company called TSI Broadband, which defendant represented was about to make an initial public offering of its stock. However, the State produced undisputed evidence that TSI Broadband was actually a closely-held company that was in financial difficulties and was attempting to obtain private financing. At the time defendant advised some of his clients to invest in TSI Broadband, the company was in the process of laying off most of its employees. Defendant obtained over $54,000 from the clients. He used some of these funds for his own expenses, and he transmitted some to Keller to keep Keller believing that his investments were paying "profits" when in fact the investments were losing money.

Finally, defendant was charged with failing to file State tax returns for 1999, 2000 and 2001. The State contended that defendant intentionally failed to file the returns in order to avoid paying State taxes on his income, much of which was derived from his illegal stock schemes.

The State produced voluminous testimonial and documentary evidence to support its case. The State's case included testimony from numerous witnesses whom defendant induced to make investments that proved to be unprofitable.

Bruce Keller, a member of defendant's congregation, was disabled and struggling to meet his mortgage payments, when defendant convinced him to take out a further mortgage on his house and let defendant invest the money in what defendant promised would be conservative investments. Thus in November 1999, Keller gave defendant $330,000 to invest for him, telling defendant to make sure that the investments made with the money were "safe, something . . . like Government bonds, something that was very secure, that there was not going to be speculation done with the money because it was all the money we had."

According to Keller, soon after he invested the money he began receiving monthly checks, which he assumed were profits. The checks were from TR Associates and NRG Associates. At some point, when Keller asked for information to help prepare his taxes, defendant told him that the money was tax free; Keller understood that the investment was in government securities. Defendant never revealed to Keller that the investments were unprofitable. At some point in 2000 or 2001, Keller finally learned from others in the congregation that his money had all been lost. At no time did defendant reveal to Keller that the "profits" he was receiving actually came from other investors' money.

The State introduced evidence that contrary to his representations to Keller, defendant had invested Keller's money in highly risky and speculative stocks. Moreover, defendant did not place the money into an account in Keller's name; instead he first placed the money into an account in the name of defendant and Christopher Mazzei. Defendant then moved the money into an account in defendant's sole name. When these investments began losing money, defendant sent Keller checks from Keller's own principal to make it appear that the investments were still profitable. Later, defendant wrote Keller checks which the State's accounting expert, James Blong, traced back to funds defendant obtained from other investors. These investors included Frank Schembre and "investors who purchased TSI Broadband shares." Further, according to Blong, at least $10,000 of Keller's money was transferred to defendant's bank accounts and was never returned to Keller.

Frank Schembre, a member of defendant's congregation, testified that in March or April of 2000, he asked defendant to help him invest between $100,000 and $200,000 in conservative, secure investments. Defendant told Schembre he could obtain returns of "16 percent to 25 percent." Schembre emphatically told defendant that he only wanted to make conservative investments and "to have a secure return." In deciding to invest with defendant, Schembre was influenced by discussions with Keller, who had already invested money with defendant and "was quite satisfied with the performance." In fact, Keller "was receiving his monthly stipend like clockwork. I think it was about $5,000."

In August 2000, Schembre gave defendant $200,000 to invest for him in NRG Capital Management, a fund to be managed by "TR Associates, Inc." Unknown to Schembre, TR Associates was not a stock manager, but rather was a company defendant had set up years earlier with a friend, Thorpe Richardson, to produce a baseball pitching machine. Once that venture was over, defendant kept the TR Associates bank account active and without Richardson's knowledge, used it for his investment schemes. Defendant's name was not on the account; it was opened using Richardson's name and social security number.

According to Schembre, defendant did not give him any documents describing the investments. Defendant gave him two pages to sign and said he would send the rest later. Schembre first gave defendant a check made payable to TR Associates, but then, at defendant's request, gave him a blank check for $200,000 which defendant filled in as payable to the Dreyfus Brokerage Fund. A memo on the check noted "NRG Capital Management fund." Later on, defendant did send Schembre some information about the account.

According to testimony from the State's securities expert, Robert Lowry, contrary to defendant's assurances to Schembre that his investments would be conservative, the Dreyfus account "was very heavily concentrated in a volatile segment of the securities industry." The material defendant gave Schembre (and Keller) described the investment as a hedge fund, a combination of conservative and risky investments designed to "hedge" against risk of loss. However, the actual investments defendant made were all risky. According to Lowry

the account was what I call "long", meaning the positions in the account were - - the only way the account would make money is if the stock market went up. If the stock market went down, it would lose money.

Lowry also testified that the account was not diversified, and the money was invested in technology stocks. "They were securities that by this time in September and October 2000 had already suffered fairly substantial losses in the market because they were concentrated. These are technology stocks and the technology industry . . . had really [suffered] large losses . . . so, these stocks, fairly low name recognition, volatile issues, volatile industry and had already suffered substantial decline and they were all long position." According to Lowry, this account could not be described as a "hedge fund."

Schembre testified that after he invested the money, defendant gave him monthly statements from the Dreyfus account. Although the statements had very little detail, with the exception of one month they all showed that the account was making a profit and increasing in value. The State introduced these statements in evidence. The State subsequently introduced in evidence, without objection from defendant, a series of documents analyzing the Dreyfus account and demonstrating that the statements defendant gave Schembre were fraudulent and grossly overstated the amount and profitability of the account. For example, Defendant gave Schembre a statement dated October 15, 2000, showing the account value at $194,169. In fact, the account was worth $75,240. Defendant gave Schembre a November 15, 2000 statement that showed a closing balance of $205,317. In fact, the true value of the account was $54,003. Schembre testified that had he known the account was experiencing such drastic losses, he "would have closed it immediately." Instead, believing that the account was profitable, he kept it open, and even told defendant to reinvest the "profits" back into the account.

Questioned about a series of withdrawals made from his account by check and wire transfer, amounting to tens of thousands of dollars, Schembre testified that he had not authorized any of the withdrawals and did not know about them. He confirmed that at no time had he authorized defendant to "remove funds from [Schembre's] investment account for the purpose of paying money to Bruce Keller." The State subsequently produced an accounting expert, James Blong, who traced the funds defendant withdrew from Schembre's account and demonstrated that some of the funds in fact were used to pay "dividends" to Keller.

According to Schembre, in February 2001, he heard about some questionable dealings by TR Associates and asked defendant to close the Dreyfus account immediately. Defendant responded that "he couldn't." When pressed for an explanation, defendant responded that "we had a couple of setbacks" and there had been "some losses in the account." When Schembre asked defendant why defendant could not get him his money, when defendant had just sent him a statement showing $205,000 in the account, defendant said he could not do it. Pressed for documentation about the account, defendant did not provide any and asked Schembre not to "hang out my dirty laundry." Defendant never returned any of Schembre's money, and Schembre subsequently learned from Dreyfus that the value of his account had dropped to $14,000.

In addition to testifying about the Dreyfus account, Schembre also testified that in August 2000, defendant had induced him to invest $180,000 in TSI Broadband stock based on defendant's representation that the stock was going to "go public" through an initial public offering (IPO) and double in value. In November 2000, defendant also induced Schembre's son to invest $10,000 in TSI shares. Defendant convinced Schembre to invest another $11,000 in TSI in November, by telling him that the IPO would happen in January 2001, that "an investor in Saudi Arabia . . . had pulled out of the investment and . . . all of a sudden, shares of the IPO had become [available] . . . and they were contacting all their better customers first in an effort to offer them at this IPO price." Defendant assured Schembre "there was no question that the IPO was going to go public." The two November checks were written to TR Associates. Schembre never received any shares of stock in TSI and never got his money back.

The State also produced testimony from investors Margaret Hadju, Pasquale Iannone, Robert Smalls and Ronald McGee, all of whom defendant induced to invest in TSI Broadband on the false premise that TSI was about to engage in an IPO. Blong, the State's accounting expert, traced their investments to show that defendant used these investors' funds to make the monthly payments to Keller and to pay defendant's mortgage and other personal debts. All of these investors lost their money.

Investor Christopher Mazzei testified that he and defendant engaged in day trading together. He testified that defendant talked him into placing $220,000 of his money in a joint account with defendant to be used for day trading. Defendant would receive commissions from the profits. According to Mazzei, while they made money at first, eventually the account dropped from $500,000 to $50,000 and Mazzei told defendant to stop trading in the account. Mazzei testified that on May 17, 2000, when there was about $32,000 in the account, defendant took over $4000 out of the account without Mazzei's permission. He testified that this money could not have been a commission, because the account had suffered disastrous losses. Mazzei also testified that defendant talked him into opening an NRG Trading account with Mazzei's social security number "so that he [defendant] can put these funds in, trade them when this investor comes in with his money, and try to make me whole again." In other words, according to Mazzei, defendant intended to use other investors' money to try to make enough profit to repay Mazzei for his losses.

The State also produced evidence that defendant failed to pay his State income taxes for 1999, 2000, and 2001. Defendant admitted that he failed to pay the taxes, but claimed that he was too upset and stressed to remember to pay them. The State produced evidence that during this time frame defendant and his wife had persistent financial problems, including repeated difficulty paying their mortgage.

Defendant's explanation for all of the State's proofs was as follows. Defendant denied defrauding investors by inducing them to invest in TSI Broadband stock. He claimed that he genuinely believed that TSI was going to engage in an IPO and he thought the stock was a good investment. In that regard, defendant claimed familiarity with various important and knowledgeable investment experts who knew about TSI. Because he worked with Glenn Russo of Russo Ventures, LLC, which was helping TSI obtain financing, defendant also claimed he attended meetings with TSI executives. However, he claimed that he knew nothing about TSI's financial problems, and had no idea it was not going to make a public stock offering, until May 29, 2001.

While he further admitted knowing that investment in a possible IPO was risky and appropriate only for a very limited class of high-income investors, he testified that he believed it was appropriate to encourage Margaret Hajdu, a waitress, and other relatively non-affluent investors, to invest in TSI. He claimed that Hajdu and the other small investors were not actually investing in TSI itself, but that they were buying some of defendant's "founder's stock" in the company, i.e., shares he owned in GM Russo which represented his contingent right to buy TSI stock in the event of an IPO.

Defendant admitted that Schembre had told him to place his money in conservative investments. He claimed that the investments he made were "conservative" in the sense that he did hedge the investments. However, his only documentary evidence that he hedged Schembre's account was a "confirmation" memorandum defendant authored, dated September 28, 2000; this document recited that defendant was pledging to the NRG account his shares of GM Russo Ventures LLC, representing defendant's contingent right to purchase TSI Broadband stock when and if there was ever an IPO. He also claimed that he lost money in Keller's account because he meant to hedge but neglected to do so over a weekend, thus resulting in losses. He did not rebut Lowry's testimony that the account was not hedged at all.

Defendant's explanation for the State's proofs that he took money out of the Schembre account was that defendant was "selling" his shares of TSI founder's stock to the hedge fund he had started for Schembre. He admitted using the proceeds of these sales for his own financial purposes. Defendant admitted these alleged sales continued through February 22, 2001. Defendant claimed not to know that TSI was in financial collapse by that point.

Defendant contended that Keller knew that his account was losing money. Defendant's explanation for the periodic payments to Keller out of the account principal was that Keller needed the money to meet expenses and, hence, asked defendant to pay him some of the principal for that purpose. Defendant admitted there was nothing in writing confirming this arrangement. Defendant did not explain why, if Keller knew he was losing money, Keller told Schembre he was happy with his investments and was getting dividends every month. Defendant admitted taking money invested by Hadju and others and giving it to Keller. He claimed that this was legitimate, because he was selling his "founder's stock" to the small investors and giving the money to Keller to try to make up for mismanaging Keller's account.

Defendant contended that Mazzei knew the day trading account had experienced huge losses, in the hundreds of thousands of dollars. However, he claimed that out of the goodness of his heart Mazzei was "nice enough" to let defendant take a 15% commission anyway, as long as the account was coming back up in value. That was defendant's explanation for taking the $4000 from the account. He agreed that although he and Mazzei had a written agreement, which did not include his right to take commissions during periods of loss, defendant contended that this was a verbal agreement they made.

In the middle of the trial, defendant produced a series of documents which the State contended had not been produced in discovery and contended defendant fabricated. One of defendant's documents purported to be an internet statement from defendant's Ameritrade investment account with Mazzei, showing 1000 shares of Anadigics in the account on May 18, 2000, at a price of 55.5. However, on cross-examination, defendant was confronted with a printout of the same account which the State obtained from Ameritrade, showing that the Anadigics stock was not purchased until May 22, 2000, at a price of 55.375. The prosecutor highlighted this evidence of fabrication in summation, and did not mention the issue of whether defendant provided the documents to his attorneys for production in discovery.

II

On this appeal, defendant raises the following points for our consideration:

POINT I: THE PROSECUTOR'S CROSS-EXAMINATION OF DEFENDANT REGARDING THE PROSECUTOR'S LATE RECEIPT OF DISCOVERY, LETTERS TO COUNSEL AND PTI MATERIALS VIOLATED MR. BAZARTE'S RIGHT TO A FAIR TRIAL. (Not Raised Below)

POINT II: THE ADMISSION OF EVIDENCE OF THE CRD RECORDS, THE BANKRUPTCY PETITION, AND THE DEED TO MS. DALTON'S HOME, COUPLED WITH THE PROSECUTOR'S IMPROPER RELIANCE UPON THIS EVIDENCE IN SUMMATION AND THE TRIAL COURT'S FAILURE TO PROVIDE PROPER LIMITING INSTRUCTIONS, DEPRIVED DEFENDANT OF HIS RIGHT TO A FAIR TRIAL. (Not Raised Below)

A. The "CRD-RECORD" Of Securities Industry Complaints Or Regulatory Actions.

B. The Bankruptcy Petition And The Testimony Regarding The Purchase Of A Family Home In Mother-In-Law's Name.

POINT III: THE PROSECUTOR'S SUMMATION COMMENTS IMPROPERLY DENIED MR. BAZARTE A FAIR TRIAL. (Not Raised Below)

POINT IV: THE TRIAL COURT ABUSED ITS DISCRETION IN REFUSING TO SEVER COUNTS SIXTEEN, SEVENTEEN, AND EIGHTEEN, THEREBY DENYING THE DEFENDANT A FAIR TRIAL.

POINT V: COUNSEL FOR MR. BAZARTE WAS INEFFECTIVE. (Not Raised Below)

Although defendant's arguments concerning ineffective assistance of counsel largely mirror those raised in his prior points, we decline to address the ineffective assistance arguments, without prejudice to defendant raising them in a petition for post-conviction relief. See State v. Preciose, 129 N.J. 451, 460 (1992). Accordingly, we turn to defendant's remaining arguments concerning trial errors.

Without objection, during the testimony of Robert Lowry, the prosecution was permitted to place before the jury a government record which contained defendant's history as a licensed stock broker. However, this CRD record also contained notations concerning prior civil actions against defendant for "misrepresentation" and other wrongdoing in connection with his activities as a stockbroker. Although the CRD record was in no way the focus of the prosecution's case, it contained evidence of prior civil "bad acts" by defendant which should not have been admitted without a Rule 104 hearing and, if admitted, a proper limiting instruction under State v. Cofield, 127 N.J. 328 (1992). Further, there was no need to introduce the CRD record on the issue of licensure, since there was no dispute that defendant had his Federal and State securities licenses. On this record, we cannot accept the State's contention that the CRD record showed that defendant "had duties of fair dealing, truthful disclosure to his clients, as well as a duty to judge their suitability for investments." Absent some further testimony about the violations on the CRD record, there was no evidence as to what they were for or how they might have educated defendant as to his obligations to his clients relevant to this case. Moreover, opinions concerning defendant's professional duties to his clients were elicited from the State's expert witness.

Moreover, these CRD entries included multiple references to defendant's employment with the Blinder Robinson firm, which Lowry testified (with no objection from defense counsel) was involved in securities fraud leading to the jailing of its president Mr. Blinder in "the 1990's." Although defendant left the Blinder firm in 1987, it is possible that the jury could have inferred from this evidence that defendant had also been involved in criminal wrongdoing while employed at the Blinder firm. On the other hand, the CRD record consisted of a series of entries in very small type; the improper information was not highlighted to the jury's attention; it was a small part of a much larger documentary presentation; and it is entirely possible that the jury did not even notice the offending information.

We next address the tax issue. Defendant admitted that he failed to file State tax returns for 1999, 2000 and 2001. The issue was whether he did so with criminal intent. On that issue, the State was permitted to introduce evidence concerning the purchase of defendant's mother's house in 1994, and defendant's subsequent payment of the mortgage, in an effort to show that defendant induced his mother to buy the house for him to avoid attachment of a pre-existing IRS lien against defendant's assets. The asserted relevance of this evidence was to show that if defendant hid assets from the IRS, he was also more likely to hide assets from the State taxing authorities and, therefore, his failure to file State tax returns in 1999, 2000 and 2001 was more likely to have been purposeful rather than an oversight or due to ill health. The evidence, which did strongly support a conclusion that defendant was concealing the house as his asset, also tended to show that defendant had little incentive to pay taxes since his major asset had been placed beyond the reach of the State taxing authorities. His repeated pleas to the mortgagee to be patient with defendant's failure to make timely payments (on a mortgage he referred to as "our mortgage held through my mother"), also supports the conclusion that defendant intentionally failed to file tax returns because he did not have the money to pay the taxes. However, even if this evidence was admissible for some purposes under N.J.R.E. 404(b), Cofield required that the court give the jury a limiting instruction to prevent them from using the information to infer that defendant had a propensity to commit tax violations. 127 N.J. at 340-41. No instruction was requested and none was given.

Next, we address the prosecution's cross-examination of defendant concerning documents that his attorney produced to the prosecution during the trial. While the State was certainly entitled to cross-examine defendant about these documents, in an effort to show that he fabricated them, we conclude it was error to place before the jury the fact that defendant had applied for pre-trial intervention (PTI) and allegedly had not given these documents to his attorney in the context of that application. If any of the juror's knew what PTI was, or even if they made assumptions as to what it was, this evidence may have led them to infer that defendant had been willing, prior to trial, to take action inconsistent with his position at trial that he did absolutely nothing wrong. While R. 3:28(c) does not directly address the issue, evidence of a defendant's prior offer to compromise with the prosecution should not be admitted, for the same reason settlement efforts are not admissible in civil cases. See N.J.R.E. 408. They may lead the jurors to unfairly regard such efforts as an admission of guilt. At minimum, a Rule l04 hearing should have been held to determine the parameters of any permissible efforts by the prosecutor to question defendant about his interactions with his attorneys, and about his PTI application, and a limiting instruction should have been given with respect to any such testimony that was allowed.

On the other hand, although defendant makes much of this issue, the prosecutor's questioning on the PTI application itself consisted of one question which defendant answered, followed by a second question to which the defense counsel objected. The trial judge sustained the objection and the word "PTI" was not mentioned again until defendant mentioned it himself once later in the cross-examination. The PTI application letter was not admitted in evidence and the prosecutor did not mention it in summation.

We turn next to the issue of defendant's 2002 bankruptcy petition. The petition was introduced to show that defendant was aware of the existing IRS liens. The petition was also relevant to rebut claims that defendant failed to file his 1999 through 2001 tax returns either through oversight or because he was too emotionally distraught to focus on his financial issues. The petition had at least some tendency in reason to support a conclusion that if defendant could file a bankruptcy petition, he could also file his tax returns. However, as the State conceded at oral argument, the prosecutor's trial summation cited the petition for a purpose beyond that for which it was admitted. The prosecutor told jurors about assorted luxury items listed in the petition, such as a Rolex watch, and also implied that defendant wished that the prosecution had been civil rather than criminal so that he could file yet another bankruptcy petition in order to escape his financial obligations. Although, these comments were quite brief, they were also improper.

Finally, we must evaluate these errors under the plain error standard, because defense counsel did not raise objections or make requests for limiting instructions at trial. R. 1:7-5; R. 2:10-2. Were these errors, individually or collectively, "clearly capable of producing an unjust result?"

Plain error is reversible if it is "clearly capable of producing an unjust result." R. 1:7-2; R. 2:10-2. Accordingly, the test to apply is whether the possibility of injustice is "sufficient to raise a reasonable doubt as to whether the error led the jury to a result it otherwise might not have reached." State v. Macon, 57 N.J. 325, 336 (1971).

Our decisions underscore the fact-specific inquiry that must be made to determine whether prejudice has resulted from the failure to give a sufficiently limiting instruction governing the use of other-crime evidence.

[State v. G.S., 145 N.J. 460, 473 (1996).]

The "harmless error" rule likewise requires an inquiry into the impact of the error on the jury:

The test of whether an error is harmless depends upon some degree of possibility that it led to an unjust verdict. The possibility must be real, one sufficient to raise a reasonable doubt as to whether the error led the jury to a result it otherwise might not have reached. State v. Macon, 57 N.J. 325, 335-336 (1971). Or, as stated in Fahy v. Connecticut, 375 U.S. 85, 86-87, 84 S. Ct. 229, 230, 11 L. Ed. 2d 171, 173 (1963), "The question is whether there is a reasonable possibility that the evidence complained of might have contributed to the conviction."

[State v. Bankston, 63 N.J. 263, 273 (1973).]

More recently, the Supreme Court characterized the rule as follows:

[O]ur standard of review dictates that "[a]ny error or omission shall be disregarded by the appellate court unless it is of such a nature as to have been clearly capable of producing an unjust result. . . ." R. 2:10-2. The harmless error standard thus requires that there be "some degree of possibility that [the error] led to an unjust result. The possibility must be real, one sufficient to raise a reasonable doubt as to whether [it] led the jury to a verdict it otherwise might not have reached." State v. Bankston, 63 N.J. 263, 273 (1973) (citing State v. Macon, 57 N.J. 325, 335-36 (1971)).

When measured against this yardstick, we conclude that the prosecutor's comments did not "raise a reasonable doubt as to whether the error led the jury to a result it otherwise might not have reached." State v. Bankston, supra, 63 N.J. at 273. The evidence against R.B. was substantial and consistent; even R.B. conceded to the police that he might have engaged in inappropriate sexual contact with C.R., although R.B. claimed an inability to remember clearly because he said he suffered from "blackouts." In this context, we do not find that the prosecutor's comments could have "led the jury to a result it otherwise might not have reached." Ibid.

[State v. R.B., 183 N.J. 308, 330-31 (2005).]

As we discussed in State v. Pillar, 359 N.J. Super. 249, 276 (App. Div.), cert. denied, 177 N.J. 572 (2003), the harmless error rule standard may be easier to articulate than it is to apply. However, both the plain error rule and the harmless error rule require a fact-specific inquiry as to the potential impact of the error on the verdict. Otherwise, any error in a trial would automatically result in reversal of the conviction. We also acknowledge that either rule is particularly difficult to apply where a defendant testifies and the erroneously-introduced evidence unfairly impugns the defendant's credibility. See Pillar, supra, 359 N.J. Super. at 279-80. Such a case requires a particularly searching inquiry. Even if the case consists of numerous witnesses on the State's side and only the defendant's testimony on the other side, the defendant may prevail if the jury finds defendant's testimony credible. On the other hand, since the touchstone of the test is whether the errors had a "clear capacity" to produce "an unjust result," we must still consider, in light of the entire record, whether the errors could have affected the outcome.

Having reviewed the record, including reading the entire voluminous trial transcript, we are not persuaded that any of the errors in the trial rose to the level of plain error. Not only did the State present a very strong case through witness testimony, but much of the State's case rested on a paper trail of financial documents. Blong's testimony was particularly devastating to defendant, because he meticulously documented the trail of funds from the small investors, through several different bank accounts, and finally to Keller. The State thus established that defendant took money from later investors and misapplied it to pay "profits" to Keller, thus concealing from Keller the fact that his investment account was experiencing devastating losses. Further, while defendant attempted to explain away the State's case, no rational jury would have believed him. This was not a case in which we harbor doubts as to whether the jury might have reached a different verdict but for the improperly-admitted evidence. Even on a cold record, defendant's testimony can only be described as preposterous, and perhaps as important, inconsistent with the documentary evidence. We have no doubt defendant would have been convicted even had he received a "perfect trial." See State v. Loftin, 146 N.J. 295, 397 (1996).

Contrary to defendant's characterization of an extended improper cross-examination, the PTI application itself was mentioned in one or two cross-examination questions, although there was some additional questioning about whether defendant turned over documents to his attorney. Most of the prosecutor's lengthy cross-examination about the late-produced documents consisted of entirely proper questions aimed at showing that the documents were fabricated. We find no merit in defendant's argument that this specific and focused cross-examination violated the prohibition in State v. Daniels, 182 N.J. 80, 98 (2004), against making generic accusations that a defendant tailored his testimony.

The prosecutor's summation did not refer to the PTI application or defendant's alleged failure to produce timely discovery. Moreover, the prosecutor did not mention the CRD record in summation or otherwise draw the jury's attention to that evidence. Compare Fitzgerald v. Stanley Roberts, Inc., 186 N.J. 286, 318 (2006)(plain error where plaintiff's counsel "repeated the most salacious aspects of [inadmissible evidence] from her opening statement through to her summation.") While the prosecutor's summation admittedly made improper references to the bankruptcy petition, the references were quite brief, were by no means the central focus of the summation, and taken in context presented no possibility of producing an unjust verdict. To the extent not addressed here, defendant's arguments do not merit further discussion in a written opinion. R. 2:11-3(e)(2).

To summarize, while defendant's able appellate counsel has carefully sifted through the record for possible sources of error, taken in context those errors amount to molehills not mountains. We cannot conclude that any of them amounted to plain error. Were we to apply the harmless error rule, we would reach the same result. There is no basis in this record to disturb defendant's conviction.

Affirmed.

 

Defendant has not appealed the aggregate eight-year sentence imposed. Effective thirty days after the date of this opinion, we vacate our prior order filed January 17, 2006, admitting defendant to bail and staying his prison sentence.

Since large numbers of documents were introduced in evidence, but the parties' appendices did not include them, we required the parties to submit supplemental appendices with all of their exhibits admitted in evidence. Defendant included in his supplemental appendix a large number of documents that were not admitted in evidence. We have not considered those documents.

Blong also traced money into and out of investor accounts and defendant's accounts to demonstrate that defendant used investors' money to pay his mortgage to mortgagee Ruby Huttner, and to pay other debts.

According to Mazzei, the two men had a written agreement that 30% of the profits would go to defendant and 70% would go to Mazzei.

Absent a PCR proceeding, we cannot tell why defense counsel did not object to the CRD record. It is possible that had he objected, the State would have produced the underlying documentation concerning defendant's civil violations, to show that he could not seriously have believed that his conduct toward his clients in this case was acceptable under the rules governing his license (i.e., absence of mistake under N.J.R.E. 404(b)).

In that connection, we find no merit in defendant's contention that the court should have severed the tax counts of the indictment for separate trial. Evidence of defendant's thefts from his clients was directly relevant to the tax counts of the indictment, because that was the income the State contended defendant was trying to avoid disclosing and paying taxes on.

The judge expressed both concern and annoyance that the defense counsel appeared not to have focused attention on preparing for trial until the last minute. Some of the problems noted in this opinion may have resulted from lack of preparation, as well as a general failure on the part of both counsel to flag to the court's attention evidentiary issues that needed to be addressed before the jury heard testimony about them. In fairness to all participants, however, we note that the sidebar conferences in this case were apparently not properly recorded, as they are almost all noted in the transcript as "indecipherable." Therefore, although none have been brought to our attention in the briefs, issues may have been raised in these sidebars that do not appear in the transcript.

(continued)

(continued)

29

A-1157-05T1

November 20, 2007