STATE OF NEW JERSEY v. DU KANG

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

A-5376-13T3

STATE OF NEW JERSEY,

Plaintiff-Appellant,

v.

DU KANG,

Defendant-Respondent.

__________________________________

STATE OF NEW JERSEY,

Plaintiff-Respondent,

v.

DU KANG,

Defendant-Appellant.

___________________________________

December 4, 2015

Argued telephonically November 9, 2015 Decided

Before Judges Yannotti and Vernoia.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Indictment No. 13-08-00139.

Daniel I. Bornstein, Deputy Attorney General, argued the cause for appellant (A-4890-13)/respondent (A-5376-13) (John J. Hoffman, Acting Attorney General, attorney; Mr. Bornstein, of counsel and on the briefs).

Andrew M. Baron argued the cause for respondent (A-4890-13)/appellant (A-5376-13) (Kochanski, Baron & Galfy, attorneys; Mr. Baron, on the briefs).

PER CURIAM

Defendant was convicted after a jury trial of second-degree conspiracy to commit theft by deception, second-degree theft by deception, and fourth-degree falsifying or tampering with records. The trial court merged the conspiracy and falsifying records charges with the second-degree theft by deception charge for purposes of sentencing. The court sentenced defendant within the third-degree sentencing range to a three-year custodial term. Defendant appeals his conviction. The State separately appeals defendant's sentence. We have consolidated the appeals, and address them in this opinion. We affirm defendant's conviction and reverse and remand for resentencing.

I.

Defendant and codefendant, Shahid Javed (Javed), were charged in an indictment with second-degree conspiracy to commit theft by deception, N.J.S.A. 2C:5-2, (count one); and second-degree theft by deception, N.J.S.A. 2C:20-4, N.J.S.A. 2C:20-2b(1) and N.J.S.A. 2C:2-6 (count two).

At the trial, the State presented evidence which established that in the spring or summer of 2010, H.D. and his wife considered investing in a business.1 H.D. learned that he might be able to invest in a gas station in Union, and he was referred to Javed. H.D. contacted Javed, who showed him several gas stations that were available.

In September or October 2010, Javed introduced H.D. to defendant. Javed said they were "business partners." Thereafter, Javed told H.D. about a gas station in the South Brunswick area. Defendant and Javed asked if H.D. was interested in purchasing the right to operate the gas station with them.

Javed said the owner wanted $425,000 for the lease, but H.D. replied that he was only interested in investing $80,000 to $100,000. Javed stated that he was "very close to the owner" and thought he could get a better price. On October 31, 2010, Javed called H.D., and stated that he and defendant wanted to meet him.

They met the following day. Javed told H.D. that the owner of the gas station was willing to drop his price, and it would be between $300,000 and $350,000. They went to look at the gas station. They also decided to open a bank account "just in case" the owner decided to drop his price, and to form a partnership.

On November 4, 2010, defendant and Javed contacted H.D. and said the owner was demanding $300,000. The owner wanted the money that day or he would sell the lease to someone else. Defendant and Javed knew that H.D. only had $100,000, so defendant said he borrowed $300,000 from his father, which had been paid to the owner that day.

The following day, defendant and Javed showed H.D. the receipt. They asked H.D. when he would be able to pay defendant's father back, and H.D. told them he needed a week to get the money. Shortly thereafter, defendant, Javed and H.D. signed a partnership agreement, which stated that H.D.'s capital contribution was $310,370, and defendant and Javed would each contribute $34,065.

H.D. testified that he wanted defendant and Javed as his partners, "because of their expertise." H.D. said he did not know what the business would be worth. Defendant and Javed told him about the gas station's performance. They put together a spreadsheet and calculated the business's profit margin.

H.D. later told defendant and Javed he had the money to repay defendant's father, and he was told to bring cash to a meeting on November 12, 2010, but H.D. informed them his bank would not give him that much cash. They agreed that he could bring the money in the form of checks, and he should try to break the total "down to smaller amounts." H.D. and his wife met defendant and Javed, and gave them three bank checks totaling $300,000.

Thereafter, H.D. told defendant that he and his wife were "so happy" with the business opportunity, and grateful that defendant had helped him pay the owner the $300,000. H.D. said they were going to work hard to make the business a success. On November 24, 2010, H.D. began to operate the gas station. He asked defendant and Javed for a copy of the signed lease. Defendant and Javed said "it was under review by the lawyer" and they did not have a copy they could provide to him.

Defendant and Javed provided H.D. with a letter of intent, but it was not the letter of intent that defendant had signed. The actual letter of intent reflected a purchase price of $125,000.

In December 2010, defendant and Javed told H.D. they had decided to withdraw from the partnership because they were pursuing other business opportunities. H.D. agreed to return their investments, and he started to do so in installments. In February 2011, the partnership was dissolved. H.D. asked the owner of the gas station to transfer the lease to him. H.D. later learned that the purchase price for the lease was $125,000, not $300,000.

R.V. testified that he was personally involved in the leasing of the gas station in the fall of 2010. R.V. stated that he never discussed a purchase price of $300,000 with defendant or Javed. He said the business had been leased for $125,000. P.V., R.V.'s son and managing partner of the family business, testified that he was the owner of eight gas stations, one of which was the gas station leased to defendant and Javed. In 2010, P.V., defendant and Javed signed a letter of intent to lease the right to operate the business. P.V. said the price was $125,000.

P.V. testified that he never told defendant and Javed the price was either $425,000 or $300,000. He said the draft lease indicated that $125,000 would be paid when it was signed. However, defendant sent P.V. a draft lease and asked that the purchase price be removed. Defendant did not tell P.V. why he wanted the price deleted. The purchase price was not included in the lease that was executed. The lease was signed on November 16, 2010, and within a few days, P.V. received $125,000.

Defendant and Javed were tried jointly. At the conclusion of the presentation of the evidence, defendant and Javed requested that the court charge the jury on the offense of fourth-degree falsifying or tampering with records, N.J.S.A. 2C:21-4, as a lesser included offense of second-degree theft by deception. The trial court denied the request but, with the consent of the defendants, the court charged the jury on the falsifying or tampering offense as an additional charge (i.e., count three).

The jury found defendant and Javed guilty of each of the charges. Defendant was sentenced on June 4, 2014. The trial court merged his convictions for conspiracy (count one) and falsifying or tampering with records (count three) with the second-degree theft by deception charge (count two). Relying upon N.J.S.A. 2C:44-1f(2), the court sentenced defendant on the second-degree theft by deception charge within the third-degree sentencing range. Defendant was sentenced to a custodial term of three years. N.J.S.A. 2C:43-6a(2) and (3). The court ordered that defendant pay fines and penalties. Defendant also was ordered to pay $87,500 in restitution to H.D.

On June 13, 2014, the State filed a notice of appeal of defendant's sentence. On June 15, 2014, defendant filed a notice of appeal of his conviction. The appeals were consolidated.

On defendant's appeal, he presents the following arguments

POINT I

APPELLANT WAS PROSECUTED AND CONVICTED FOR WHAT ESSENTIALLY WAS A CIVIL DISPUTE BETWEEN THE PARTIES.

POINT II2

IF THE CONVICTION WITHSTANDS SCRUTINY, THE COURT BELOW APPROPRIATELY SENTENCED APPELLANT IN ACCORDANCE WITH N.J.S.A. 2C:44-1f(2). AS SUCH, THE STATE'S CROSS-APPEAL, WHICH MAY NOT HAVE BEEN TIMELY FILED, MUST FAIL.

On the State's appeal, it makes the following argument

POINT I

THE SENTENCING COURT ABUSED ITS DISCRETION IN IMPOSING A DOWNGRADED SENTENCE OF THREE YEARS FOR THE SECOND-DEGREE CRIME OF THEFT BY DECEPTION, WITHOUT ARTICULATING AN ADEQUATE BASIS FOR DOING SO, AS REQUIRED BY N.J.S.A. 2C:44-1f(2) AND STATE V. MEGARGEL, 143 N.J. 484 (1996).

II.

Defendant argues that his conviction for theft by deception should be overturned because "affirmative disclosure" is not an element of theft by deception.3 He contends his failure to disclose to H.D. the true purchase price of the business does not satisfy the elements of the crime of theft by deception, but rather constitutes civil wrongdoing. It is defendant's position, therefore, that the evidence was insufficient to sustain his conviction under N.J.S.A. 2C:20-4.

We note that defendant essentially argues that the jury's verdict is against the weight of the evidence. An appeal based upon such a contention is not cognizable "because defendant failed to move for a new trial based upon that ground as required by Rule 2:10-1." State v. Reininger, 430 N.J. Super. 517, 538 (App. Div.), certif. denied., 216 N.J. 367 (2013). A motion for a new trial was not made here. We exercise our discretion, however, to consider and decide defendant's "against the weight of the evidence" argument, to the extent that is what he argues here. State v. Smith, 262 N.J. Super. 487, 511-512 (App. Div.), certif. denied. 134 N.J. 476 (1993).

In determining the sufficiency of the State's proof, the test to be applied is, "whether the evidence viewed in its entirety, and giving the State the benefit of all of its favorable testimony and all of the favorable inferences which can reasonably be drawn therefrom, is such that a jury could properly find beyond a reasonable doubt that the defendant was guilty of the crime charged." State v. Moffa, 42 N.J. 258, 263 (1964) (citing State v. Fiorello, 36 N.J. 80, 90 (1961)).

"[A] person is guilty of theft if he purposely obtains property of another by deception." N.J.S.A. 2C:20-4. To purposefully deceive means: (a) to "create[] or reinforce[] a false impression, including false impressions as to law, value, intention, or other state of mind"; (b) to "prevent[] another from acquiring information which would affect his judgment of a transaction"; or (c) to "fail[] to correct a false impression which the deceiver previously created or reinforced." Id. Theft by deception "'occurs where one obtains the property of another by purposely creating a false impression.'" State v. Rodgers, 230 N.J. Super. 593, 601 (App. Div.) (quoting State v. Talley, 184 N.J. Super. 167, 169 (App. Div. 1982), rev'd on other grounds, 94 N.J. 385, 388 (1983)), certif. denied, 117 N.J. 54 (1989).

Defendant contends there was insufficient evidence presented upon which he could have been convicted of theft by deception. We have considered the evidence presented and find the State presented sufficient evidence defendant violated each of the subsections of N.J.S.A. 2C:20-4 to sustain his conviction for second-degree theft by deception.4 Moffa, supra, 42 N.J. at 263.

We are convinced that sufficient evidence was presented at trial from which the jury could find that defendant "create[d]" and "reinforce[d]" a "false impression" as to the purchase price of the business. N.J.S.A. 2C:20-4(a). Defendant advised H.D. that the purchase price was $300,000 when, in fact, it was $125,000. There was evidence presented that defendant prevented H.D. from "acquiring information which would affect his judgment" of the purchase transaction. N.J.S.A. 2C:20-4(b). Defendant provided H.D. with the letter of intent containing a false purchase price and later requested that the purchase price be deleted from the lease. This evidence also established that defendant "fail[ed] to correct a false impression which [he] previously created or reinforced." N.J.S.A. 2C:20-4(c). In sum, we are convinced that there was ample evidence upon which "a jury could properly find beyond a reasonable doubt that the defendant was guilty of" second-degree theft by deception in violation of each of the subsections of N.J.S.A. 2C:20-4. Moffa, supra, 42 N.J. at 263.

Defendant argues that his conviction should be reversed because a conviction for theft by deception cannot be based upon a failure to make an affirmative disclosure. In support of this argument, defendant relies upon State v. Damiano 322 N.J. Super. 22, 49-50 (App. Div. 1999), certif. denied, 163 N.J. 396 (2000). In that case, we stated that the Legislature's rejection of a proposed provision in N.J.S.A. 2C:20-4 which would have made a failure to make an affirmative disclosure a crime reflected a "decision that a mere breach of the implied warranty of good title, obviously actionable under the Uniform Commercial Code in a civil action, is not by itself sufficient to constitute criminal conduct." Id.

We reject defendant's contention because, as we have explained, his actions went well beyond any "mere" failure to make an affirmative disclosure. The evidence supported defendant's convictions under each of the subsections of N.J.S.A. 2C:20-4, without regard to any alleged failure to make an affirmative disclosure. N.J.S.A. 2C:20-4a, b and c; Rodgers, supra, 230 N.J. Super. at 602. We therefore conclude that the jury's verdict was not against the weight of the evidence.

III.

The State appeals the trial court's decision to sentence defendant within the third-degree range under N.J.S.A. 2C:44-1f(2). The State contends the trial court incorrectly found and relied upon mitigating factors six and ten in its sentencing decision. N.J.S.A. 2C:44-1b(6) and (10).

Defendant challenges the timeliness of the State's appeal. When a court "downgrades" a sentence under N.J.S.A. 2C:44-1f(2), "that sentence does not become final for ten days in order to permit the State to contest the sentence imposed." State v. Sanders, 107 N.J. 609, 616 (1987); N.J.S.A. 2C:44-1f(2). "[F]ailure to perfect an appeal within the ten-day period will result in a dismissal of the State's appeal." Sanders, supra, 107 N.J. at 616. Defendant was sentenced on June 4, 2014. The judgment of conviction was entered by the court on June 5, 2014. The State's notice of appeal was filed on June 13, 2014, eight days after the judgment of conviction was filed. The State's appeal was timely.

When reviewing a trial court's sentencing decision, this court "may not substitute its judgment for that of the trial court." State v. Fuentes, 217 N.J. 57, 71 (2014). A reviewing court must, however, ensure the sentencing guidelines in the criminal code have been followed. Id. We must "require that an exercise of discretion be based upon findings of fact that are grounded in competent, reasonably credible evidence" and "that the factfinder appl[ied] correct legal principles in exercising its discretion." State v. Roth, 95 N.J.334, 363 (1984).

The trial court found aggravating factor nine, "the need to deter the defendant and others from violating the law," to be "strong." N.J.S.A. 2C:44-1a(9). The court found mitigating factor six, that the defendant will compensate the victim, N.J.S.A. 2C:44-1b(6); seven, that defendant had no criminal history, N.J.S.A. 2C:44-1b(7); ten, that defendant is likely to respond affirmatively to probation, N.J.S.A. 2C:44-1b(10); and eleven, which the court gave "slight" weight, that defendant's imprisonment would entail excessive hardship to himself or his dependents. N.J.S.A. 2C:44-1b(11).

The court further found it was "convinced" that the mitigating factors "substantially outweigh the aggravating and the interest of justice demands a downgraded sentence." Relying on its authority under N.J.S.A. 2C:44-1f(2), the court sentenced defendant within the third-degree range to a three-year custodial sentence on the second-degree theft by deception charge. N.J.S.A. 2C:43-6a(3).

The State argues that the trial court erred by finding mitigating factor six. Under N.J.S.A. 2C:44-1b(6), the court may properly consider that the "defendant has compensated or will compensate the victim of his conduct." (emphasis added). The purpose of this mitigating factor is to aid in the "rehabilitation of the wrongdoer, [deny] a wrongdoer any fruits of the crime, [compensate] the victim for financial loss, or a combination of those factors." State v. Corpi, 297 N.J. Super 86, 92 (App. Div.), certif. denied, 149 N.J. 407 (1997) (citations omitted). This factor may be found where the court determines there is a "factual basis and present or potential ability to pay." Id. at 93.

The court found mitigating factor six based upon what it described as counsel's statement that defendant had "money available at this time" to make payment of a "significant portion" of the monies due to H.D. The court's finding is not supported by the record. Defendant's counsel explained to the court that defendant would make restitution if defendant was "given the ability to do so."

Counsel also advised the court that defendant would not be able to make restitution if he was sentenced to a custodial term and faced the possibility of deportation. However, as we stated previously, the court sentenced defendant to a custodial term. As a result, counsel's statements did not support the court's finding that defendant would make restitution. Indeed, counsel indicated that imposition of a custodial sentence would render defendant unable to make restitution. We conclude the trial court erred in finding mitigating factor six.

The State also argues that the trial court erred by finding mitigating factor ten, that "the defendant is particularly likely to respond affirmatively to probationary treatment." N.J.S.A. 2C:44-1b(10). Defendant was convicted of a second-degree offense, which carries a presumption of incarceration. N.J.S.A. 2C:44-1d. The trial court did not find that the presumption of incarceration should be overridden. See e.g., State v. Evers, 175 N.J. 355, 388 (2003). Because the presumption of incarceration under N.J.S.A. 2C:44-1d applied to defendant's conviction, he was not eligible for probation and the trial court's finding of mitigating factor ten was in error. State v. Washington, 408 N.J. Super. 564, 581 (App. Div.) (the sentencing court properly disregarded mitigating factor ten in sentencing a defendant for second-degree theft by unlawful taking, because "[d]efendant did not establish any basis to override that presumption [of incarceration]"), certif. denied, 200 N.J. 549 (2009).

The State further argues that the trial court erroneously sentenced defendant to a term within the third-degree range pursuant to N.J.S.A. 2C:44-1f(2), which states in relevant part

In cases of convictions for crimes of the first or second degree where the court is clearly convinced that the mitigating factors substantially outweigh the aggravating factors and where the interest of justice demands, the court may sentence the defendant to a term appropriate to a crime of one degree lower than that of the crime for which he was convicted.

In State v. Megargel, 143 N.J. 484, 504-05 (1996), the Court held that "the standard for downgrading an offense for the purpose of sentencing under section 44-1f(2) is two-pronged: first, the court must be 'clearly convinced' that the mitigating factors 'substantially' outweigh the aggravating ones, and second, the court must find that the 'interest of justice' demands that the sentence be downgraded." Thus, the statute establishes a "high standard" for a reduction in a sentencing range. Id. at 500 (citing State v. Hodge, 95 N.J. 369, 376 (1984)).

We are compelled to reverse the trial court's decision to sentence defendant within the third-degree range under N.J.S.A. 2C:44-1f(2). First, the trial court incorrectly found and relied upon mitigating factors six and ten. The court must, therefore, reweigh the factors in order to make a proper determination whether the court is "clearly convinced" the mitigating factors substantially outweigh the aggravating factors. Megargel, supra, 143 N.J. at 505. Here, the trial court merely stated that it was "convinced" that the mitigating factors substantially outweighed the aggravating factors.

Second, to sentence defendant within the third-degree range, the court must also have found that the "interest of justice" demanded a sentence reduced to a term appropriate for a crime one degree lower than that for which the defendant was convicted. N.J.S.A. 2C:44-1f(2). To meet that standard, the defendant must provide, and the sentencing court must find, "compelling reasons for the downgrade." Megargel, supra, 143 N.J. at 502. "These reasons must be in addition to, and separate from, the 'mitigating factors which substantially outweigh the aggravating factors,' that the trial court finds applicable to a defendant under the first prong of section 44-1f(2)." Ibid.

"[T]he severity of the crime remains the single most important factor in considering whether the interest of justice demands a downgrade." State v. Lake, 408 N.J. Super. 313, 326 (App. Div. 2009). "In evaluating the severity of the crime, the trial court must consider the nature of and the relevant circumstances pertaining to the offense." Megargel, supra, 143 N.J. at 500. Because the "interest of justice" focuses on the offense and not the offender, the "circumstances used as compelling reasons for a downgrade should arise from within the context of the offense itself." Lake, supra, 408 N.J. Super. at 326. If the circumstances of the offense are similar to a lower degree offense, "a downgraded sentence may be appropriate." Ibid.

Furthermore, "a trial court should also state why sentencing the defendant to the lowest range of sentencing for the particular offense for which he was convicted, is not a more appropriate sentence than a downgraded sentence under section 44-1f(2)." Megargel, supra, 143 N.J. at 502; See also State v. Johnson, 376 N.J. Super. 163, 173 (App. Div.), certif. denied, 183 N.J. 592 (2005). "It is not enough to say that the 'interest of justice' demanded that defendant be sentenced within a third-degree range; the trial court was obligated to explain how it reached that conclusion." State v. Lebra, 357 N.J. Super. 500, 514 (App. Div. 2003).

Here, the trial court did not make the findings necessary for a downgraded sentence under N.J.S.A. 2C:44-1f(2). The court's decision to downgrade defendant's sentence was based upon the court's finding that the "interest of justice demands a downgraded sentence." Because the "court failed to identify any reasons, compelling or otherwise, in addition to and separate from, the mitigating factors, which would explain why the interest of justice demanded a downgraded sentence," Megargel, supra, 143 N.J. at 503, the sentence is vacated and the matter is remanded remanded for resentencing in accordance with this opinion.

Affirmed on defendant's appeal, and reversed in part on the State's appeal. The matter is remanded to the trial court for resentencing in conformance with this opinion. We do not retain jurisdiction.

1 We refer to certain individuals involved in this matter by their initials to protect their privacy.

2 Point II of defendant's brief is not made in support of his appeal. It is made in opposition to the State's appeal of his sentence. The arguments made in Point II will be addressed infra in the discussion of the State's appeal of defendant's sentence.

3 Defendant's challenge to the validity of his conviction is based solely upon the purported insufficiency of the proof presented on the theft by deception charge. N.J.S.A. 2C:20-4. Defendant does not expressly challenge his convictions for conspiracy or falsifying or tampering with records.

4 Defendant does not dispute the State presented sufficient evidence to establish that the amount of the theft was $75,000 or more, thereby justifying his conviction for a second-degree offense. N.J.S.A. 2C:20-2b(1)(a). As we have explained, there was sufficient evidence from which a jury could find that defendant stole $175,000 from H.D.