STATE OF NEW JERSEY VS. LING ZHOU (18-08-0622, CAPE MAY COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: February 23, 2021
• Docket: A-1151-19
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-1151-19

STATE OF NEW JERSEY,

Plaintiff-Respondent,

v.

LING ZHOU,

Defendant-Appellant. _______________________

Argued October 26, 2020 – Decided February 23, 2021

Before Judges Fasciale and Susswein.

On appeal from Superior Court of New Jersey, Law Division, Cape May County, Indictment No. 18-08- 0622.

Thomas M. Cannavo argued the cause for appellant (Steven W. Hernandez, PC, attorneys; Thomas M. Cannavo, of counsel and on the brief).

Jeffrey H. Sutherland, Cape May County Prosecutor, argued the cause for respondent (Gretchen A. Pickering, Senior Assistant Prosecutor, attorney; of counsel and on the brief).

PER CURIAM Defendant, Ling Zhou, appeals from her conditional guilty plea conviction

for financial facilitation of criminal activity, N.J.S.A. 2C:21-25(b)(2)(A).

Defendant challenges the April 24, 2019 order issued by Judge Sarah Beth

Johnson denying her motion to dismiss the indictment. After carefully

reviewing the record in light of the governing principles of law, we affirm.

We briefly summarize the evidence presented to the grand jury. In

January 2017, a real estate title agency, Seaboard Title Company, received a

fraudulent email that caused the agency to transfer funds from an escrow

account. Seaboard is located in Avalon, New Jersey. The escrow account

contained the proceeds of the sale of property in Avalon. Prior to closing, the

real estate agent for the seller, RJ Soens, instructed Seaboard to mail a cheque

for the proceeds of the sale in the amount of $788,477. Seaboard thereafter

received an email, purportedly sent by Soens, requesting that the proceeds be

sent instead by wire transfer. However, that email was not sent from Soens —

rather, the originating email address was nearly identical to Soens's save for a

subtle misspelling. Deceived into believing that Soens had sent new

instructions, Seaboard wired the proceeds of the sale to the Wells Fargo Bank

account referenced in the fraudulent email. That account, which was opened

and serviced at a branch in Santa Clara, California, was in the name of Happy

A-1151-19 2 Oceans, Inc. Defendant's signature is the only signature on that account. The

proceeds of the sale were transferred almost immediately from defendant's Wells

Fargo account to accounts outside the United States.

Law enforcement agencies in other States were investigating similar

fraudulent transactions involving defendant. In the course of those

investigations, defendant admitted to receiving large sums of money and sending

the money to foreign accounts. She admitted to investigators that she knew

some of the transferred funds were the result of fraudulent activity. She also

admitted to lying on multiple occasions to conceal fraudulent transactions.

Based on this evidence, a grand jury returned an indictment charging

defendant with first-degree financial facilitation of criminal activity, N.J.S.A.

2C:21-25(b)(2)(a); second-degree theft by deception, N.J.S.A. 2C:20-4; and

second-degree impersonation, N.J.S.A. 2C:21-17(a)(1). Defendant filed a

motion to dismiss the indictment arguing that New Jersey lacks jurisdiction to

prosecute her for these crimes. She also argued the State failed to present a

prima facie case for theft, financial facilitation of criminal activity, or

impersonation, and that the prosecutor failed to disclose clearly exculpatory

information to the grand jury. Judge Johnson denied defendant's motion,

A-1151-19 3 rendering an eight-page written decision. Defendant filed an emergent motion

seeking leave to appeal, which we denied.

Thereafter, defendant entered a conditional guilty plea to second-degree

financial facilitation of criminal activity. The State agreed to dismiss the

remaining counts in the indictment. The negotiated agreement recommended a

suspended sentence in the third-degree range. The plea agreement also allowed

defendant to preserve the right to appeal the order denying her motion to dismiss

the indictment. See R. 3:9-3(f).

In November 2019, defendant was sentenced in accordance with the plea

agreement to a non-custodial term of probation. Defendant's sentence runs

concurrently with a non-custodial sentence imposed in Minnesota stemming

from a conviction for similar criminal activity.

Defendant presents the following contentions for our consideration:

POINT I

THE COURT BELOW ERRED IN DENYING THE DISMISSAL OF THE CHARGES IN THE INDICTMENT DUE TO LACK OF TERRITORIAL JURISDICTION AND EVIDENCE. THUS, THE MONEY LAUNDERING CONVICTION SHOULD BE VACATED AND DISMISSED WITH PREJUDICE.

A-1151-19 4 POINT II

FAILURE BY THE STATE TO DISCLOSE CLEARLY EXCULPATORY EVIDENCE TO THE GRAND JURY REQUIRED DISMISSAL OF ALL CHARGES IN THE INDICTMENT WITH PREJUDICE. EVEN IF NOT EXCULPATORY, THE EMAILS AND TEXTS WERE NECESSARY TO A FAIR CONSIDERATION OF JURISDICTION BY THE GRAND JURY.

We reject these contentions and affirm substantially for the reasons

expressed in Judge Johnson's thoughtful written opinion. We add the following

comments.

I.

Territorial Jurisdiction

As a general proposition, New Jersey may exercise jurisdiction only over

offenses that occur within its borders. State v. Sumilkoski, 221 N.J. 93, 101

(2015) (citing State v. Denofa, 187 N.J. 24, 36 (2006)). Territorial jurisdiction

nonetheless extends "to offenses committed partly outside of the State." Id. at

102 (quoting State v. Streater, 233 N.J. Super. 537, 543 (App. Div. 1989)). The

critical inquiry is whether there exists "a direct nexus to New Jersey." Ibid.

(citing N.J.S.A. 2C:1-3).

N.J.S.A. 2C:1-3(a)(1) provides that "a person may be convicted . . . of an

offense committed by his [or her] own conduct . . . if [e]ither the conduct which

A-1151-19 5 is an element of the offense or the result which is such an element occurs within

the State." Furthermore, N.J.S.A. 2C:1-3(g) extends jurisdiction

[w]hen the result which is an element of an offense consists of inflicting a harm upon a resident of this State or depriving a resident of this State of a benefit, . . . even if the conduct occurs wholly outside this State and any property that was affected by the offense was located outside this State.

In this instance, the sale of the property occurred in New Jersey, the

escrow account containing the proceeds of the sale was located in New Jersey,

the fraudulent email that induced the transfer of funds was received in New

Jersey, the victim of the criminal scheme was in New Jersey, the financial loss

suffered by the victim occurred in New Jersey, and the amount involved that

determined the gradation of the money laundering crime is the amount that was

stolen from the New Jersey escrow account. We view these circumstances as

sufficient to establish a direct nexus between defendant's criminal activity and

this State.

Defendant's reliance on the outcome in Sumilkoski is misplaced. In that

case, school officials chaperoned high school students from New Jersey on an

overseas trip. The school officials were accused of sexually assaulting the

students while abroad. Id. at 95–96. Although the physical acts constituting the

alleged sexual misconduct occurred entirely overseas, the prosecutor argued that

A-1151-19 6 an element of the sexual assault offense—the school officials' supervisory

authority over the students, N.J.S.A. 2C:14-2(c)(3)(b)—originated in New

Jersey. The Court rejected the State's argument, holding that supervisory

authority over the students was merely an attendant circumstance that did not on

its own confer jurisdiction. 1 Id. at 106–07. The Court concluded there was

insufficient nexus to this State because the alleged sexual conduct and the

result—the harm allegedly inflicted on the children by their adult chaperones —

occurred entirely outside the borders of New Jersey. Id. at 107.

As Judge Johnson aptly noted, the circumstances in the case before us are

quite different from those presented in Sumilkoski. The scheme to electronically

divert funds from the targeted New Jersey escrow account was effectuated by a

fraudulent email that was addressed to an escrow agent in this State. That email

resulted in the transfer of monies from the New Jersey-based account. We deem

it to be significant that the financial facilitation of criminal activity statute

provides that the grade of the offense is determined by the "amount involved."

1 N.J.S.A. 2C:1-14(h) defines an "[e]lement of an offense" as "conduct," "a result of conduct," or "attendant circumstances." Conduct is defined as "an action or omission and its accompanying state of mind, or, where relevant, a series of acts or omissions." N.J.S.A. 2C:1-14(d). The term "attendant circumstances" is not defined in the New Jersey Code of Criminal Justice statute. Nor does the statute define the term "result of conduct." A-1151-19 7 N.J.S.A. 2C:21-27(a) ("The offense defined in [N.J.S.A. 2C:21-25(b)]

constitutes a crime of the first degree if the amount involved is $500,000.00 or

more."). In the present case, the amount involved relates directly to the money

that was fraudulently diverted from the New Jersey escrow account, reflecting

the loss suffered by the New Jersey victim. In these circumstances, we believe

the "amount involved" element that determines the gradation of the crime is not

an "attendant circumstances" element comparable to the school officials'

supervisory capacity in Sumilkoski. Rather, we believe the amount involved is

tantamount to a "result" element for purposes of establishing territorial

jurisdiction. Cf. State v. Tringali, 451 N.J. Super. 18, 31 (App. Div. 2017)

("[T]he 'result,' consisting of the monetary harm to the victim, is an 'element' of

the crime of second-degree impersonation, within the meaning of the

jurisdiction statute, even though its function is to establish the grade of the

crime."). As Judge Johnson aptly noted, "the State has proffered prima facie

evidence not only that the victim . . . is a New Jersey entity[,] but also that the

property in question . . . was located in New Jersey before it was fraudulently

transferred to California." Cf. State v. Aloi, 458 N.J. Super. 234, 241 (App. Div.

2019) (finding that evidence of threats originating in Maryland but received by

the alleged victim in New Jersey was sufficient to support indictment for

A-1151-19 8 extortion and establish territorial jurisdiction). Put simply, unlike in

Sumilkoski, the harm in this instance occurred in New Jersey.

Furthermore, the act of sending the fraudulent email to New Jersey, which

accomplished its objective to precipitate the transfer of funds from the escrow

account, constitutes conduct that occurred both in this State and the point of

origin, California. 2 That email was an integral part of the criminal scheme to

siphon monies from this State and to spirit those funds to overseas accounts.

Given that criminal conduct occurred at least partly in this State, and caused

financial harm here, we conclude the State established a direct nexus sufficient

to hold defendant accountable under New Jersey criminal law.

II.

Prima Facie Case

We next address defendant's contention the State failed to present to the

grand jury sufficient proofs to establish a prima facie case of money laundering,

theft, and false personation. This contention lacks sufficient merit to warrant

extensive discussion in this opinion. R. 2:11-3(e)(2). An indictment is

presumed valid, see State v. Perry, 124 N.J. 128, 167–68 (1991), and should not

2 We recognize that defendant denies having sent that email. As discussed in Section II, infra, the State presented ample evidence to establish a prima facie case that defendant committed the theft. A-1151-19 9 be dismissed unless "manifestly deficient or palpably defective," State v. Hogan,

144 N.J. 216, 229 (1996). See also Tringali, 451 N.J. Super. at 27 ("A trial court

should only dismiss an indictment on the 'clearest and plainest' grounds and only

when it is clearly defective.") (quoting State v. N.J. Trade Waste Ass'n, 96 N.J.

8, 18–19 (1984)). The scope of our review is narrow. We review the trial court's

determination of a motion to dismiss for a clear abuse of discretion. Aloi, 458

N.J. Super. at 238 (citing State v. Ferguson, 455 N.J. Super. 56, 63 (App. Div.

2018)).

The grand jury is tasked with "determin[ing] whether the State has

established a prima facie case that a crime has been committed and that the

accused has committed it." Hogan, 144 N.J. at 228. A prima facie case is much

less than the proof beyond a reasonable doubt standard necessary to sustain a

conviction. While a prima facie case requires "at least 'some evidence as to each

element' of the alleged crime," we have recognized that "the quantum of such

evidence 'need not be great.'" State v. Fleischman, 383 N.J. Super. 396, 399

(App. Div. 2006) (quoting State v. Schenkolewski, 301 N.J. Super. 115, 137

(App. Div. 1997)). In determining whether the prima facie standard is met,

"[t]he court should evaluate whether, viewing the evidence and the rational

inferences drawn from that evidence in the light most favorable to the State, a

A-1151-19 10 grand jury could reasonably believe that a crime occurred and that the defendant

committed it." State v. Morrison, 188 N.J. 2, 13 (2006).

As Judge Johnson explained in her opinion, the grand jury heard testimony

from a detective that following the receipt of the fraudulent email, Seaboard

Title transferred $788,477 to a bank account that belonged only to defendant.

Money was then electronically transferred almost immediately from defendant's

account to multiple foreign bank accounts. When defendant was asked by out-

of-state investigators about suspicious transactions, she admitted that she knew

some of the funds she had transferred from her account were the result of

fraudulent activity. Defendant also admitted to lying to conceal the fraud.

Viewed in the light most favorable to the State, and allowing for rational

inferences, this evidence was sufficient for the grand jury to reasonably believe

that defendant had committed financial facilitation of criminal activity,

impersonation, and theft by deception. Morrison, 188 N.J. at 13.

III.

Exculpatory Evidence

We also reject defendant's contention Judge Johnson erred by denying the

motion to dismiss the indictment on the grounds the prosecutor failed to present

clearly exculpatory evidence to the grand jury. Defendant portrays herself as a

A-1151-19 11 victim of a foreign conman referred to as "Gerald Moretti," with whom she had

a romantic relationship. She contends the grand jury should have been provided

with the voluminous emails and text messages between defendant and Moretti.

Judge Johnson did not abuse her discretion in reaching a contrary conclusion.

Prosecutors have a "limited [disclosure] duty" to disclose to the grand jury

evidence that both "directly negates the guilt of the accused and is clearly

exculpatory." State v. Hogan, 144 N.J. 216, 237 (1996). Evidence that directly

negates the guilt of the accused is defined as evidence that "squarely refutes an

element of the crime in question." Ibid. This does not include evidence as to

motive, which generally is not an element of a crime. Ibid.

The second requirement, that evidence be clearly exculpatory, "requires

an evaluation of the quality and reliability of the evidence." Ibid. The evidence

"must be sufficiently reliable[,] bear some indicia of credibility in its own right[,

and] cannot require the grand jury to engage in significant credibility

determinations." State v. Evans, 352 N.J. Super. 178, 197 (App. Div. 2001).

Defendant presented Judge Johnson with a package of emails, text

messages, and an audio recording of defendant's interview with out -of-state

investigators. Because we affirm for the reasons explained in Judge Johnson's

written opinion, we need not in this opinion re-address defendant's arguments at

A-1151-19 12 length, much less describe each communication. We note the record shows that

Judge Johnson carefully reviewed these submissions before rendering her

decision.

Applying the principles established in State v. Evans, 352 N.J. Super. 178,

196 (2001), Judge Johnson examined the emails and text messages to determine

whether they were "sufficiently reliable and bear[] some indicia of credibility in

[their] own right without requiring the grand jury to engage in any credibility

determinations." Ibid. Judge Johnson concluded the emails and text messages

failed to meet that standard because the grand jury would be required to make a

credibility determination as to the authenticity and veracity of those

communications.

Judge Johnson characterized the emails and text messages as "a series of

disjointed communications, taken out of context and supported by a self-serving

statement, which do not establish that [d]efendant was an innocent and unwitting

actor in these events." The judge added that these communications neither

"affirmatively or unequivocally show that [d]efendant played no role in sending

the undisputedly fraudulent email to Seaboard; nor do they show that she

reasonably believed she had a valid or legal claim to the $788,000 transferred

A-1151-19 13 into her bank account—particularly when [d]efendant knew that similar, past

transfers were the result of fraudulent activity."

The judge also reviewed the recorded interview and found it demonstrated

defendant was aware, or should reasonably have been aware, she was a

participant in a fraudulent money transfer scheme. That interview also

confirmed she intentionally misrepresented the purpose of the transactions.

We agree with Judge Johnson's conclusion that the evidence submitted by

defendant was not clearly exculpatory. Evans, 352 N.J. Super. at 197. At best,

the text messages and emails show that defendant was motivated to commit the

offenses by her misguided devotion to Moretti. However, such evidence of

motive does not directly negate any element of the charged offenses and thus

was not required to be presented to the grand jury. Hogan, 144 N.J. at 235.

Affirmed.

A-1151-19 14