Misapplication of Entrusted Property
(fiduciary DUTY)
(N.J.S.A.
2C:21-15) model jury charge
Count(s) _____ charge(s) defendant
with Misapplication of Entrusted Property.
[READ
COUNT OF INDICTMENT]
The pertinent
part of the statute on which the indictment is based reads as follows:
A person commits a crime
if he applies or disposes of property that has been entrusted to him as a fiduciary
* * * in a manner which he knows is unlawful and involves substantial risk of
loss or detriment to the owner of the property or to a person for whose benefit
the property was entrusted whether or not the actor has derived a pecuniary
benefit.
The State must prove the following five
elements of the crime beyond a reasonable doubt:
1.
Defendant knowingly[1]
applied or disposed of property;
2.
The property at issue was entrusted to defendant
as a fiduciary;
3.
Defendant’s application or disposition of the
property was unlawful;
4.
Defendant’s application or disposition involved
substantial risk of loss or detriment to the owner of the property or to a
person for whose benefit the property was entrusted;
5.
Defendant knew that his/her
conduct was unlawful; and
6.
Defendant knew that his/her
conduct involved a substantial risk of loss or detriment to the owner of the
property or to the person for whose benefit the property was entrusted.
The first element the State must
prove beyond a reasonable doubt is that defendant knowingly applied or disposed
of property. Here the State asserts that
the property was [describe property].
The
term “property” means anything of value,[2] even
though it may be impossible to identify particular property as belonging to the
victim at the time defendant allegedly misapplied the property because the
victim’s property may have been mixed with or joined with other property.
Defendant must have applied or
disposed of the property knowingly. A
person acts knowingly as to the nature of his/her
conduct or the attendant circumstances if he/she is
aware that his/her
conduct is of that nature, or that such circumstances exist, or he/she is
aware of a high probability of their existence.
One acts knowingly as to a result of his/her
conduct if he/she is
aware that it is practically certain that his/her
conduct will cause such a result. One
acts knowingly if one acts with knowledge, if one acts consciously, if one
comprehends his/her acts.
Knowledge
is a condition of the mind. It is rarely
susceptible of direct proof, but must ordinarily be inferred from the
facts. Therefore, it is not necessary
that the State produce witnesses to testify that an accused said that he/she had a
certain state of mind when he/she
engaged in a particular act. It is
within your power to find that such proof has been furnished beyond a
reasonable doubt by inference which may arise from the nature of his/her acts
and his/her
conduct, and from all he/she said
and did at the particular time and place, and from all the surrounding
circumstances.
The
second element the State must prove beyond a reasonable doubt is that the
property at issue was entrusted to defendant as a fiduciary. A fiduciary includes a trustee, guardian,
executor, administrator, receiver, and any person carrying on fiduciary
functions on behalf of a corporation or other organization which is itself a
fiduciary.[3]
A
fiduciary relationship arises between two persons when one person is under a
duty to act for or give advice for the benefit of another on matters within the
scope of their relationship. The
fiduciary's obligations to the dependent party include a duty of loyalty and a
duty to exercise reasonable skill and care.[4]
[CHARGE
WHERE DEFENDANT’S FIDUCIARY DUTY OF CARE
DOES NOT
DERIVE FROM DEFENDANT’S PROFESSION]
The
third element that the State must prove beyond a reasonable doubt is that defendant’s
application or disposition of the property was unlawful, that is, he/she
applied or disposed of the property in a manner contrary to his/her
responsibility as a fiduciary.
In this
case, the State asserts that defendant’s responsibility was: [describe
specific obligations arising from fiduciary duty.[5]]
As I
have already explained, the State bears the burden of proving defendant guilty
beyond a reasonable doubt as to each and every element of the crime. The State’s burden is not reduced or shifted
to defendant because he/she may
have violated a fiduciary duty. The
fiduciary duty of care is relevant to determining defendant's state of mind,
because it may have placed defendant on notice as to what was expected of him/her when he/she became
the custodian of the property.
A
violation of a fiduciary duty, in and of itself, is insufficient, as a matter
of law, to sustain a finding of criminal culpability. However, together with any other evidence in
the case, you may consider defendant’s breach of his/her fiduciary
duty as evidence of defendant's state of mind. The more egregious the
violation, the more likely defendant acted knowingly. For example, an extended pattern of conduct,
displaying an utter disregard for his/her
fiduciary duty would have more probative value than an isolated incident of bad
recordkeeping or accounting. [6]
OR
[CHARGE
WHERE DEFENDANT’S DUTY IS ESTABLISHED
BY
REFERENCE TO AN ETHICAL RULE, OR
A
PROFESSIONAL PRINCIPLE, RULE, OR STANDARD]
The
third element that the State must prove beyond a reasonable doubt is that defendant’s
application or disposition of the property was unlawful, that is, he/she
applied or disposed of the property in a manner contrary to the regulations and
laws defining his/her duty as a [specify position or
profession]. In this case, the State
asserts that defendant’s responsibility was [describe source of duty].
As I
have already explained, the State bears the burden of proving defendant guilty
beyond a reasonable doubt as to each and every element of the crime. The State’s burden is not reduced or shifted to
defendant because he/she may
have violated a/an (ethical rule) (professional principle) (professional rule) and/or
(professional standard). The standards of (recordkeeping) (accounting practices)
delineated in the (ethical rule) (professional principle) (professional
rule) and/or (professional standard) are
relevant to determining defendant's state of mind, because they placed defendant
on notice as to what was expected of him/her when he/she became
the custodian of the property.
A violation
of a/an (ethical rule) (professional principle) (professional rule)
(professional standard), in and of itself, is insufficient, as a matter of law,
to sustain a finding of criminal culpability. However, together with any other evidence in
the case, you may consider a violation of the (ethical rule) (professional
principle) (professional rule) (professional standard) as evidence of defendant's
state of mind. The more egregious the violation, the more likely defendant
acted knowingly. For example, an
extended pattern of conduct, displaying an utter disregard for his/her
fiduciary duty would have more probative value than an isolated incident of bad
recordkeeping or accounting.[7]
[RESUME
CHARGE IN ALL CASES]
Fourth,
the State must prove beyond a reasonable doubt that defendant’s application or
disposition of the property involved substantial risk of loss or detriment to
the owner of the property or to a person for whose benefit the property was
entrusted.
Fifth,
the State must prove beyond a reasonable doubt that defendant knew that his/her
conduct was unlawful. I have already
defined knowingly for you.
Sixth,
the State must prove beyond a reasonable doubt that defendant knew that his/her
application or disposition of the property involved a substantial risk of loss
or detriment to the owner of the property or to a person for whose benefit the
property was entrusted. A substantial
risk is one that is of such a nature and degree that, considering the nature
and purpose of defendant’s conduct and the circumstances known to him/her, its disregard involves a gross deviation
from the standard of conduct that a reasonable person would observe in defendant’s
situation. In other words, the State must prove beyond a reasonable doubt that defendant
knew that it was very likely that his/her
treatment of the property would create a risk of loss or detriment to the owner
or person for whose benefit the property was entrusted, and that defendant went
ahead anyway, where a reasonable person would not. I have already defined knowing for you. It is not necessary for the State to
prove that defendant himself/herself
derived a benefit during his/her
application or disposition of the property. [8]
If the
State has proven each of the six elements of this crime beyond a reasonable
doubt, then you must find defendant guilty of misapplication of entrusted
property. On the other hand, if the
State has failed to prove any element beyond a reasonable doubt, you must find him/her not guilty. If you
find defendant not guilty, your consideration of the misapplication of
entrusted property charge should end here.
However,
if you find defendant guilty beyond a reasonable doubt, you must then proceed
to make two additional factual findings.
Specifically, you must indicate whether defendant derived a benefit from
his misapplication of entrusted property, and, if so, the benefit he/she
derived.
First,
you must determine whether the State has proven beyond a reasonable doubt that defendant
derived a benefit as a result of his/her
misapplication of entrusted property. Benefit
means a gain or advantage, or anything regarded by the beneficiary as a gain or
advantage, including but not limited to a pecuniary benefit or a benefit to any
person or entity in whose welfare he/she is
interested. Please indicate whether the
State has proven that defendant derived a benefit from the alleged
misapplication beyond a reasonable doubt by marking “yes” or “no” on your
verdict sheet.
If you have both determined
that defendant is guilty of misapplication of entrusted property, and
indicated that “yes,” that defendant did derive a pecuniary benefit from the
misapplication, then you must go on to determine the amount of that pecuniary
benefit. Specifically, you should
indicate on the verdict sheet if the benefit that defendant derived has a value
that:
[choose
appropriate sections]
(1) is $75,000.00 or more;
(2) exceeds $1,000.00, but is less than
$75,000.00;
(3) is $1,000.00 or less.
The
“benefit derived” includes the value of all funds or property misapplied by defendant.[9] That is, the value of the property misapplied
is not simply the value of its use during the period in which defendant
exercised control over the property. For
example, if a defendant applies or disposes of $5,000, but later reimburses the
victim, the value of the “benefit derived” is the full $5,000. It is not merely the amount of interest that
a bank might have charged for the use of a $5,000 loan during the period in
which defendant made use of the money.
Similarly, if a defendant applies or disposes of $5,000, but reimburses
the victim for all but $200 of the amount, the benefit derived is still $5,000,
the entire amount involved. In
calculating the “benefit derived,” you must include but are not limited to, the
amount of any tax avoided, evaded, unpaid, improperly retained, or improperly
disposed of.
[CHARGE
WHEN PROPERTY AT ISSUE IS
SOMETHING
OTHER THAN MONEY]
In this
case, the State alleges that the benefit derived was something other than
money. You must determine the value of that
benefit. Value means the fair market
value of the property at the time and place of the alleged misapplication.[10] Fair market value is the price that a
buyer would be willing to pay and a seller would be willing to accept if both parties
were aware of all the relevant surrounding circumstances and neither party were
under any compulsion to buy or sell.
Here,
the State has provided you with evidence of the value of the property by
[describe testimony or other evidence used to establish value]. The State has the burden of proving the fair
market value of the property involved. This means that you must be satisfied
beyond a reasonable doubt that the property is worth what the State claims.
[1] Matter of Iulo, 115 N.J.
498, 502 (1989); State v. Manthey, 295 N.J. Super. 26, 30-31
(App. Div. 1996); N.J.S.A. 2C:2-2c(3).
[2] N.J.S.A. 2C:20-1g. The statutory
definition gives examples of various types of property as being included in the
definition, such as trade secrets and choses in action. Reference should be made to the statutory
definition in particular cases to determine whether additional language should
be charged.
[3] N.J.S.A. 2C:25-15.
[4] F.G. v. MacDonell, 150 N.J.
550, 563-564 (1997).
[5] Fiduciary duties may be based upon statutory
or common law and vary depending on the industry and relationship at
issue. See e.g., N.J.S.A. 3B:1-6 et seq.
(administration of estates); N.J.S.A. 3B:11-4.1 (defining fiduciary
duties in the setting of trusts); N.J.S.A. 3B:20-11.2 (Prudent Investor
Act); N.J.S.A. 42:1A-24 (Fiduciary Duties of Partners); N.J.S.A.
46:2B-8.13 (attorney-in-fact); F.G. v. MacDonell, 150 N.J. 550,
564-65 (1997) (fiduciary duty owed to parishioner by clergyman acting as
counselor). The particular fiduciary
duties owed in a given legal setting must be determined by the judge as a
matter of law during the charge conference.
R. 1:8-7.
[6] See
generally State v. Mahoney, 188 N.J. 359, 379 (2006), cert.
denied, 549 U.S. 995, 127 S. Ct. 507, 166 L. Ed. 2d
368 (2006).
[7] The preceding two paragraphs describing
the significance to be attributed to professional standards, regulations, and
duties is required by State v. Mahoney, 188 N.J. 359, 379 (2006),
cert. denied, 549 U.S. 995, 127 S. Ct. 507, 166 L. Ed.
2d 368 (2006), in which the Court addressed an attorney’s violation of R.P.C.
1:21-6.
[8] If
defendant derived no pecuniary benefit from his misapplication, he is guilty of
a fourth-degree crime under this section.
See Cannel, New Jersey Criminal Code Annotated, comment 3 on
N.J.S.A. 2C:21-15 (2008); American
Law Institute, Model Penal Code and Commentaries, § 224.13, comments 1
and 3 at pp. 358-60, 363 (1980) (distinguishing this crime from embezzlement
and theft).
[9] State v. Modell, 260 N.J.
Super. 227, 250-51 (App. Div. 1992), certif. denied, 133 N.J.
432 (1993); see also State v. Cetnar, 341 N.J. Super. 257,
263-64 (App. Div.), certif. denied, 170 N.J. 89 (2001).
[10] N.J.S.A. 2C:1-14m.
