Misapplication of Entrusted Property in New Jersey: What You Need to Know

If you’ve been entrusted to manage property or funds belonging to someone else, you have a legal responsibility to use that property appropriately and in the interest of the rightful owner. Unfortunately, sometimes people make mistakes or questionable judgment calls when handling other people’s assets. And in some cases, greed or desperation leads people to intentionally misuse or misapply money or property they were trusted with.

In New Jersey, misapplication of entrusted property is a criminal offense under Section 2C:21-15 of the state’s criminal code. This law applies not only to individuals entrusted with others’ private property, but also to people responsible for managing government or financial institution funds.

I know this can be a confusing and scary issue if you made some mistakes while managing property or money belonging to someone else. My goal in this article is to walk through the basics of Section 2C:21-15, what constitutes a violation, potential penalties, and possible defenses. I’ll also share some real-world examples to help illustrate how this law works in practice.

The bottom line is that misapplication of entrusted property is a serious criminal charge in New Jersey that you don’t want to take lightly. But there are often good defenses that an experienced criminal defense lawyer can raise on your behalf. So take a deep breath, educate yourself on the law, and contact a lawyer if you find yourself facing charges.

What is Misapplication of Entrusted Property in New Jersey?

Let’s start at the beginning – what exactly constitutes misapplication of entrusted property under New Jersey law? Section 2C:21-15 states that it’s a criminal offense when someone:

• Applies or disposes of property that has been entrusted to them as a fiduciary, or property of the government or a financial institution, in a way that they know is unlawful or involves substantial risk of loss or detriment to the owner of the property or government/institution.
• Intentionally or recklessly misapplies property of a government or financial institution.

In other words, if you’re entrusted with managing someone else’s assets, and you intentionally use that property in a way that exposes it to significant risk of loss, you could be charged with misapplication. The same goes if you recklessly manage government or bank funds.

Some examples of misapplication of entrusted property include:

• A financial advisor using a client’s investment funds to trade risky stock options without their consent.
• An executor using estate funds to pay off their personal debts.
• A government employee embezzling public funds.
• A bank manager approving risky loans that cause substantial losses.

As you can see, this criminal statute applies very broadly to any person who is a “fiduciary” over property. Fiduciaries include financial or legal advisors, executors, trustees, guardians, administrators, managers, or any other person with responsibility for supervising assets for someone else’s benefit.

Penalties Under Section 2C:21-15

The penalties for misapplication of entrusted property in New Jersey vary based on the amount of benefit derived from the offense:

• If the benefit is less than $1,000, it is a 4th degree crime punishable by up to 18 months imprisonment and a $10,000 fine.
• If the benefit is between $1,000 and $75,000, it is a 3rd degree crime punishable by 3-5 years imprisonment and a $15,000 fine.
• If the benefit exceeds $75,000, it is a 2nd degree crime punishable by 5-10 years imprisonment and a $150,000 fine.

In addition to fines and possible jail time, anyone convicted under this statute will also face restitution costs to repay the victim(s) for their losses. The court may also impose a term of probation or community service.

As you can see, misapplication charges should not be taken lightly, as penalties can quickly escalate based on the extent of the loss or misuse of funds. The court takes these crimes seriously given the violation of public trust.

Real World Examples

To understand how misapplication charges play out, let’s look at some real-world examples from New Jersey case law:

• In State v. Claypool, a township tax collector was charged when she used over $13,000 in tax payments to cover personal expenses instead of turning the funds over to the township government as required by law. This was a clearcut case of misapplication of entrusted government funds.
• In State v. Markun, an attorney was convicted for misusing over $87,000 in client funds held in his trust account. Instead of maintaining the money for client matters as intended, he withdrew the funds for other business and personal uses.
• In State v. Leavitt, an executor of a $2 million estate was charged when she wrote dozens of checks to herself from the estate account far in excess of the executor fees she was entitled to. This was a textbook case of misapplying entrusted private funds.

As you can see, Section 2C:21-15 covers any person who intentionally or recklessly misuses funds, whether public or private, in contravention of their fiduciary duties. The key is the violation of trust and responsibility over assets.

Possible Defenses

There are viable defenses that a knowledgeable criminal defense attorney can raise if you’ve been accused of misapplication of entrusted property:

• Lack of criminal intent – The prosecution must prove you knowingly or purposely misused funds illegally or in a recklessly risky manner. If you can show there was no intent or recklessness, but rather an honest mistake, you may be able to fight the charges.
• No substantial risk of loss – If the funds were applied in a reasonable manner that did not expose them to substantial loss, this could refute charges.
• Good faith – Demonstrating you had a good faith belief that your actions were lawful and appropriate could undermine criminal charges.
• Reliance on counsel – Acting on the advice of an attorney who assured you the conduct was legal may provide a defense.
• Coercion – If you can show you were coerced into the misapplication of property through threats, you may avoid conviction.

Don’t assume that charges under this statute are indefensible. An attorney experienced in fighting financial crimes can thoroughly analyze the facts of your case and build an argument to undermine the prosecution’s claims.

Takeaways

The bottom line is that misapplication of entrusted property is a serious offense in New Jersey carrying potentially severe penalties. If you believe you may have run afoul of Section 2C:21-15, it’s critical to consult with a criminal defense lawyer immediately to protect your rights. An attorney can advise you on the strengths and weaknesses of the case and possible defenses.

With an experienced legal advocate in your corner, it’s possible to avoid conviction or at least mitigate the penalties. Don’t wait to seek counsel if you find yourself under investigation or charged. The sooner you engage a lawyer, the better your chances of a favorable resolution. While the law takes misapplication crimes seriously, an adept defense attorney can often negotiate a better outcome or even defeat the charges where warranted.