the staff of the Ridgewood blog
Trenton NJ, Attorney General Gurbir S. Grewal announced that a prominent Ocean County attorney who hosted a radio show and taught seminars on elder law pleaded guilty today to stealing millions of dollars from elderly clients of his law firm and laundering the money through various bank accounts, including his attorney trust and business accounts. The victims generally did not have close relatives to guard their interests and in some cases suffered from dementia.
Robert Novy, 66, of Brick, N.J., pleaded guilty today to first-degree money laundering before Superior Court Judge Michael T. Collins in Ocean County. Under the plea agreement, the state will recommend that Novy be sentenced to 10 years in state prison, including three years and four months of parole ineligibility. In pleading guilty, Novy admitted that he stole millions of dollars from law clients. The state’s investigation revealed that he stole nearly $3 million from at least two dozen victims. Novy is scheduled to be sentenced on Sept. 28.
Novy must pay restitution to his victims out of two funds totaling $4 million that are being created using assets previously seized from him by the state: one fund of $3 million to provide restitution to client victims, heirs, estates and trusts already identified through the state’s investigation, and a second fund of $1 million to provide restitution, with court approval, for others not previously identified who come forward with proof that they were victims of thefts. Novy also must surrender his license to practice law in New Jersey and pay $500,000 to the state as an anti-money laundering profiteering penalty.
Deputy Attorneys General Peter Gallagher and William Conlow prosecuted Novy and took the guilty plea for the Division of Criminal Justice Financial & Computer Crimes Bureau. The guilty plea is the result of an investigation by the Division of Criminal Justice Financial & Computer Crimes Bureau, assisted by the New Jersey Division of Taxation Office of Criminal Investigation.
As an expert in elder law, Novy hosted a bi-monthly radio program “Inside the Law,” focusing on topics of concern to senior citizens. He was arrested on Oct. 18, 2016. Detectives executed a search warrant at the time at his firm, Novy & Associates, on Ridgeway Avenue in Manchester, seizing billing records and other evidence. The Attorney General’s Office obtained court orders freezing over $4 million in assets held by Novy and his firm and appointing a trustee to oversee the firm’s business operations.
“By exploiting elderly clients and stealing their life savings, Novy sank to the lowest levels of greed, dishonesty, and callousness,” said Attorney General Grewal. “This guilty plea serves justice by ensuring that Novy will face a substantial prison sentence and that his victims will receive restitution from assets already seized from him by the Division of Criminal Justice.”
“A fundamental concern in this case was to secure restitution for Novy’s many victims, including his elderly clients and the heirs and beneficiaries who had millions of dollars stolen from them,” said Director Veronica Allende of the Division of Criminal Justice. “Through this guilty plea, we have achieved that goal and have sent a strong message that lawyers and others who hold positions of trust will be held accountable if they betray that trust and steal from those who are vulnerable.”
The case was referred to the Division of Criminal Justice by Ocean County Surrogate Jeffrey W. Moran. Novy also was investigated by the New Jersey Office of Attorney Ethics, which issued an ethics complaint against him on Jan. 26, 2016, and assisted the Division of Criminal Justice.
The investigation revealed that Novy stole funds from elderly and deceased clients who often did not have a close relative to claim their estate or challenge Novy’s actions. He used the stolen funds for his own benefit, paying personal and business expenses. Novy gained control through wills, powers of attorney, and trust documents, making himself the sole financial decision-maker for the clients. When clients had sizeable assets in the form of an annuity or life insurance policy, Novy directed insurance companies to redeem the policies and send the money directly to him. In some cases, when challenged by trustees or relatives about particular funds that had been withdrawn from client accounts, Novy claimed they were “administrative errors” and repaid the funds.
The Division of Criminal Justice obtained a state grand jury indictment on April 30, 2018 charging that Novy engaged in three different schemes by which he stole funds from clients:
- In one scheme, Novy simply transferred funds from his clients’ personal bank accounts or from his clients’ liquidated personal assets into his own bank account.
- In the second scheme, Novy transferred funds from his clients’ personal accounts or liquidated assets into IOLTA (Interest on Lawyer Trust Account) sub-accounts that he controlled. The powers of attorney executed by the victims legally required Novy to place their assets into independent trust funds selected by the victims that would manage their assets, so the act of placing the funds into accounts that he controlled constituted a theft by Novy.
- In the third scheme, Novy transferred client funds from various accounts – including the clients’ personal accounts, the clients’ IOLTA sub-accounts, or the firm’s attorney trust account – into the firm’s operating and disbursement accounts. Novy excessively billed the clients for power of attorney fees without any supporting invoices.
Novy was charged with money laundering because he engaged in transactions involving the stolen funds and the various accounts – primarily his attorney trust accounts and/or attorney business accounts – by which he concealed the source of the stolen funds and used them to promote his criminal activities.
Deputy Attorneys General Gallagher and Conlow prosecuted the case for the Division of Criminal Justice Financial & Computer Crimes Bureau under the supervision of Deputy Bureau Chief Mark Kurzawa and Deputy Division Director Christine Hoffman. The case was investigated by Detective Michael Arduini, Detective Michael Woods, Lt. Anne Hayes, Investigator Jordan Thompson, Investigator Wayne Cummings and Analyst Terri Drumm. Deputy Attorney General Derek Miller and Investigator Debra Maiorano handled the state’s forfeiture action. Attorney General Grewal thanked the Ocean County Surrogate, the New Jersey Office of Attorney Ethics and the Division of Taxation Office of Criminal Investigation for their valuable assistance in the investigation. Special Agents Mike Mullane and Will Makar investigated for the Division of Taxation Office of Criminal Investigation.
Persons, relatives, heirs, estates or trusts who believe they are victims of Novy and can offer proof of damages should write to Deputy Attorney General Kara R. Webster in the State Office of Victim Witness Advocacy at WebsterK@njdcj.org, or if they do not have email access, phone (609) 376-2444.