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.
According to authorities, Robert Novy, 66, of Brick, 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.
Officials say 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.
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.
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:
1. 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.
2. 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.
3. 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.
Authorities charged Novy 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.
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.