Holmdel's overbilling suit against disgraced tax-appeal attorney may proceed, judges rule

HOLMDEL - The township can move forward with its lawsuit against its disgraced, former tax appeal attorney, after an appeals court last week ruled the suit does not interfere with the criminal case against the defendant or his cooperation in a state political corruption sting.

Judges Clarkson S. Fisher Jr., Mary Gibbons Whipple and Francis J. Vernoia of the Appellate Division of Superior Court upheld Superior Court Judge Linda Grasso Jones’ decision not to halt the township’s lawsuit against its former tax appeal attorney, Matthew O’Donnell, until the state’s criminal case against him in a pay-to-play scheme is complete.

The lawsuit alleges O’Donnell, 57, of Caldwell, and his shuttered Morristown-based firm, O’Donnell McCord, charged the township $250,000 between 2016 and 2019 for tax appeal and liquor license work that was never performed.

Previously:'We're being asked to trust a criminal,' Holmdel says, pushing suit against its ex-lawyer

The suit alleges O’Donnell sent bills to the township that were between double and four times amounts other law firms billed the township to perform the same work in the years before and after O’Donnell served as Holmdel’s tax appeal and liquor license attorney.

O’Donnell sought to put the lawsuit on hold, claiming his right against self-incrimination in the criminal case would be jeopardized if he were forced to now defend himself in the civil suit.

The appellate judges, however, disagreed. In a June 30 opinion, they noted O’Donnell and his law firm already have pleaded guilty in the criminal case, and their plea agreements immunize them from further prosecution over billing practices or in additional pay-to-play matters.

The appellate judges also said the conduct alleged in the civil suit is different from that which formed the basis for the criminal case against O’Donnell.

“Normally, the clash between competing interests occurs when a party to the civil action is facing criminal prosecution for the conduct alleged in the civil action,’’ the appellate judges wrote. “That concern is not present here. Defendants have already pleaded guilty because of other conduct, so they have already incriminated themselves and can no longer claim a presumption of innocence. They have also failed or are unable to show that the guilty pleas they have entered involve conduct alleged by plaintiffs in this civil action, or that they may face criminal prosecution arising from the conduct alleged in this civil action, or that relevant discovery that has or may be sought by plaintiffs will have any direct bearing on the other criminal prosecutions in which defendants have pledged their cooperation.’’

O’Donnell came under investigation in 2017, when the state Attorney General’s Office received information that he was making campaign contributions in excess of legal limits through “straw donors’’ to public officials and candidates for office, according to court documents. The Attorney General’s Office later that year approached him and asked if he would be a cooperating witness for the state. O’Donnell agreed to wear recording devices and meet with individuals whom he believed would ask him for illegal contributions, said a brief filed by the Attorney General’s Office.

“The investigation resulted in the indictment of five defendants for bribery and other charges,’’ the brief said.

O’Donnell pleaded guilty in June 2018 to conspiracy to commit misconduct by a corporate official in a plea agreement that called for an eight-year prison term and required his full cooperation with the state’s investigation.

O’Donnell in September entered into a revised plea agreement in which his firm also admitted guilt in the scheme. He pleaded guilty to conspiracy to commit misconduct by a corporate official and tampering with public records or information. The revised agreement called for a three-year prison term instead of eight years and immunized him from criminal prosecution related to “activities in connection with his firm’s billing practices.’’

But for his sentencing, the criminal case against O’Donnell is over, the township’s attorney, Jerry J. Dasti, argued at a virtual hearing before the appellate judges on June 22. He asked that the lawsuit be allowed to proceed immediately.

O’Donnell’s attorney, Kevin J. Musiakiewicz, argued at the hearing that the civil suit, if it was not put on hold, could adversely impact prosecution of the pending cases O’Donnell has cooperated with, and that harm could negatively impact whatever sentence he gets.

The appellate judges noted the Attorney General’s Office expressed concern that dissemination of information in the civil case could result in difficulty selecting jurors in the pending criminal cases. However, the appellate judges said they share the township’s view, that there is little likelihood information from a civil suit in Monmouth County would impact jury selection in Essex County, where the criminal cases are pending.

The judges said they found little prejudice to O’Donnell and the Attorney General’s Office by allowing the lawsuit to move forward, “while harm to the plaintiffs, if there is merit in their claims, seems obvious if they are delayed in seeking damages for what they claim was defendant’s fraud or overbilling.’’

Dasti, at the appellate hearing, said he feared O’Donnell would sell his Sea Girt home, his primary asset, if the civil suit was delayed indefinitely.

The appellate judges, in their decision, noted that the judge in Monmouth County rejected the township’s request to seize or place a lien on the home pending the outcome of the civil suit.

Kathleen Hopkins, a reporter in New Jersey since 1985, covers crime, court cases, legal issues and just about every major murder trial to hit Monmouth and Ocean counties. Contact her at khopkins@app.com.

This article originally appeared on Asbury Park Press: Holmdel NJ lawsuit against disgraced tax appeal attorney may proceed