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                                             97 N.J.L.J. 766
                                            October 3, 1974

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court


OPINION 289

Attorney's Participation
In Transacting Usurious Loan

    The inquirer asks whether it is ethical for a New Jersey attorney, A, to participate in a transaction as herein indicated.
    A's clients, a New Jersey corporation and an individual (a New Jersey resident), wish to borrow jointly $100,000 from a New York businessman who we assume is not authorized or permitted by law to charge interest in excess of 50% per annum. Interest will be charged in the amount of $20,000 on $100,000 for 30 days (an annual rate of over 240%). The inquirer states that, in A's opinion, the loan is not usurious under New Jersey statutes since it is in an amount in excess of $50,000 and that the loan if transacted in New Jersey would not constitute the crime of loan sharking in violation of N.J.S. 2A:119-A-l since in A's opinion the statute wasn't designed to govern loans of a "commercial nature." He states, however, that the attorney for the New York businessman disagrees and believes the loan is illegal as usurious in New York and is possibly criminal in New Jersey. He wishes to have the loan transaction executed in Georgia since he has searched throughout the country and discovered that in his opinion the loan is not illegal or criminal in that jurisdiction.     
    The inquirer asks whether A may participate as an attorney in this transaction at all or under certain circumstances. Our answer is no. A's opinion that the proposed transaction would not constitute the crime of loan sharking if executed or carried out in New Jersey is probably unfounded. The statute is clear and our courts have held that a conviction does not depend upon proof of scienter and criminal intent. State v. Tillem, 127 N.J. Super. 421 (App. Div. 1974). That case is also instructive on the seriousness with which our courts consider that our legislature and the courts themselves view this particular crime. The crime consists not only of making a loan but of charging, taking, agreeing to take, or receiving interest at over the maximum rate. We further believe that by assisting in any way in the commission of this crime A and his clients might be committing the crime described in N.J.S. 2A:85-14, i.e., "aiding and abetting," making all three guilty as principals.
    It seems clear, therefore, that what A is proposing to assist his New Jersey clients in doing is to engage in conduct with a New York resident that New Jersey has declared to be criminal and New York to be illegal and against public policy. There is no suggestion that the business or domicile of the proposed parties be
altered, but simply that a document be executed in Georgia - so as presumably to have the enforcement of the contract governed by Georgia law. The substance of the transaction remains with New York and New Jersey and it will be carried out between these two jurisdictions.

    We think any lawyer should also question whether the transaction might under the circumstances and if all the facts were fully disclosed, be unenforceable even in the Georgia courts so that there is, in the supposed facts, a suggestion that the proposed Georgia execution is merely designed to conceal the true substance of the transaction from the courts concerned.
    The proposed participation would in our opinion constitute misconduct under each of the six subsections of DR 1-102 and DR 7-102(A)(8) and possibly other disciplinary rules. See by analogy our Opinion 118, 90 N.J.L.J. 749 (1967), and see A.B.A. Comm. on Professional Ethics and Grievances, Opinion 281 (1952) as to the impropriety of an attorney advising clients as to how unlawful acts may be done in a manner so as to avoid conviction.

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