The former chief financial officer at McElroy, Deutsch, Mulvaney & Carpenter has pleaded guilty to embezzling more than $1.5 million from the firm.
John Dunlea, 61, pleaded guilty to two counts of second-degree theft by deception and five counts of third-degree failure to pay taxes before Superior Court Judge Stephen J. Taylor in Morris County Superior Court. Under a plea agreement, the state will recommend that Dunlea be sentenced to five years in state prison and that he pay restitution to his former law firm and the state Division of Taxation, the Attorney General’s Office said in a statement. Sentencing is set for June 14.
As part of the guilty plea, Dunlea admitted to misappropriating $1,538,221 from McElroy Deutsch by paying himself unauthorized excess compensation, according to the Attorney General’s Office. Between January 2017 and December 2022, Dunlea paid himself unauthorized compensation in the amount of $1,182,965 and misled the firm into paying his personal credit card charges for international and domestic airline flights, hotels and restaurant outings for himself and his family, totaling $355,256, the Attorney General’s Office said. Dunlea also admitted to evading the payment of income tax totaling $22,568 to the state from 2018 to 2022 for income derived from the credit card scheme, the office said.
“The defendant in this case has admitted giving himself a staggering, unauthorized, and illegal seven-figure pay raise, and treating himself and his family, at his employer’s expense, to travel, hotels, and dining out, without his employer’s consent,” said Attorney General Matt Platkin. “Individuals who exploit positions of trust to commit financial fraud will be held accountable.”
Ricardo Solano Jr. and Danielle Craft of Gibbons in Newark represent Dunlea in the criminal case. A statement from Craft said, “Obviously, this is a difficult day for Mr. Dunlea, a highly successful professional and caring family man, who made a terrible decision that he regrets and for which he will pay for the rest of his life. Mr. Dunlea has always been willing to accept responsibility for his actions when he is wrong, and today is no different. His goal is to serve his punishment, move past this, and hopefully rebuild his personal and professional life.”
The alleged embezzlement came to light in June 2023, when McElroy Deutsch filed a suit against Dunlea and his wife, Nicole Alexander, the firm’s former director of professional and business development. The suit claims Dunlea paid himself large bonuses every year that were not authorized by the firm’s executive committee. In some years the overpayments exceeded $200,000, the suit claims.
The suit also accuses both Dunlea and Alexander of engaging in “widespread fraud and theft” in connection with a business credit card account that they had access to. The complaint says Dunlea and Alexander treated themselves to at least 60 vacations at luxury hotels at the firm’s expense, often flying first class.
The suit also claims firm funds were used for a business previously launched and owned by Alexander. The suit claims $1.6 million in illegitimate credit card charges were found, and no reimbursements paid.
The suit claims $1.6 million in illegitimate credit card charges have been discovered so far. When Dunlea was confronted with the alleged thefts, he “confessed to his wrongdoing and apologized for his misconduct,” offering “no explanation other than to say that he needed the extra money to meet family obligations,” the complaint said.
Dunlea and Alexander left the firm within days of each other in April 2023 after firm leaders discovered the alleged wrongdoing, according to court documents.
McElroy Deutsch is seeking a constructive trust over the couple’s home in Westfield, which the suit claims is valued at $1.3 million and was purchased with funds embezzled from the firm.
Alexander filed a separate suit against her former firm, bringing one count of marital status discrimination. She has also moved to discharge a notice of lis pendens on the Westfield house, a move opposed by McElroy Deutsch.
Kevin Marino of Marino, Tortorella & Boyle in Chatham, representing McElroy Deutsch, declined to comment on Dunlea’s guilty plea.
