A former chief financial officer for McElroy, Deutsch, Mulvaney & Carpenter has been sentenced to five years in prison after admitting that he embezzled more than $1.5 million from the firm and evaded state income taxes.
John Dunlea, 61, was sentenced by Morris County Superior Court Judge Stephen J. Taylor on Friday. He also was ordered to pay more than $20,000 to the state as restitution.
The sentence was handed down after Dunlea entered a guilty plea May 8 to two counts of second-degree theft by deception and five counts of third-degree failure to pay taxes.
When Dunlea entered his plea, he admitted taking $1,538,221 from the law firm by paying himself unauthorized excess compensation, the Attorney General’s Office said.
Between January 2017 and December 2022, Dunlea paid himself $1,182,965 in unauthorized compensation, and misled the firm into paying his personal credit card charges for international and domestic flights, hotels, and restaurant meals for himself and his family, totaling approximately $355,256.
Dunlea also admitted to evading income tax totaling $22,568 to the state for the tax years 2018 through 2022, for income derived from the credit card scheme, the Attorney General’s Office said.
“The defendant admitted to 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 meals,” Attorney General Matthew Platkin said in a statement. “Today’s sentence demonstrates the Division of Criminal Justice’s firm commitment to holding individuals accountable who exploit positions of trust to commit financial fraud.”
“The defendant misused his position of power and trust to take advantage of his employer and the taxpayers of the state of New Jersey,” said Legal Chief Pablo Quiñones of the Office of Securities Fraud and Financial Crimes Prosecutions in a statement. “This sentence underscores our commitment to ensuring that those who turn to deception and cheating to improperly enrich themselves will be held accountable.”
The former CFO’s guilty plea is the latest development in a saga that became public in June 2023, when McElroy Deutsch brought legal action against Dunlea and Nicole Alexander, the firm’s former director of professional and business development.
The suit claimed Dunlea and Alexander, who were married in 2015, treated themselves to at least 60 vacations at luxury hotels at the firm’s expense, often flying first class. The suit seeks a constructive trust over Dunlea and Alexander’s Westfield home, which the suit claimed was valued at $1.3 million and was purchased with funds embezzled from the firm.
Ricardo Solano Jr. of Gibbons. Courtesy photoRicardo Solano Jr. of Gibbons, who represents Dunlea, said at the sentencing that his client has the full support of Alexander, his daughters and his extended family.
“John’s conduct really was aberrational and highly unlikely to ever repeat itself. John is thankful that the court agreed with his negotiated sentence, and imposed the minimum sentence possible. At this stage, John’s hope is to serve out his sentence in as little time as possible and begin rebuilding his life, professionally and personally,” Solano said in an email.
McElroy Deutsch’s civil suit against Dunlea and Alexander claims the couple took more than a dozen trips at the firm’s expense to the Hotel Coronado in San Diego, racking up bills of roughly $89,000.
The couple also visited The Savoy in London, The Ritz and the Hotel George V in Paris, various resorts in Ireland, Punta Cana and Caneel Bay in the Caribbean, and they stayed at Disney World hotels with Dunlea’s children, all at the firm’s expense, the suit claimed. Alexander often posted on Instagram and her blog about the trips she was enjoying, without revealing that the firm was paying for the trips, the suit claims.
McElroy Deutsch has filed a motion of lis pendens on Alexander and Dunlea’s home, which serves as a notice that the property is subject to a claim in litigation. Alexander has moved to discharge the lis pendens, arguing that there is no evidence she participated in the wrongdoing or had knowledge of Dunlea’s actions. On July 9, Dunlea filed a Chapter 11 voluntary bankruptcy petition in the U.S. Bankruptcy Court in the District of New Jersey.