Understanding the Tort of Conversion

HNWBusiness Law, Fraudulent Transfer Litigation

By Fredrick P. Niemann, a Freehold Township, Monmouth County New Jersey Fraud & Conversion Attorney

A real estate investor residing in London, England, entered into a real estate deal with a “fraudster” (meaning a shady character).  Each agreed to provide $2.5 million towards the purchase of a property in Irvington, New Jersey.   Plaintiff’s alleged that at the fraudster’s direction, he wired $2,412,163.50 to the attorney trust account of a New Jersey lawyer and, thereafter, at fraudster’s direction, the law firm disbursed all of the funds for other purposes.   These payments benefitted fraudster’s investments in other properties plus a payment of a fee to the law firm.   Plaintiff alleged that the Irvington purchase the parties had agreed to acquire was never consummated.  They alleged that the fraudster and the law firm defrauded him, as he had done to others.

The claim against the law firm was for conversion.  Conversion is a term we hear a lot about but what does it mean legally?   Conversion is the exercise of any act of control over another’s title to the property, or inconsistent with the ownership rights of the true owner.

A defendant need not intend to act wrongfully to convert another’s property, but must have intended to exercise “dominion” or “control” over the property which is inconsistent with a plaintiff’s rights.   A person may be liable for conversion “although he or she acted in good faith and in ignorance of the rights or lawful title of the owner”.

Although conversion historically applied to tangible personal property, New Jersey Courts have held that the tort may, under certain circumstances, apply to the exercise of dominion or control over money.   Conversion is frequently recognized in connection with funds that have been or should have been segregated for a particular purpose or that have been wrongfully obtained, retained or diverted in a transaction.  It is essential that the money have belonged to the injured party and that it be identifiable.

Must the owner demand return of the money or property to have a legal claim?   Demand is not an essential element of conversion.  In particular, it is not required when the alleged converter has already parted with the property or, an identifiable fund of money.   Rather, demand is required where the possessor of the property still retains it.

Contact me personally today to discuss your New Jersey fraud and conversion matter.  I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns.  You can reach me toll free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.


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