“The fraudulent conduct identified by our Bureau of Securities in this case is striking. Today, we are taking action to stop [NRIA’s] unlawful conduct and to put the public on notice. If an investment opportunity promising high guaranteed returns sounds too good to be true, it usually is.” – Acting Attorney General Platkin
State takes action against NRIA over alleged fraud
By: Matthew Fazelpoor | June 22, 2022 8:02 am
Article Source: https://njbiz.com/state-takes-action-against-nria-for-fraud/
The New Jersey Bureau of Securities issued a Summary Cease and Desist Order to Secaucus-based National Realty Investment Advisors LLC (NRIA) June 21, after determining the company fraudulently sold at least $630 million in securities to investors from 2018 to 2022.
At least 1,800 investors across the country, including 380 in New Jersey, allegedly were sold the fraudulent securities in the form of a real estate investment fund known as the NRIA Fund, according to the Bureau.
The fund was touted as a billion-dollar-plus real estate development enterprise focused on the “ground-up” development of townhomes, condominium complexes, luxury residences, and mixed-use rental developments. NRIA allegedly claimed the fund purchased property at below-market prices, which would then be developed for a large profit.
In addition to NRIA, the Bureau’s order named the following entities: NRIA Partners Portfolio Fund I LLC (“the NRIA Fund”), NRIA Capital Partners Inc., and NRIA Structured Credit Strategies LLC.
The company principals named in the order include:
- Thomas Nicolas Salzano of Secaucus, who was a senior independent executive advisor and portfolio manager of the NRIA Fund
- Rey Grabato of Hoboken, president of the NRIA Fund and 80% owner of NRIA
- Coley O’Brien of Southampton, N.Y., co-CIO of the NRIA Fund and 100% owner of NRIA Capital Partners
- Arthur Scutaro of Bloomfield, executive vice-president of project management and advisors to the NRIA Fund
“The fraudulent conduct identified by our Bureau of Securities in this case is striking,” said acting Attorney General Platkin. “Today, we are taking action to stop their unlawful conduct and to put the public on notice. If an investment opportunity promising high guaranteed returns sounds too good to be true, it usually is.”
Would-be investors were allegedly enticed with guaranteed returns of 12% on the investments, up to a possible 21% return. NRIA also used a nationwide advertising campaign with radio spots and billboards at the entrance to the Lincoln and Holland Tunnels to attract investors.
To conceal the company’s poor performance, the Bureau alleges that investor money was used to fund the annual distributions while straw purchasers were used to create nonexistent sales of certain units.
The Bureau also found that the principals used millions of investor dollars to make lavish payments to family members.
“The rules are not complicated: if you are selling securities in New Jersey, you must comply with our securities laws,” said acting Division of Consumer Affairs Director Cari Fais. “These respondents lured investors in New Jersey and across the nation with empty promises and, in some cases, went to great lengths to conceal their own fraudulent conduct. The action we’ve taken today is meant to halt their dishonest, predatory conduct once and for all.”
“The conduct outlined in today’s filing is egregious. It’s the very kind of conduct that undermines public confidence in our financial institutions and – ultimately – in investing,” said Acting Bureau of Securities Director Amy Kopleton. “These respondents offered investors a securities opportunity that sounded too good to be true, and it was.”
Both NRIA and the NRIA Fund have initiated Chapter 11 bankruptcy proceedings.