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SEC announces charges in a $600 million scheme

On Behalf of | Oct 28, 2022 | False Claims Act

The Securities and Exchange Commission (SEC) recently announced that it charged the National Realty Investment Advisors LLC (NRIA) of New Jersey and four of its former executives. The allegations state that the company raised about $600 million from around 2,000 investors, which included 382 retirees who had contributed more than $94 million in savings.

The complaint alleges that fraud started at the beginning of 2018 when NRIA and the four men solicited investors in a nationwide campaign that claimed it would buy and develop properties. They contended that properties would generate profits for a 20% return on the investors’ money.

A classic Ponzi scam

According to the SEC, the four men at NRIA — Daniel Coley O’Brien, of Southampton, New York, Rey E. Grabato II, of Hoboken, New Jersey, Arthur S. Scutaro, of Bloomfield, and Thomas Nicholas Salzano, of Secaucus, New Jersey – used the invested money to pay fake returns to earlier investors. Funds from the scam also went towards purchasing luxury items for the four men and their families. The defendants also used the money to hire reputation management firms tasked with misleading any investors doing their due diligence on the four men and the scam.

The complaint also contends that the company altered the fund’s financial reports and information when distributing money to investors. It intentionally misled investors into believing that the company and the fund were more financially successful than they were – the company had little revenue. NRIA and the fund filed Chapter 11 bankruptcy earlier this year.

The four men and NRIA are charged with violating the Securities Act and the Securities Exchange Act. The SEC’s complaint seeks injunctions against future violations involving the four men, the company and two relief defendants. There is no announced court date at this time.

Help available to those who identify this behavior

Those involved in or witness these kinds of illegal schemes can blow the whistle by reporting the illegal activity to the SEC. Depending upon the quality of the information provided to investigators, the whistleblower can receive up to 30% of the money collected when the monetary sanctions exceed $1 million. They may also remain anonymous. Those with questions can contact a law firm that protects the client’s best interests as they guide whistleblowers through the process.