Fake real estate fund scammed NJ investors out of $650 million, Fed says
The U.S. District Court in New Jersey issued an indictment against two men for fraud to investors across the state on $650 million using a real estate Ponzi scheme that promised high returns with low commitments, but the company never saw a dime of profit, eventually tipping over on its own burden to compensate the victims.
Nicholas Salzano, 64, of Secaucus, and Rey Grabato, 43, who resided in Hoboken and the Philippines, were charged in an 18-count indictment announced Wednesday, with fraud and conspiracy violations. Meanwhile, Salzano also faces charges of aggravated identity theft and tax evasion in federal court, according to the U.S. Attorney’s Office.
A third conspirator, Arthur S. Scuttaro, 62, of Nutley, pleaded guilty to conspiracy and is expected to be sentenced Feb. 23, federal prosecutors said.
“This case should serve as a cautionary tale to the consumer,” said the FBI’s James Dennehy, “be familiar with the red flags that can alert you to fraud; don’t let dollar signs cloud your judgment; and remember the old adage that if it sounds too good to be true, it probably is.”
Salzano ran National Realty Investment Advisors, a supposed development investment firm founded in Delaware in 2016, but hid his true role as CEO under various bogus titles that posed as an independent consultant, the lawyers say in the deed. of accusation.
Along with Scuttaro and Grabato, who acted as chairman of the NRIA, the three are accused of accepting investments in real estate developments in Philadelphia and New Jersey that yielded little or no profit, and have covered up the scheme by offering up to $100 million in monthly distributions to investors that were, in reality, nothing more than money taken from new victims in an effort to further the fraud, the office claims of the US Attorney.
Meanwhile, to prevent the hoax from collapsing under its own lack of returns, investors were forced to accept bonuses in the form of new portfolio stakes, thus keeping investors’ money in the account of business and extending the time until further payments are due.
But those funds were simply transferred between various shell companies, as Salzano spent the money on opulent dinners, parties and payments to his wife and an unnamed romantic partner, the lawyers claim.
Victims were allegedly lured into fake businesses, such as the River Run apartment project in North Bergen, with promises of investments limited to 5% in overall development costs, supposedly led by the NRIA, limiting investors’ supposed losses if the projects went off track, according to the indictment.
The NRIA website has previous updates on this development, saying it was due to be presented to the planning board in 2021, but needed to be resubmitted. However, an employee of the North Bergen zoning office said on Friday there was no record of any development at 8709 River Road being heard by the township council in 2021 or 2020.
For his part, Grabato helped Salzano set up front companies to hide the source of the funds, handing over envelopes of cash to Salzano and allowing Salzano to put townhouses and luxury cars in his name, claim the lawyers.
Salzano dodged more than $1.6 million in tax debt, according to his indictment.
As a result of these federal criminal allegations, the Securities and Exchanges Commission filed civil lawsuits against Salzano, Grabato and Scuttaro.
Salzaro and Grabato could face five to 20 years in prison on each fraud and conspiracy charge and fines ranging from $100,000 to $250,000, if convicted.
In addition, Salzaro could face a mandatory two-year jail term if convicted of aggravated impersonation, which must be served consecutively to any other sentence handed down.
This article originally appeared on NorthJersey.com: Fake Real Estate Fund Ponzi Scheme Scammed NJ Investors, Feds Say