For years, National Realty Investment Advisors promised their clients an easy way to get rich. And they had bold names like Bill O’Reilly and Lawrence Taylor making their case.
After investing a few thousand dollars, the New Jersey-based group focused on high-end properties in gentrifying neighborhoods and claimed clients could see returns of at least 12 percent. The message was repeated in thousands of emails, on giant billboards in the Lincoln and Holland Tunnel and even in radio commercials featuring the former Fox News host and ex-NFL star.
But on Thursday, prosecutors claimed that the investment company’s president and an employee were actually involved in a brazen $650 million Ponzi scheme that defrauded thousands of investors.
The US Attorney’s Office in New Jersey announced an 18-count indictment, including securities and wire fraud charges, against Thomas Nicholas Salzano and Rey E. Grabato II for their roles in the nearly four-year-old alleged scheme. The couple also allegedly tried to evade $26 million in taxes.
Salzano was also charged with aggravated identity theft, tax evasion and subscribing to false tax returns. Prosecutors said he was arrested on Wednesday while Grabato was on the run. Salzano’s attorneys did not immediately respond to a request for comment, and an attorney for Scutaro could not be immediately reached.
Neither O’Reilly nor Taylor — nor any other prominent endorser — was charged with any criminal offenses, and prosecutors did not say in one way or another whether they were aware of the company’s alleged fraud network. None immediately responded to requests for comment.
The Securities and Exchange Commission also on Thursday charged NRIA and four of its former executives — including Salzano and Grabato — with defrauding 2,000 investors by falsely promising to use their money to buy and develop real estate. The group asked investigators with promises of returns “of up to 20 percent.”
“Among the investors were 382 retirees who contributed more than $94.8 million from retirement accounts,” the SEC complaint reads.
The SEC says the group actually used the money “to pay dividends to other investors, to fund an executive’s family’s personal and luxury purchases, and to pay reputation management firms to thwart investor due diligence on executives.” “. The federal indictment says the money was also used to pay for high-end cars, at least a week-long trip to the Jersey shore that included a banquet and hotel rooms for a dozen friends and family, and at least Salzano’s wife Paying $3,000 a week for a no-show job.
“These defendants planned to launch a fraudulent high-pressure marketing campaign to fool investors that their bogus real estate company was generating substantial profits,” US Attorney Philip Sellinger said in a press release announcing the indictment. “In reality, their criminal tactics were straight out of the Ponzi scheme playbook so they could defraud their investors and line their own pockets.”
The charges against Salzano and Grabato mark the latest episode in the spectacular collapse of a seemingly successful real estate investment firm — albeit one that has drawn skepticism from news outlets in several states. Arthur Scutaro, the company’s former sales manager who was also indicted by the SEC, pleaded guilty Thursday to charges of conspiracy to commit securities fraud in the alleged pyramid scheme. Last year, Salzano was arrested by the FBI after an hour-long police altercation, and the company filed for bankruptcy in June before being shut down by the state of New Jersey.
Prosecutors say the program began in February 2018 when NRIA established the investment fund “which allegedly acquired interests in limited liability companies that invested in real estate assets.” The SEC complaint finds that the fund owned properties in New York, New Jersey, Florida and Pennsylvania.
“As part of its investments, the fund provided investors with monthly distributions, typically between 6 and 10 percent of their initial investment on an annual basis, through a direct transfer to their bank accounts,” the indictment reads. “Each investor in the fund also received a written guarantee from NRIA of an annual return of at least 12% per annum for a period of five years, plus full repayment of their investment or NRIA would pay any shortfall.”
To market the fund, Scutario and Salzano allegedly used an “aggressive multi-year nationwide marketing campaign that included thousands of emails to investors; advertising on billboards, television and radio; and meetings and presentations for investors.” While marketing deemed the fund solvent, the indictment states that in reality NRIA “generated little to no profit and operated as a pyramid scheme, kept afloat by new fund investors.”
Prosecutors went on to say that Salzano, who served as NRIA’s “shadow CEO,” was the company’s “guiding force” and “veiled his leadership role … to avoid scrutiny from investors and the IRS.” A key reason he wanted to avoid detection, the indictment said, was his ugly history — which included the Federal Trade Commission indictments in 2006.
Those allegations claimed he defrauded nonprofits, churches, and small businesses while he was the chief managing officer of a New Jersey telecommunications company. Seven years later, Salzano pleaded guilty to theft by fraud in Louisiana for defrauding small businesses in that state by “falsely promising consumers they would receive cost savings on telecommunications services.” (The FTC case was settled in 2006 and the Louisiana charges were later dropped.)
To cover up Salzano’s past, prosecutors allege that he used Grabato, NRIA’s president, as the company’s public face and had him sign all bank accounts used with NRIA and documents issued to investors. As the scheme grew, prosecutors allege, the pair began orchestrating a separate conspiracy to con the IRS to hide the millions Salzano owed the IRS. This allegedly included the pair lying to the government, using multiple bank accounts for bogus companies, and even forging company documents.
Eventually, prosecutors say, some scammed investors began demanding documentation about the supposedly bulletproof investment program. In response to one of those demands, Salzano allegedly sent a customer a fake letter about an investment property in North Bergen, New Jersey. The letter eventually ended up in the hands of the FBI — leading to Salzano’s arrest in 2021.
But if a top dog being slammed could have been an indication his peers should play nice, prosecutors say, Grabato didn’t get the memo.
“Following Salzano’s arrest, Grabato continued to divert at least approximately $1.4 million from fund investors to Salzano and other members of Salzano’s family and friends through a network of shell companies and nominee accounts,” the indictment reads.
https://www.thedailybeast.com/bill-oreilly-and-lawrence-taylor-endorsed-a-real-estate-investment-firm-the-feds-say-is-a-ponzi-scheme?source=articles&via=rss Bill O’Reilly and Lawrence Taylor backed a real estate investment firm the Fed says is a Ponzi scheme