Feds: 2 NJ Men Indicted for $650 Million Real Estate Investment Ponzi Scheme
Federal authorities say the president and a top officer of a real estate investment company have been charged for their roles in a scheme to defraud more than 2,000 investors in a $650 million Ponzi scheme.
U.S. Attorney Philip Sellinger says 64-year-old Thomas Nicholas Salzano (a.k.a. "Nicholas Salzano") of Secaucus and 43-year-old Rey E. Grabato II of Hoboken and the Philippines are charged in an 18-count indictment with conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, wire fraud, and conspiracy to defraud the United States.
Salzano is also charged with two counts of aggravated identity theft, two counts of tax evasion, and five counts of subscribing to false tax returns.
Officials say Grabato was president of National Realty Investment Advisors (NRIA) and Salzano was the firm's shadow CEO.
From February 2018 through January 2022, Salzano and Grabato defrauded investors and potential investors of NRIA Partners Portfolio Fund I LLC, a real estate fund operated by NRIA, of $650 million through lies, deception, misleading statements, and material omissions. These included false representations about NRIA’s financial position, how the defendants and their conspirators used fund investor money, and Salzano’s managerial role at NRIA and his history of fraud.
The two executed their scheme through an aggressive nationwide marketing campaign that was intended to mislead investors into believing that NRIA was a solvent business that generated significant profits, according to Sellinger's office. In reality, they say NRIA generated little to no profits and operated as a Ponzi scheme, which was kept afloat by new investors.
Salzano and Grabato also orchestrated a separate conspiracy to defraud the IRS in its effort to collect $26 million in outstanding taxes Salzano owed to the U.S. Treasury. Salzano and Grabato are alleged to have lied to the IRS, used a web of nominees, opened bank accounts in the names of phony entities, and used false and fraudulent company documents.
Salzano was arrested Wednesday and is scheduled to appear before a judge today. Grabato remains at large.
A third player
Also today, 62-year-old Arthur S. Scuttaro of Nutley, the former head of sales at NRIA, pleaded guilty to one count of conspiracy to commit securities fraud in the same scheme. His sentencing is scheduled for February 23rd.
More legal trouble
In a separate civil action, the Securities and Exchange Commission has filed a complaint against all three men, "based on the allegations underlying the Ponzi scheme alleged in the indictment and information."
U.S. Attorney speaks
Sellinger said in a statement,
As charged in the indictment, these defendants schemed to create a high-pressure, fraudulent marketing campaign to hoodwink investors into believing that their bogus real estate venture generated substantial profits. In reality, their criminal tactics were straight out of the Ponzi scheme playbook so that they could cheat their investors and line their own pockets.
If convicted, Salzano and Grabato potentially face decades in prison and millions of dollars in fines.
The public is reminded that charges are accusations and all persons are considered innocent until proven guilty in a court of law.