Posted on

New Jersey Bureau of Securities Takes Action Against Middlesex Man for Allegedly Defrauding More than $1.3 Million from NJ Investors

the staff of the Ridgewood blog

Newark NJ,  Attorney General Gurbir S. Grewal and the Bureau of Securities within the Division of Consumer Affairs today filed suit against a Middlesex County man and the various investment companies he operated, alleging he defrauded more than $1.3 million from 26 New Jersey investors who bought stock in his online gambling companies, and then used the money to bankroll his lavish lifestyle.
In a complaint filed in New Jersey Superior Court, the Bureau alleges that Sandy J. Masselli, Jr., of Old Bridge, New Jersey, told investors that the money they invested in his Carlyle Gaming & Entertainment Ltd, and its successor company, Carlyle Entertainment, Ltd. (collectively the “Carlyle Companies”) would be used for proper corporate purposes.

Continue reading New Jersey Bureau of Securities Takes Action Against Middlesex Man for Allegedly Defrauding More than $1.3 Million from NJ Investors

Posted on

“Operation Mother’s Attic” Catches 29 Unlicensed Movers in New Jersey

for sale Ridgewood_Real_Estate_theRodgewopodblog

the staff of the Ridgewood blog

Trenton NJ,  Attorney General Gurbir S. Grewal and the Division of Consumer Affairs today announced that 29 unlicensed movers have been issued Notices of Violation (“NOVs”) as a result of “Operation Mother’s Attic, a State-led undercover sting targeting public movers suspected of operating without licenses. Each unlicensed mover was also assessed a $2,500 civil penalty
The sting operation occurred over the course of four days in April 2018. Investigators from the Division’s Office of Consumer Protection (“OCP”) posed as individuals planning to move from an upscale neighborhood in Montville. The investigators found various unlicensed moving companies advertising online and hired them for their “move.” The movers drove to Montville, expecting to find a luxury home full of items to load, and were instead met by a team of OCP investigators, who issued them NOVs for operating without licenses.

Continue reading “Operation Mother’s Attic” Catches 29 Unlicensed Movers in New Jersey

Posted on

“Safe Summer” 2018 Boardwalk Inspections are Underway

artchick_jerseyshore_theridgewoodblog

photo by ArtChick

July 18,2018

the staff of the Ridgewood blog

Seaside Hight’s NJ,  Amid the crowds on the Seaside Heights boardwalk today, Attorney General Gurbir S. Grewal and the Division of Consumer Affairs announced that the annual “Safe Summer” boardwalk compliance efforts are underway along the Jersey Shore and initial inspections have found 12 establishments in two seaside towns that have allegedly violated state consumer protection laws and regulations.

The Safe Summer initiative, designed to promote a family-friendly environment in New Jersey’s coastal communities, is a Division enforcement effort to check boardwalk games for fairness of play, and to ensure they haven’t been modified to the disadvantage of players. Investigators also check stores for compliance with pricing and refund policies.

For many families, a trip to the Jersey Shore isn’t complete without a visit to the boardwalk to enjoy rides and games, and perhaps purchase a souvenir,” said Attorney General Grewal. “We don’t want anyone walking away from what should be an enjoyable trip feeling like they, or worse, their children, were taken advantage of by rigged games or deceptive sales practices.”
“Our investigators comb the boardwalk to ensure a fair and safe experience for the thousands of individuals and families who flock to the Jersey Shore each summer,” said Paul R. Rodríguez, Acting Director of the Division of Consumer Affairs. “Through their efforts, we are making sure that the few stores and amusement game operators who aren’t playing by the rules are held accountable so they don’t spoil the fun for everyone.”
Since Safe Summer 2018 got underway last month, investigators from the Division’s Legalized Games of Chance Control Commission (LGCCC) unit and its Office of Consumer Protection (OCP) have visited boardwalks in Seaside Heights and Atlantic City.

LGCCC investigators inspected a total of 8 arcades and 27 individual amusement games and found 5 locations with alleged violations, including crane machines with prizes too heavy or packed too tightly to be picked up, and a boardwalk game where it was impossible to win the top prize in the number of allotted chances. Investigators wrote up a total of 11 violations that will be presented to the Legalized Games of Chance Control Commission for possible action.

OCP investigators inspected a total of 25 stores and found 7 with alleged violations, including hundreds of items from children’s clothing to shot glasses without clearly marked prices and a shop without a prominently posted refund policy. Citations will be written up and sent out to the alleged violators.
The Safe Summer initiative is a coordinated effort by the Division to blanket a handful of boardwalks with investigators each summer. In addition to inspecting for consumer protection violations, investigators also check for sales of prohibited items, such as novelty lighters, and test toys and prizes for excessive levels of lead. The Division also hands out educational materials to consumers to empower them as their own best advocates against fraud and deceit in the marketplace.

In addition to the Safe Summer sweeps, investigators with LGCCC conduct boardwalk inspections all season long; visiting every one of the state’s 266 amusement game licensees at least once. There are 16 shore resort municipalities in New Jersey with licensed amusement games: Keansburg, Long Branch, Pt. Pleasant, Manasquan, Seaside Park, Seaside Heights, Sea Isle City, Wildwood, North Wildwood, Stone Harbor, Beach Haven, Atlantic City, Brigantine, Beachwood, Toms River, and Cape May.

Since the Safe Summer initiative began in 2014, LGCCC has issued183 citations alleging one or more violations against amusement games licensees. Violations are subject to fines of up to $250.00 for the first offense and up to $500.00 for the second and each subsequent offense. The Commission also has the power to revoke licenses.

Posted on

New Jersey Bureau of Securities Revokes Registrations of Investment Advisory Firm and Its Owner for Defrauding Elderly New Jersey Investors

June 16,2018

the staff of the Ridgewood blog

Trenton NJ, Attorney General Gurbir S. Grewal and the Division of Consumer Affairs announced that the Bureau of Securities (“the Bureau”) today revoked the registrations of a Morris County investment advisory firm and its owner, and assessed them $500,000 in civil penalties for fraudulently selling at least $6.1 million in unregistered securities to elderly and retired New Jersey investors.
Richard Belott, the managing member and investment adviser representative of Financial Planning Advisors, LLC (“FPA”), sold unregistered securities to at least eight investors, including elderly and retired clients of FPA, then used at least $1.55 million of investors’ funds on personal expenses, including his daughter’s college tuition, extravagant trips for himself and his wife, and mortgage payments on the couple’s beach house.
The Bureau’s action comes on World Elder Abuse Awareness Day, a day when individuals and organizations from around the globe participate in activities and events to raise awareness about the physical, emotional, and financial abuse of elders.

“Preventing the financial exploitation of seniors is a top priority for New Jersey’s Bureau of Securities, not just on World Elder Abuse Awareness Day, but every day,” Attorney General Gurbir S. Grewal. “The enforcement action announced by the Bureau today underscores our ongoing efforts to protect elder investors from financial predators in the securities market.”
In a Summary Penalty and Revocation Order issued today, Bureau Chief Christopher Gerold found that between 2008 and 2015, Belott and FPA offered and sold at least 24 promissory notes purportedly issued by local diners and a developer. Belott represented to investors that their funds were investments in those businesses.

In reality, instead of receiving promissory notes from the diners or developer, investors received personal promissory notes from the owners of those businesses, who had
undisclosed business relationships with Belott. In at least one instance, the promissory note was issued by Belott.

The promissory notes had a term of one year or more with stated interest rates ranging from 5 percent to 18 percent annually. Interest and principal payments to the promissory note investors were paid from the bank accounts of various entities, including the diners, developer and FPA, Gerold found.

In offering and selling the promissory notes, Belott failed to disclose to investors that: the diners and developer purportedly issuing the promissory notes were clients of his accounting firm, that he had outside business relationships with the owners of the businesses, or that he was a co-owner of some of the diners. Belott also failed to disclose that he received a commission on the sale of certain promissory notes he sold, or that he would use the investors’ funds for his personal benefit.

“Elderly clients of FPA trusted Belott, as their financial advisor, to guide them in making wise investments. Instead, he lured them into a fraudulent investment scheme to enrich himself,” said Paul Rodríguez, Acting Director of Division of Consumer Affairs. “These investors, some of whom risked their entire retirement savings on Belott’s scheme, had no idea that he was using their funds to subsidize his lavish lifestyle.”
As set forth in the Summary Penalty and Revocation Order, Bureau Chief Gerold found that:

Belott and FPA violated New Jersey’s Uniform Securities Law through the following activities, among others:
offering and selling unregistered securities;
engaging in fraud or deceit upon FPA’s advisory clients and others;
engaging in dishonest and unethical practices in the investment advisory business; and
failing to maintain written investment advisory contracts.
Belott violated New Jersey’s Uniform Securities Law by:
acting as an agent without registration;
making untrue statements of material fact and/or omitting to state material facts; and
making false and misleading statements to Bureau investigators during an investigative deposition.
FPA violated New Jersey’s Uniform Securities Law by:
failing to make and keep required books and records;
failing to maintain minimum capital or the required bond while having custody of clients’ funds.

The Bureau’s action was handled by Deputy Bureau Chief Amy Kopleton, Director of Examinations Stephen Bouchard, and Investigator Theresa Hendricks, within the Division of Consumer Affairs.
Deputy Attorney General and Section Chief Victoria Manning and Deputy Attorney General Katherine A. Gregory of the Securities Fraud Prosecution Section in the Division of Law represented the Bureau in this matter.
More information for both elderly investors and their caregivers can be found on the Bureau’s website at www.njconsumeraffairs.gov/bos/Pages/investormaterials.aspx or at www.ServeOurSeniors.org.
The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey. It is critical that investors “Check Before You Invest.” Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contacting the Bureau toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600, or by visiting the Bureau’s website at www.NJSecurities.gov.

Posted on

New Jersey Bureau of Securities Orders Three Online Cryptocurrency Promoters to Stop Offering Unregistered Securities in the State

Utah Software Engineer Mints Physical Bitcoins

May 22,2018

the staff of the Ridgewood blog

NEWARK NJ, Attorney General Gurbir S. Grewal and the Division of Consumer Affairs announced that the Bureau of Securities (“the Bureau”) today issued three emergency orders to stop online cryptocurrency-related investment entities from fraudulently offering unregistered securities in New Jersey.

The Cease and Desist Orders against Bullcoin Foundation a/k/a Bullcoin Gold (“Bullcoin”,) Trident d/b/a Trident Crypto Index Fund (“Trident”,) and Springcryptoinvest were announced today as part of “Operation Cryptosweep,” an international crackdown on fraudulent Initial Coin Offerings (“ICOs”) and crypto currency-related investment products.
More than 40 other state and provincial securities regulators in the United States and Canada are participating in the sweep, which is being coordinated by the North American Securities Administrators Association (NASAA), of which the Bureau is a member.

“New Jersey’s Bureau of Securities has been a national leader in proactively protecting investors against the significant threat of fraudulent activity involving initial coin offerings and cryptocurrency-related investment products,” said Attorney General Grewal. “Today the Bureau joins securities regulators across the nation and beyond in sending a message that we will vigilantly safeguard our financial industry from schemes and scams involving cryptocurrencies.”
Operation Cryptosweep has resulted in nearly 70 investigations and 35 completed or pending enforcement actions since the beginning of May. NASAA members are conducting additional investigations into potentially fraudulent conduct that may result in additional enforcement actions. These actions are in addition to more than a dozen enforcement actions previously undertaken by NASAA members regarding these types of products.
“New Jersey is proud to announce enforcement actions under Operation Cryptosweep to help raise public awareness of the risks associated with initial coin offerings and cryptocurrency-related investment products,” said Kevin Jespersen, Acting Director of the Division of Consumer Affairs. “The Cease and Desist Orders we issued today successfully shut down three online entities seeking to prey on New Jersey investors.”
The Bureau found that Bullcoin is offering investors an unregistered security in the form of an ICO of its Bullcoin Gold cryptocurrency (the “BCG token”) through its website and through various social media websites. The Bullcoin securities were not registered with the Bureau to be sold in New Jersey. Bullcoin further violated the law by failing to disclose key material facts to prospective investors, including its assets and liabilities, or financial information about the business; the risks associated with the BCG tokens; and the cryptocurrencies that the Bullcoin fund would invest. The Bureau also found that Bullcoin made untrue statements of material facts on its website, including that it is “the leading crypto-hedge fund,” an assertion that is either untrue or unsupported.

The Bureau found that Trident is offering investors an unregistered security in the form of an ICO of its Trident coins (“TDC Coin”) through its website and through various social media websites. The TDC Coins were not registered with the Bureau to be sold in New Jersey. Trident further violated the law by failing to disclose key material facts to prospective investors, including the identity of its principals; its physical address and principal place of business; its assets and liabilities, or financial information about the business; the persons or entities that developed the TDC coins; and the persons or entities that are buying and selling the cryptocurrency in the Trident Crypto Index Fund. The Bureau also found that Trident made untrue statements of material facts, including a statement on its website that in 2017 the Trident Crypto Index Fund had a return of more than 1400 percent but there is no evidence provided of these returns; and a statement on its WhitePaper that since the beginning of 2016 TDC coin has “gained by a factor of 154” but the Trident Website indicates that Trident was not founded until 2017.

The Bureau found that Springcryptoinvest is offering investors an unregistered security in the form of various investment packages through its website and through various social media websites. In order to invest with Springcryptoinvest, investors must open an online account through its website. After opening an account, investors are urged to fund the account by purchasing a plan using the cryptocurrencies Bitcoin, Litcoin, or payment websites PerfectMoney or Payeer. The Springcryptoinvest investment packages were not registered with the Bureau to be sold in New Jersey. Springcryptoinvest further violated the law by failing to disclose key material facts to prospective investors, including the identity of its principals; Springcryptoinvest’s assets and liabilities, and other financial information; and how investor funds are invested. The Bureau also found that Springcryptoinvest made untrue statements of material facts on its website by claiming it was incorporated in the United Kingdom in November 2002 with 04588340 as its registration number. However, United Kingdom registration number 04588340 is not assigned to Springcryptoinvest, and there is no United Kingdom registration number for the name Springcryptoinvest.

“Not every initial coin offering or cryptocurrency-related investment is fraudulent, but the risk of fraud is significant,” said Christopher W. Gerold, Chief of the New Jersey Bureau of Securities and Chair of NASAA’s Enforcement Section. “Since cryptocurrencies began attracting headlines last year, we have been warning investors to approach crypto-related investments with extreme caution and stay away from any investment that requires them to transmit funds to an unidentified online entity that fails to disclose who is behind its investment products, the financial status of its business, and the physical location of its operations.”
In April 2018, NASAA organized a task force of its member state and provincial securities regulators to begin a coordinated series of investigations into ICOs and cryptocurrency-related investment products. Regulators identified many cryptocurrency-related products and as part of its work, the task force identified hundreds of ICOs in the final stages of preparation before being launched to the public. These pending ICOs were advertised and listed on ICO aggregation sites to attract investor interest. Many have been examined and some were determined to warrant further investigation. A number of these investigations are ongoing and others resulted in enforcement actions announced today.
NASAA’s task force also found approximately 30,000 crypto-related domain name registrations, the vast majority of which appeared in 2017 and 2018.

Posted on

NJ Attorney General and the New Jersey Bureau of Securities, Division of Consumer Affairs, Issue Caution on Cryptocurrency

Bitcoin

January 10,2018
the staff of the Ridgewood blog

Ridgewood NJ, With cryptocurrencies continuing to attract headlines, Attorney General Christopher S. Porrino and the Bureau of Securities, which is within the Division of Consumer Affairs, today reminded New Jersey investors to be cautious about investments involving cryptocurrencies.

“Cryptocurrencies may be the new rage when it comes to investments, but there are significant risks associated with transactions involving these predominantly unregulated currencies,” said Attorney General Porrino. “Investors should fully understand the types of currency and transactions being pitched to them before agreeing to invest.”

Cryptocurrencies are a medium of exchange that are created and stored electronically in the blockchain, a distributed public database that keeps a permanent record of digital transactions. Current common cryptocurrencies include Bitcoin, Ethereum and Litecoin. Unlike traditional currency, these alternatives have no physical form and typically are not backed by tangible assets. They are not insured or controlled by a central bank or other governmental authority, cannot always be exchanged for other commodities, and are subject to little or no regulation.

A survey of state and provincial securities regulators by the North American Securities Administrators Association (NASAA), of which the Bureau of Securities is a member, shows 94 percent believe there is a “high risk of fraud” involving cryptocurrencies. Regulators also were unanimous in their view that more regulation is needed for cryptocurrency to provide greater investor protection.

“Because of the high risk of fraud and some projections of huge returns, investors must be on alert and not be tempted to invest in cryptocurrency-related investments without first vigorously vetting any transaction,” said Sharon M. Joyce, Acting Director of the Division of Consumer Affairs. “Understanding what is being sold is the best armor an investor has against fraud.”

Last month, NASAA identified Initial Coin Offerings (ICOs) and cryptocurrency-related investment products as emerging investor threats for 2018. Unlike an Initial Public Offering (IPO) when a company sells stocks in order to raise capital, an ICO sells “tokens” in order to fund a project, usually related to the blockchain. The token likely has no value at the time of purchase. Some tokens constitute, or may be exchangeable for, a new cryptocurrency to be launched by the project, while others entitle investors to a discount, or early rights to a product or service proposed to be offered by the project.

“Transactions involving cryptocurrency are often complicated and confusing with an unproven track record. They are not designed for investors with a low tolerance for risk or volatility,” said Christopher W. Gerold, Chief of the Bureau of Securities. “The best advice we can give is for investors to be completely aware of the risks before investing and act accordingly.”

NASAA offers a short animated video to help investors understand the risks associated with ICOs and cryptocurrencies. NASAA and its members first alerted investors of the risks associated with cryptocurrencies in 2014.
Common Cryptocurrency Concerns

The following are some common concerns investors should consider before investing in any offering containing cryptocurrency:

Cryptocurrency is subject to minimal regulatory oversight, susceptible to cybersecurity breaches or hacks, and there may be no recourse should the cryptocurrency disappear.
Cryptocurrency accounts are not insured by the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits up to $250,000.
The high volatility of cryptocurrency investments makes them unsuitable for most investors, especially those investing for long-term goals or retirement.
Investors in cryptocurrency are highly reliant upon unregulated companies, including some that may lack appropriate internal controls and may be more susceptible to fraud and theft than regulated financial institutions.
Investors will have to rely upon the strength of their own computer security systems, as well as security systems provided by third parties, to protect purchased cryptocurrencies from theft.

Common Red Flags of Fraud

The Bureau of Securities also reminds investors to keep watch for these common red flags of investment fraud:

“Guaranteed” high investment returns. There is no such thing as guaranteed investment returns, and there is no guarantee that the cryptocurrency will increase in value. Be wary of anyone who promises a high rate of return with little or no risk.
Unsolicited offers. An unsolicited sales pitch may be part of a fraudulent investment scheme. Cryptocurrency investment opportunities are promoted aggressively through social media. Be very wary of an unsolicited communication—meaning you didn’t ask for it and don’t know the sender—about an investment opportunity.
Sounds too good to be true. If the project sounds too good to be true, it probably is. Watch out for exaggerated claims about the project’s future success.
Pressure to buy immediately. Take time to research an investment opportunity before handing over your money. Watch out for pressure to act fast or “get in on the ground floor” of a new tech trend.
Unlicensed sellers. Many fraudulent investment schemes involve unlicensed individuals or unregistered firms. The Bureau of Securities can help investors research the background of those selling or advising the purchase of an investment.

Posted on

New Jersey Releases Annual Statistics on Cyber Breaches for the First Time

October 31,2017
the staff of the Ridgewood blog

 

Trenton NJ,  Attorney General Christopher S. Porrino and the New Jersey State Police  announced that 676 data breaches were reported to the State Police in 2016 affecting more than 116,000 New Jersey account holders. October is National Cybersecurity Month, and the announcement – the first release of annual statistics on data breaches in the state – was made as New Jersey offered advice and resources to residents to protect their sensitive personal information. The Attorney General’s Office also highlighted legal actions taken this year by the Division of Law and Division of Consumer Affairs to address data breaches.

“Doing business online and on our devices has become so routine that it’s easy to let our guard down. But as these statistics on data breaches highlight, it’s critical that we protect our sensitive personal information from the many who seek to access it for harmful ends,” said Attorney General Christopher Porrino. “The internet touches almost all aspects of our daily life, whether we realize it or not, and Cyber Security Awareness Month is a good time to examine whether our accounts are secure. I urge everyone to take advantage of the great resources New Jersey offers in this area.”

To assist in tackling these security challenges, the New Jersey Cybersecurity & Communications Integration Cell (NJCCIC) acts as the state’s one-stop shop for cybersecurity information sharing, threat analysis, and incident reporting. Located at the State Police Regional Operations Intelligence Center (ROIC), the NJCCIC brings together analysts and engineers to promote statewide awareness of cyber threats and widespread adoption of best practices.

“Our mission is to help make NJ more resilient to cyber attacks. We encourage all NJ residents and businesses to reach out to the NJCCIC for advice, to subscribe to our alerts, and to report incidents via our website – www.cyber.nj.gov,” said Michael Geraghty, Director of the NJCCIC.

“The statistics compiled present a sobering picture of the challenges that face us when it comes to cyber security,” said Sharon Joyce, Acting Director of the Division of Consumer Affairs. “We urge citizens to use the resources available through the Division of Consumer Affairs in order to protect themselves and their loved ones from identity theft and other forms of cybercrime. In addition, the Division remains committed to protecting consumers from those companies that fail to safeguard or improperly gather personal information.”

The information released by the Attorney General’s Office and the State Police details data breaches in New Jersey occurring in 2016. Data breaches involve the unauthorized access to personal information, which may include a person’s first and last name linked with a social security number, driver’s license number, or account, debit, or credit card number. Under New Jersey law, any business that operates in New Jersey or any public entity that compiles or maintains computerized records that include personal information must disclose any breach of security to customers who are New Jersey residents and whose personal information was or believed to have been accessed by an unauthorized person.

The business sectors most often involved with breaches include finance/banking, health services followed by business services and retail trade. Other areas include education, restaurant, industrial/manufacturing, hotels, non-profits, non-medical insurance, and telecommunications, among others.

The methods used to breach security were led by phishing, a form of fraud in which the attacker tries to learn information such as login credentials or account information by masquerading as a reputable entity or person in email, instant message or other communication channels, and hacking. Website malware, employee incident, unauthorized email access and ransomware were also utilized.

The Division of Consumer Affairs offers the following Tips to Consumers:

Avoid clicking on e-mail links or attachments from unknown individuals, financial institutions, computer services or government agencies. To check out the message, go to the sender’s legitimate public website, and use the contact information provided.

Adjust device privacy settings to control sharing of data between applications, software and address books.

Choose a strong password containing letters, numbers and symbols. If a website offers two-factor authentication security, use it.

To protect your device from unauthorized access and malware software, install security software, often available from your internet provider, and ensure that firewall and anti-virus protections are updated continually.

Before disposing of any electronic device, wipe the hard drive using specialized software that will overwrite your information; or donate the device to a certified recycling facility that follows government standards for the destruction of data.

Avoid free Wi-Fi, especially for health, financial, and other personal transactions.

Before giving up your personal information to win a contest or participate in a survey, read the “Terms and Conditions” and “Privacy Policy” within the website or app. These sections should clearly lay out how the website will use and share your information.

Under federal law, consumers can get three free credit reports per year through www.annualcreditreport.com. New Jersey law entitles consumers to an additional three free credit reports annually – one from each of the national credit reporting agencies. Scrupulous checking of credit reports, bank and credit card statements, and subscription services can catch identity theft at its earliest stages.

Parents can report concerns about websites directed to children to the Division of Consumer Affairs, which enforces the federal Children’s Online Privacy Protection Act (COPPA). Parents should take advantage of parental control software offered by their internet service provider, adjust browser settings to limit children’s access, and review history logs to monitor usage.