SECAUCUS, NJ – This week the state of New Jersey announced that it has granted a cease and desist order to a real estate investment company based in Secaucus.
The company is National Realty Investment Advisors (NRIA).
One of the owners of the company is Thomas Nicholas Salzano, also known as “Nick Salzano”. Salzano was arrested by the FBI last March after refusing to leave his Riverside Court apartment for hours with Secaucus police and FBI agents.
In this case, he was accused of cheating a customer out of hundreds of thousands of dollars. The FBI alleges that in 2019 he used a fake term sheet to try to get a woman to increase her investment in one of NRIA’s real estate companies.
The same real estate fund was shut down by the state of New Jersey this week. Also, NRIA filed for bankruptcy just last week.
The New Jersey Attorney General has ordered NRIA to cease operations because the company sold at least $630 million worth of securities to investors in New Jersey and across the country from 2018 to 2022, according to the state.
The directors of the company are listed by the Attorney General as follows:
- Salzano von Secaucus, portfolio manager of the NRIA fund
- Rey Grabato of Hoboken, President of the NRIA Fund and 80% owner of NRIA
- D. Coley O’Brien of Southampton, NY, Co-CIO of the NRIA Fund and 100% owner of NRIA Capital Partners
- Bloomfield’s Arthur Scutaro, Executive Vice President of Project Management and Advisor to the NRIA Fund
According to the NJ Attorney General, their alleged scam worked like this: The company sold membership in a real estate mutual fund called the NRIA Fund to at least 1,800 investors across the country, including 380 investors in New Jersey.
Salzano and the other men touted the NRIA fund as a multi-billion dollar real estate development company focused on “fundamental” development of townhouses, condos, luxury residences and mixed-use rental developments, NJ Acting Attorney General Matt Platkin said in the cease-and-desist order, which you can read here.
NRIA claimed that all monies invested in its funds would be used to purchase land or property at below market value, which would then be developed for sale at a large profit.
To attract potential investors, the company deployed a nationwide advertising campaign that included radio spots and high-profile messages on billboards at the entrances to the Lincoln and Holland tunnels. The billboard advertising guaranteed returns of 12 percent on the investments, with the added possibility of earning returns of up to 21 percent.
However, the company was investigated by the New Jersey Bureau of Securities, which found multiple violations of the New Jersey Uniform Securities Law.
NRIA also ran a pyramid scheme, the attorney general said: To cover up the company’s poor performance, its owners used investors’ own money (rather than actual cash flow) to fund annual distributions and used straw buyers to fund non-existent sales of certain ones Residential real estate units and inflated the company’s performance.
Also, the company created several fake and fake websites to reduce the likelihood that internet searches would reveal that the two men who ran the company – Salzano and Scutaro – had previously been subpoenaed by the Federal Trade Commission (FTC) for their involvement with consumers had been scammed while running a company called NorVergence.
According to NorVergence, the FTC has permanently barred Salzano from similar behavior in the future.
As part of its plan to enrich itself at the expense of investors, the state of New Jersey says these four men used millions of investor dollars to make lavish payments to family members — including a salary Salzano’s wife paid for a no-show job was paid.
The directors also hired businesses owned or controlled by the family, including a construction company where Salzano’s son was the chief financial officer, and businesses owned by Grabato’s relatives that were used to create scammers and websites.
The state of New Jersey called NRIA’s actions “outrageous”.
“It’s exactly the kind of behavior that undermines public confidence in our financial institutions and — ultimately — in investments,” said Amy Kopleton, acting director of the Bureau of Securities.
“The fraudulent conduct found by our Bureau of Securities in this case is striking,” Acting Attorney General Platkin said. “Today we are taking action to stop their unlawful behavior and bring this to public attention.
“The rules aren’t complicated: If you’re selling securities in New Jersey, you must comply with our securities laws,” said Cari Fais, deputy director of the Department of Consumer Affairs. “These respondents have lured investors in New Jersey and across the country with empty promises and, in some cases, gone to great lengths to hide their own fraudulent behavior. The actions we have taken today are designed to stop their dishonest, predatory behavior once and for all.”
In addition to the reportedly “billion-dollar” real estate development company, NRIA also invested up to a quarter of all investor funds in commercial mortgage-backed securities, the majority of which were below investment grade (aka junk bonds). to generate returns it had promised investors but failed to deliver through the NRIA fund’s real estate projects.
The state says NRIA leveraged the junk bonds through buyback agreements with financial institutions. This use of repurchase agreements to create leverage significantly increased the risk of the junk portfolio of commercial mortgage-backed securities for those who invested in the NRIA fund, but the risk was never disclosed to investors, the state says.
Read about Salzano’s arrest in March 2021: Secaucus man arrested by FBI in financial fraud case: A Secaucus man who worked as a financial portfolio manager was taken into custody by the FBI and accused of defrauding a client out of hundreds of thousands of dollars, the US Attorney’s Office in Newark said.