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 real estate in gentrifying neighborhoods, clients claiming they could earn returns of at least 12 percent. The message was repeated in thousands of emails, on huge billboards in the Lincoln and Holland tunnel, and even in radio ads featuring the former Fox News host and ex-NFL star.
But on Thursday, prosecutors claimed that the investment company’s president and an associate were in fact participating in a blatant $650 million Ponzi scheme that defrauded thousands of investors.
The US Attorney’s Office in New Jersey announced an 18-point indictment, including charges of securities fraud and wire transfers, against Thomas Nicholas Salzano and Rey E. Grabato II for their roles in the nearly four-year 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 lawyers did not immediately respond to a request for comment.
Neither O’Reilly nor Taylor — nor any other celebrity endorser — was charged with criminal offenses, and prosecutors in no way indicated whether they were aware of the company’s alleged web of deception. Neither of them immediately responded to requests for comment.
The Securities and Exchange Commission on Thursday also accused NRIA and four of its former executives — including Salzano and Grabato — of accusing 2,000 investors of falsely promising to use their money to buy and develop real estate. The group asked researchers with promises of returns “up to 20 percent.”
Investors included 382 retirees who contributed more than $94.8 million from retirement accounts.
The SEC says the group actually used the money “to pay distributions to other investors, to fund the personal and luxury purchases of an executive’s family, and to pay reputation management firms to carry out the executives’ due diligence by investors.” thwart.” According to the federal indictment, the money was also used to pay for expensive cars, at least a week-long trip to the Jersey shore with a banquet and hotel rooms for a dozen friends and family, and to pay Salzano’s wife at least $3,000 a week before. a no show job.
“These defendants plotted to mount a fraudulent, high-pressure marketing campaign to trick investors into believing that their bogus real estate company was generating significant profits,” US attorney Philip Sellinger said in a press release announcing the charges. “In reality, their criminal tactics came straight from the Ponzi scheme so they could defraud their investors and line their own pockets.”
The indictment of Salzano and Grabato marks the latest episode in the spectacular collapse of an apparently successful real estate investment firm — albeit one that had sparked skepticism among news outlets in multiple states. Arthur Scutaro, the company’s former head of sales, who was also indicted by the SEC, pleaded guilty Thursday to a charge of conspiracy to commit securities fraud in the alleged Ponzi scheme. A lawyer for Scutaro could not be reached immediately. Last year, Salzano was arrested by the FBI after an hours-long police standoff, and the company filed for bankruptcy in June before being shut down by the state of New Jersey.
Prosecutors say the settlement began in February 2018, when NRIA set up the investment fund “that allegedly acquired equity stakes in limited liability companies investing in real estate.” The SEC complaint notes that the fund owned properties in New York, New Jersey, Florida and Pennsylvania.
“As part of their investments, the Fund provided investors with monthly distributions, typically between six percent and ten percent of their original principal investment on an annual basis, through a direct transfer to their bank accounts,” the indictment said. “Each investor in the Fund also received a written guarantee from NRIA of an annual return of at least twelve percent per annum for a period of five years plus a full return on their investment, otherwise any shortfall would be paid by NRIA.”
To market the fund, Scutaro and Salzano are said to have used an “aggressive multi-year nationwide marketing campaign involving thousands of emails to investors; advertisements on billboards, television and radio; and investor meetings and presentations.” Although the marketing deemed the fund solvent, the charge alleges that in reality NRIA “produced little to no profit and operated as a Ponzi scheme, operated by new Fund investors.”
Prosecutors went on to say that Salzano, who served as NRIA’s “shadow chief executive officer,” was the company’s “guiding force” and “hidden his leadership role…to avoid scrutiny by investors and the IRS.” One of the main reasons he wanted to avoid detection, the indictment, was his ugly history — including charges from the Federal Trade Commission in 2006.
Those charges alleged that he defrauded nonprofits, churches and small businesses when he was the chief managing officer of a telecommunications company in New Jersey. Seven years later, Salzano pleaded guilty to fraudulent theft in Louisiana for defrauding small businesses in that state by “falsely promising consumers that they would receive cost savings on telecommunications services.” (The FTC case was settled in 2006 and the Louisiana charges were later dropped.)
To hide Salzano’s past, prosecutors allege that he used Grabato, who was the president of NRIA, as the public face of the company, making him sign all bank accounts used with NRIA and documents provided to investors. . As the plan grew, prosecutors say, the pair began orchestrating a separate conspiracy to defraud the IRS into hiding the millions Salzano owed to the IRS. The couple allegedly lied to the government, used various bank accounts for fake entities and even falsified company documents.
Eventually, prosecutors say, some duped investors began demanding documentation about the so-called bulletproof investment plan. In response to one of those demands, Salzano allegedly sent a client a forged 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 pooped might have hinted that his colleagues should play nice, prosecutors say, Grabato didn’t get the memo.
“After Salzano’s arrest, Grabato continued to divert at least about $1.4 million from investors in the fund to Salzano and other Salzano family and friends through a web of shell companies and nominees’ accounts,” the indictment said.