For years, National Realty Investment Advisors has promised its clients an easy way to get rich. And they had bold names like Bill O’Reilly and Lawrence Taylor to champion their cause.
After investing a few thousand dollars, the New Jersey-based group focused on high-end real estate in gentrifying neighborhoods, claiming clients could see returns of at least 12%. The message was repeated in thousands of emails, on huge billboards at the Lincoln and Holland Tunnel, and even in radio ads featuring the former Fox News host and ex-NFL star.
But on Thursday, prosecutors alleged that the chairman of the investment firm and an associate were actually part of a brazen $650 million Ponzi scheme that defrauded thousands of investors.
The New Jersey U.S. Attorney’s Office announced an 18-count indictment, including securities fraud and wire fraud charges, against Thomas Nicholas Salzano and Rey E. Grabato II for their roles in the alleged scheme nearly four years old. The couple also reportedly tried to evade $26 million in taxes.
Salzano was also charged with aggravated impersonation, tax evasion and underwriting false tax returns. Prosecutors said he was arrested on Wednesday, while Grabato was on the loose. Salzano’s attorneys did not immediately respond to a request for comment.
Neither O’Reilly nor Taylor – or any other celebrity endorsers – have been charged with any offenses, and prosecutors have not indicated one way or another whether they were aware of the alleged network of corporate deception. Neither immediately responded to requests for comment.
The Securities and Exchange Commission on Thursday also accused the NRIA and four of its former executives, including Salzano and Grabato, of defrauding 2,000 investors by falsely promising to use their money to buy and develop real estate. The group solicited investigators with promises of returns “up to 20%”.
“Among the investors were 382 retirees who contributed more than $94.8 million to retirement accounts,” the SEC complaint states.
The SEC says the group actually used the money “to pay distributions to other investors, to fund an executive’s family’s personal and luxury purchases, and to pay property management companies.” reputation in order to thwart investors’ due diligence on management”. The federal indictment says the money was also used to pay for high-end cars, at least a week-long Jersey Shore trip that included a banquet and hotel rooms for a dozen friends and family, and to pay at least $3,000 to Salzano’s wife. a week for a no-show job.
“These defendants conspired to create a high-pressure fraudulent marketing campaign to trick investors into believing that their bogus real estate business was generating substantial profits,” U.S. Attorney Philip Sellinger said in a press release announcing the charges. “In reality, their criminal tactics were straight out of the Ponzi scheme playbook so they could cheat their investors and line their pockets.”
The indictment against Salzano and Grabato marks the latest episode in the dramatic collapse of a seemingly successful real estate investment firm, though it has drawn media skepticism in several states. Arthur Scutaro, the company’s former sales chief, who was also indicted by the SEC, pleaded guilty on Thursday to one count of conspiracy to commit securities fraud in connection with the alleged scheme of Ponzi. A lawyer for Scutaro could not immediately be reached. Salzano was arrested by the FBI last year after an hours-long police confrontation, and the company filed for bankruptcy in June before being shut down by the state of New Jersey.
Prosecutors say the scheme began in February 2018, when the NRIA established the investment fund “which allegedly acquired stakes in limited liability companies that invested in real estate assets”. 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 6% and 10% of their initial principal investment on an annual basis, through a direct transfer to their bank accounts,” says the indictment. “Each investor in the Fund has also received a written guarantee from the 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 the NRIA.”
To market the fund, Scutaro and Salzano reportedly used an “aggressive, multi-year national marketing campaign involving thousands of investor emails; advertisements on billboards, television and radio; and investor meetings and presentations. While marketing deemed the fund solvent, the indictment says that in reality the NRIA ‘generated little or no profit and operated as a Ponzi scheme, which was kept afloat by new investors in the Fund”.
Prosecutors went on to say that Salzano, who acted as the NRIA’s “shadow chief executive,” was the company’s “guiding force” and “hid his leadership role…to avoid scrutiny of investors and the IRS”. One of the main reasons he wanted to avoid discovery, according to the indictment, was his ugly history, which included charges from the Federal Trade Commission in 2006.
Those charges alleged that he defrauded nonprofits, churches and small businesses while he was chief executive of a New Jersey telecommunications company. Seven years later, Salzano pleaded guilty to larceny by fraud in Louisiana for defrauding small businesses in that state by “falsely promising consumers that they would receive 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 he used Grabato, who was the chairman of the NRIA, as the company’s public face, having him sign all bank accounts used with the NRIA and documents issued to investors. . As the scheme developed, prosecutors say, the couple began orchestrating a separate plot to defraud the IRS in order to conceal the millions Salzano owed the IRS. This allegedly involved the couple lying to the government, using multiple bank accounts for fake entities and even falsifying company documents.
Eventually, according to prosecutors, some duped investors began to demand so-called bulletproof investment plan documents. In response to one such request, Salzano allegedly sent a client a fake letter regarding 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 while a high-profile dog getting blown could have been a cue that his co-workers should play nice, prosecutors say, Grabato didn’t get the memo.
“After Salzano’s arrest, Grabato continued to divert at least approximately $1.4 million from Fund investors to Salzano and other family members and friends of Salzano through a network of shell companies and corporate accounts. nominee,” the indictment reads.