TRENTON –Attorney General Gurbir S. Grewal announced that a father and son have pleaded guilty to defrauding investors of millions of dollars through two successive scams involving sales of bogus investments. After defrauding 26 investors in the first scam, the father and son agreed to pay $5.5 million, including $4 million in investor restitution, to settle a suit filed by the New Jersey Bureau of Securities, but they then proceeded to defraud 15 of the same investors of $3 million in a second scam.
The following defendants pleaded guilty yesterday before Superior Court Judge Margaret M. Foti in Bergen County:
George Sr., George Jr., and Wilma Bussanich are jointly and severally liable for full restitution to the victims, along with the following four defendants who previously pleaded guilty to third-degree charges of money laundering – or conspiracy and theft in the case of Nazor – and face sentences of probation: Bryan Nazor, 47, of Chestnut Ridge, N.Y., an attorney; Heidi Francavilla, 60, of Park Ridge, N.J.; Robert Schooley, 67, of Park Ridge, an accountant; and Christopher Hanna, 37, of Parlin, N.J.
The defendants agreed to forfeit all assets seized in the investigation.
Special Deputy Attorney General Brandy Malfitano, currently an Assistant Prosecutor for the Bergen County Prosecutor’s Office assigned to the case, and Deputy Attorney General Amy Sieminski prosecuted the case for the Division of Criminal Justice Gangs & Organized Crime Bureau.
“These guilty pleas ensure that this father and son will face substantial prison sentences for their schemes, in which they ruthlessly stole the life savings of elderly investors to bankroll their own expensive homes, high-end cars, and luxury dining and travel,” said Attorney General Grewal. “What makes this case even more egregious is that they defrauded many of the same elderly retirees a second time after the first scheme was exposed, playing on their desperation to recover their lost savings.”
“These defendants perpetrated a classic Ponzi scheme in which they used a small fraction of the invested funds to pay investors purported ‘dividends’ or ‘returns’ and conceal that they were diverting most of the funds for their personal use,” said Director Veronica Allende of the Division of Criminal Justice. “We will continue to work with the Bureau of Securities to investigate and aggressively prosecute any dishonest operators who defraud New Jersey investors and deprive them of their hard-earned savings.”
“As a result of the Bureau’s previous civil action and now this action by the Division of Criminal Justice, these financial predators are being held fully accountable for what they did,” said Bureau of Securities Chief Christopher Gerold. “The lengthy prison sentences they face send a clear message that those who lie, cheat, and steal from New Jersey investors will not go unpunished.”
Sentencing for the defendants is scheduled for June 28 before Judge Foti.
The defendants were indicted in an investigation by the Division of Criminal Justice Gangs & Organized Crime Bureau. George Sr., George Jr., Wilma Bussanich, Francavilla and Schooley were initially arrested by the Division of Criminal Justice on Sept. 2, 2015.
The $5.5 million settlement obtained in August 2014 by the Bureau of Securities, within the Division of Consumer Affairs, resolved a lawsuit that alleged that from May 2009 to July 2013, George Bussanich Sr. and George Jr. misled investors in the sale of unregistered investment notes in Metropolitan Ambulatory Surgical Center, LLC (MASC). The Bureau of Securities found that the Bussaniches defrauded 26 investors of more than $4 million. Despite its name, MASC was not an actual surgical center, but simply a holding company controlled by Bussanich Sr. The Bussaniches made dividend payments to investors out of the initial principal funds, thereby deceiving investors into believing their investments were generating profits. Meanwhile, they diverted investor moneys to buy multiple homes and seven luxury cars – including two Maserati Quattroportes, a Ferrari F430 Spider and a Mercedes ML350 – and to pay for lavish shopping, dining, travel and entertainment bills.
The consent order obtained by the Bureau of Securities in August 2014 barred Bussanich Sr. and his son from the securities industry in New Jersey, prohibiting them from selling securities and from controlling or acting as officers or directors of any entity that sells securities. However, the investigation by the Division of Criminal Justice revealed that beginning the very next month, the Bussaniches began soliciting investments in a fictitious company called Global Fund Management that they created with Schooley, who was an accountant for the family. Between September 2014 and September 2015, a total of 15 of the original 26 investors invested just over $3 million in the purported business venture. Once again, the defendants fraudulently diverted most of the investor funds for their personal use.
As in the first scheme, the defendants never actually invested the funds from the investors as promised. The investors received monthly “returns,” paid out of the original principal investment, which gave them the impression that the investments were legitimate and were profiting. The defendants would simply move money from one account to another and then disburse a fraction of the funds back to the investors as a “return.” The defendants also used new investor funds to make penalty payments required under the consent order. However, the vast majority of the monies invested went to the personal use and enjoyment of the defendants, including making down payments and mortgage payments on various properties, paying restaurant bills and financing vacations.
Deputy Attorneys General Malfitano and Simienski presented the indictment to the state grand jury for the Division of Criminal Justice Gangs & Organized Crime Bureau, under the supervision of Bureau Chief Lauren Scarpa Yfantis and Deputy Director Annmarie Taggart. They were assigned to the investigation with former Detective Matthew Tully, who was lead detective, under the supervision of Lt. Brian Bruton and Deputy Chief of Detectives Christopher Donohue.
The Bureau of Securities investigation was led by Chief of Enforcement Rudolph G. Bassman.
Bureau of Securities Chief Christopher Gerold urged people to call the Bureau of Securities before they invest to make sure that any securities that are offered to them are properly registered, as required by law. The Bureau can be contacted toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600.
For George Bussanich Sr.: Michael Baldassare, Esq., Baldassare & Mara, LLC:
For George Jr.: Mark Berman, Esq., Hartman, Doherty, Rosa, Berman & Bulbulia, LLC;
For Wilma Bussanich: Michael J. Maher, Esq., Hackensack, N.J.