Bankrupt New Jersey Developer NRIA Accused of $630M Fraud

NRIA Fund president Rey Grabato (LinkedIn, iStock)

The trouble keeps building for National Realty Investment Advisors.

Fresh off a bankruptcy filing, the home builder was accused of a massive fraud by New Jersey Tuesday, who issued a cease-and-desist order.

New Jersey acting Attorney General Matthew Platkin announced the order, which was issued by the New Jersey Bureau of Securities. The bureau determined NRIA fraudulently sold at least $630 million in securities from 2018 to 2022.

Acting Attorney General Matthew Platkin (New Jersey Department of Law & Public Safety)

According to the attorney general, the Secaucus-based company sold membership units in its NRIA Fund to at least 1,800 investors. The order stated that the NRIA Fund was held up as a billion-dollar enterprise of “ground-up” development.

The developer advertised guaranteed returns of 12 percent on investments and the possibility of returns as 21 percent. Authorities alleged the firm schemed to defraud investors, made false statements and omitted key information in connection to the fund’s securities.

The principals of the NRIA allegedly used investor money to fund annual distributions and made straw purchases to make it look like projects were selling better than they were. The company also allegedly improperly recognized certain revenues.

The bureau also accused company principals of using investor money to enrich themselves, including giving a million-dollar, no-show job to the wife of NRIA Fund portfolio manager Thomas Nicholas Salzano. There was also alleged self-dealing, such as the use of a construction firm where Salzano’s son was the chief financial officer.

“These respondents offered investors a securities opportunity that sounded too good to be true, and it was,” said Amy Kopleton, acting Bureau of Securities director, in a statement.

The other principals named in the order were NRIA Fund president Rey Grabato, NRIA Fund co-CIO D. Coley O’Brien and fund adviser Arthur Scutaro. The scope of the cease-and-desist order and its effect on the development company’s bankruptcy case is unclear.

The New Jersey-based firm filed for Chapter 11 protection this month. It listed assets worth between $50 million and $100 million and liabilities between $500 million and $1 billion.

The company, founded in 2006 as a fix-and-flip firm, focuses on condominium, townhome and multifamily development and investment. More than a dozen projects in Brooklyn, along with projects beyond New York, were listed on the company’s website.

Last March, the FBI reportedly arrested Salzano after a lengthy standoff outside his New Jersey home. He was charged with faking a $25 million loan guarantee while trying to defraud a California woman out of $150,000, according to Regulatory Compliant Watch. At the time, the company dismissed it as a “single, isolated incident.”

Grabato reportedly stepped down as CEO two months ago.

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