By David Voreacos - (special thanks to Eddie Cruz for the info)
March 9 (Bloomberg) -- New Jersey investment company Serafino Holdings LLC and its owner Anthony Lucchetto Jr. were accused in a complaint by regulators of operating a $15 million Ponzi scheme linked to the alleged fraud of Nicholas Cosmo.
State Attorney General Anne Milgram sued Serafino and Lucchetto for selling unregistered securities invested in construction loans, according to a complaint in state court in Elizabeth, New Jersey. Serafino told investors he would put their money in “completely safe” certificates of deposit with a “capital protection program,” according to the complaint.
Serafino told investors on Jan. 27 that he had put their funds into Agape World Inc., a company run by Cosmo, who was arrested a day earlier and accused by federal authorities of operating a five-year, $370 million Ponzi scheme. In a Ponzi scheme, money from new investors is used to pay old investors.
“Lucchetto and Serafino Holdings, through Lucchetto, misappropriated a large portion of the investor funds by transferring them to Agape World and Nick Cosmo, now known to be an alleged Ponzi scheme, and there was no such safe investment or insurance program,” according to the complaint filed March 4.
Lucchetto, who lives in Plainfield, New Jersey, was a registered agent and investment adviser for Metlife Securities Inc. until his licenses expired April 30, according to the complaint. He held himself out to investors as a certified financial planner, according to the complaint.
Serafino’s customers included a family that invested funds from their pizzeria business, custodial accounts for their five children, and an IRA account, according to the complaint.
‘Innocent Young Man’
Lucchetto attorney William Hood III said today his client is “an innocent young man” who set up his business in Fanwood, New Jersey, about a year and a half ago. Lucchetto invested money with Cosmo without knowing he was operating a Ponzi scheme, Hood said in an interview.
Hood said that Lucchetto and his family lost about $3 million and “have the biggest interest in making sure there’s a recovery.”
Cosmo is being held without bail after his arrest on a criminal complaint by the U.S. Postal Inspection Service. The Federal Bureau of Investigation also is probing Cosmo and Agape.
Lucchetto “did his due diligence,” Hood said. “He went out and looked at Cosmo’s files and he was convinced it was solid, or he wouldn’t have put his own money or his investors’ money in there. The FBI has asked us to show them all the material that Agape World showed us in order to induce us to invest. We’ve done that.”
Several investors sued Lucchetto in a private lawsuit in Elizabeth, Hood said. Lucchetto has retained a New York law firm to work with a court-appointed receiver on the Cosmo case to try to recover money for Serafino investors, Hood said.
“He’s getting blamed by these investors, and they’re angry,” Hood said. “Obviously, these are bad times and we’re trying to do the best we can to try and help people.”
The case is Anne Milgram v. Anthony Lucchetto Jr., C-32-09, Superior Court of New Jersey, Union County (Elizabeth).
To contact the reporter on this story: David Voreacos in Newark, New Jersey, at email@example.com.
- ► 2010 (11)
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- ▼ March (43)