Six Arrested on Conspiracy Charges

Acting Attorney General John J. Hoffman announced that six people – including one with a NJ politically sounding name – have been arrested on first-degree charges of conspiracy, racketeering and money laundering for allegedly defrauding 15 investors of approximately $3 million through the sale of bogus investments.  Last year, two of the defendants – George Bussanich Sr. and his son, George Bussanich Jr. – agreed to pay $5.5 million, including $4 million in full investor restitution, to settle a civil action filed by the New Jersey Bureau of Securities, which investigated a similar investment scheme that victimized 26 investors.

 

Each of these people was arrested Sept. 2 by the Division of Criminal Justice and charged by complaint with conspiracy (1st degree), racketeering (1st degree), money laundering (1st degree), securities fraud (2nd degree), misconduct by a corporate official (2nd degree) and theft by deception (2nd degree):

  1. George Bussanich Sr., 56, of Park Ridge, N.J., who allegedly led the scheme;
  2. George Bussanich Jr., 35, of Saddle River, N.J., his son;
  3. Wilma Bussanich, 54, of Park Ridge, N.J., wife of George Sr.;
  4. Heidi Francavilla, 56, of Park Ridge, N.J.;
  5. Robert G. Schooley, 64, of Park Ridge, N.J.; and
  6. Brendan M. Byrne, 44, of Paterson, N.J.

In addition, the Bussaniches and Francavilla are charged with failure to file a tax return (3rd degree) and filing a fraudulent tax return (3rd degree), respectively, and contempt (4th degree).  Schooley also is charged with failure to file a tax return.

 

The indictment is the result of an investigation by the Division of Criminal Justice Gangs & Organized Crime Bureau.  The criminal investigation revealed that, immediately after entering into a consent order on Aug. 1, 2014 to settle the suit by the Bureau of Securities alleging that they defrauded 26 investors of more than $4 million, George Bussanich Sr. and George Jr. allegedly solicited more than $3 million from 15 of those same investors for a new bogus investment.  This violated the consent order, which barred them from selling securities in New Jersey.  George Bussanich Sr., George Jr. and the other four defendants who were arrested allegedly conspired to avoid the strictures of the consent order and launder fraudulently obtained investor funds through the use of multiple shell corporations.  They allegedly diverted most of the investor funds for their personal use.  They also used new investor funds to make penalty payments required under the consent order.

 

“The audacity of these defendants is astounding,” said Acting Attorney General Hoffman.  “After the Bureau of Securities exposed how this father and son deceived investors, securing a $5.5 million settlement against them, the defendants allegedly went right back to their old game, defrauding investors of another $3 million and even using some of the new funds to make payments under the settlement.  The game is up for these con artists, who potentially face very long prison sentences.”

 

“Because Bussanich paid returns to investors, the investors believed he was earning profits for them,” said Director Elie Honig of the Division of Criminal Justice.  “In reality, he simply was giving them back a fraction of the principal they invested, while he, his son and the other defendants allegedly stole most of the money for their personal use, including paying for expensive homes, fast cars and lavish dining and entertainment bills.”

 

“These arrests should put fraudsters on notice that continued violations of the New Jersey Uniform Securities Law and Bureau consent orders will be prosecuted to the fullest extent of the law,” said Bureau of Securities Chief Laura H. Posner.  “The Bussaniches’ egregious fraudulent Ponzi schemes make clear how critical it is for investors to do their homework before they invest – never invest before you check whether your financial professional has a history of fraudulent activity and is registered with the Bureau to work in the securities industry.”

 

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).  In that case, 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 father and son made dividend payments to investors out of the initial principal funds, thereby deceiving investors into believing their investments were generating profits. Meanwhile, the defendants diverted investor moneys to purchase multiple homes and seven luxury cars – including two Maserati Quattroportes, a Ferrari F430 Spider and a Mercedes ML350 – and to pay for their lavish shopping, dining, travel and entertainment expenses.

 

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, Bussanich Sr. allegedly began soliciting investments in a fictitious company he created with Schooley called Global Fund Management.  Between September 2014 and March 2015, a total of 15 of the original 26 investors invested just over $3 million in the purported business venture.  The investor funds allegedly were transferred to bank accounts controlled by the defendants, most of which were registered under the names of limited liability companies.  The majority of the companies did not operate as legitimate businesses, and the bank accounts associated with them allegedly were used primarily to launder the investor money.

 

The investors received monthly “returns,” which gave them the impression that the investments were legitimate and were profiting. In reality, those returns were paid out of the original principal investment.  It is alleged that Bussanich and the other members of the enterprise never actually invested the funds from the investors as promised.  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 vast majority of the monies invested allegedly 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.  George Bussanich Jr. allegedly used investor funds to buy his home in Upper Saddle River, which is worth nearly $1 million.  None of the defendants filed state tax returns for 2014 reflecting the proceeds of the investment scheme.  In fact, Francavilla was the only defendant who filed a state tax return at all in 2014.

 

The six defendants were lodged in jail with bail set at $350,000 for George Bussanich Sr. and George Jr., and $300,000 for each of the other four defendants.  The Division of Criminal Justice has obtained court orders placing liens on the home of George Bussanich Jr. in Upper Saddle River, two homes in Park Ridge and Emerson owned by a limited liability company controlled by Bussanich Sr. that are valued at a total of approximately $1 million, numerous bank and brokerage accounts controlled by the Bussanich enterprise, and an attorney trust account used for the benefit of the defendants.

 

The lead detective on the case for the Division of Criminal Justice Gangs & Organized Crime Bureau is Detective Matthew Tully, who investigated under the supervision of Lt. Brian Bruton and Deputy Chief of Detectives Christopher Donohue.  The lead prosecutors are Deputy Attorneys General Brandy Malfitano and Amy Simienski, under the supervision of Bureau Chief Lauren Scarpa Yfantis and Deputy Bureau Chief Annmarie Taggart.

 

The Bureau of Securities investigation was led by Chief of Enforcement Rudolph G. Bassman.

 

First-degree charges carry a sentence of 10 to 20 years in state prison and a fine of up to $200,000.  The first-degree money laundering charge carries a mandatory minimum term of parole ineligibility of one-third to one-half of the sentence imposed.  That charge also carries a fine of up to $500,000, and an additional anti-money laundering profiteering penalty of up to $500,000 or three times the value of any property involved.  Second-degree charges carry a sentence of five to 10 years in prison and a fine of up to $150,000. Third-degree charges carry a sentence of three to five years in prison and a fine of up to $15,000, while fourth-degree charges carry a sentence of up to 18 months in prison and a $10,000 fine.

 

The charges are merely accusations and the defendants are presumed innocent until proven guilty.  Because they are indictable offenses, the charges will be presented to a grand jury for potential indictment.

 

Acting Consumer Affairs Director Steve Lee and Bureau of Securities Chief Posner 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.  The public is encouraged to visit the Bureau’s website atwww.njsecurities.gov.

Six Arrested on Conspiracy Charges