Eight people including a Paterson man were indicted on Friday for allegedly defrauding investors of $7 million, according to authorities.
George Bussanich Sr., 58, of Park Ridge; George Bussanich Jr., 37, of Saddle River; Wilma Bussanich, 56, of Park Ridge; Heidi Francavilla, 58, of Park Ridge; Bryan Nazor, an attorney, 45, of Chestnut Ridge, NY; Robert G. Schooley, an accountant, 65, of Park Ridge; Brendan M. Byrne, 45, of Paterson; Christopher Hanna, 35, of Parlin were indicted on first-degree conspiracy, racketeering, multiple counts of money laundering, and other crimes, according to the New Jersey Attorney General’s Office.
Authorities said the eight individuals defrauded 26 investors of more than $7 million in two successive scams. After the first scam Bussanich junior and senior agreed to pay $5.5, including $4 million in restitution, but then allegedly defrauded 15 of the same investors in a second scam.
“Even after their first scam was exposed, the defendants allegedly defrauded many of the same investors a second time, exploiting their desperation and enlisting a lawyer to add an aura of legitimacy,” attorney general Christopher S. Porrino said.
Porrino said the scam targeted elderly retirees “stealing their life savings” to pay for the alleged scammers’ expensive homes, fast cars, and lavish lifestyles.
Bussanich Jr. allegedly ran the scam and solicited funds with his father Bussanich Sr. and mother Wilma.
All eight except for Hanna were also charged with second-degree misconduct by a corporate official. The father, mother, son, attorney, and accountants were each charged with second-degree securities fraud and multiple counts of theft.
Francavilla is charged with two counts of second-degree theft. Bussaniches, Francavilla and Schooley also face charges for failing to pay taxes. Francavilla is charged with filing a fradualent tax return.
Bussanich Jr. and his wife Cheryl Bussanich, ninth person in this case, are charged with failing to file and pay taxes.
“Rather than using investor funds for legitimate business ventures, these defendants allegedly stole the money and laundered it through shell companies that were as hollow as their promises,” Elie Honig, director of the Division of Criminal Justice, said. “Meanwhile, in classic Ponzi-scheme fashion, they returned a fraction of the millions they allegedly stole as purported monthly interest to keep the investors in the dark. This case illustrates the devastating impact fraud can have on elderly investors.”
The first scam happened from May 2009 to July 2013. The father and son sold unregistered investment notes in Metropolitan Ambulatory Surgical Center, LLC (MASC), an allegedly fake surgical center that was really a holding company controlled by the father.
Investors were given dividend payments from the principals collected to make them believe their investment was generating profits. The investors’ money was used by the family to buy multiple homes, seven luxury cars including a Maserati Quattroportes, a Ferrari F430 Spider, and a Mercedes ML350. Lavish shopping, dining, travel, and entertainments were also paid for using the money.
Bureau of Securities, within the Division of Consumer Affairs, obtained a $5.5 million settlement in August 2014. A consent order barred father and 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, authorities said.
The next month, Bussaniches allegedly began soliciting investments for a fake company called Global Fund Management that was created through the family’s accountant Schooley. From September 2014 and September 2015 out of the 26 original investor 15 invested over $3 million in the business venture.
Authorities said money was transferred to bank accounts controlled by the eight individuals through limited lability companies (LLCs) setup by their attorney Nazor. Majority of the LLCs did not operate as legitimate businesses and bank accounts associated with the shell firms were allegedly used to launder investors’ money to avoid the strictures of the consent order.
Nazor’s attorney trust account was used to launder the investors’ money, authorities said. The involvement of an attorney gave the alleged scam a legitimate feel. Byrne opened a bank account and Hanna opened several and a stock trading account to launder investors’ money and divert them for personal use, authorities said.
The money was never invested as promised to investors, but moved around and small monthly returns were issued to investors to give the impression it was generating profits, authorities said. The money gathered in the alleged second scam was used to make payments for the penalty that resulted from the first alleged scam, authorities said.
In one example, authorities said Bussanich junior and Francavilla allegedly stole $500,000 from an elderly woman. The woman and her husband were among the first 26 in the first scam. The husband died and the wife needed help managing her finances. Bussanich junior had himself as power of attorney for the victim. Bussanich junior and Francavilla allegedly drained $500,000 from the woman’s bank account authorities said.
“We’ll make sure these con artists go to prison and are held accountable for paying back their victims,” Porrino said.