Attorney General and New Jersey Division of Consumer Affairs Announce $940,000 Bureau of Securities Settlement with North Jersey Investment Adviser
Attorney General Jeffrey S. Chiesa and the New Jersey Division of Consumer Affairs today announced a Bureau of Securities settlement with Jacob Eisenstark, his wife Blanche Eisenstark, and Jacob Eisenstark’s two Livingston-based investment companies, in which Jacob Eisenstark admitted he defrauded investors out of $850,000 by diverting invested funds for his family’s personal expenses, and by making unsuitable investments.
Under the Final Judgment and Consent Order, the Eisenstarks, of Livingston, and Jacob Eisenstark’s firms, Eisenstark Advisory Inc. and J.N.J. Capital Management Inc., are required to pay $940,000, consisting of $850,000 in consumer restitution and a $90,000 civil monetary penalty. Jacob Eisenstark and the firms also consented to a permanent bar from the securities industry in New Jersey.
"Jacob Eisenstark convinced victims, including senior citizens, to part with their hard-earned savings, with the false promise of a 15 percent rate of return – only to then misuse their money to pay mortgages and other personal expenses," Attorney General Jeffrey S. Chiesa said. "Fraud schemes like this leave victims with pain and heartache and little else. Through this action, we've shut down the defendant's operation and taken a significant step toward providing restitution to victims."
Jacob Eisenstark was a registered investment adviser representative and principal of Eisenstark Advisory, an investment adviser firm previously registered with the Bureau of Securities. Blanche Eisenstark was the secretary for J.N.J Capital Management, a company controlled by Jacob, her husband.
In the settlement, Jacob Eisenstark admitted that he violated the New Jersey Uniform Securities Law by, among other things, misleading some investors with the claim that he managed a fictitious fund consisting of at least $15 million in assets, and that they would earn a 15 percent annual return, by investing in the fund. He further misled some investors by giving them monthly “interest distribution payments” that they believed were from the interest earned by their investments. Nearly all of those “interest distributions” were fictitious, because most were taken from the investors’ own principal investments.
Jacob Eisenstark further admitted that he used invested funds for the family’s personal expenses, including mortgage payments on residential properties in Livingston and in Palm Harbor, Florida, and fees for a residence purchased by the Eisenstarks’ daughters in West Orange.
"As a result of our lawsuit, this defendant is stopped from using deceit and lies to line his pockets with investors' money,” Eric T. Kanefsky. Acting Director of the New Jersey Division of Consumer Affairs, said. “Our Bureau of Securities remains vigilant in investigating financial fraud and protecting the hard-earned assets of investors."
The court previously granted the Bureau Chief’s request to freeze the defendants’ assets. The court-appointed receiver worked to recover assets from the defendants and from their children, to whom assets, purchased with investor money, had been transferred. The State’s lawsuit was filed on behalf of the Bureau Chief by the Division of Law.
“Investors who believe they are victims in a fraudulent scheme should file a complaint with us. The Bureau has investigators who will check into filed complaints and take swift action when there’s fraud,” said Abbe R. Tiger, Chief of the N.J. Bureau of Securities.
Deputy Attorneys General Samuel Cornish and Victoria Manning of the Securities Fraud Prosecution Section, and Anna Lascurain, Special Deputy Attorney General, represented the Bureau Chief in this matter. The investigation was conducted by Supervising Investigator Arlene Ferris-Waks and Investigator Rosemary Gonzalez in the Bureau of Securities.
The Bureau of Securities can be contacted toll-free within New Jersey at 1-877-I-INVEST (1-877-446-8378) or from outside New Jersey at 973-504-3600.
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