Peter C. Harvey, Attorney General
Division of Consumer Affairs
Reni Erdos, Director
For Immediate Release:
May 17, 2004
For Further Information Contact:
Peter Aseltine (609) 292-4791
TRENTON - Attorney General Peter C. Harvey announced today that the New Jersey Bureau of Securities has obtained a court order freezing the assets of Brian D. Winters ("Winters") and the investment firms he controlled, Global Trading Investment LLC ("Global") and Wyndam Group LP ("Wyndam"), following the filing of a State complaint alleging that they sold more than $4 million in fraudulent and unregistered securities to investors in violation of the New Jersey Uniform Securities Law and other state laws.
The order was issued today by Superior Court Judge Harriet F. Klein in Newark following the filing of a complaint by Attorney General Harvey and Bureau of Securities Chief Franklin L. Widmann. The complaint alleges that Winters, of Bayville, who was not registered to sell securities in New Jersey, lured investors into buying fake securities issued by Global - and, later, partnership shares in Wyndam - by making false claims about past and projected earnings and about how investor funds were being invested and used. The complaint alleges Winters engaged in a pattern of racketeering activities in violation of New Jersey's Racketeer Influenced and Corrupt Organizations (RICO) statute.
The State securities fraud and racketeering complaint alleges Winters fraudulently diverted hundreds of thousands of dollars in investor funds for his personal use, including the transfer of $975,000 into investments held solely for his benefit; installation of a swimming pool and landscaping at his home for nearly $40,000; and purchases of a $78,000 Landrover, a Corvette and two BMWs. Winters allegedly used investor funds to buy three employees new BMWs and to pay a fourth $40,000 in lieu of a BMW as winners of contests rewarding employees who solicited the most investor funds. Employees allegedly earned 10 percent commissions on investor funds they brought in for Global.
"Brian Winters ruthlessly deceived investors," said Attorney General Harvey. "He lured them with reports of fictitious gains, claiming returns as high as 167 percent for Global Trading Investment in 2001, even though the firm didn't receive its first investments until 2002. In fact, it was Winters who reaped huge gains by diverting investor funds to bankroll his lavish lifestyle. We'll do everything in our power to get restitution for these investors."
Winters signed a consent order with the Bureau of Securities on June 26, 2003 that required him to pay $215,000 to 57 known investors of Global - as full restitution of their original investments - and a $100,000 penalty. He stated under oath that the 57 investors, identified in records obtained from Global, represented all of Global's investors. He produced canceled checks to verify payment of the restitution and agreed to stop violating state securities laws.
Winters statements to the Bureau of Securities were false, and his misrepresentations were quickly discovered by the Bureau. The Bureau learned that there were additional Global investors and that Winters had continued soliciting investors in Global and Wyndam. In addition to the racketeering allegations, the State alleges in the complaint that Winters lied under oath in connection with the consent order.
The Bureau of Securities has now identified at least 176 investors who invested a total of more than $4.2 million in Global and Wyndam.
Deputy Attorneys General Priya Doraswamy and Isabella Trifilio are handling the case for the State. Supervising Investigator Rudolph Bassman and Chief of Enforcement Richard Barry handled the investigation for the Bureau of Securities.
The lawsuit seeks, among other things, restitution for investors, disgorgement of illegal profits and civil monetary penalties, including damages against Winters under the RICO statute equal to three times his gains. The suit asks the court to enjoin Winters from having any interest in or control of any broker-dealer or securities issuer registered in New Jersey and to enjoin all defendants from issuing or selling any securities in New Jersey.
In addition to Winters, the named defendants include a trust that holds a majority interest in Wyndam, Excalibur Trust, and three individuals accused of committing fraud as employees of Global and general partners of Wyndam: Nicole Kearney of Beachwood; Laura Zemsky of Sayreville (Winters' sister-in-law); and Jeffrey Winters (Winters' brother). Eight other employees of Global and/or Wyndam are named for allegedly acting as securities agents without being registered with the Bureau of Securities.
"This asset freeze is a significant step toward securing restitution for investors cheated by these shameless con artists," said Securities Chief Widmann. "We've asked the court to appoint a receiver to find every asset controlled by the defendants and to identify every investor who may have been defrauded. We're also seeking civil monetary penalties."
Winters allegedly began selling securities through Global in February 2002, purporting to offer investors a choice of three funds with progressively higher risks and returns - the Silver Fund, the Gold Fund and the Platinum Fund. The Silver, Gold and Platinum Funds did not exist, the complaint alleges. All of the investor funds were, in fact, deposited initially in a single bank account. Funds were subsequently transferred from that account to other accounts for Winters' use and benefit, the complaint alleges. On July 11, 2003, two weeks after Winters signed the consent order, Zemsky, Kearney and Jeffrey Winters formed Wyndam, of which Winters operated as an undisclosed controlling partner, the complaint alleges. Global investors were sent a letter stating that Global was becoming Wyndam, a venture capital firm, and inviting them to roll over their investments into Wyndam. A Wyndam offering circular projected returns of 73 percent to 219 percent.
The eight employees of Global and/or Wyndam alleged to have acted as securities agents without being registered with the Bureau of Securities are Egidio Enea of Freehold; Michael Malley of Ship Bottom; Jay Malhado of Toms River; Joan Potts of Flemington; Robert Baranyi of Surf City; Michael F. Pritchard of Toms River; Matthew A. Ryer of Toms River; and Ernesto Oliveira of Barnegat.
To avoid becoming a victim of securities fraud, investors should:
Call the Bureau of Securities at 973-504-6300 to find out if the person who is selling you securities is registered by the New Jersey Bureau of Securities and if the investment opportunity is registered for sale in New Jersey. If the person is registered, the Bureau can tell you if that person has a history of discipline by state or federal regulators.
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