New Jersey Obtains $5 Million In Judgements Against South Jersey
Man Who Defrauded Investors Through Two Securities Scams
NEWARK – The State has obtained judgments totaling about $5 million against a Camden County man, his wife and two shell companies – Chamberlain Worldwide (Chamberlain) and The Service Group (TSG) – which they used to defraud investors through the sale of unregistered securities, Bureau of Securities Chief Franklin L. Widmann announced today.
The Attorney General’s Office and Bureau of Securities filed suit in Superior Court in Essex County in May 2004 alleging that Nicholas Marinella, 67, of Oaklyn, engineered two securities fraud schemes involving Chamberlain and TSG through which he diverted investor funds for his own use and benefit. The complaint, which alleged numerous violations of the New Jersey Uniform Securities Law, also accused his wife, Barbara Marinella, of fraud with respect to Chamberlain.
Superior Court Judge Kenneth S. Levy has entered a final judgment against TSG and Nicholas Marinella in the amount of $1,629,000, representing $543,000 for restitution for TSG investors and a civil monetary penalty of $1,086,000.
Judge Levy also has entered a final judgment against Chamberlain, Nicholas Marinella and Barbara Marinella in the amount of $3,330,427, representing $1,110,142 for restitution for Chamberlain investors and a civil monetary penalty of $2,220,285.
"Mr. Marinella promised big returns to investors, claiming his companies offered cutting-edge computing and business services to a world-wide clientele," said Bureau Chief Widmann. "In fact, these companies were nothing but shells. These judgments are a significant step in our efforts to obtain restitution for the investors who were defrauded by these defendants."
Judge Levy ordered that the defendants be permanently barred from selling, distributing, promoting or advertising securities in New Jersey. The defendants were not registered to sell securities in New Jersey. Chamberlain and TSG formerly had offices in Thorofare, Gloucester County.
Deputy Attorney General Isabella Trifilio Stempler handled the case for the State. Supervising Investigator James Lane investigated for the Bureau of Securities.
From 1997 to 1999, Nicholas Marinella allegedly sold more than $500,000 in investment interests in TSG, which promotional literature described as a company offering a full range of computer services, including business computer hardware, software, communications and Internet access. The literature promised investors that they would get their principal back in six to eight months and represented that other investors had doubled or tripled their money. In fact, TSG was not engaged in any legitimate business, the State alleged.
From 1999 to 2001, Nicholas Marinella solicited investors for Chamberlain, which was touted as a company that provided services and products throughout the world related to planning and structuring business enterprises. Chamberlain, through the Marinellas, allegedly raised approximately $1.1 million from investors, who never recovered their principal or received any earnings.
Investors in Chamberlain were offered a "Club Benefits" membership through which they could purchase "Club Units" at a cost of $250 per unit. Promotional materials represented that a single $250 unit could accrue Club Benefits exceeding $300,000 in just five years. The written materials encouraged prospective investors to become "Key Members," who could earn additional compensation for recruiting new members. Barbara Marinella allegedly processed club memberships, deposited investor funds into two Chamberlain bank accounts in Delaware, and created false investor statements indicating gains of 11 to 11.5 percent for each investor.