Peter C. Harvey, Attorney General
Bureau of Securities
Franklin L. Widmann, Chief
For Immediate Release:
April 26, 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 a Toms River man and his firm, Cobalt Investors Services Inc. ("Cobalt") of Manasquan, following the filing of a State complaint alleging that the man swindled at least seven elderly women out of more than $360,000 in retirement savings.
Superior Court Judge Harriet F. Klein of Essex County issued the order late Friday against Richard Thomas Geck, 56, of Carter Street, Toms River, and Cobalt, located at 2520 Highway 35, Manasquan. Cobalt was previously located at 74 Brick Boulevard, Brick. Judge Klein also granted the State's request to immediately appoint a receiver to take possession of any assets owned or controlled by the defendants.
On April 16, Attorney General Harvey and Bureau of Securities Chief Franklin L. Widmann filed a complaint alleging that Geck used Cobalt to defraud his victims, who included at least seven women over the age of 70. Geck allegedly forged the signatures of investors, prepared false summaries of investors' accounts, lied to investors and issued bad checks to investors as part of a scheme to divert their investment funds for his personal use and benefit. Geck, at the time, was not registered to sell securities or serve as an investment adviser in New Jersey.
The complaint accuses Geck and Cobalt of violating the New Jersey Uniform Securities Law by, among other things, engaging in a scheme to defraud investors and acting as unregistered broker-dealers. Geck was fired from an investment firm in 2000 because an internal audit revealed that he had converted at least $44,000 in customer funds for his own use without the knowledge or consent of the customers. The firm reported Geck to the National Association of Securities Dealers (NASD), which took action in 2001, barring him from the securities industry.
"We allege that Mr. Geck ruthlessly preyed on elderly investors, depriving them of their life savings," said Attorney General Harvey. "Motivated by greed, he targeted vulnerable, unsuspecting seniors who placed their trust in him. This asset freeze is an important first step toward securing restitution for his victims."
"We urge all investors to be on their guard," said Securities Chief Widmann. "Mr. Geck piled deception upon deception to hide his treachery. However, once investors started questioning his actions and turning to authorities, he was exposed. Investors should ask questions even before they invest by calling the Bureau of Securities to learn whether investment professionals are registered and in good standing."
Investors can reach the Bureau of Securities at 973-504-3600. Anyone who has information about this case or believes he or she may have been defrauded by Geck or Cobalt is urged to call the Bureau.
Geck convinced his elderly victims to make him their financial adviser. At least five of Geck's victims were employees " or the spouse of an employee " of a medical packaging company in Mount Holly, N.J. Before being barred by the NASD, Geck provided investment counseling to a large group of the company's employees who were approaching retirement.
In at least three instances described in the complaint, Geck allegedly cashed out " or partially cashed out " annuity or 401K accounts that victims held with other companies without their knowledge and consent. The signatures of the victims were allegedly forged on the documents authorizing the surrender of their accounts. When two of those victims became aware of the surrenders, which involved annuities worth roughly $83,000 and $76,000, Geck allegedly told them he had better investments for them and provided them with false statements from Cobalt purporting to show that their money had been invested in cash accounts at Cobalt as well as stocks.
In two other cases, Geck allegedly convinced elderly investors to cash out annuities worth roughly $105,000 and $60,000 and invest their funds with Cobalt. He allegedly promised fixed monthly distributions that, in fact, dwindled over time until only bad checks were received. Geck allegedly told another investor that he would use her funds to open an IRA account in her name with The Equitable, but no account was ever opened. Geck also solicited a $25,000 loan from one victim which he never repaid, according to the complaint.
In numerous instances, Geck wrote bad checks for payments due to victims. The complaint alleges that Geck and Cobalt issued more than 150 bad checks during the past year alone. After numerous attempts to get payments from Geck, some investors have demanded that he cash out their Cobalt investments. However, Geck has not returned the victims@ funds, according to the complaint.
The lawsuit seeks, among other things, restitution for investors, disgorgement of illegal profits and civil monetary penalties.
Deputy Attorney General James L. Esposito is handling the case for the State. Investigator Adam J. Heck handled the investigation for the Bureau of Securities.