Press Release

For Immediate Release:
May 30, 2013

Office of The Attorney General
Jeffrey S. Chiesa, Attorney General

Division of Consumer Affairs
Eric T. Kanefsky, Acting Director

Bureau of Securities
Abbe R. Tiger, Chief
  For Further Information and Media Inquiries:
Jeff Lamm
Neal Buccino
(973) 504-6327

Bergen County Biotech Companies and Their President/CEO Ordered to Pay More than $11 Million in Restitution and Penalties Under Settlement with New Jersey Division of Consumer Affairs’ Bureau of Securities

View Order I & View Order II

NEWARK – Thomas Fagan and the Bergen County biotech companies of which he is the former President/CEO, are ordered to pay $10.2 million in investor restitution and $1 million in civil penalties, under a settlement with the New Jersey Office of the Attorney General and the State Division of Consumer Affairs’ Bureau of Securities.

“The State is bringing every available enforcement tool to bear on this defendant, who illegally raised millions of dollars by selling unregistered stock to hundreds of investors – and allegedly defrauded those investors by spending the money on vacations and other personal expenses,” Attorney General Jeffrey S. Chiesa said. “Today’s settlement represents the culmination of our civil action. As for the next chapter, criminal actions remain pending.”

In the civil suit filed by the Division of Law on behalf of the Bureau of Securities, within the New Jersey Division of Consumer Affairs, the State accused Thomas J. Fagan of violating New Jersey’s securities law and defrauding investors. Fagan is the former President/CEO of Energex Systems, Inc. and Arbios Systems, Inc., and the managing member of Arbios Acquisition Partners, LLC, all based in Allendale.

Energex purportedly developed medical devices including a “hemo-modulator,” which according to the company’s claims would use ultraviolet light to fight blood-borne diseases such as HIV/AIDS. Arbios Acquisition Partners (AAP) was created by Fagan in 2009 to gain control of Arbios Systems, Inc. (ASI), which was being reorganized under a Chapter 11 bankruptcy.

Fagan violated the Uniform Securities Law by selling Energex stock, ASI stock, and ASI promissory notes to more than 700 investors – all while Fagan was not registered as an agent with the Bureau of Securities. The stock and promissory notes also were not registered. Additionally, Fagan allegedly defrauded investors by misusing investor funds for personal expenses such as overseas travel and stays in Las Vegas and Atlantic City casinos.

A Superior Court judge ruled on summary judgment that Fagan and Energex violated the Securities law through sales of unregistered securities by an unregistered agent. The remaining charges were to be resolved at trial.

The settlement announced today fully resolves the State’s civil complaint. Under the settlement, Fagan is ordered to pay $1 million in civil penalties. Energex, AAP and ASI are collectively ordered to pay $10.2 million in restitution to investors, with Energex responsible for $9.5 million of that payment.

Fagan’s wife, Candace Fagan, must disgorge $20,000 under a separate settlement announced today. Fagan also is permanently barred from selling securities in New Jersey, and from holding controlling interest in or serving as an officer or director of any company that issues securities in New Jersey, including Fagan’s former companies.

“This vigorous investigation, and its outcome, underscores our commitment to rooting out investment fraud,” said Eric T. Kanefsky, Director of the State Division of Consumer Affairs. “Would-be scammers should realize that when they attempt to defraud to enrich themselves, they ultimately do not profit but instead end up paying a high price for their greed.”

Separately, a State grand jury on May 21 indicted Fagan on charges that he stole more than $230,000 in investor funds. The criminal investigation resulted from a referral by the Bureau of Securities.

“Unregistered individuals selling unregistered securities should be immediate red flags to potential investors. Registration exemptions do exist but investors need to perform their due diligence and we are ready to assist investors,” Bureau Chief Abbe R. Tiger said. “The Bureau is the state’s investor resource center, and our staff is here to help investors identify and avoid financial frauds.”

The Bureau of Securities can be contacted toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600. The Bureau's website is located at

Rudolph G. Bassman, Chief of Enforcement for the Bureau of Securities, conducted the investigation of this case. Deputy Attorneys General Victoria A. Manning and Paul E. Minnefor of the Securities Fraud Prosecution Section in the Division of Law represented the Bureau.

The Bureau of Securities can assist investors in determining whether those selling securities, as well as securities offered for sale, are registered or are exempt from registration.  The Bureau can be contacted toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600.  The Bureau's website is

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Last Modified: 3/16/2015 1:56 PM