TRENTON – Attorney General Gurbir S. Grewal and the New Jersey Bureau of Securities within the Division of Consumer Affairs announced today that the State has filed a four-count lawsuit against Illinois-based investment firm Northridge Holdings, Ltd. and its president Glenn C. Mueller. The lawsuit alleges Northridge, Mueller and four other corporate entities controlled by Mueller illegally paid unregistered New Jersey-based agents to solicit and sell to investors more than $10 million in unregistered securities.
Mueller and Northridge have never been registered with the Bureau of Securities in any capacity, nor have the other entities named as defendants in today’s lawsuit: Eastridge Holdings, Ltd; Unity Investment Group I, Ltd.; Southridge Holdings, Ltd. and Amberwood Holdings, L.P. Each of the defendant companies is based in Addison, Ill.
New Jersey and three other states – Illinois, Massachusetts and New Hampshire – are taking action Mueller and Northridge, an alleged unregistered broker-dealer that allegedly sold unregistered securities to more than 500 investors in more than 30 states. New Jersey and the other three states worked cooperatively on the investigation.
In a related action, the New Jersey Bureau of Securities today issued an administrative Summary Cease and Desist Order directing that Mueller and the corporate entities immediately stop selling the unregistered securities.
“Today’s lawsuit should serve as a strong message to everyone operating in this area of the investment business that we take seriously the need for compliance with New Jersey’s securities laws,” said Attorney General Grewal. “If you insist on acting outside of the law by being an unregistered agent or selling unregistered securities in our state, we will take action,” Attorney General Grewal said.
According to the State’s complaint, Mueller and Northridge unlawfully sold more than 130 unregistered securities totaling $10.46 million to or from New Jersey between March 2011 and the fall of 2018.
The State’s complaint alleges that each of the defendants illegally engaged and paid commissions or fees to unregistered agents who offered and sold the unregistered securities.
Filed in New Jersey Superior Court in Morris County, the State’s complaint alleges the unregistered securities were typically one-page promissory notes issued through the various entities Mueller controlled.
According to the complaint, Mueller and Northridge contracted with at least two unregistered agents to offer and sell the unregistered securities from New Jersey. Those unregistered agents received $694,977 in commissions or fees for their efforts.
The complaint alleges that the unregistered Northridge securities “were sold to investors without the benefit of any meaningful risk disclosures, information regarding the financial solvency of the entities, corporate structure, or any of the information that would typically be found in a private placement memorandum or prospectus.”
Each count of today’s actions charges violations of New Jersey’s Uniform Securities Law.
Count one of the Superior Court complaint alleges that all defendants -- Mueller, Northridge, Eastridge, Southridge, Unity and Amberwood – took part in the unlawful offer and sale of unregistered securities. Count two alleges that Northridge unlawfully acted as an unregistered broker-dealer. Count three alleges that Mueller acted as an unregistered agent, and count four alleges that Northridge, Eastridge, Southridge and Unity and Amberwood unlawfully employed unregistered agents.
“Unregistered agents and unregistered securities are often at the heart of investment scams, which is why the Bureau strongly encourages investors to verify and review the registration records of anyone offering to sell them an investment and understand the product that they are purchasing,” said Paul Rodríguez, Acting Director of the Division of Consumer Affairs. “We encourage investors to contact the Bureau of Securities within the Division of Consumer Affairs to obtain information regarding registration of both the seller and the security being offered before investing.”
“The Bureau will not sit back and allow issuers of securities to continuously violate state securities laws,” said Bureau Chief Christopher W. Gerold. “The Bureau is proactively investigating securities offerings sold, whether through broker-dealers, investment advisers or unregistered agents, to ensure that the securities sold to New Jersey investors are in compliance with the law.”
The State’s lawsuit seeks a finding from the court that Mueller and his companies violated the New Jersey Uniform Securities Law, and seeks a permanent injunction barring them from selling securities in New Jersey. The complaint also seeks the assessment of individual civil monetary penalties, as well as an order that the defendants offer restitution or rescission to investors who were sold the Northridge securities to or from New Jersey.
The Bureau’s action was handled by Deputy Bureau Chief Amy Kopleton, Chief Investigator Rudolph G. Bassman, and Investigator Delfin Rodriguez.
The Bureau is represented by Section Chief/Deputy Attorney General Victoria Manning and Deputy Attorney General Nicholas Dolinsky of the Securities Fraud Prosecution Section in the Division of Law.
The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey. It is critical that investors “Check Before You Invest.” Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contacting the Bureau toll-free within New Jersey at 1-866-I-Invest (1-866-446-8378) or from outside New Jersey at (973) 504-3600, or by visiting the Bureau’s website at www.NJSecurities.gov. Investors can also contact the Bureau for assistance, or to raise issues or complaints about New Jersey-based financial professionals or investments.