Ralph Saviano, a former broker with Centaurus Financial, Inc., was sentenced to 27 months in federal prison after pleading guilty to one count of wire fraud.
The New Jersey-based broker and investment adviser was charged with intentionally devising a defrauding scheme that lasted about five months. Saviano had approximately 300 clients, many of whom were elderly “unsophisticated investors,” according to a lawsuit filed against him.
Saviano, aware that some of his clients were about to receive “significant amounts of cash,” including maturing certificates of deposit, told them to invest their funds into low-risk investments or into his company, the Saviano Financial Group, which he operated as a Ponzi scheme.
Instead of investing the money for his clients, Saviano used the funds to repay loans from other clients and for personal expenses, including a family vacation to Aruba and new granite countertops in his Somerset, New Jersey home. He also used some of the money to cover his mortgage and rent payments.
In one particular instance, an 85-year-old client of Saviano’s gave him approximately $63,000, to be invested into two investment funds. The money never got invested – Saviano wired the money from a New Jersey bank account to a Philadelphia bank account, and used the money for personal expenses.
Another client, an 80-year-old woman, provided Saviano with $75,000 that she had recently acquired. He used this money for personal expenses, as well, informing the client that he was “working on” investing her money when she inquired.
According to the lawsuit filed in the United States District Court in New Jersey, Saviano purposefully targeted clients whom he had known for many years and who trusted his financial expertise.
Saviano was associated with Centaurus until June 2012, when the fraud allegations arose. Under FINRA rules, Centaurus was responsible for supervising Saviano. Specifically, Centaurus had the obligation to enforce a supervisory system reasonably calculated to ensure that its brokers acted in compliance with applicable rules and regulations and to ensure that its brokers were not engaging in illicit outside business activities. It appears that Centaurus failed in this respect.
It may be possible for Saviano’s investors to recover funds from Centaurus by pursuing claims against the firm in arbitration at FINRA Dispute Resolution. Contact Blau & Malmfeldt at 312-443-160, or email Paul Malmfeldt at firstname.lastname@example.org, for a no-obligation consultation regarding possible recovery options. Blau & Malmfeldt is a law firm that represents investors across the United States in securities, commodity futures, partnership, and shareholder rights disputes.