FOR IMMEDIATE RELEASE:
November 27, 2002

FOR FURTHER INFORMATION CONTACT:
Genene Morris (973)504-6327

NEWARK - Governor James E. McGreevey and Attorney General David Samson today announced the filing of separate lawsuits against three New Jersey men who allegedly engaged in separate schemes that defrauded unsuspecting investors.

"On Monday, we announced the filing of lawsuits against four major corporations that we allege were responsible for more than $150 million in State pension system losses," Governor James E. McGreevey said. "Today, we announce legal actions against unscrupulous individuals who we allege misled and cheated small investors.

"These actions show that no matter how large or how small the company is, if it dares to engage in schemes that defraud our hard-working citizens, we will take strong action to stop it," Governor McGreevey said.

The first lawsuit names a Monmouth County man who allegedly cheated investors out of hundreds of thousands of dollars by selling them unregistered securities in a phony business venture and using the proceeds from the unlawful sales for his own personal use and benefit.

The State's six-count complaint, which includes the Attorney General and the New Jersey Division of Consumer Affairs' Bureau of Securities as co-plaintiffs, alleges that Louis P. Arena cheated 13 investors out of $300,000 in connection with the sale of securities in Arena's company, Global Placemakers Incorporated, formerly known as Global Emergency Housing and as International Emergency Housing. At least five of the 13 investors were from New Jersey, the complaint alleges. Global, formerly located at 10 Mechanic St., Suite 160, Red Bank, is now located at 20 Gibson Place, Suite 210, Freehold.

The State's complaint, filed in Essex County Superior Court, alleges that the securities, which were not registered with the Bureau of Securities, were sold in the form of Promissory Notes, called "Special Subscription," in Global. The complaint also alleges that Arena, himself an unregistered agent, misrepresented to private investors that their money would be used to build "disaster proof" homes in the United States and overseas. He allegedly told investors that when the promissory notes became due and payable, two years from their issue dates, investors would be entitled to a refund of their initial investment, made in semi-annual payments, plus interest at above-market rates. The notes, Arena claimed, would also give investors an equity stake or interest in Global.

The State's investigation revealed, however, that Arena used the money to lease himself a Jaguar, pay the lease on his home, pay his daughter's wedding expenses, pay off personal credit card bills, pay for visits to massage parlors and buy jewelry for his friends.

"This man lied to investors and defrauded them to the tune of $300,000," Attorney General Samson said. "He guaranteed a high-rate of return on their investments, he guaranteed there was low risk on the notes and he took their money knowing full well that his claims were false and could not be reasonably attained. Our action seeks to return to investors what is rightfully theirs."

"Mr. Arena told investors that their investments would be utilized for the manufacture and sale of disaster proof homes within the United States and abroad," Consumer Affairs Director Reni Erdos said. "He, however, failed to disclose to investors that a significant portion of their investments would be converted for his personal gain and use - facts that were certain to have a chilling effect on potential investors."

"This is fraud - plain and simple," BOS Chief Franklin Widmann said. "Mr. Arena took investors' money for his own personal use."

In selling the unregistered securities, the complaint alleges that Arena misstated and falsely represented, among other things:

• the intended uses of the proceeds of the promissory notes;
  
  
• the history, financial condition, access to capital, operating results and outlook for the business in which Global was engaged;
  
  
• the ability of Global to pay interest and to repay the principal at maturity; and

The State's suit seeks an order prohibiting Arena from selling securities from or within the State of New Jersey; enjoining him from destroying or concealing any books, records and documents relating to his business, and financial and personal affairs; and requiring him to pay civil monetary penalties and restitution, plus interest, to affected investors.

Deputy Attorney General Priya Doraswamy of the Division of Law is handling this matter for the State.

In the second case, also brought by the Attorney General and the BOS, the State is suing an Ocean County man who allegedly held himself out as an investment adviser at "Senior Financial Survival" seminars where he used deceptive tactics to trick senior citizens into converting millions of dollars of their investments into annuities he was selling.

The complaint alleges that John M. Convery of 773 Dunedin St., Toms River, organized seminars that were directed at senior citizens in order to sell annuities on behalf of Brokers Choice, a wholesaler of annuities that operate under the name Senior Benefit Centers Network.

Convery, an insurance producer licensed with the New Jersey Department of Banking and Insurance ("DOBI"), is chairman of Triarco Organization, Inc., 134 Monmouth Road, Spotswood. Even though Convery offered investment advisory services, neither he, his business nor Brokers is registered with the BOS as an investment adviser or in any other capacity, as required by law. Despite this fact, the complaint alleges, Convery held himself out as an "elder planner" and charged for services he described as "estate and business continuation planning," giving the impression that he was qualified to work as an investment adviser. In addition, he charged elderly investors more than $3,500 for his services, the complaint alleges.

The complaint also alleges that during the seminars, Convery made statements that created a negative impression of the value of investing in securities, while attempting to create among audience members a feeling of confidence in the annuities he was selling.

Those attending presentations also were subjected to a sales pitch that involved Convery criticizing stock brokers as people who get paid to risk the money of others, and portraying his annuities as safer than the stock market and posed "zero risk" to investors.

Convery, however, neglected to tell his audience members that he had an agreement with Brokers Choice that required him to procure a minimum amount of annuity premiums and that he would derive commissions from each annuity sale, the complaint alleges.

Furthermore, the complaint alleges, after members agreed to a home visit with Convery and later purchased the annuities, Convery induced investors into selling their securities through Vanguard Capital, a California-based company that is registered with the BOS as a broker-dealer. The proceeds from those sales, totaling some $2.5 million and resulting in more than $40,000 in commissions for Vanguard, were then transferred to annuity providers.

"While it is not clear that investors lost money in this scheme, it is clear that Mr. Convery used sleazy, under-handed tactics to get their business," Attorney General Samson said. "This type of business practice is shameful and cannot be tolerated in New Jersey."

"Securities and financial-related frauds represent one of the top four areas of fraud that affect senior citizens the most," Director Erdos said. "This case highlights the lack of regard some people have for our elderly population, the lengths they will go to defraud them and the efforts we're taking to stop their unscrupulous activities."

Deputy Attorney General Devanshu Modi of the Division of Law is handling this matter for the State.

Finally, the State has filed an administrative complaint against Patrick Dacosta for selling more than $600,000 worth unregistered securities to 15 investors from throughout the United States and from Jamaica.

The complaint alleges that Dacosta entered into investment contracts with the investors associated with and on behalf his company, Ultimate Chasers. Dacosta allegedly represented to prospective investors that his company, Ultimate Chasers made and would continue to make profits by investing in real estate and by promoting athletes. However, Dacosta neglected to tell investors that he, Ultimate Chasers and the securities he was selling were not registered with the BOS, as required by law. Dacosta has resided at 84 Seaview Ave., Jersey City and 8430 192 Street, Flushing, N.Y.

The State's suit seeks to have Dacosta pay civil monetary penalties of up to $10,000 for the first violation and up to $20,000 for each subsequent violation.