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For Immediate Release:  
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January 13, 2005

Office of The Attorney General
- Peter C. Harvey, Attorney General
Bureau of Securities
- Franklin L. Widmann, Chief


Genene Morris
Jeff Lamm


Attorney General Sues New York Man Who Allegedly Obtained $42 Million from Investors in Massive Securities Fraud Scheme

TRENTON – The Attorney General’s Office and the New Jersey Bureau of Securities filed suit today against a New York City man, Joseph Greenblatt, several members of his family and 68 corporations that they allegedly created to carry out a massive securities fraud scheme, including Maywood Capital Corp., a New Jersey corporation based in Paramus that was the umbrella company for the investment scheme, Attorney General Peter C. Harvey announced. The suit alleges that the individual defendants obtained more than $42 million from over 100 investors, diverting millions to pay their personal expenses.

Attorney General Harvey and Bureau of Securities Chief Franklin L. Widmann filed a complaint today in Superior Court in Essex County against Greenblatt; his wife, Alexandra Horvath; his father, Max Greenblatt; the estate of Joseph Greenblatt’s mother, Vera Greenblatt; and Maywood Capital Corp. In addition to Securities Law violations, the complaint alleges that Joseph Greenblatt, Max Greenblatt and two key associates engaged in a pattern of racketeering activities in violation of New Jersey’s Racketeer Influenced and Corrupt Organizations (RICO) statute.

“We will do everything in our power to obtain restitution for the investors who fell victim to the greed of these defendants,” said Attorney General Harvey. “The defendants claimed to offer investments in residential properties in New York City secured by ‘safe’ first mortgages. Investors were promised 14 percent interest, plus additional profits when the buildings were renovated and resold. In fact, we allege, the investments were largely unsecured and were used to pay the defendants’ personal expenses.”

Previously, Joseph and Max Greenblatt pled guilty in 1995 to criminal charges in Kings County, New York, in connection with an unrelated securities fraud scheme. New Jersey’s complaint alleges that the Greenblatts’ latest scheme was used, in part, to fund $5 million in restitution ordered as a result of the New York guilty pleas.

The complaint also names Peter Vogel, legal counsel for Maywood Capital; Jerome Rosenthal, who solicited investments for Maywood Capital; and Value Capital Group Inc., a new umbrella company incorporated by the Greenblatts and Vogel in New York on March 18, 2004.

The other corporate defendants are Maywood Management Corp., Maywood Construction Corp., Maywood Consolidated Properties, Inc. and AP Construction Associates, Inc. – used by the individual defendants to manage investment properties – and 63 shell corporations formed to purchase particular properties and solicit investments.

Deputy Attorneys General Anna Lascurain, Chief of the Securities Fraud Prosecution Section of the Division of Law, and David Puteska are handling the case for the Attorney General. It was investigated by Supervising Investigator James Lane and Investigators Jake Gertsman and Julian Leone of the New Jersey Bureau of Securities. The Bureau was assisted by Investigator Alan Tunkavige of the Florida Office of Financial Regulation, under the supervision of Commissioner Don Saxon.

The complaint alleges numerous violations of the New Jersey Uniform Securities Law, including that the defendants engaged in a scheme to defraud investors, sold unregistered securities and acted as unregistered broker-dealers. The complaint alleges RICO violations by Joseph Greenblatt, Max Greenblatt, Vogel and Rosenthal. The complaint seeks permanent injunctive relief, restitution for investors, disgorgement of illegal profits and civil monetary penalties, including, for the RICO defendants, penalties equal to three times their illegal gains. The complaint asks the Court to freeze the assets of the individual and corporate defendants and appoint a receiver to identify and seize those assets.

“Through our extensive investigation, we uncovered a huge network of corporations that the individual defendants allegedly used to defraud investors from as far away as California and Florida,” said Securities Chief Widmann. “We have asked the court to freeze the assets of the defendants and appoint a receiver to take charge of those assets on behalf of the investors.”

The Fraudulent Scheme

The defendants placed newspaper ads offering interests in “safe” mortgages. Joseph Greenblatt solicited investors in the states of California, Florida, Massachusetts, New Jersey and New York, among others, to invest in residential properties in New York City that were in need of repair. The ads claimed the investments were ideal for IRAs, Keoghs, pensions and personal portfolios.

Corporations formed by the individual defendants would allegedly purchase properties for renovation and/or resale through Maywood Capital. Investor funds were purportedly invested in the entity owning the property and secured by mortgage interests in the property. In reality, many of the properties controlled by the defendants were over-mortgaged and did not produce the unrealistic profits promised to investors. In many cases, investors’ mortgage interests were never recorded or were extinguished without their knowledge so that new investments could be secured by mortgages on the buildings in question. In certain cases, the defendants did not even own the properties that they mortgaged to investors.

Misappropriation of Clients’ Money Alleged in the Complaint

Investor funds that were supposed to be maintained in individual accounts for individual properties were transferred to Maywood Capital’s main corporate account, where they allegedly were co-mingled and disbursed as “officer loans” to pay the personal expenses of individual defendants. Joseph Greenblatt, Max Greenblatt and Vogel allegedly received more than $9.4 million in “officer loans” from investor funds. Joseph Greenblatt allegedly received more than $8.8 million to pay for personal expenses for himself and his wife, including travel and purchases of clothing and jewelry from stores such as Saks Fifth Avenue, Neiman Marcus and Polo/Ralph Lauren. Disbursements also allegedly were made for monthly payments on Max Greenblatt’s home in Rego Park, N.Y., and his condominium in Florida. Joseph Greenblatt was indicted by a state grand jury in Bergen County in August 2004 on charges that he wrote $1.9 million in bad checks to investors.

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