| NEWARK – Vincent P. Falci (“Falci”) of Middletown, his wife, Donna Falci, also of Middletown, and their son, Vincent N. Falci, of Wall Township, and various investment companies that Falci created and operated, must collectively disgorge and pay $6.7 million in full restitution to defrauded investors as the result of legal action brought by the New Jersey Bureau of Securities. Falci also was assessed $800,000 in civil penalties and permanently barred from working in the securities industry in New Jersey.
Falci, a former fire chief with Monmouth County, and his companies committed multiple violations of the State’s Uniform Securities Law. Among other things, Falci – an unregistered agent – and his companies made false and misleading statements to 182 investors in connection with the sale of unregistered securities. Specifically, Falci created and provided investors with annual updates that purported to show that their money had primarily been invested in tax certificates as promised. In reality, the majority of money raised from investors was not invested in tax lien certificates, but was used toward the purchase of, among other things, seven homes by Falci and his wife, Donna. Only 3% of investors’ funds were actually invested in tax lien certificates.
“This judgment is a significant result for those investors who received false promises and invested in the Falci-controlled companies,” said Attorney General John J. Hoffman. “Funds that were originally diverted for personal use will now be returned back to investors and Vincent P. Falci will no longer be working in New Jersey’s securities industry as a result of the work of the Bureau of Securities.”
“This case illustrates the importance of performing due diligence,” said Steve Lee, Acting Director of the State Division of Consumer Affairs. “Unregistered persons or unregistered securities should raise a red flag for investors, and investors need to follow up by contacting the Bureau of Securities.”
“With fake annual reports and fictitious rates of return, the numbers didn’t add up for investors in Falci’s companies,” said Steve Lee, Acting Director of the New Jersey Division of Consumer Affairs. “This result should send a message that lies to investors and securities fraud will lead to serious consequences.”
In addition to making false statements regarding how much of investor funds had been invested in tax certificates, Falci promised investors a 7% rate of return based on fictitious previous year results.
“To attract investors to his fraudulent scheme – many of whom were firefighters and police officers – Falci promised a high rate of return. Any guarantee of investment results should be viewed with skepticism, especially in a low interest rate environment where lower rates of return are the norm,” said Laura H. Posner, Chief of the Bureau of Securities.
The investment companies and funds created and controlled by Falci included Saber Funds LLC; Saber Funds Distributors, LLC; Saber Asset Management, LLC; Fixed Term Government Fund, LLC; MSI Fund I, LLC; MSI Fund II, LLC; BWX Fund, LLC; Preferred Income Portfolio, I; Phoenix Equities, LLC; and Hallus Realty Group, LLC. Donna Falci was a part owner of Saber Asset Management, LLC and Saber Funds, LLC while son Vincent N. Falci was a part owner of Hallus Realty Group, LLC and Phoenix Equities, LLC.
If all terms of the Consent Order and Final Judgment are met, $217,500 of the $800,000 civil penalty will be suspended.
Rudolph G. Bassman, Chief of Enforcement, conducted the investigation on behalf of the Bureau and Amy G. Kopleton, Deputy Bureau Chief, oversaw the prosecution of this matter on behalf of the Bureau.
Deputy Attorneys General Victoria A. Manning and Isabella T. Stempler of the Securities Fraud Prosecution Section in the Division of Law represented the Bureau of Securities in this matter.
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 public is encouraged to visit the Bureau’s website at www.njsecurities.gov.
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