NEWARK – Attorney General Gurbir S. Grewal and the Bureau of Securities within the Division of Consumer Affairs today filed suit against a Middlesex County man and the various investment companies he operated, alleging he defrauded more than $1.3 million from 26 New Jersey investors who bought stock in his online gambling companies, and then used the money to bankroll his lavish lifestyle.
In a complaint filed in New Jersey Superior Court, the Bureau alleges that Sandy J. Masselli, Jr., of Old Bridge, New Jersey, told investors that the money they invested in his Carlyle Gaming & Entertainment Ltd, and its successor company, Carlyle Entertainment, Ltd. (collectively the “Carlyle Companies”) would be used for proper corporate purposes.
However, according to the complaint, Masselli, used more than $1.3 million of the investor funds for the personal benefit of himself and his family, including his wife Charlene T. Masselli, a.k.a. Charlene Dunn, who is named as a nominal defendant in the Bureau’s complaint.
The complaint, which seeks restitution for the defrauded investors and penalties against Masselli and other defendants, alleges Masselli spent hundreds of thousands of dollars on personal expenses that included cash withdrawals, credit card payments, restaurants and hotel tabs, auto leases, his son’s college tuition, and a $93,000 payment to the law firm that defended him in a prior criminal action.
“Masselli held himself out to investors as a savvy businessman with a long and successful track record in the online gambling industry,” said Attorney General Grewal. “Today’s allegations make clear that this was nothing more than a million-dollar fraud, and that Masselli used investors’ hard-earned money to finance his own extravagant lifestyle. The complaint filed by the Bureau of Securities is simply the latest step in our effort to protect New Jersey’s investors and crack down on financial fraudsters.”
The complaint, which also names Masselli’s business associate Joseph L. Picco of Colts Neck as a defendant, alleges that Masselli and Picco raised more than $1.3 million from the sale of Carlyle Gaming and Carlyle Ltd. common stock to at least 26 New Jersey investors between July 2012 and December 2017.
Masselli instructed investors to direct their investment funds to his related companies, Intercapital Management Ltd., Intercapital Partners Ltd., Intercapital Partners LLC, and Duke and Duke LLC (collectively, the “Defendant Entities”). Masselli controlled the bank accounts held in the names of the Defendant Entities that received investor funds, according to the complaint.
Though investors were told or understood that their funds would be used for investment in the Carlyle Companies, those funds were not in fact used for that purpose. In reality, a majority of investor funds were never transferred to or spent for the benefit of the Carlyle Companies. Rather, investors’ funds totaling at least $1.3 million were deposited into various bank accounts controlled by Masselli that were unassociated with the Carlyle Companies, according to the complaint.
“This wasn’t a case where defendants diverted a small portion of investor funds for their own use, we allege that nearly every dime the defendants took in from investors was funneled into their own accounts and they helped themselves to the money as if it belonged to them,” said Paul R. Rodríguez, Acting Director of the Division of Consumer Affairs. "They, like other similarly situated defendants, will now pay the price for living the high life on the backs of defrauded investors.”
According to the Bureau’s complaint, at least $1.3 million of the investor funds held in the Defendant Entities’ respective bank accounts were misused for the personal benefit of, and diverted to, Masselli and Picco, as well as the nominal defendants, as follows:
- payment of at least $145,000 for Masselli and Dunn’s personal credit card bills;
- transfers of at least $500,000 to the Masselli USAA Account from the Intercapital Management Wells Account, including a transfer of $400,000 on September 6, 2012 and a transfer of $100,000 on September 7, 2012;
- checks and wire transfers to law firms or attorneys unrelated to the business of the Carlyle Companies, totaling at least $252,000, including a check for $93,000 payable to a New Jersey law firm from the Intercapital Management Wells Account on September 6, 2012 for, upon information and belief, that firm’s representation of Masselli in a criminal matter;
- checks totaling at least $7,700 payable to Masselli;
- transfers to accounts owned by, or checks made payable to, nominal defendant Dunn totaling at least $11,000;
- payments totaling at least $25,649 to automobile leasing or financing companies for vehicles used by Masselli through the Intercapital Entities;
- cash withdrawals, both by counter withdrawals and at ATMs, totaling at least $70,000;
- checks made payable to “Cash” totaling at least $22,000;
- transfers and checks payable to Sunshine 61 Trust LLC totaling at least $45,000;
- wire transfers of at least $8,000 to accounts controlled by Picco;
- debit card purchases totaling at least $68,000 at restaurants, clothing stores, hotels, and for other apparent personal expenses of Masselli; and
- payments for additional goods and services unrelated to the Carlyle Companies totaling at least $144,000, including automobile insurance, online purchases via PayPal, and at least $17,000 to George Washington University, for, upon information and belief, the college tuition of Masselli’s son.
"Masselli and his codefendants' conduct was a pure scam that preyed upon New Jersey investors" said Bureau Chief Christopher W. Gerold. “They made untrue statements and omitted material facts in dealings with investors to defraud investors. Our action today sends a message that those who financially prey on New Jersey investors face serious consequences.”
Supervising Investigator Peter Cole and Investigator Isaac Reyes conducted the investigation on behalf of the Bureau within the Division of Consumer Affairs. Deputy Attorneys General Benjamin R. Zakarin and Toral M. Joshi of the Securities Fraud Section in the Division of Law are representing the Bureau of Securities in this matter. The Bureau would also like to thank the Securities and Exchange Commission for its cooperation 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.
Follow the New Jersey Attorney General’s Office online at Twitter, Facebook, Instagram, Flicker & YouTube. The social media links provided are for reference only. The New Jersey Attorney General’s Office does not endorse any non-governmental websites, companies or applications.