The New Jersey Bureau of Securities has revoked the registration of a financial agent and also ordered him to pay $200,000 in civil penalties after an investigation revealed that he had exploited a 30-plus year business relationship and had defrauded the now-elderly client.
Unbeknownst to the victim, Ronald Paul Rafaloff, of the Bronx, New York, used the $405,000 invested by the victim to fund companies that he founded and controlled. The victim was Rafaloff’s sole client.
To orchestrate his fraud and to earn the trust of his victim, Rafaloff befriended the victim – offering to run errands for her, taking her to dinner and accompanying her to medical appointments – and promised her “capital appreciation” of 30% to 40% with a personal guarantees on the securities.
The Bureau’s investigation found that Rafaloff committed multiple violations of the state’s Uniform Securities Law, including filing a false application with the Bureau by not disclosing his business interests, making untrue statements or omitting material facts to the victim, and engaging in dishonest or unethical business practices.
The investigation of this matter was conducted by Supervising Investigator Michael McElgunn and Investigators Richard Smullen and Thomas Della Torre in the Bureau of Securities.
Deputy Attorneys General Martin Gandelman and Patrice Andrews in the Securities Fraud Prosecution Section in the Division of Law assisted the Bureau in this matter.
The Bureau 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.