Attorney General Christopher S. Porrino announced that eight people were indicted today on first-degree charges of conspiracy, racketeering and money laundering for allegedly defrauding 26 investors of more than $7 million through two successive scams involving sales of bogus investments.
After the first scam, two defendants – George Bussanich Sr. and George Bussanich Jr. – agreed to pay $5.5 million, including $4 million in investor restitution, to settle a suit filed by the New Jersey Bureau of Securities, but they then allegedly proceeded to defraud 15 of the same investors in a second scam.
The Division of Criminal Justice Gangs & Organized Crime Bureau today obtained a state grand jury indictment charging each of the following defendants with conspiracy (1st degree), Racketeering (1st degree) and multiple counts of money laundering (1st degree), among other crimes:
1. George Bussanich Sr., 58, of Park Ridge, N.J.;
2. George Bussanich Jr., 37, of Saddle River, N.J., who allegedly ran the schemes and solicited investor funds with his father, George Sr., and mother, Wilma;
3. Wilma Bussanich, 56, of Park Ridge, N.J.;
4. Heidi Francavilla, 58, of Park Ridge, N.J.;
5. Bryan Nazor, Esq., 45, of Chestnut Ridge, N.Y., an attorney;
6. Robert G. Schooley, 65, of Park Ridge, N.J.; an accountant;
7. Brendan M. Byrne, 45, of Paterson, N.J.; and
8. Christopher Hanna, 35, of Parlin, N.J.
All of those defendants except Hanna are also charged with misconduct by a corporate official (2nd degree). Also, George Sr., George Jr., Wilma Bussanich, Nazor, and Schooley are each charged with securities fraud (2nd degree) and multiple counts of theft (2nd degree), and Francavilla is charged with two counts of theft (2nd degree).
The Bussaniches, Francavilla and Schooley face third-degree tax charges for failure to file tax returns and failure to pay taxes, or in the case of Francavilla, filing a fraudulent tax return. A ninth defendant, Cheryl Bussanich, the wife of George Jr., is named in two counts charging the couple with failure to file a tax return and failure to pay taxes (both 3rd degree).
A settlement obtained in August 2014 by the Bureau of Securities, within the Division of Consumer Affairs, resolved a lawsuit that alleged that from May 2009 to July 2013, George Bussanich Sr. and George Jr. misled investors in the sale of unregistered investment notes in Metropolitan Ambulatory Surgical Center, LLC (MASC). The Bureau of Securities found that the Bussaniches defrauded 26 investors of more than $4 million.
Those allegations became part of the criminal investigation and are the subject of charges in the indictment returned today, as are the claims related to the second scheme. Despite its name, MASC was not an actual surgical center, but simply a holding company controlled by Bussanich Sr.
The Bussaniches, including Wilma, allegedly made dividend payments to investors out of the initial principal funds, thereby deceiving investors into believing their investments were generating profits.
Meanwhile, they allegedly diverted investors money to buy multiple homes and seven luxury cars – including two Maserati Quattroportes, a Ferrari F430 Spider and a Mercedes ML350 – and to pay for lavish shopping, dining, travel and entertainment bills.
The consent order obtained by the Bureau of Securities in August 2014 barred Bussanich Sr. and his son from the securities industry in New Jersey, prohibiting them from selling securities and from controlling or acting as officers or directors of any entity that sells securities. However, the investigation by the Division of Criminal Justice revealed that beginning the very next month, the Bussaniches allegedly began soliciting investments in a fictitious company called Global Fund Management that they created with Schooley, who was an accountant for the family.
Between September 2014 and September 2015, a total of 15 of the original 26 investors invested just over $3 million in the purported business venture. Once again, the defendants fraudulently diverted most of the investor funds for their personal use.
The investor funds allegedly were transferred to bank accounts controlled by the defendants, most of which were registered under the names of limited liability companies that were set up by Nazor as attorney for the Bussaniches.
The majority of the companies did not operate as legitimate businesses, and the bank accounts associated with these shell companies allegedly were used primarily to launder the investor money and avoid the strictures of the consent order.
The defendants also allegedly used Nazor’s attorney trust account to launder investor money and to provide investors with the false belief that the investments were legitimate and safe because they were being conducted through an attorney. In addition, Byrne opened a bank account and Hanna allegedly opened several bank accounts and a stock trading account that were used to launder investor funds and divert them for personal use.
It is alleged that, as in the first scheme, the defendants never actually invested the funds from the investors as promised. The investors received monthly “returns,” paid out of the original principal investment, which gave them the impression that the investments were legitimate and were profiting. The defendants would simply move money from one account to another and then disburse a fraction of the funds back to the investors as a “return.”
The defendants also used new investor funds to make penalty payments required under the consent order. However, the vast majority of the monies invested allegedly went to the personal use and enjoyment of the defendants, including making down payments and mortgage payments on various properties, paying restaurant bills and financing vacations.
George Bussanich Jr. allegedly used investor funds to buy his home in Upper Saddle River, which is worth nearly $1 million. Most of the defendants failed to file state tax returns reflecting the money they received from the investment scheme, while Francavilla allegedly filed fraudulent tax returns.
George Bussanich Jr. and Francavilla are charged with two counts of second-degree theft for allegedly stealing nearly $500,000 from an elderly woman.
The woman and her husband were among the 26 investors in the first scheme, but the husband subsequently died, and the victim needed help managing her financial affairs.
George Jr. had himself named as a power of attorney for the victim, and he and Francavilla allegedly drained nearly $500,000 from the victim’s bank account, including $300,000 purportedly “invested” in Global Fund Management as part of the second scheme.
Wilma Bussanich is charged with second-degree theft for allegedly signing false mortgage documents against a property she did not own, without the owner’s permission, to secure bail totaling nearly $1 million for the Bussaniches after they were arrested in September 2015.
The Bureau of Securities investigation was led by Chief of Enforcement Rudolph G. Bassman.
First-degree charges carry a sentence of 10 to 20 years in state prison and a fine of up to $200,000. The first-degree racketeering charges carry a mandatory period of parole ineligibility equal to 85 percent of the sentence imposed. The money laundering charge carries a mandatory term of parole ineligibility of one-third to one-half of the sentence imposed. That charge also carries a fine of up to $500,000 and an additional anti-money laundering profiteering penalty of up to $500,000 or three times the value of any property involved.
Second-degree charges carry a sentence of five to 10 years in prison and a fine of up to $150,000. Third-degree charges carry a sentence of three to five years in prison and a fine of up to $15,000, while fourth-degree charges carry a sentence of up to 18 months in prison and a $10,000 fine.