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TRENTON
– Attorney General Paula T. Dow and
Criminal Justice Director Stephen J. Taylor
announced that a Bergen County man has pleaded
guilty to defrauding investors by selling
unregistered shares of stock in his startup
horseshoe manufacturing company and misappropriating
investor funds for his personal use. Hundreds
of investors lost a total of $1.7 million.
According
to Director Taylor, Samuel M. Serritella,
66, of Garfield, pleaded guilty to a second-degree
charge of securities fraud before Superior
Court Judge Patrick J. Roma in Bergen County.
The charge was contained in a March 23,
2010 state grand jury indictment. Under
the plea agreement, Serritella faces a sentence
of five to 10 years in state prison, and
must sign a consent judgment to pay $1.7
million in restitution to the investors
he defrauded. Judge Roma scheduled sentencing
for Serritella for Jan. 14, 2011.
Deputy
Attorney General Francine S. Ehrenberg prosecuted
the case and took the guilty plea for the
Division of Criminal Justice Major Crimes
Bureau. The charges resulted from an investigation
by the New Jersey Bureau of Securities and
the Division of Criminal Justice.
Serritella
was president, chief financial officer and
chairman of International Surfacing Inc.,
based at 5 Erie Street in Garfield. Between
February 2002 and May 2008, Serritella obtained
approximately $1.7 million from more than
300 investors by selling them shares of
International Surfacing. The shares were
not registered with the Bureau of Securities
as required by law, and Serritella was not
registered as an agent authorized to sell
securities in New Jersey.
Most
investors were from New Jersey, and many
of them were police officers and firefighters.
Serritella represented that he was manufacturing
therapeutic horseshoes with a cushioning
layer of rubber on them. He held investment
conferences where he told investors they
could get in on the ground floor by purchasing
shares in a company he planned to take public.
He told at least one group of investors
during a hotel meeting that the venture’s
clients included a prince in Dubai who purchased
the shoes for his camels. He also falsely
claimed that they were being used by Olympic
competitors and would be used in the Olympics
in Athens, Greece.
The
state’s investigation revealed that
Serritella misappropriated more than $350,000
in investor funds to pay for personal expenses.
Although he used some funds for startup
costs for the company, including renting
a building and paying salaries, he never
purchased the necessary equipment and tools
to manufacture the horseshoes, and the venture
failed.
Serritella
deposited the investors’ funds into
several bank accounts that he controlled.
He wrote checks to himself, made cash withdrawals
at ATMs, paid credit card bills, and made
debit card purchases using investor funds
in the accounts. He used the funds to pay
for such personal expenses as airline and
hotel bills, tavern bills, and medical costs.
He also used investor funds to make personal
loans to friends totaling $64,000.
The
Bureau of Securities investigation was conducted
by Chief of Investigations Rudolph Bassman.
Deputy Attorney General Victoria Manning
represented the Bureau in its investigation.
Deputy
Attorney General Ehrenberg and Detective
Michael Fallon handled the case for the
Division of Criminal Justice Major Crimes
Bureau.
At
the time that Serritella was initially charged
by complaint in July 2009, New Jersey Bureau
of Securities Chief Marc B. Minor issued
an order assessing a penalty of $20,000
against Serritella for violation of the
New Jersey Uniform Securities Law. The Bureau
Chief found that Serritella committed securities
fraud and sold unregistered securities as
an unregistered agent.
Bureau
Chief Minor noted that anyone offering to
sell securities in the state must be registered
with the New Jersey Bureau of Securities.
In many instances, the security itself must
also be registered before it can be offered
to investors. He urged investors to check
with the Bureau of Securities before investing
to see if the security and the person offering
it are registered. The Bureau of Securities
can be contacted toll-free within New Jersey
at 1-877-I-INVEST (1-877-446-8378)
or from outside New Jersey at 973-504-3600.
The Bureau’s web site is located at
www.njsecurities.gov.
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