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NEWARK
– N.J. Attorney General Paula T. Dow
today announced that three brokers have
been disciplined for allegedly violating
state securities laws and regulations in
their dealings with several current former
Major League Baseball players who were clients.
The
N.J. Bureau of Securities found that Stephen
Elliott Hill, an owner of a Woodcliff Lake-based
financial firm, Kolinsky-Hill Financial
Group, misappropriated nearly $1.7 million
from a client. The Bureau’s Summary
Order revoked the broker registrations of
Hill, 55, and firm co-owner Steven Kolinsky,
49, in effect barring them from the New
Jersey securities industry. Both are residents
of Upper Saddle River. The Order also sanctioned
sales representative Roy Glassberg, 56,
of Boca Raton, Florida, for failing to disclose
his outside business activities to the broker-dealer
firm with which he was affiliated, Royal
Alliance Associates, Inc. The funds misappropriated
by Hill benefited a company owned by Glassberg
and Hill's wife.
“Clients
trusted these industry professionals with
their hard-earned savings, and that trust
was broken. Professional athletes, working
toward a financially secure future upon
retirement, became victims to those seeking
to enrich themselves,” Attorney General
Dow said.
According
to the Summary Order, since 2001, all three
brokers were registered at NFP Securities,
Inc., as agents and investment advisers,
and moved to Royal Alliance Associates,
Inc., in 2008. Hill and Kolinsky built a
practice attracting many professional baseball
players, who had neither the time nor expertise
to manage investments. Over the course of
several years, the respondents created private
real estate and other investment deals,
often undisclosed to NFP Securities and
Royal Alliance Associates, and then solicited
the players to invest in them.
As
the Summary Order details, in one such deal
dating back to 2005, six Kolinsky-Hill clients
invested a total of $5 million for an undeveloped
parcel of riverfront land in Hackensack,
N.J. To date, no development of the property
has occurred. Kolinsky and Hill never informed
NFP of this business venture, of their relationship
to a series of corporations created for
the property’s development, or of
their solicitation of clients to invest
in them.
By
2008, Kolinsky-Hill had built relationships
with baseball players’ accountants,
so with just a phone call, they could direct
the wiring of the players’ funds.
Hill coaxed one former player into approving
an investment of $103,000 into what was
represented to be a dental products company,
only to have Hill orchestrate the siphoning
away of approximately $1.7 million through
fraudulent transfer documents and misrepresentations
to banks, broker-dealers, and clearing firms.
The funds ultimately benefited Gryphon Hill
- a company in which Hill’s wife and
Glassberg were the managing members.
The
Order also sets forth the findings that
Kolinsky, in addition to failing to disclose
his own outside business dealings, as the
branch supervisor and the broker of record
on the above-referenced account, never noticed
or reported any unusual activity by Hill
or other Kolinsky-Hill employees. Kolinsky
is alleged to have failed to familiarize
himself with his own customer accounts or
to reasonably supervise to prevent or detect
the violations that occurred while affiliated
with NFP and Royal Alliance.
“The
inducement of investments through deception
and misstatements is outright fraud, which
can have a devastating impact on people’s
lifesavings,” said Thomas R. Calcagni,
Acting Director of Consumer Affairs. “We
will bring New Jersey’s securities
laws to bear on unscrupulous brokers and
advisors who seek to take advantage of investors.”
The
Bureau assessed a $210,000 civil penalty
against Hill, in addition to ordering the
revocation of Hill’s and Kolinsky’s
broker registrations. The Bureau suspended
Glassberg for two months, for failing to
inform Royal Alliance of outside business
activities.
“Respondents
repeatedly solicited clients in their private
deals, hidden from the brokerage firm’s
view,” said Bureau Chief Marc B. Minor.
“According to the findings set forth
in the Summary Order, this culminated in
Hill’s brazen misappropriation, which
benefited his wife and his business partner.
Kolinsky ignored his supervisory duty to
uncover undisclosed dealings and bogus documents
that set the stage for Hill’s acts.”
Royal
Alliance terminated its relationship with
Hill and Kolinsky earlier this year.
Respondents
have 15 days from notice of the Bureau Chief’s
Summary Order to file written submissions
contesting the findings. The matter may
then be transmitted to the Office of Administrative
Law or the Bureau for a hearing with a full
and fair opportunity to contest the action
and the findings alleged in the Order.
Bureau Deputy Chief Amy Kopleton and Enforcement
Chief Rudolph Bassman conducted the investigation
of this matter. Securities Fraud Prosecution
Section Chief Anna M. Lascurain and Deputy
Attorney General Toral Joshi represent the
state.
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