– The New Jersey Bureau of Securities,
within the State Division of Consumer Affairs,
has filed suit against an Allendale-based
company, its top executive and his wife,
and two other business entities, alleging
that nearly 800 investors were defrauded
of approximately $9.5 million through the
sale of unregistered stock and notes and
the subsequent misuse of the invested funds.
J. Fagan (“Fagan”), President
and CEO of Energex Systems, Inc., allegedly
violated the State’s Uniform Securities
Law by using the funds raised from investors
for personal expenses for himself and his
wife, Candace Fagan. Fagan was not registered
as an agent with the N.J. Bureau of Securities
when he sold approximately $9.5 million
in unregistered Energex stock.
State’s nine-count Complaint and Order
to Show Cause, filed in State Superior Court
in Hackensack, names as defendants Fagan;
Candace Fagan; Energex Systems, Inc.; Arbios
Acquisition Partners, LLC; and Arbios Systems,
founded Arbios Acquisition Partners in 2009
to gain control of Arbios Systems, Inc.,
and allegedly sold unregistered ASI promissory
notes and ASI stock to investors. According
to the Complaint, Fagan allegedly commingled
investors’ funds among the entities
he controlled and misused approximately
$2.3 million for his personal benefit and
complaint outlines how Fagan allegedly used
investors’ hard-earned money as his
personal piggy bank, misspending corporate
funds for personal travel to Atlantic City
and Las Vegas casinos and to see the Olympics
in Europe,” Attorney General Paula
T. Dow said. “We are bringing this
action to hold Fagan accountable.”
state is seeking court approval to freeze
the defendants’ assets and the appointment
of a receiver, as well as enjoining Fagan
from engaging in any securities-related
activity. According to Delaware records,
where the defendant businesses were incorporated
or formed, Energex is no longer in existence.
Arbios Acquisition Partners exists but is
not in good standing. Arbios Systems, Inc.
exists and its stock is traded on the Over-the-Counter
Bulletin Board (OTCBB).
alleged in our Complaint, Fagan cheated
investors by distorting the line between
his personal and business expenses, misappropriating
investor money that he controlled. Through
this lawsuit, we’re seeking to place
Fagan on the hook for his actions and put
an end to the investor deception,”
said Thomas R. Calcagni, Director of the
State Division of Consumer Affairs.
Systems, Arbios Acquisition Partners, and
Arbios Systems, Inc., all listed the same
Allendale address as their business location.
Energex Systems, formerly known as Orthomedics
and Orthosonix, claimed to be in the business
of various biotech products, including ones
related to blood safety.
need to be alert to persons who are violating
New Jersey’s Securities Law by offering
and selling securities without proper registrations.
The Bureau of Securities can assist investors
in performing due diligence,” said
Abbe R. Tiger, Bureau Chief. “The
Bureau of Securities will do everything
in its power to be vigilant in shutting
down fraud schemes, but we need to hear
from those who believe they may be victims.”
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 Bureau's
website is located at www.njsecurities.gov.
G. Bassman, Chief of Enforcement for the
Bureau of Securities, conducted the investigation
of this case. Deputy Attorneys General Victoria
A. Manning and Paul E. Minnefor of the Securities
Fraud Prosecution Section in the Division
of Law, are representing the Bureau.