NEWARK – Attorney General Gurbir S. Grewal and the New Jersey Bureau of Securities within the Division of Consumer Affairs today announced that the Bureau has filed a seven-count suit against a Union County financial consultant and his company, alleging he defrauded at least 57 investors out of nearly $2.2 million through the fraudulent sale of unregistered securities and then used much of the money for his own personal benefit, including payments for his Maserati.
Owusu A. Kizito, of Hillside, is alleged to have fraudulently sold the unregistered securities to his clients as investments in his business, Investigroup, LLC, a NJ-based management consulting firm, which he claimed had offices in New York, Oman, China, and Ghana.
Kizito allegedly diverted at least $960,500 into the bank account of his unrelated non-profit, Investigroup NP, and also used investors’ funds to make large cash withdrawals, payments for personal credit cards, payments for his home mortgage and property taxes, and payments for his luxury sports car.
The State’s lawsuit, filed in Superior Court in Union County yesterday, alleges that defendants Kizito and Investigroup, through Kizito, violated the anti-fraud and registration provisions of the New Jersey Uniform Securities Law. The suit also names Investigroup NP as a nominal defendant, alleging that Investigroup NP unjustly benefitted from the diversion of investor funds into its bank account, and seeks to have those funds disgorged.
The State also asked the Court for temporary restraints and preliminary injunctive relief to stop Kizito and Investigroup from engaging in the offer and sale of securities, or acting in any capacity in the securities industry.
“We are committed to stopping fraudulent and unlawful ‘investment opportunities’ that cheat investors of their savings, and to holding the perpetrators of these schemes accountable,” said Attorney General Grewal. “The investment scheme we are taking down was all the more offensive because the defendant took money from people who trusted him and used it to fuel his own lavish lifestyle.”
According to the State’s complaint, from 2016 to 2020, Kizito and Investigroup, through Kizito, offered and sold investments in securities totaling at least $2,187,814 to 57 investors - including 34 New Jersey residents - through 104 transactions.
The majority of the securities were in the form of membership interests - called “Units” - in Investigroup that were sold to at least 53 investors in the total amount of $1,722,814. The remaining securities were in the form of agreements purporting to monetize commercial standby letters of credit acquired by Investigroup; they were sold to at least nine investors in the amount of $465,000.
Kizito and Investigroup represented to investors in written offering materials for the Units that their investment money would help fund the expansion and growth of Investigroup through new office buildout; growth marketing; international expansion; strategic partnerships; legal and portal onboarding; and hiring and training. Kizito allegedly described the terms of the investment to some investors, promising them a specific rate of return on their investment and stating when their investment would mature.
According to the complaint, Investigroup and Kizito failed to disclose material information to investors, including that:
- investor funds would be used for Kizito’s personal benefit and for other non-business-related expenses, including cash withdrawals made by Kizito or transfers made to Kizito and the use of at least one investor’s money to pay off a prior investor;
- at least $960,500 of investor funds would be diverted to the account of Investigroup NP, Kizito’s non-profit entity in which the investors had not invested or received a beneficial interest;
- Investigroup had been borrowing significant amounts of money through factoring agreements with merchant cash advance companies, thereby assigning the rights to future account receivables to those companies, which would be withdrawing significant amounts of investor funds from Investigroup accounts to repay those advances;
- in 2011, the Internal Revenue Service had assessed taxes, interest, and penalties against Kizito and Investigroup, and ordered them to pay unpaid taxes and interest totaling $252,367.40 for 2009 and 2010;
- there were additional undisclosed pending legal proceedings against Investigroup and Kizito;
- Kizito could or would change the maturity date of the investment without investor consent;
- the Investigroup securities were not registered with the Bureau nor exempt from federal or state registration as required by law; and
- Kizito was not registered with the Bureau as an agent to sell securities as required by law.
“People and companies selling securities are required by law to disclose to each potential investor all material information about the company, its principals, and the investment including the risks,” said Paul R. Rodríguez, Acting Director of the Division of Consumer Affairs. “Not only did the defendants fail to make these disclosures, but they misled investors and hid material facts that a reasonable person would want to know in order to make an informed investment decision. After deceiving them, Kizito used investors’ money as if it were his own. This kind of blatant violation of our Securities Law and abuse of investor trust will not be tolerated in New Jersey.”
The State’s suit seeks court-ordered monetary penalties, investor restitution, disgorgement, and permanent injunctive relief barring Kizito and Investigroup from violating the Securities Law or participating the sale or issuance of securities in the future.
“The defendant marketed the unregistered securities to his own clients. He was counting on the fact that people are more trusting when someone they know offers them an investment opportunity,” Christopher W. Gerold, Chief of the New Jersey Bureau of Securities. “This case highlights why no one should ever hand over funds without thoroughly vetting the investment and checking the registration status of the person offering it.”
The Bureau’s investigation was handled by Deputy Bureau Chief Amy Kopleton, Enforcement Chief, Richard Szuch, Supervising Investigator, Michael McElgunn and Investigator Michael LaChapelle. Assistant Attorney General Brian McDonough and Deputy Attorneys General Victoria Manning, Michael Eleneski, and Elisabeth Juterbock of the Securities Fraud Prosecution Section in the Division of Law’s Affirmative Civil Enforcement Practice Group are representing the State in this matter.
The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey.
It is critical that investors “Check Before You Invest.” Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contacting the Bureau toll-free within New Jersey at 1-866-I-Invest (1-866-446-8378) or from outside New Jersey at (973) 504-3600, or by visiting the Bureau’s website at www.NJSecurities.gov. Investors can also contact the Bureau for assistance, or to raise issues or complaints about New Jersey-based financial professionals or investments.
The mission of the Division of Consumer Affairs, within the Department of Law and Public Safety, is to protect the public from fraud, deceit, misrepresentation and professional misconduct in the sale of goods and services in New Jersey through education, advocacy, regulation and enforcement. The Division pursues its mission through its 51 professional and occupational boards that oversee 720,000 licensees in the state, its Regulated Business section that oversees 60,000 NJ registered businesses, as well as its Office of Consumer Protection, Bureau of Securities, Charities Registration section, Office of Weights and Measures, and Legalized Games of Chance section.