N.Y. AG files civil suit against tax preparer for alleged Ponzi scheme
NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman is suing the owner of a tax-preparation business, who was recently arrested after being indicted on multiple charges of securities fraud, money laundering and grand larceny.
Robert H. "Bob" Van Zandt is currently in custody after being indicted Monday by a Bronx County grand jury for an alleged multi-million dollar Ponzi scheme.
He faces up to 25 years in prison if found guilty.
The attorney general's civil lawsuit, filed Thursday, charges that Van Zandt targeted clients of his business, the Van Zandt Agency, and abused his knowledge of his clients' finances to lure them into investing in "high-risk bets" for purported development ventures that he either owned or controlled, and stocks.
"Money laundering and securities fraud are serious crimes, and when people abuse trust built upon long-standing relationships to steal investors' life savings, our office will prosecute civilly and criminally to the fullest extent of the law," Schneiderman said in a statement.
The Attorney General's Office began investigating Van Zandt in 2010.
Last year, the office's Investor Protection Bureau, or IPB, suspecting securities fraud, froze certain assets of Van Zandt's and other defendants, and continued its investigation.
It found, over the last decade, the Bronx-area tax preparer perpetrated a scheme to defraud more than 250 investors out of more than $35 million.
According to the attorney general's lawsuit, Van Zandt frequently promised investors 7 to 12 percent returns, or quick return of principal. He also falsely claimed that funds would be used to invest in securities, or to finance the construction secured by mortgages, when they were not.
In addition to Van Zandt, Schneiderman's suit also names 20 companies that were under Van Zandt's control and were involved in the scheme -- among them, Van Zandt Agency Inc., Burke and Grace Avenue Corp., Empire Builders of New York Corp., MIG of Westchester Inc., Rockwell Consulting of NY Inc. and R.S. Enterprises of New York Inc. -- two relief defendants who received funds fraudulently transferred from Van Zandt's companies, and Kimmarie Gervasi Van Zandt.
The attorney general contends that Van Zandt and Gervasi Van Zandt failed to file and maintain the necessary registrations of their companies with the office's IPB as securities issuers, or of securities salesmen for those companies, as required the state's Martin Act.
The defendants all have been charged with materially false or misleading representations under New York securities law statutes, persistent fraud and illegality under the Executive Law, and failure to register.
The attorney general is seeking restitution on behalf of investors of more than $35 million, including the $4.6 million being sought in the criminal prosecution of Van Zandt.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.
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