NEWARK, N.J. (Legal Newsline) - New Jersey Attorney General Jeffrey Chiesa announced an $11.2 million settlement Thursday with multiple Bergen County biotechnology companies and their former president and CEO, Thomas Fagan.

Fagan is the former president and CEO of Arbios Systems Inc. and Energex Systems Inc. He was also the managing member of Arbios Acquisition Partners LLC. Fagan allegedly violated New Jersey's securities laws and defrauded investors.

"The state is bringing every available enforcement tool to bear on this defendant, who illegally raised millions of dollars by selling unregistered stock to hundreds of investors - and allegedly defrauded those investors by spending the money on vacations and other personal expenses," Chiesa said. "Today's settlement represents the culmination of our civil action. As for the next chapter, criminal actions remain pending."

Fagan allegedly violated the Uniform Securities Laws by selling ASI stock, Energex stock and ASI promissory notes to more than 700 investors, all while he was not registered as an agent with the Bureau of Securities. Fagan allegedly failed to register the stock and promissory notes and defrauded investors by misusing investor funds for personal expenses.

Under the terms of the settlement, Fagan must pay $1 million in civil penalties and Energex, ASI and AAP must collectively repay $10.2 million in restitution to investors. Energex is responsible for a $9.5 million portion of the settlement. Fagan is also permanently barred from selling securities in New Jersey. The settlement resolves the state's civil complaint.

On May 21, a state grand jury indicted Fagan on criminal charges, alleging he stole more than $230,000 in investor funds.

In a separate settlement, Fagan's wife, Candace Fagan agreed to disgorge $20,000.

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