NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a civil lawsuit on Thursday against a tax preparer for allegedly abusing his knowledge of his clients' finances to lure unsophisticated investors into high-risk bets.
"Money laundering and securities fraud are serious crimes, and when people abuse trust built upon longstanding relationships to steal investors' life savings, our office will prosecute civilly and criminally to the fullest extent of the law," Schneiderman said.
"My office is committed to rooting out these kinds of scams, and bringing justice to defrauded investors."
Schneiderman's Investor Protection Bureau suspected securities fraud by Robert H. "Bob" Van Zandt and other defendants in 2011 and froze some of their assets while continuing its inquiry that led to the legal action. Van Zandt allegedly perpetrated a scheme to defraud more than 250 investors out of more than $35 million.
Also named in the lawsuit are Kimmarie Gervasi Van Zandt, 20 companies under Van Zandt's control that were allegedly involved in the scheme, including R.S. Enterprises of New York Inc., Rockwell Consulting of NY Inc., MIG of Westchester Inc., Empire Builders of New York Corp., Burke & Grace Avenue Corp. and Van Zandt Agency Inc., and two relief defendants who allegedly received funds that were fraudulently transferred from companies Van Zandt controlled.
Van Zandt allegedly frequently promised investors seven to 12 percent returns or a quick return of principal, claimed that funds would be used to finance construction secured by mortgage or to invest in securities when they were not, and misappropriated investor funds for personal use.
Van Zandt and Gervasi Van Zandt allegedly failed to maintain and file necessary registrations for their companies with Schneiderman's IPB as securities salesman or security issuers, as is required by the state's Martin Act. The defendants allegedly made materially false or misleading representations under state securities law statutes, engaged in common law fraud and the Martin Act, engaged in persistent fraud and illegality under the executive law, and engaged in failure to register.
Schneiderman is seeking restitution on behalf of the investors of more than $35 million, including $4.6 million in the criminal prosecution of Van Zandt. All criminal charges are accusations and the defendant is presumed innocent until and unless proven guilty in a court of law.
Van Zandt also faces up to 25 years in prison for a separate criminal indictment that alleges two counts of money laundering, two counts of securities fraud under the Martin Act, two counts of scheme to defraud and 29 counts of grand larceny. Van Zandt is currently in custody after being indicted on May 14 by a Bronx County Grand Jury on multiple charges for an alleged multi-million dollar Ponzi scheme. Van Zandt allegedly lured investors into contributing to purported development ventures he controlled or owned, in addition to stocks.