NEWARK, N.J. (Legal Newsline) - New Jersey Attorney General Jeffrey Chiesa and the Division of Consumer Affairs announced a Bureau of Securities settlement on Thursday with a North Jersey investment adviser who allegedly defrauded investors out of $850,000.
Jacob Eisenstark, his wife Blanche and his two Livingston-based investment companies allegedly made unsuitable investments and defrauded the investors by diverting invested funds for personal expenses
Under the terms of a final judgment and consent order, the Eisenstarks, Eisenstark Advisory Inc. and J.N.J. Capital Management Inc. must pay $940,000, which includes $850,000 in consumer restitution and a $90,000 civil monetary penalty. Jacob Eisenstark and the firms also agreed to be permanent barred from the New Jersey securities industry.
"Jacob Eisenstark convinced victims, including senior citizens, to part with their hard-earned savings, with the false promise of a 15 percent rate of return - only to then misuse their money to pay mortgages and other personal expenses," Chiesa said. "Fraud schemes like this leave victims with pain and heartache and little else. Through this action, we've shut down the defendant's operation and taken a significant step toward providing restitution to victims."
Jacob Eisenstark was a registered investment adviser representative and principal of Eisenstark Advisory, an investment adviser firm that was previously registered with the New Jersey Bureau of Securities. Blanche Eisenstark was the secretary for J.N.J. Capital Management, a company that Jacob controlled.
In the settlement, Jacob Eisenstark admitted that he was in violation of the New Jersey Uniform Securities Law when he misled investors by claiming that he managed a fictitious fund that consisted of at least $15 million in assets and investors they would earn a 15 percent return annually by investing in the fund.
Jacob Eisenstark also allegedly misled investors by giving them monthly interest distribution payments that they thought were payments of interest earned from their investments. Almost all of the interest distributions were allegedly fake, because most were taken from the principal investments the investors made in the first place.
Jacob Eisenstark also admitted that he used invested funds for the personal expenses of his family, including mortgage payments and fees for a residence bought by the Eisenstarks' daughter.
The court previously granted a request to freeze the assets of the defendants. A court appointed receiver worked to recover the defendants' assets.
Chiesa's lawsuit was filed on behalf of the chief of the Bureau of Securities.