Former Rutgers board member to pay $750K for unregistered securities
Jeffrey Mitchell Isaacs, a New-Brunswick man and former Rutgers Board of Trustees member, has been ordered to pay $750,000 in connection with selling New Jersey investors more than $7 million worth of unregistered securities that were tied to an alleged $1.2 billion nationwide ponzi scheme, according to a news release from the Office of the Attorney General.
Attorney General Gurbir S. Grewal and the New Jersey Bureau of Securities within the Division of Consumer Affairs announced yesterday that Isaacs and his companies — JB Financial Resources and related entities — sold the unregistered securities for the Woodbridge Group of Companies (Woodbridge). The Woodbridge company has been charged by the U.S. Securities and Exchange Commission (SEC) in connection with running a ponzi scheme.
Securities are things like stocks, bonds and financial notes. Before it can be offered to public people, it must first be registered with the SEC, according to Investopedia. There are certain exceptions to the rules.
Records show that Isaacs served on the Rutgers Board of Trustees as far back as 2003, according to archived catalogs from the University. Another release indicates that he served until 2009, when he was an Alumni Trustee.
“Despite having no legal authority to sell investments in New Jersey, Isaacs sold the unregistered Woodbridge securities to New Jersey investors,” said Kevin Jespersen, acting director of the Division of Consumer Affairs. “Isaacs shamelessly profited from this alleged Ponzi scheme while the investors that purchased the unregistered securities are now left to deal with the devastating impact of trying to recover their investments.”
The company allegedly defrauded more than 8,400 investors in unregistered Woodbridge funds, according to a press release of the SEC’s charge against Woodbridge.
The company advertised its primary business as issuing loans to supposed third-party commercial property owners, paying Woodbridge 11 to 15 percent annual interest for short-term financing, according to the press release.
It allegedly promised to pay investors 5 to 10 percent interest annually, according to the press release. The SEC’s charge alleges that many of the company’s borrowers were owned by former CEO of Woodbridge Robert H. Shapiro, and had no income and did not make interest payments on the loans.
“Unregistered agents are often at the heart of investment scams, which is why the Bureau strongly encourages investors to verify and review the registration records of anyone offering to sell them an investment,” said Christopher Gerold, chief of the Bureau of Securities. “Had these investors checked with the Bureau, they would have learned that Isaacs is not registered to sell securities in New Jersey, information that could have prevented them from becoming a victim.”
Gerold said that as the case against Woodbridge continues, the bureau will continue to identify and hold accountable the individuals that sold unregistered securities, according to the news release.
According to a Summary Penalty Order issued yesterday, Isaacs’s agent and investment-adviser representative registrations were suspended by the Bureau of Securities in 2013 for “dishonest or unethical practices.”
Between 2013 and 2017, Isaacs and his related entities allegedly sold approximately 88 of Woodbridge’s unregistered securities — valued at approximately $7.1 million — to at least 26 New Jersey investors, according to the Summary Penalty Order.
He allegedly acted as an unregistered agent in the offer and sale of the unregistered Woodbridge investment products in the form of First Position Commercial Mortgages (FPCMs), according to the Summary Penalty Order.
On Dec. 4, 2017, Woodbridge and related entities filed for Chapter 11 bankruptcy protection and the FPCM interest payments to investors stopped, according to the Summary Penalty Order. Weeks later, on Dec. 20, 2017, the SEC filed a complaint against Woodbridge and related companies.
When reached for comment, Isaac said this was the first he had heard of the order and asked for the press release and penalty order to review, according to TAPinto New Brunswick. He declined to comment further.
Isaacs also attended Rutgers and graduated from the University’s Livingston College in 1984. He was previously honored by the Rutgers Alumni Association with the “Loyal Sons & Daughters of Rutgers Award,” according to a list of the recipients.
“Ponzi schemes only work when unscrupulous individuals lure unsuspecting victims into a scam for their own profit,” Grewal said according to the release. “To protect New Jersey from these types of Ponzi schemes, we will continue to take action against those who seek to harm our residents and our financial markets.”