Law EnforcementMarch 11, 2024

‘Shadow CEO’ of Real Estate Investment Firm Pleads Guilty to $650M Ponzi Scheme

Nicholas Salzano agreed to a prison term of eight to 12 years for securities fraud, conspiracy to commit wire fraud and conspiracy to defraud the U.S.

Reported by Michael Katz

The “shadow” CEO of a New Jersey real estate investment firm has pleaded guilty to defrauding more than 2,000 investors of more than $650 million through a Ponzi scheme while also conspiring to evade tens of millions of dollars in taxes.

The U.S. Attorney’s Office for the District of New Jersey referred to Nicholas Salzano as the “shadow chief executive officer” of Secaucus-based National Realty Investment Advisors who secretly ran the company behind the scenes. Salzano admitted to misappropriating millions of dollars from investors to benefit himself, his family and friends.

Prosecutors say Salzano hid his true managerial role at NRIA to avoid investors looking into his background and finding out that he pleaded guilty in 2006 to five counts of theft by fraud.

According to the indictment against Salzano, he and his cohorts ran an aggressive nationwide marketing campaign that involved thousands of emails to investors; TV, radio and billboard ads; and meetings with and presentations to investors.

“Salzano led and directed the marketing campaign, which employed deception, material misrepresentations and omissions, and falsified documents to manipulate investors,” the indictment stated, adding that the “misrepresentations and omissions” were intended to mislead investors into believing that NRIA was solvent and generated significant profits.

“For years, Salzano told lie after lie to investors, continuously deceived them, and operated his business as a Ponzi scheme, through which he stole money from thousands of investors.” U.S. Attorney Philip Sellinger said in a release. “His greed and flagrant disregard for the law caused staggering losses in excess of $650 million.”

The fund provided investors with monthly distributions of between 6% and 10% of their original principal investment on an annual basis, according to the indictment. The investors also received written guarantees from NRIA of an annual return of at least 12% annually for five years, plus a full return of their investment. NRIA also said it would cover any shortfall.

“In reality, NRIA generated little to no profits and operated as a Ponzi scheme, which was kept afloat by new fund investors,” according to the indictment. “Despite investing almost none of their own capital into the business, the defendants misappropriated millions of dollars of investor money to support their lavish lifestyles.”

Salzano also led a separate conspiracy to “obstruct, impede, and impair the IRS” from collecting tens of millions of dollars in outstanding taxes owed by Salzano by, “lying to the IRS, using a web of nominees, opening bank accounts in the names of phony entities, and using false and fraudulent company documents.”

Under his plea agreement, Salzano has agreed to serve a prison term of eight to 12 years, forfeit more than $8.5 million and pay full restitution of $507.4 million to his victims.