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Post date: May 17 2012

A.G. Schneiderman Announces Civil Lawsuit Against Robert Van Zandt & Others In $35 Million Securities Fraud Scheme

A.G. Sues Indicted Bronx Fraudster In $35 Million Fraud, Including Ponzi Scheme

Schneiderman: We Will Root Out These Frauds And Bring Justice For Investors And Retirees

NEW YORK - Attorney General Eric T. Schneiderman today announced the filing of a civil lawsuit against the recently arrested Robert H. "Bob" Van Zandt, who is currently in custody after being indicted May 14 by a Bronx County Grand Jury on multiple charges of securities fraud, money laundering and grand larceny for an alleged multi-million dollar Ponzi scheme. Today's civil lawsuit charges that Van Zandt targeted clients of his tax-preparation business, the Van Zandt Agency, and abused his knowledge of clients' finances to lure unsophisticated investors into high-risk bets for purported development ventures that he owned or controlled, and stocks.

The Attorney General's separate criminal indictment includes two counts of Money Laundering, two counts of Scheme to Defraud, two counts of Securities Fraud under the Martin Act, and 29 counts of Grand Larceny. Van Zandt faces up to 25 years in prison.

"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," said Attorney General Schneiderman."My office is committed to rooting out these kinds of scams, and bringing justice to defrauded investors."

This case stems from an investigation initiated by the Attorney General's Investor Protection Bureau (IPB) in 2010. In 2011, IPB, having cause to suspect securities fraud, froze certain assets of Van Zandt and other defendants, and continued its inquiry culminating in this legal action.

Over the last decade, Van Zandt, of the Bronx, perpetrated a scheme to defraud more than 250 investors out of over $35 million.

The lawsuit also names Kimmarie Gervasi Van Zandt, 20 companies that were under Van Zandt’s control and were involved in the scheme, including Van Zandt Agency, Inc., Burke & Grace Avenue Corp., Empire Builders of New York, Corp., MIG of Westchester Inc., Rockwell Consulting of NY Inc., and R.S. Enterprises of New York Inc., and two relief defendants who received funds fraudulently transferred from Van Zandt’s companies.

Even in declining markets, Van Zandt frequently promised investors 7-12 percent returns, or quick return of principal. He also falsely claimed that funds would be used to invest in securities, or to finance the construction secured by mortgages, when they were not. In fact, he misappropriated investor funds for personal use.

Defendants Van Zandt and Gervasi Van Zandt failed to file and maintain the necessary registrations of their companies with the Attorney General's Investor Protection Bureau as securities issuers, or of securities salesmen for those companies, as required by New York's Martin Act.

The defendants have been charged civilly with materially false or misleading representations under New York securities law statutes, the Martin Act, and common law fraud, Persistent Fraud and Illegality under the Executive Law, and Failure to Register. The Attorney General seeks restitution on behalf of investors of over $35 million, including the $4.6 million being sought in the Attorney General’s criminal prosecution of Van Zandt.

The criminal charges are merely accusations and the defendant is presumed innocent until and unless proven guilty in a court of law.

The civil case is being handled by Assistant Attorneys General Elizabeth Block and Verle Johnson of the Investor Protection Bureau, under the supervision of Bureau Chief Marc B. Minor and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez. The investigation was handled by Investigator Edward Ortiz and Analyst Justin Tatham, under the supervision of Supervising Investigator Kenneth Morgan, Deputy Chief Investigator John McManus, Deputy Chief Investigator John Reidy, and Chief Dominick Zarrella.