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Post date: June 20 2016

A.G. Schneiderman Announces Indictment Of Albany Insurance Broker For Million-Dollar Securities Fraud Scheme

Lawrence D. Rosenbaum, Chairman Of Saratoga Cheese Corporation, Allegedly Fraudulently Solicited Over $1 Million From More Than 10 Investors And Diverted Their Monies For Personal Use 

Defendant Faces Up to 15 Years In State Prison If Convicted On All Counts 

ALBANY – Attorney General Eric T. Schneiderman today announced the arraignment of Lawrence D. Rosenbaum, 64, of Albany, New York, on a 27-count indictment charging him with fraudulently soliciting over $1 million from more than 10 investors to invest in the production of kosher and halal cheese in upstate New York and bio-energy companies he claimed would provide services in New York State and Costa Rica.  Rosenbaum is accused of luring investors, many of whom he had established relationships with over his decades-long career as an insurance broker, and then diverting their monies for his own personal use, including funding a $1,000-per-month apartment in Costa Rica for several years.  Rosenbaum is charged with Grand Larceny and Securities Fraud, among other charges, and if convicted faces up to 20 years in prison. 

“Investors should be able to trust that their hard-earned money is being is properly managed and is not being pocketed for personal use,” said Attorney General Schneiderman. “My office takes allegations of securities fraud seriously and we will continue to advocate for victims and hold fraudsters accountable.” 

According to statements made by prosecutors in court today, Rosenbaum is an insurance broker who owned and operated Rosenbaum Financial Services in Albany, New York for decades. In approximately 2001, Rosenbaum formed a limited liability company, Saratoga Cheese Company LLC, which he claimed would develop a halal and kosher cheese plant in the Capital Region, using local dairy products and a cheese coagulator that he had learned about when he was an exchange student in Germany decades earlier.  In 2006, Rosenbaum reformed this entity as Saratoga Cheese Corporation, with the stated purpose of developing a cheese manufacturing facility in Cayuga County.  

Also according to prosecutors, Rosenbaum created additional related entities, including Saratoga Milk Corporation, which he claimed would oversee the milk production for his cheese facility, and Saratoga Bio Gas Corporation and Bioenergies of the Americas, which he claimed would develop alternative energy uses in New York and Costa Rica for the waste produced by cows in the cheese and milk facilities.  

According to prosecutors, between April 2006 and October 2012, Rosenbaum allegedly solicited over $1 million in private investments in Saratoga Cheese Corporation and its related entities by promising investors substantial returns and shares of stock in his corporations.   Rosenbaum then allegedly used his various corporate entities as personal bank accounts, diverting over $600,000 to himself by writing checks payable to himself, transferring funds to other accounts, and making numerous cash withdrawals, including withdrawals in both the Albany area and in Costa Rica.  According to prosecutors, some of the stolen money was used to travel to and from Costa Rica, where for years he paid for a $1,000-per-month apartment.   None of the production or processing facilities for which Rosenbaum solicited funds were ever built.  

Prosecutors also allege that Rosenbaum failed to file New York State personal income tax returns since at least 2008, thereby evading taxes on the money he diverted to himself over the six-year scheme.   

The Attorney General’s indictment charges Rosenbaum with one count of Grand Larceny in the Second Degree (a class C felony), eight counts of Grand Larceny in the Third Degree (a class D felony), ten counts of Securities Fraud under the Martin Act (a class E felony), one count of Scheme to Defraud in the First Degree (a class E felony), five counts of Repeated Failure to File Personal Income Tax Returns under the New York Tax Law (a class E felony), and two counts of Criminal Tax Fraud in the Fourth Degree (a class E felony).  

Rosenbaum was arraigned today in Albany County Court before the Honorable Peter A. Lynch and he is currently being held on $250,000 in bond or cash bail.   The charges against the defendant are allegations and he is presumed innocent until proven guilty in a court of law.   

The Office of the Attorney General thanks the New York State Tax Department’s Criminal Investigations Division for its invaluable assistance on this case.

This conviction is the latest in a series of securities fraud prosecutions brought by the Attorney General’s Criminal Enforcement and Financial Crimes Bureau.   In February 2016, the Bureau convicted Albany broker Frederick Monroe for running a decade-long, $5 million Ponzi scheme; Monroe was sentenced to 5 1/3 to 16 years in prison.  Also in February 2016, the Bureau convicted William Vogt on felony charges in both Ulster County and New York County for posing as an internationally renowned fashion designer named “Bill Bolland” to lure his victims into making more than $400,000 in investments; Vogt is scheduled to up to 6 to 12 years in prison this July. In December 2015, following a two-week jury trial, the Bureau convicted Moazzam Ifzal Malik, a.k.a. Mark Malik, on a 28-count indictment for stealing over $800,000 from investors by fraudulently soliciting them to invest in his fake hedge funds; Malik was sentenced to 5 to 15 years in prison.   In January 2015, the Bureau convicted broker Khawaja Saud Masud for stealing over $1 million from a retired pediatrician and his wife by fraudulently soliciting investments in his purported hedge fund, RKS Capital, LP.  In November 2014, the Bureau convicted Robert H. Van Zandt on a 33-count indictment for operating a $4.8 million Ponzi scheme; Van Zandt was sentenced to 3 2/3 to 11 years in prison.The criminal case against Rosenbaum is being handled by Assistant Attorneys General Benjamin S. Clark and Philip V. Apruzzese of the Criminal Enforcement and Financial Crimes Bureau.  The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chief Stephanie Swenton. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan. 

The Attorney General’s investigation was conducted by Investigator Dennis Churns and Deputy Chief Antoine Karam. Forensic accounting was performed by Meaghan Scovello. The Investigations Bureau is led by Chief Dominick Zarrella.  The Forensic Audit Section is led by Chief Auditor Edward J. Keegan.