Is this Impressive - $658M Ponzi Scheme

[Chris Seveney]

First let me start out by saying I have a hard enough time remembering the truth, but wow - this was one heck of a ponzi scheme. Why am I posting this:

1. This was done in 2018 - 2022, when real estate was doing very well. So it does not matter during good or bad times, bad actors are bad actors.

2. This was not a new company. According to Linkedin and the profile of one of the individuals Rey Grabato, the company was founded in 2006, NRIA has grown to be one of the nation’s leading specialists in institutional-caliber private real estate investment management with over $1.25B AUM*, focusing on luxury townhome, condominium and multifamily acquisition and development in many supply constrained, high barrier-to-entry markets along the east coast.

So what could have investors done in this instance? Honestly most likely nothing. Sometimes it is impossible to determine if a company has a bad actor, and their intentions may not have started that way and something could have changed. 

One final comment I want to make, not every deal that goes bad is fraud or a ponzi scheme. 

District of New Jersey | Leader of Real Estate Investment Firm Admits Role in $658 Million Ponzi Scheme and Multimillion-Dollar Tax Evasion Conspiracy | United States Department of Justice

[Taylor L.]

In looking at the allegations I'd say the primary red flag is the use of the word "guaranteed" when discussing returns.

[Paul Azad]

thanks for posting this, it's amazing - basically took investors money and paid out as dividends to old and existing, just like Bernie Maddoff did, he owned very little unprofitable real estate simply as a fake patina of a business to drive the LPs to invest 

from pg 3 of indictment
"Each investor in the Fund also received a written guarantee from NRIA of an annual return of at least
twelve percent per year for a period of five years plus a full return of their investment, or else any
shortfall would be paid by NRIA."

pg 10

"From the Fund’s inception in or around February 2018, the Defendants, both
individually and through project managers at NRIA, represented to investors and prospective investors
that NRIA was a solvent, profitable business that generated significant cash flow, separate and apart
from investor fundraising. In reality, throughout its history, NRIA generated little or no profits from its
developments, and in many cases lost money."

p16  

"Salzano used this money, much of which was traceable to Fund investors, for an array
of lavish personal expenses, including erectile dysfunction medications, expensive dinners, extravagant
birthday parties, and payments to Individual-4 (Salzano’s wife), Individual-5 (with whom Salzano had
a romantic relationship), and Individual-7 (Salzano’s ex-wife), none of whom worked at NRIA in any
capacity."

the rest of the 44 pages just itemize the crimes, he made fraudulent documents/forgeries etc, to get 2000 investors to put in about 658 million over 4-5 yrs, WOW, i wonder how many other similar PONZIs have been running all around the country, particularly in the growthier multi-family syndications

[Chris Seveney]

@Taylor L.

Exactly. For anyone new and Learning - anytime anyone says anything that insinuates a guarantee or provides a guarantee run as far away as possible

[Ronald Rohde]

the ED medication was pure spite to embarrass the guy, no way he's spending a majority of his funds on that.

[Nate Marshall]

Madoff is in his grave going "Hold my beer". 

There are likely more ponzis or soon to be ponzis than we know. A lot of fraud. Some was likely intentionally. Enron was legit at one time, Theranos had good intentions buy you can barely get hydration from protection from a drop of blood when donating plasma

Due diligence means I don't know maybe visiting the properties to see if they exist or not. If you have the money to invest you should also have the money to do site visits. 

[Evan Polaski]

@Chris Seveney, the fun of NRIA.  They got exposed because they were running national TV ads, and a whistleblower saw one.  This was a financial crimes convict, that heard the ads and knew enough about private markets to think: why would a group with such a strong track record be offering above market returns to LPs.  

I actually had a call with one of NRIA's project managers back in 2020.  I didn't invest because the "project manager" was late (significantly) to scheduled call and he seemed very unclear on investment structure.  He claimed he was a developer that was actually working on the deals, and all the NRIA Investor Relations were really just construction guys pulling double duty on the deals and investor calls.  That smelled off.  But the returns did continue to pique my interest.  Thankfully before I ended up pulling the trigger, someone shared the whistleblower article on these forums...

[Nate Marshall]

Quote from @Evan Polaski:

@Chris Seveney, the fun of NRIA.  They got exposed because they were running national TV ads, and a whistleblower saw one.  This was a financial crimes convict, that heard the ads and knew enough about private markets to think: why would a group with such a strong track record be offering above market returns to LPs.  

I actually had a call with one of NRIA's project managers back in 2020.  I didn't invest because the "project manager" was late (significantly) to scheduled call and he seemed very unclear on investment structure.  He claimed he was a developer that was actually working on the deals, and all the NRIA Investor Relations were really just construction guys pulling double duty on the deals and investor calls.  That smelled off.  But the returns did continue to pique my interest.  Thankfully before I ended up pulling the trigger, someone shared the whistleblower article on these forums...

[Sebastian Bennett]

More heads should be rolling here.....the son of the guy pulling the strings is the CEO of US Construction who is a heavy hitter in the luxury development business. US Construction was receiving money from NRIA. This is no coincidence. The son must've known Nick with his criminal past should not be running NRIA.

[Nate Marshall]

Quote from @Sebastian Bennett:

More heads should be rolling here.....the son of the guy pulling the strings is the CEO of US Construction who is a heavy hitter in the luxury development business. US Construction was receiving money from NRIA. This is no coincidence. The son must've known Nick with his criminal past should not be running NRIA.

You'd be surprised at what people can be convicted of and not be considered a bad actor by the SEC though.