2 South Florida men barred from securities sales were in on a $2 million fraud, SEC says
Two men from Boca Raton with a history of securities fraud made over $500,000 as part of a multi-million-dollar scheme headed by a Coral Springs man, the Securities and Exchange Commission charged in a complaint last week.
The SEC’s filing in Fort Lauderdale federal court accused Joseph DeVito and Dean Esposito of soliciting investors for Property Income Investors (PII) as they “deceived investors by concealing their prior disciplinary histories, including the fact that each was subject to two prior Commission permanent injunctions, as well as associational and penny stock bars.”
After the SEC accused each in 2015 of operating a boiler room of telephone marketers that helped them defraud 400 investors out of $11 million, each got “a full associational bar and a penny stock bar” and remains “subject to an outstanding judgment to the Commission in excess of $2.5 million.”
Esposito and DeVito each got hit with a $300,000 civil money penalty. They , along with their companies Espo Consulting, DJC Consulting and J & D Marketing were responsible for $2,128,000 disgorgement and $108,457 in interest.
To hide those histories to PII investors, the SEC says, DeVito substituted his middle name to go by “Salvatore DeVito” and Esposito dropped his surname to go by “Dean Anthony.”
There’s more “aka” when talking PII. Anthony Nicolosi, PII’s top sales agent, according to the previous SEC complaint involving this scam, spent most of his life as “Anthony Peluso.” But once Anthony Peluso was barred from associating with any member of National Association of Securities Dealers for lying to customers, Nicolosi legally changed his name to obscure his past to internet searchers.
READ MORE: South Florida man used his real estate company to steal $1.1 million, the SEC says
Coral Springs’ Larry Brodman still has his name and his home. Brodman started PII and got hit with a judgment after the previous SEC complaint accused him of stealing $1.1 million of the approximately $9.06 million raised from 156 investors in 26 states.
The sales pitch by the men with two names
From January 2016 through September 2020, PII salesmen such as DeVito and Esposito told investors, the complaints said, that the common stock or “Membership Interests” they were selling would go toward buying “turnkey multifamily properties in South Florida, which would then be renovated, rented to tenants and eventually sold.”
PII did buy 12 properties, the SEC said, and sold three but didn’t pass the profits along to investors as promised. So, who got paid? Brodman and the brokers, unlicensed though they were, the SEC said.
“Based on the disclosures in the offering materials, Brodman was entitled to receive, at most, a total of approximately $312,000 as his share of the profits from the businesses,” the SEC said. “However, even after offsetting this $312,000, Brodman misappropriated approximately $1.12 million in investor funds, which was diverted into his personal account.”
The SEC figured Brodman and PII misappropriated or misused $2.44 million.
Investors were told licensed brokers would receive in commissions no more than 10% of the proceeds raised. But, the SEC noted, none of the brokers, including DeVito, Esposito and Nicolosi, were licensed or associated with registered broker-dealers.
And, the SEC says, they got more than 10% of the proceeds as a group. Individually, the complaint against DeVito and Esposito says, they made $246,750 and $245,750, respectively, in commissions.
After the June 14, 2021, judgment against PII, Brodman and Nicolosi, seven properties that PII bought were sold by a receiver as part of a liquidation.
This story was originally published April 20, 2022 at 7:42 AM.
