December 11, 2023

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A former New Jersey broker who spent years at 14 different firms will have to pay more than $1 million in damages to elderly clients he defrauded through an investment scheme.

Joseph Orazio DeGregorio of Freehold, New Jersey, agreed on May 5 to repay four victims $1,084,500 in ill-gotten gains that he had promised to use in Personal Expenses and Gambling. The SEC, which oversees the wealth management industry, accused de Gregorio of telling clients between October 2015 and March 2021 that he would put their money in promissory notes that guaranteed a 13% return. According to the SEC, the notes never existed.

The SEC also said DeGregorio committed to investing clients’ funds in two private companies: Blue Omega, an alleged cybersecurity firm, and Globotix, an alleged financial advisory firm. Instead, the funds went to entities that DeGregorio owned and had no legitimate business activities.

“DeGregorio also used a fraction of investor funds to pay investors alleged ‘interest’ on fake promissory notes, thereby creating the misleading impression that the notes were genuine and encouraging investors to make additional investments with him,” According to the SEC complaint.

DeGregorio’s victims ranged in age from 78 to 94, the SEC said. DeGregorio’s attorney, Nicholas Kaizer, said his client deeply regrets the scheme.

“He wants to pay back every penny he took,” Kaiser said. “He regrets the great harm he has caused his clients and wishes to be fully compensated as soon as possible.”

DeGregorio was sentenced to a separate one-year sentence in September 2022 after pleading guilty in a related criminal case. He has worked for 14 different firms in approximately 14 years in the brokerage industry, According to BrokerCheck database Maintained by the Financial Institutions Regulatory Authority, the broker-dealer industry’s self-regulatory body. Most of them are based in New Jersey or New York, and many have similarly spotty records on BrokerCheck.

DeGregorio’s latest employer, Garden State Securities in Red Bank, New Jersey, has 27 client complaints and other disclosures on its record.

DeGregorio himself was the subject of 15 disclosures. Many of these led to settlements.

For example, a dispute over alleged unauthorized transactions was settled in October 2007 for $96,400. In September 2017, he was suspended after failing to pay an arbitration award in a dispute with one of his former firms.

Douglas Schulz, president of Invest Securities Consulting and a longtime FINRA arbitrator, said de Gregorio should have been brought to the attention of regulators sooner because of his past.

“All the while, brokers switching broker-dealers on a regular basis over a period of two years or less is definitely a red flag,” Schulz said. “Firms that hire someone who by definition has a checkered past should be asked To: Why would you hire someone who changes companies more often than I change underwear?”