The Division of Law of the New Jersey Bureau of Securities has filed suit and taken administrative action against George J. Bussanich, 55, of Park Ridge and his son, George Bussanich, 34, of Upper Saddle River alleging they engaged in securities fraud in connection with sales to 26 New Jersey of $3.5 million of unregistered notes. The Bussanichs allegedly used the investor funds for their own personal enrichment. New Jersey also alleged that George J. Bussanich also provided funds to various members of his family as well. New Jersey alleged that investor funds were used to purchase three homes and exotic vehicles including two Maseratis and a Ferrari.
According to New Jersey, investors were told that their money would be used for Metropolitan Ambulatory Surgical Center, LLC (Metro Ambulatory) and George J. Bussanich’s other companies. Contrary to its name, Metro Ambulatory is not a surgical center but rather a holding company controlled by George J. Bussanich. New Jersey stated that the notes sold to investors purchased carried a 6% to 8% annual rate of return.
Acting New Jersey Attorney General John J. Hoffman said “This was not a legitimate investment gone bad but a scam by the defendants to line their pockets and live the high life.” New Jersey filed an Order to Show Cause with the Court asking the Court to freeze the assets of the defendants, appoint a receiver to take title to and possession of defendants’ property, and review all financial books and records.
According to New Jersey, George Bussanich previously worked for an investment firm that fired him upon discovering unreported outside activities, including the sale of the unregistered promissory notes. According to the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck, from October 2006 through December 2011, George J. Bussanich was registered with Kovack Securities, Inc. (Kovack Securities). On July 5, 2013, FINRA suspended Bussanich for thirty days and fined him $5,000 for participating in an outside business activity without having sought prior approval from the Kovack Securities. In September 2013, FINRA opened an investigation into Bussanich’s other undisclosed outside business activities and/or private securities transactions away from Kovack Securities. However, Bussanich failed to comply with FINRA’s requests for information and refused to provide testimony. In November 2013, FINRA permanently barred Bussanich from the securities industry.
The allegations brought against Bussanich constitute allegations of “selling away” activity. Selling away occurs when a broker solicits securities, promissory notes, or other investment opportunities without the prior approval and notification of the broker’s firm. A broker’s private financial arrangements are often unregistered securities and frequently involve fraudulent activity. Victims of selling away violations are often unaware that anything is wrong until the promised return is not paid or the broker is sanctioned by securities authorities.
Brokerage firms typically deny liability for selling away claims by claiming ignorance to the transactions. However, ignorance does not exonerate a brokerage firm’s failure to supervise their employees’ misconduct. The attorneys at Gana Weinstein LLP are experienced in investigating claims concerning private loans and securities dealings. Our consultations are free of charge and the firm is only compensated if you recover.