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Gary Scheer, managing member and sole investment adviser representative of Retirement Financial Advisors, LLC in Morristown, recommended and sold unregistered securities to at least 50 investors from 2010 through 2018, state Attorney General Gurbir S. Grewal said.
He made more than $600,000 in commissions on the sales, which involved franchises, pension income streams, real estate development and mortgages, among other investments, Grewal said.
Six of the investments that Scheer recommended turned out bogus, draining customers’ hard-earned savings, the attorney general said.
Scheer steered his customers, for example, into the unregistered “Woodbridge Securities,” a $1.2 billion Ponzi scheme that defrauded 8,400 real estate investors nationwide, Grewal said.
He also was involved in “Northridge Securities,” an unregistered “fix-and-flip” real estate scam whose principal and entities were recently charged by the U.S. Securities and Exchange Commission with running a $47 million Ponzi scheme, the attorney general said.
Scheer continued to advise customers to purchase unregistered securities even as regulators scrutinized others he’d pushed, Grewal said.
“Investment advisers are expected to serve the interests of their customers with undivided loyalty, and not exploit them for financial gain,” the attorney said.
Scheers actions “resulted in serious financial consequences for investors who are now left with the devastating impact of trying to recover their investments,” added Paul R. Rodríguez, New Jersey’s acting Division of Consumer Affairs director.
Scheer "breached his fiduciary duty and violated New Jersey securities law," according to a "summary penalty and revocation ordered" issued Tuesday by the state Bureau of Securities, Grewal said.
Investor restitution efforts were underway by several federal and state agencies, he noted.
The investigation was conducted by the state Bureau of Securities Deputy Chief Amy Kopleton and Investigator Delfin Rodriguez.
Assistant Attorney General Brian F. McDonough, Deputy Attorney General and Section Chief Victoria Manning and Deputy Attorney General Nicholas Dolinsky of the Securities Fraud Prosecution Section in the Division of Law are representing the bureau.
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CHECK BEFORE YOU INVEST: Potential investors can obtain information, including the registration status and disciplinary history of any financial professional doing business to or from New Jersey by contracting the state Bureau of Securities toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600, or by visiting the Bureau's website.
Investors can also contact the bureau for assistance or to raise issues or complaints about New Jersey-based financial professionals or investments, Grewal said. The agency’s job is to protect investors from investment fraud while regulating the securities industry in the state, he said.
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