Barred Stockbroker Charged With Five Counts of Wire and Mail Fraud. Did Any Victim Do Any Due Diligence?

August 18, 2022

In today's blog, author Bill Singer is taking advantage of a golden opportunity to show the investing public how a minimal amount of due diligence involving only a few minutes (at most) may reveal inconsistencies between what an investing professional is presenting to you as his/her bona fides. In many cases, there may be reasonable explanations as to various dates and prior employment. In other cases, you may come away with more questions and few answers. Regardless, not enough investors kick the tires and take a test drive. Hopefully, this blog will serve as an eye-opener.

A Quick First Search

Just by way of an exercise -- by way of making a point -- let's visit  FINRA Disciplinary Actions Online https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions-online and fill in the field for "Individuals" with the last name of "Mastroianni." After agreeing to FINRA's Terms of Use and clicking on SUBMIT we get one -- and only one -- result. 

2016 FINRA AWC: Bar

The search result in FINRA's Disciplinary database discloses a 2016 regulatory settlement.
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Anthony Mastroianni, Jr. submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Anthony Mastroianni, Jr.,  Respondent (FINRA AWC 2015047001401 / December 8, 2016)
https://www.finra.org/sites/default/files/fda_documents/2015047001401
_FDA_JG411993%20%282019-1563176962814%29.pdf

The AWC asserts that Anthony Mastroianni, Jr. was first registered in 2001 and was associated, at times, with J/P. Turner & Company and Alexander Capital, L.P..  In accordance with the terms of the AWC, FINRA imposed upon Mastroianni Jr. a Bar from associating with any FINRA member in any capacity. As alleged in part in the AWC:

On October 31, 2016, FINRA staff sent a request to Mastroianni for on-the-record testimony pursuant to FINRA Rule 8210 related to allegations that, in or around 2011 through 2013, he engaged in excessive trading or churning in an elderly customer's account maintained at J.P, Turner and then at Alexander Capital while Mastroianni was associated with those member firms, and borrowed funds totaling $90,000 from that customer and an additional customer in four transactions ,without notifying his firms or obtaining their approval.

As stated in his Mastroianni's counsel's email to FINRA staff on November 8, 2016, and by this agreement, Mastroianni acknowledges that he received FlNRA's request and will not appear for on-the-record testimony at any time. By refusing to appear for on-the-record testimony as requested pursuant to FINRA Rule 8210, Mastroianni violates F?NRA Rules 8210 and 2010. 

Just by way of another exercise -- by way of making another point -- let's visit FINRA's Arbitration Awards Online at https://www.finra.org/arbitration-mediation/arbitration-awards, and, after agreeing to the "Terms of Use," let's enter the name "Mastroianni," and then click on SEARCH. Simple enough, right? So . . . what results did that one-name search produce? Well, three "Award Documents." Let's quickly see what's what.

2017 FINRA Arbitration Award

Our first hit is 2017 FINRA Arbitration Award in which a Mastroianni is named as a Respondent.
In the Matter of the Arbitration Between Roy N. Gruenburg, Claimant, v. J.P. Turner & Company, L.L.C,  Alexander Capital, L.P., and Anthony Mastroianni, Jr., Respondents (FINRA Arbitration Award 16-01776 / August 28, 2017)
https://www.finra.org/sites/default/files/aao_documents/16-01776.pdf 
As set forth in part in the "Case Summary":

Claimant asserted the following causes of action: churning; unsuitable investment recommendations; breach of fiduciary duty; violation of the Michigan Uniform Securities Act of 2002; breach of contract; conversion; violations of FINRA Rule 3240; negligent supervision; and liability under agency law, respondeat superior, and/or as statutory control persons. The causes of action related to Claimant's allegations that Mastroianni engaged in "in and out" trading of the same unspecified speculative stocks in Claimant's account for the sole purpose of maximizing commissions and took two personal "loans" from Claimant. Claimant further asserted that JPT and Alexander did not properly supervise Mastroianni. 

Claimant Gruenberg sought $750,000 in compensatory damages from JP Turner and Mastroianni, jointly and severally; and Claimant further sought $1,250,000 in damages from Alexander Capital and Mastroianni, jointly and severally. Claimant settled his claims and dismissed same against JP Turner and Alexander Capital. Following a FINRA Arbitration Hearing, the FINRA Arbitration Panel  rendered this Award:

1. Respondent Anthony Mastroianni, Jr. is liable for and shall pay to Claimant Roy N. Gruenburg the sum of $540,000.00 in compensatory damages minus any amount recovered from Alexander Capital, L.P. 

2. Counsel for Claimant Roy N. Gruenburg shall provide an affidavit to Respondent Anthony Mastroianni, Jr. indicating the amount recovered from Alexander Capital, L.P. 

3. Other than forum fees which are specified below, the parties shall each bear their own costs and expenses incurred in this matter. 

4. Any and all claims for relief not specifically addressed herein, including punitive damages, sanctions, and attorneys' fees, are denied.

May 2020 FINRA Arbitration Withdrawal/Default

Our second hit is another FINRA Arbitration in which Mastroianni is named as a Respondent.
In the Matter of the Arbitration Between Terry McCay Frieda McCay Terry McCay & Frieda C. McCay Rev Trust, Claimants, v. Stalin Alfredo Cruz, Joseph Stone Capital L.L.C., Damian Maggio, Anthony Mastroianni, Anthony Pace, James Vincent Pardy, John F. Riccardi, Neal Scott, Windsor Street Capital, LP, and Sebastian Wyczawski Respondents  (FINRA Arbitration Award 18-02049 / May 20,, 2020)
https://www.finra.org/sites/default/files/aao_documents/18-02049.pdf, we have the reference to Respondent Anthony Mastroianni but without the additional qualifier of "Jr." So, this could be a different Mastroianni from the one referenced in the two FINRA Arbitration Awards cited above, or it could be the same individual. for our purposes it's of no consequence, and all the more so because:

On April 23, 2019, Claimants filed a notice withdrawing their claims against JSC, Wyczawski, Pardy and Maggio with prejudice. 

. . .

[T]he Panel issued an Order requesting an update from Claimants as to the status of WSC, Riccardi, Mastroianni and Cruz in the case. 

On February 5, 2020, Claimants filed a Motion to Commence Default Proceedings as to WSC, Mastroianni, Cruz and Riccardi. On February 24, the Director of FINRA Dispute Resolution Services granted Claimants' Motion for Default with respect to to WSC, Mastroianni and Riccardi ("Defaulting Respondents") pursuant to Rule 12801 of the Code. The Director denied the motion with respect to Cruz. Accordingly, all claims against the Defaulting Respondents will proceed under a separate FINRA arbitration case. 

On May 6, 2020, Claimants filed a notice withdrawing their claims against Cruz with prejudice. 

June 2020 FINRA Arbitration Default Award

Our third hit is another FINRA Arbitration in which Mastroianni is named as a Respondent, who appears to have defaulted.
In the Matter of the Arbitration Between Terry McCay Frieda McCay Terry McCay & Frieda C. McCay Rev Trust, Claimants, v. Anthony Mastroianni, Jr., John F. Riccardi, Jr., and Windsor Street Capital, LP, Respondents  (FINRA Arbitration Award 20-00620/ June 25, 2020)
https://www.finra.org/sites/default/files/aao_documents/20-00620.pdf
As set forth in part in the "Case Summary":

Claimants asserted the following causes of action: common law fraud; breach of fiduciary duty; negligence (gross negligence); breach of contract; unsuitability; overconcentration; and negligent supervision. The causes of action relate to the following securities: Carter Validus Mission Critical REITS (CVMC REIT II), International Metal, SignPath Pharma, and Fifth Street Finance Corp, Inc.

Claimants sought $250,000 in compensatory damages, $250,000 in punitive damages, and interest, costs, and fees. Respondents did not file Answers or appear, and were deemed in Default. Following a FINRA Arbitration Hearing, the sole FINRA Arbitrator rendered this Award:

1. Respondents are jointly and severally liable for and shall pay to Claimants the sum of $250,000.00 in compensatory damages. 

2. Respondents are jointly and severally liable for and shall pay to Claimants interest on the above-stated sum at the rate of 6% per annum from June 15, 2016 until the Award is paid in full. 

3. Any and all claims for relief not specifically addressed herein, including any requests for punitive damages and attorneys' fees, are denied.

2022 DOJ Complaint: Wire/Mail Fraud

All of which brings us to August 17, 2022, when Anthony Mastroianni, Jr. was charged with five counts of wire fraud and mail fraud. Barred Broker Dealer Charged with $1 Million Investment Scheme and Fraudulently Obtaining $96,000 Cares Act Loan (DOJ Release)
https://www.justice.gov/usao-nj/pr/barred-broker-dealer-charged-1-million-investment-scheme-and-fraudulently-obtaining-96000As alleged in part in the DOJ Release:

In 2016, Mastroianni consented to being permanently barred by the Financial Industry Regulatory Authority (FINRA), which prohibited him from acting as a broker or intermediary in securities transactions. Despite that debarment, from January 2017 to August 2022, Mastroianni defrauded victim investors, many of whom were senior citizens, by falsely and fraudulently claiming that he would generate large investment profits for them through his company, Global Business Development & Consulting Corp. Instead of investing the money as promised, Mastroianni used victim funds on personal expenses, including household rent, automobile payments, credit card bills, and cash withdrawals. Mastroianni defrauded 10 victims out of $1 million.

Mastroianni also exploited the ongoing global pandemic by submitting a false and fraudulent application to obtain $96,300 from a federal COVID-19 emergency relief loan meant for distressed small businesses. As with his investment fraud scheme, Mastroianni misused the loan proceeds to make personal purchases and cash withdrawals.

If we click on the link to the Complaint appended to the DOJ Release
https://www.justice.gov/usao-nj/press-release/file/1526951/download, we come upon, in part, the following allegations (and let's be clear that the Complaint is merely alleging facts and that Mastroianni is presumed innocent unless and until proven guilty in a court of law):

Victim-1 

8. MASTROIANNI originally contacted Victim-1, who is currently 82 years old, in or before 2015. Victim-1 invested in three or four stocks through Mastroianni at an investment company where MASTROIANNI previously worked. 

9. In approximately 2017, MASTROIANNI contacted Victim-1 about additional investments. MASTROIANNI claimed that he was raising millions of dollars to fund lending agreements with banks on short-term loans. MASTROIANNI claimed that he would pool money from multiple investors to make loans to banks, sometimes just overnight and sometimes for a few weeks at a time, and that the banks would pay significant interest on those short-term loans. In fact, no such pooled investment existed. 

10. MASTROIANNI sent Victim-1 a promissory note in furtherance of the scheme, dated September 18, 2017. The note documented a $12,500 transaction between Victim-1 and Global. Mastroianni, on behalf of Global, signed the document representing that Global would repay the $12,500 with interest at a rate of 50% per year.representing that Global would repay the approximately $10,000 with interest at a rate of 100% per year. In the same email, MASTROIANNI attached a pre-made FedEx label from Victim-2 to MASTROIANNI. 

11. On or about September 22, 2017, in reliance on the promissory note and MASTROIANNI's false and fraudulent representations, Victim-1 wired approximately $12,500 to Global's bank account at Bank-1, which MASTROIANNI controlled. MASTROIANNI was the only authorized signatory on the Global bank account at Bank-1. 

12. MASTROIANNI sent Victim-1 another promissory note in furtherance of the scheme, dated July 26, 2019. The note documented a $5,000 transaction between Victim-1 and Global. MASTROIANNI, on behalf of Global, signed the document representing that Global would repay the $5,000 with interest at a rate of 80% per year. 

13. On or about July 29, 2019, in reliance on the promissory note and MASTROIANNI's false and fraudulent representations, Victim-1 wired approximately $5,000 to Global's bank account at Bank-2. MASTROIANNI was the only authorized signatory on the Global bank account at Bank-2. 

14. MASTROIANNI sent Victim-1 additional promissory notes for more money purportedly to be invested the same way. In reliance on those promissory notes and MASTROIANNI's f'.alse and fraudulent representations, Victim-1 wired MASTROIANNI a total of at least $88,500, all of which Victim-1 believed to be directed into the same pooled investment structure. 

15. Instead of investing Victim-l's funds as he represented, MASTROIANNI used the funds, along with other money in Global's accounts, on personal expenses and cash withdrawals. 

Victim-2 

16. Victim-2, who is currently 67 years old, met MASTROIANNI through a broker ("Broker-1") who previously worked with MASTROIANNI. 

17. Victim-2 invested in securities and other private equity investments through Broker-1, and believed that MASTROIANNI was Broker-l's partner. 

18. In approximately July 2019, MASTROIANNI called Victim-2 directly, offering him a new investment opportunity in "factoring," or buying accounts receivable from small businesses like doctor's offices as part of a larger pool of investors, which would result in a high rate of return. In fact, no such pooled investment existed. 

19. On or about September 10, 2019, MASTROIANNI emailed Victim-2 attaching a promissory note in furtherance of the scheme that was nearly identical to the promissory notes MASTROIANNI sent to Victim-1. The note, dated on or about September 10, 2019, documented an approximately $10,000 transaction between Victim-2 and Global. Mastroianni, on behalf of Global, signed the document 

20. On or about September 10, 2019, in reliance on the promissory note and MASTROIANNI's false and fraudulent representations, Victim-2 mailed via FedEx a check for $10,000 from Michigan to MASTROIANNI in New Jersey. 

21. On or about September 11, 2019, MASTROIANNI deposited or caused to be deposited Victim-2's check into Global's bank account at Bank-2.

22. MASTROIANNI sent Victim-2 another promissory note in furtherance of the scheme, dated January 8, 2021. The note documented a $40,000 transaction between Victim-2 and Global. Mastroianni, on behalf of Global, signed the document representing that Global would repay the $40,000 with interest at a rate of 175% per six months. 

23. On or about January 8, 2021, in reliance on the promissory note and MASTROIANNI's false and fraudulent representations, Victim-2 mailed via FedEx a check for $40,000 from Michigan to MASTROIANNI in New Jersey. 

24. On or about January 11, 2021, MASTROIANNI deposited or caused to be deposited Victim-2's check into Global's bank account at Bank-3. MASTROIANNI was the only authorized signatory on the Global bank account at Bank-3. 

25. MASTROIANNI sent Victim-2 additional promissory notes for more money purportedly to be invested the same way. In reliance on those promissory notes and MASTROIANNI's false and fraudulent representations, Victim-2 sent to MASTROIANNI approximately $160,300, all of which Victim-2 believed to be directed into the same pooled investment structure. 

26. Instead of investing Victim-2's funds as he represented, MASTROIANNI used the funds, along with other money in Global's accounts, on personal expenses and cash withdrawals. 

27. In or around mid-2021, Victim-2 began asking MASTROIANNI to cash out some of his investment, which MASTROIANNI promised he would do. Mastroianni made several excuses, but never provided Victim-2 with any funds. 

28. In or around June 2022 and July 2022, during the course of lawfully recorded phone calls with Victim-2, MASTROIANNI made false and fraudulent representations that Victim-2 would be receiving a $50,000 check representing proceeds of his investments. Victim-2 still has not received any check or money transfer from MASTROIANNI or Global.

2022 SEC Complaint

In addition to DOJ's criminal case, we have a Complaint filed in the United States District Court for the District of New Jersey, the SEC alleged that Mastroianni and Global violated the antifraud provisions of the federal securities laws
https://www.sec.gov/litigation/complaints/2022/comp-pr2022-147.pdf. As alleged in part in :SEC Charges Barred Broker and His Company with Defrauding Older Americans / Defendant Promised Hefty Returns while Spending Investors' Money on Luxury Goods" (SEC Release)
https://www.sec.gov/news/press-release/2022-147 In:

[M]astroianni, a New Jersey resident, sold at least 11 investors promissory notes issued by his company, Global, beginning as early as 2017. The complaint alleges that Mastroianni induced investors, ranging in age from 64 to 82, to purchase the notes by promising exorbitant interest rates ranging from 50% to 175%. In 2016, Mastroianni  was barred by the Financial Industry Regulatory Authority (FINRA) from associating with any registered broker-dealer after refusing to appear for testimony to answer allegations of, among other things, excessive trading in an elderly customer's account.

The SEC's complaint further alleges that Mastroianni gave investors conflicting explanations of the nature of Global's business, and often convinced them to roll-over their notes into new notes combining unpaid amounts with new investments by the investors. In reality, Global did not use investor monies to generate income and the SEC investigation determined that Mastroianni withdrew over $486,000 of investors' money from Global's bank account and also used ill-gotten funds for personal expenses on luxury items.

Bill Singer's Comment

As the above online searches demonstrate, it doesn't require all that much time or sophistication to do some basic due diligence when trying to learn about a financial professional. In the case of Mastroianni, for example, by July 1, 2020, you could have discovered that:
  • In December 2016, FINRA barred Mastroianni from the industry. That AWC was posted on FINRA's website.

  • In August 2017, there was a FINRA Arbitration Award against Mastroianni for over $500,000. That Award was posted on FINRA's website.

  • In June 2020, there was a FINRA Arbitration Award against Mastroianni for over $250,000 jointly and severally. That Award was posted on FINRA's website.
As to those three bits of information, it would be up to any investor to decide whether Mastroianni was someone from whom they would seek investment counsel. Some folks might opt not to do business with someone with such disclosures; however, other folks might be willing to become a customer. It would all depend on what's important to you and, to some extent, the explanations that Mastroianni might offer for the two awards and the Bar.

Victim 1 in the DOJ Complaint started investing with Mastroianni by 2015, which predated the 2016, 2017, and 2020 events posted on FINRA's website. However, the Promissory Note referenced in the Complaint was dated September 18, 2017, which was after the 2016 FINRA Bar and the $500,000 2017 FINRA Arbitration Award. Moreover, Victim 1 continued to wire additional funds to Mastroianni in 2019.

Victim 2 in the DOJ Complaint started investing with Mastroianni in September 2019, a date after the 2016 FINRA Bar and the $500,000 2017 FINRA Arbitration Award. Moreover, Victim 1 continued to make additional investments with Mastroianni in 2021. 

If Victim 1 and Victim had done some relatively basic due diligence after August 2017 and after June 2020, they may not have turned over thousands of dollars in additional funds to Mastroianni - or perhaps, despite the disclosures, they would have. The point here is NOT to further victimize the two alleged victims but to point out that investors are often able to utilize very basic and easy to use self-help in order to perform due diligence about investment professionals. Would it be fair to expect that an octogenarian such as Victim 1 would know how to use FINRA's online resources in furtherance of such due diligence? Probably not, and I pointedly decline to wag a finger at him for just that very reason. On the other hand, Victim 1 may have had family, friends, and caretakers, who, if they had known and/or been asked could have gone online on behalf of the elderly customer. Similarly,  friends, family, and acquaintances of elderly investors might want to pursue such online searches on a monthly basis to make sure that there are no troubling new developments. 

But let's agree for the sake of argument that not everyone knows that FINRA exists; or that many folks are deterred by having to agree to any "Terms of Service/Use;" and others just don't know that there is a Arbitration Award database or a Regulatory Database. For those folks, let's see what a simple Google search would yield for "Anthony Mastroianni Jr." https://www.google.com/search?q=anthony+mastroianni%2C+jr.&rlz=1C1CHBF_enUS791US791&ei=pU79YvD-EYOp5NoPmu-Q-AM&ved=0ahUKEwiw5abK2s75AhWDFFkFHZo3BD8Q4dUDCA4&oq=anthony+mastroianni%2C+jr.&gs_lcp=Cgdnd3Mtd2l6EAxKBAhBGABKBAhGGABQAFgAYABoAHAAeACAAQCIAQCSAQCYAQA&sclient=gws-wiz

That name search produced some 14 pages of Google results -- not all of them for the Anthony Mastroianni Jr. who is the Respondent in the FINRA arbitration and AWC or the Defendant in the DOJ Complaint. The first search result on Page 1, however, directs us to this LinkedIn page, which is very much on point
https://www.linkedin.com/in/amastroiannijr/  According to the title for this LinkedIn page, it belongs to:
Anthony Mastroianni Jr. 
President at Global Business Development and Consulting Corporation

Just going by the allegations in the DOJ Press Release and the Complaint, we seem to have the same guy per the "Global Business" affiliation. Further, consider this in the "About" box:

Anthony Mastroianni Jr. is a decorated U.S. Navy veteran. With 13 years experience as a Wall Street broker, Anthony founded Global Business Development and Consulting to offer his expertise in business consulting to entrepreneurs domestically and internationally. 

Global Business Development and Consulting provides business-tailored support in private equity and financial counseling.

Finally, consider these disclosures under "Experience"

President
Global Business Development and Consulting
Jan 2017 - Present · 5 yrs 8 mos
New Jersey, United States

Senior Vice President of Investments
Meyers Associates L.P.
Feb 2004 - Dec 2016 · 12 yrs 11 mos
New York City Metropolitan Area

Yeoman Third Class
US Navy
Oct 1995 - Oct 1999 · 4 yrs 1 mo
- Worked directly with Chief of Naval Operations to execute orders for commands internationally
- Worked with the Communications Department of the Secret Service for the Clinton Administration 
- Received two Navy Achievement Medals from former President Bill Clinton

Also featured among the Google search results is FINRA's BrokerCheck database, which discloses information about Mastroianni https://brokercheck.finra.org/individual/summary/2151249 If all that you did was click on the link to the first page of Mastroianni's FINRA BrokerCheck disclosure, you would see that he is listed as having been with Meyers Associates, L.P. from 2013 - 2016 -- which doesn't match up with his LinkedIn resume. Also, the BrokerCheck first page discloses, among other "Registration History," that Mastroianni was with J.P. Turner & Company, L.L.C. and Alexander Capital, L.P.  How do we account for the discrepancy on Mastroianni's LinkedIn page that from February 2004 to December 2016 he was an SVP with Meyers Associates, but that under "Registration History," BrokerCheck asserts in part that he had worked at five brokerage firms during the span from 2004 to 2016:

11/2013 - 08/2016: Meyers Associates, L.P.
05/2012 - 11/2014: Alexander Capital, L.P
04/2009 - 05/2012 J.P. Turner & Company, L.L.C.
05/2008 - 05/2009: National Securities Corporation
02/2004 - 05/2008 Joseph Stevens & Company, Inc.

I am NOT blaming Victim 1 or Victim 2 for not detecting the inconsistencies with Mastroianni's various resumes. I am NOT asserting that Mastroianni is guilty of the allegations in the DOJ Complaint because he retains the presumption of innocence at this point in the process.