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AG Office, NJ Bureau of Securities Sue Hillside Financial Consultant for Allegedly Defrauding Investors

By kbm0423 on

Attorney General Gurbir S. Grewal and the New Jersey Bureau of Securities within the Division of Consumer Affairs today announced that the Bureau has filed a seven-count suit against a Union County financial consultant and his company, alleging he defrauded at least 57 investors out of nearly $2.2 million through the fraudulent sale of unregistered securities and then used much of the money for his own personal benefit, including payments for his Maserati.

According to officials, Owusu A. Kizito, of Hillside, is alleged to have fraudulently sold the unregistered securities to his clients as investments in his business, Investigroup, LLC, an NJ-based management consulting firm, which he claimed had offices in New York, Oman, China, and Ghana.

Kizito allegedly diverted at least $960,500 into the bank account of his unrelated non-profit, Investigroup NP, and also used investors’ funds to make large cash withdrawals, payments for personal credit cards, payments for his home mortgage and property taxes, and payments for his luxury sports car.

The State’s lawsuit, filed in Superior Court in Union County yesterday, alleges that defendants Kizito and Investigroup, through Kizito, violated the anti-fraud and registration provisions of the New Jersey Uniform Securities Law.

The suit also names Investigroup NP as a nominal defendant, alleging that Investigroup NP unjustly benefitted from the diversion of funds into its bank account, and seeks to have those funds disgorged.

The State also asked the Court for temporary restraints and preliminary injunctive relief to stop Kizito and Investigroup from engaging in the offer and sale of securities or acting in any capacity in the securities industry.

“We are committed to stopping fraudulent and unlawful ‘investment opportunities’ that cheat investors of their savings, and to holding the perpetrators of these schemes accountable,” Attorney General Grewal said. “The investment scheme we are taking down was all the more offensive because the defendant took money from people who trusted him and used it to fuel his own lavish lifestyle.”

According to the State’s complaint, from 2016 to 2020, Kizito and Investigroup, through Kizito, offered and sold investments in securities totaling at least $2,187,814 to 57 investors - including 34 New Jersey residents - through 104 transactions.

The majority of the securities were in the form of membership interests - called “Units” - in Investigroup that were sold to at least 53 investors in the total amount of $1,722,814.

The remaining securities were in the form of agreements purporting to monetize commercial standby letters of credit acquired by Investigroup; they were sold to at least nine investors in the amount of $465,000.

Kizito and Investigroup represented to investors in written offering materials for the Units that their investment money would help fund the expansion and growth of Investigroup through new office buildout; growth marketing; international expansion; strategic partnerships; legal and portal onboarding; and hiring and training.

Kizito allegedly described the terms of the investment to some investors, promising them a specific rate of return on their investment and stating when their investment would mature.

According to the complaint, Investigroup and Kizito failed to disclose material information to investors, including that:

- investor funds would be used for Kizito’s personal benefit and for other non-business-related expenses, including cash withdrawals made by Kizito or transfers made to Kizito and the use of at least one investor’s money to pay off a prior investor

- at least $960,500 of investor funds would be diverted to the account of Investigroup NP, Kizito’s non-profit entity in which the investors had not invested or received a beneficial interest

- Investigroup had been borrowing significant amounts of money through factoring agreements with merchant cash advance companies, thereby assigning the rights to future account receivables to those companies, which would be withdrawing significant amounts of investor funds from Investigroup accounts to repay those advances

- in 2011, the Internal Revenue Service had assessed taxes, interest, and penalties against Kizito and Investigroup, and ordered them to pay unpaid taxes and interest totaling $252,367.40 for 2009 and 2010

- there were additional undisclosed pending legal proceedings against Investigroup and Kizito

- Kizito could or would change the maturity date of the investment without investor consent

- the Investigroup securities were not registered with the Bureau nor exempt from federal or state registration as required by law

-Kizito was not registered with the Bureau as an agent to sell securities as required by law.

“People and companies selling securities are required by law to disclose to each potential investor all material information about the company, its principals, and the investment including the risks,” Paul R. Rodríguez, Acting Director of the Division of Consumer Affairs, said. “Not only did the defendants fail to make these disclosures, but they misled investors and hid material facts that a reasonable person would want to know in order to make an informed investment decision. After deceiving them, Kizito used investors’ money as if it were his own. This kind of blatant violation of our Securities Law and abuse of investor trust will not be tolerated in New Jersey.”

The State’s suit seeks court-ordered monetary penalties, investor restitution, disgorgement, and permanent injunctive relief barring Kizito and Investigroup from violating the Securities Law or participating in the sale or issuance of securities in the future.

“The defendant marketed the unregistered securities to his own clients. He was counting on the fact that people are more trusting when someone they know offers them an investment opportunity,” Christopher W. Gerold, Chief of the New Jersey Bureau of Securities, said. “This case highlights why no one should ever hand over funds without thoroughly vetting the investment and checking the registration status of the person offering it.”