The son of incumbent Mina, Iloilo Mayor Lydia Grabato and three others were charged by the US Securities and Exchange Commission (SEC) for allegedly running a $600-million (P35 billion) Ponzi-like property scam that defrauded thousands of investors, including hundreds of retirees, in the United States.
Named in the complaint were New Jersey-based luxury property firm National Realty Investment Advisors LLC and former executives Rey Grabato II, Daniel Coley O鈥橞rien, Thomas Nicholas Salzano, and Arthur Scutaro.
Grabato also is the son of Rey Grabato, who also served as mayor of the municipality.
A Ponzi scheme is a type of scam that generates 鈥渞eturns鈥� using money collected from newer investors instead of any legitimate investment activity. National Realty, which promised profits of up to 20 percent, told investors it would use the money to buy and develop real estate properties.
鈥淚n reality, payments were being made from the investors鈥� own funds,鈥� Thomas Smith Jr., associate regional director of enforcement in the SEC鈥檚 New York regional office, said in a recent statement.
The company was also accused of using investors鈥� money to finance personal luxury purchases by an executive鈥檚 family and to pay a reputation management firm to 鈥渢hwart investors鈥� due diligence of the executives.鈥�
Bankruptcy
It also alleged the firm manipulated its financial documents and other marketing materials that were shown to investors to create the false appearance the firm was a successful business venture.
In reality, National Realty had 鈥渓ittle to no revenue鈥� and it eventually filed for Chapter 11 bankruptcy protection on June 7.
The SEC鈥檚 complaint was filed in federal court in the district of New Jersey. It charges National Realty and the four former executives with violating the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.
The SEC said the scam began in 2018, or 12 years after the company was started.
Profile
It has since defrauded over 2,000 investors, including 382 retirees who had contributed more than $94 million in savings, the regulator said.
According to the indictment, Grabato, 43, was a resident of Hoboken, New Jersey, and the Republic of the Philippines.
He was the president of National Realty Investment Advisors LLC which was established in 2006 as well as its majority owner.
On the professional networking platform LinkedIn, Grabato identified himself as the CEO of National Realty, which supposedly had over $1.25 billion in assets under management as of the middle of 2020.He earned a degree in business administration from De La Salle-College of Saint Benilde in Manila, his profile showed.
National Realty describes itself as an integrated development firm with dedicated fund management, luxury home sales and apartment rental divisions.
On its website, it lists 20 properties that were sold and another 24 projects that were available, including multimillion dollar townhouses in New York and luxury villas in Palm Beach, Florida, near the Mar-a-Lago resort of former US President Donald Trump.
Meanwhile, the SEC complaint seeks injunctions 鈥渁gainst future violations of the antifraud provisions, disgorgement of ill-gotten gains plus prejudgment interest, penalties, and officer and director bars against the four executives, and names Olena Budinska and Jamie Samul, aka Jamie Samul Salzano as relief defendants.鈥�
鈥擶ith a report from Inquirer Research
READ: DOJ charges 鈥楶onzi scam鈥� leaders