04/23/2010

News / Court Grants Attorney Generals Request to Shut Livingston Investment Firm and Freeze its Assets Amid Fraud Allegations

NEWARK -- A Livingston investment firm has been temporarily closed and its assets frozen under court order after Attorney General Paula T. Dow and the New Jersey Bureau of Securities filed suit against the company and its principals, alleging that they had defrauded investors out of more than $450,000.

Defendants Jacob Eisenstark and Blanche Eisenstark, who are husband and wife, are alleged to have used the invested funds for their personal expenses, including the purchase of residences in Livingston and West Orange, New Jersey and Palm Harbor, Florida.

The state’s five-count Complaint, filed in Superior Court in Essex County, alleges that the defendants violated the New Jersey Uniform Securities Law and committed securities fraud. Rather than invest the funds as instructed, the defendants allegedly diverted the funds for personal use.

“The victims trusted that their hard-earned investment funds would be applied as promised. Unfortunately, the defendants allegedly violated their trust and, in so doing, the State’s Uniform Securities Law,” Attorney General Dow said.

The state is seeking restitution for the defrauded investors, as well as civil penalties against the defendants. The court granted the State’s request to freeze assets. The court-appointed receiver has been designated to recover assets from the defendants.

Jacob Eisenstark was a registered investment adviser representative and principal of Eisenstark Advisory, Inc., a registered firm. Blanche Eisenstark was the secretary for J.N.J, Capital Management, Inc., a company controlled by her husband.

Jacob Eisenstark allegedly told the investors that they would receive an annual 15% return on their investments. No investment contracts were signed, as required by state law, and the funds were not invested as directed by the investors.

Marc B. Minor, Chief of the Bureau of Securities cautioned that “investors should always perform due diligence, which includes, among other things, checking that the person offering an investment and also the investment itself are registered with the Bureau.”

http://www.nj.gov/oag/newsreleases10/pr20100422b.html

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