The Securities and Exchange Commission said a former broker who had been suspended by the Financial Industry Regulatory Authority has agreed to settle fraud charges that he duped elderly investors out of more than $1 million.
In a parallel action, the U.S. Attorney's Office for the Eastern District of New York yesterday filed criminal charges against Joseph DeGregorio, 45, of Freehold, N.J. DeGregorio lived in Staten Island, N.Y., during the alleged fraud, the complaint noted.
The SEC's complaint alleges that between October 2015 and March 2021, DeGregorio solicited $1.2 million from four investors, ages 78 to 94, by tricking them into believing that their funds would be used to purchase promissory notes that guarantee a 13% annual return. He also falsely told them that he would invest the funds in two private companies.
DeGregorio, the complaint said, sought out investors by, among other methods, making cold calls and gaining their trust over time, claiming he was a successful financial professional with wealthy clients around the world. In soliciting the promissory notes, he represented that the entity offering the note, TDJD Corp., earned revenue by making short-term loans to small businesses. The complaint said the investors together offered up a total of $250,000 between about October 2015 and January 2019 to invest in the purported promissory notes.
TDJD, however, was a shell company, the complaint said, and the promissory notes were fake. DeGregorio misappropriated most of the investor funds sent to the company for his personal use, authorities said, including his living expenses, as well as for his drinking and gambling habits.
He also used a small portion of the investor funds to make so-called “interest payments” back to each of the four investors, which helped to convince them that the promissory notes were real and to conceal the fraud. He returned about $62,500 to investors in the form of the purported “interest payments.” Separately, he returned $50,000 to one of the investors in November 2015.
He never told the investors that he owned and controlled TDJD. Neither did he tell them that the money he used to make the purported “interest payments” came from their own funds or the funds of other investors, the complaint said.
“At all relevant times, DeGregorio knew or recklessly disregarded that his representations about the promissory note were materially false and misleading.”
The complaint said DeGregorio, who was an independent representative of an unregistered affiliate of a Middletown, N.J.-based broker-dealer, investment advisor and fintech firm, continued to defraud the four elderly investors in 2017. He began touting two additional sham investments, Blue Omega Inc., a purported cybersecurity firm, and Globotix Inc., a supposed financial consulting firm. DeGregorio told at least one investor that Blue Omega was likely to become a public company, the complaint said.