adaret Grant Broker Steven Pagartanis Guilty Of Fraud Conspiracy
Former Cadaret, Grant & Co., Inc. registered representative, Steven Pagartanis (CRD#: 1958879, Setauket, New York), has pleaded guilty to conspiracy to commit wire and mail fraud in connection with a Ponzi scheme that Pagartanis operated between 2000 and 2018. Pagartanis now faces up to 20 years behind bars.
Steven Pagartanis Pleads Guilty To Conspiracy To Commit Wire And Mail Fraud
According to the United States Attorney for the Eastern District of New York, Richard P. Donoghue, Pagartanis perpetuated the fraudulent scheme against elderly investors who could not afford to lose their life savings. Pagartanis apparently admitted to having solicited those investors to purchase real estate-based investments. Those investments allegedly linked to publicly traded companies as well as an international hotel company and Canadian entity. Particularly, Pagartanis supposedly told a minimum of five investors that their money would be used to buy common stock issued by Canadian home building and land development company, Genesis Land Development Co., which is traded on the Toronto Stock Exchange.
Evidently, Pagartanis promised the elderly investors that the principal they invested would be secured and produce between a 4.5 percent and 8 percent annual return. The United States Attorney’s Office reported that Pagartanis then instructed the elderly investors to write out checks to Genesis, a company that Pagartanis secretly controlled. However, Pagartanis never invested the investors’ money as promised.
Pagartanis purportedly used several bank accounts in order to launder the money that he stole from the investors. Then, Pagartanis used the money to buy luxurious things and pay his personal expenses. Moreover, Pagartanis paid previous investors dividend or interest payments he obtained from other investors. That is, Pagartanis’ activities were clearly indicative of a Ponzi-Scheme.
Not only that, but Pagartanis evidently made fake account statements which portrayed investors’ ownership interest in GDC. This was done to conceal Pagartanis’ fraudulent scheme and induce more investors to provide him money. Eventually, Pagartanis acquired more than $13,000,000.00 from investors. Those investors lost more than $9,000,000.00, the United States Attorney’s Office stated.
FINRA and SEC Commence Actions Against Steven Pagartanis Amid Terminations
In a parallel action, the Securities and Exchange Commission (“the SEC”) charged Pagartanis with committing violations of Section 10(b) of the Securities Exchange Act, Rule 10b-5, and Section 17(a) of the Securities Act.
The Financial Industry Regulatory Authority (“FINRA”) BrokerCheck Report for Pagartanis shows that before FINRA brought civil and criminal actions against Pagartanis, his two most recent employers terminated him based on allegations of misconduct, then barred by FINRA.
Specifically, Cadaret disaffiliated with Pagartanis on March 20, 2017. The firm alleged that its decision to discharge Pagartanis was based on the receipt of a customer-initiated, investment-related arbitration claim. That claim apparently contained allegations against Pagartanis of conversion, fraud and selling away. Cadaret apparently conducted an investigation of Pagartanis’ branch but was not provided information that it’s examiners requested.
Pagartanis’ most recent employer, Lombard Securities Incorporated, disaffiliated with him on March 17, 2018. Lombard stated that it conducted an internal investigation into Pagartanis about a customer complaint. However, Pagartanis refused to provide information to Lombard. Pagartanis also reportedly failed to provide information regarding his outside investment activities.
Moreover, Pagartanis disclosed that 11 customers have brought investment-related complaints about him. Customers filed 10 of those complaints, including those described below, between March 3, 2017 and August 30, 2018:
August 30, 2018 Arbitration
A customer of Cadaret and Lombard filed FINRA Arbitration #18-03070 on August 29, 2018. The customer alleged that Pagartanis sold real estate and equity investments which the firms did not authorize. Pagartanis then allegedly used the customers’ money for his personal gain. Because of this, the customer has requested $285,000.00 in damages.
May 4, 2018 Arbitration
A Cadaret customer brought FINRA Arbitration #18-01353 on May 4, 2018. According to the customer, Pagartanis induced the customer to invest in Genesis Land Development Corp. – an unapproved real estate investment controlled by Pagartanis. Records show that the customer demanded $3,100,000.00 in damages. This matter is still underway.
If you have suffered losses by investing with Steven Pagartanis, call (888) 760-6552 for a free consultation with Soreide Law Group’s experienced counsel. Our firm has recovered millions of dollars for investors who have been victim to broker and brokerage firm misconduct. We represent clients on a contingency fee basis and advance all costs.