A former New Jersey broker who worked for 14 different firms in as many years will have to pay more than $1 million in restitution to elderly clients he defrauded through an investment scheme.
Joseph Orazio DeGregorio, of Freehold, New Jersey, agreed on May 5 to pay back $1,084,500 in ill-gotten gains to four victims whose money he promised he'd invest but actually used for personal expenses and gambling. The Securities and Exchange Commission, which oversees the wealth management industry, accused DeGregorio of telling clients from October 2015 to March 2021 that he'd put their funds into promissory notes with a guaranteed 13% return. The notes never existed, according to the SEC.
The SEC also said DeGregorio promised to invest the clients' money into two private companies: Blue Omega, supposedly a cybersecurity firm, and Globotix, supposedly a financial consulting firm. The funds were instead funneled into entities that DeGregorio owned and that had no legitimate business activities.
"DeGregorio also used a small portion of the investor funds to make purported 'interest payments' on the fake promissory notes to investors, thereby fostering the misleading impression that the notes were genuine and encouraging the investors to make additional investments with him,"
DeGregorio's victims ranged in age from 78 to 94, the SEC stated. Nicholas Kaizer, DeGregorio's attorney, said his client deeply regrets the scheme.
"He hopes to pay back every penny he took," Kaizer said. "He regrets the great harm he caused his clients and hopes to make full restitution very quickly."
DeGregorio was separately sentenced in September 2022 to a year in prison after pleading guilty in a related criminal case. He worked for 14 different firms in his roughly 14 years in the brokerage industry,
DeGregorio's latest employer, Garden State Securities in Red Bank, New Jersey, has 27 customer complaints and other disclosures on its record.
DeGregorio himself was the subject of 15 disclosures. Many of them resulted in settlements.
One dispute over alleged unauthorized trading, for instance, was settled in October 2007 for $96,400. He was suspended from the industry in September 2017 after failing to pay an arbitration award in a dispute with one of his former firms.
Douglas Schulz, the president of Invest Securities Consulting and a longtime FINRA arbitrator, said DeGregorio, given his past, should have caught regulators' attention earlier.
"It has always been a given that a broker who switched broker-dealers regularly, in two years or less, that is an absolute red flag," Schulz said. "And the firms hiring a guy who by definition had a checkered past should have been asked: Why are you hiring someone who switches firms more often than I change my underwear?"
