A former advisor allegedly promised to invest $8M into land developments. He never made a single investment, the SEC says.

Steven Pagartanis, 58, told nine clients — who were mostly retirees and longtime customers — their funds would be invested into either a publicly traded or privately held land-development company, according to an SEC complaint filed in New York this week. He even guaranteed fixed interest rates of up to 8% annually, the regulator says.

Almost $7 million was supposed to be invested Genesis Land Development, a publicly traded company based in Canada, says the SEC. But after telling clients to make checks payable to “Genesis,” Pagartanis deposited the money into his shell company Genesis I Holdings, the regulator says.

“As part of the alleged scam, Pagartanis preyed on his customers’ trust, duping them to write checks payable to his own entity,” says Marc Berger, director of the SEC’s New York Regional Office.

To prop up the scheme, Pagartanis deceptively provided some of the investors with fictitious account statements indicating that they owned Genesis Land Development stock and its financial statements, court records show.

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Pagartanis transferred the money to his personal bank account and used around $1.8 million to make monthly interest payments back to investors, the SEC says. He also made cash withdrawals totaling around $175,000 from Genesis I's bank account, says the regulator. As of February, the account balance was around $8,000, court records show.

“Regardless of how long investors have worked with their brokers, they should always confirm that recommended investments are approved for sale by their brokerage firm before transferring funds,” Berger says.

The alleged fraud took place between 2013 and at least 2018, the SEC says. The Suffolk County District Attorney’s Office has also filed parallel criminal charges.


Pagartanis was last registered with the Baltimore-based Lombard Securities as of September, and worked at the firm’s Setauket, New York branch office. An attorney for the firm, Charles O’Rourke, says most of the alleged wrongdoing took place before the advisor moved to Lombard Securities and that the firm will address customer inquiries as appropriate.

“Virtually everything he was allegedly doing occurred prior to Lombard,” O’Rourke says, adding that FINRA and the state of New York both reviewed and approved the advisor’s registration. “Until someone gives you a reason, the broker-dealer will always be at risk,” he says.

Pagartanis was discharged from Lombard Securities in March after allegations surfaced, per FINRA BrokerCheck records.

“As a result of an internal investigation, the representative failed to respond to customer complaint questions and requests for information,” according to BrokerCheck records. “The firm requested specific information on unapproved investments allegedly made outside of the firm by a customer and why the broker failed to notify the firm regarding such outside investments.”

FINRA barred Pagartanis in April after he failed to appear for on-the-record testimony in connection with the regulator’s investigation, per BrokerCheck. Pagartanis accepted the bar without admitting or denying guilt, per BrokerCheck.

He previously worked with the Syracuse, New York-based Cadaret Grant, most recently from 2012 to 2017, during the period of the alleged wrongdoing, per BrokerCheck.

Cadaret Grant declined to comment.

Sean Allocca

Sean Allocca is an associate editor of Financial Planning, On Wall Street and Bank Investment Consultant.