Press Release

NEWARK - Following a trial before the Honorable Thomas P. Olivieri, New Jersey Superior Court Judge, the Court found that the head of two businesses, represented to be involved in developing and manufacturing specialty peanut butter, committed 160 violations of state securities laws, and ordered payment of $269,750 in civil penalties and restitution for defrauded investors.

Defendant Zoltan A. Phillips, 69, raised $109,750 from three investors and their spouses, as well as additional funds from 15 other investors and couples. The investors bought promissory notes in his two companies, Peanut Butter Better Company and ZAP Products Corporation. In violation of state securities laws, however, neither Phillips nor the promissory notes he sold were registered with the New Jersey Bureau of Securities.

At trial, Deputy Attorneys General from the Affirmative Civil Enforcement litigation group ("ACE"), within the Division of Law, along with investigators from the Bureau of Securities ("BOS"), within the Division of Consumer Affairs, further demonstrated that rather than using the investor funds for the development and manufacture of peanut butter, Phillips fraudulently diverted almost all of the money for his own personal enrichment and for that of two other individuals – his wife and ex-wife.

"Through the outstanding investigation and prosecution by our Bureau of Securities and Affirmative Civil Enforcement team, the fraud that defendant Phillips perpetrated on investors became clear," Attorney General Jeffrey S. Chiesa said. "Now, we will direct our efforts to enforce the court's order and ensure the defendant lives up to his payment obligations to the victims and to the Bureau of Securities."

The Bureau of Securities is taking steps to place a lien in the amount of the judgment on real property that Mr. Phillips or his companies may own in New Jersey, among other efforts to collect the judgment.

Peanut Butter Better Co. was initially based in Weehawken and incorporated in November 2005. It later operated out of Atlantic City and Brigantine. Its corporate charter was revoked in June 2008 after failure to file annual reports for two years. ZAP Products Corp., also led by Phillips, was incorporated in August 2008 and functioned as a successor company. ZAP Products Corp. maintained locations in Atlantic City and Brigantine.

The Court found that the two companies and Phillips had deceived investors by misrepresenting that investor funds would be used to develop peanut butter products, when in fact almost all of the money went to the personal benefit of Phillips and the other individuals.

"Mr. Phillips fraudulently enticed investors through the offer of getting in on the ground floor of a company with a supposedly bright future. No matter how powerful the lure, we always caution investors to step back and perform their due diligence," said Thomas R. Calcagni, Director of the N.J. Division of Consumer Affairs.

"Investors should always verify that the person offering a security, and the security itself, are both registered with us," said Abbe R. Tiger, Chief of the N.J. Bureau of Securities. "We stand ready as a resource that investors can use, and our investigators are ready to act upon complaints received from investors."

The Bureau of Securities can be contacted toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600. The Bureau's website is located at NJsecurities.gov.

Deputy Attorneys General Elizabeth Lash and Anna Lascurain of the Affirmative Civil Enforcement's Securities Fraud Prosecution Section represented the Bureau of Securities and Bureau Chief in this case. Leon C. Martin, Supervising Investigator, and Investigators Isaac Reyes and Michael LaChapelle in the Bureau of Securities conducted the investigation.

The Bureau of Securities can assist investors in determining whether those selling securities, as well as securities offered for sale, are registered or are exempt from registration.  The Bureau can be contacted toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600.  The Bureau's website is www.njcsecurities.gov.

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