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Press Release

​​​​​​​​​​​​​​For Immediate Release:
December 21, 2021    

Office of The Attorney General
Andrew J. Bruck, ActingAttorney General

Division of Consumer Affairs
Sean P. Neafsey, Acting Director

Bureau of Securities
Christopher W. Gerold, Bureau Chief
​ ​
Division of Law
Michelle Miller, Director
​​​​ For Further Information Contact:
Gema de las Heras,DCA@dca.njoag.gov

Acting AG Bruck Announces Two Securities Enforcement Actions Against Sellers of Unregistered Securities Tied to Fraudulent Schemes


NEWARK – Acting Attorney General Andrew J. Bruck and the New Jersey Bureau of Securities within the Division of Consumer Affairs today announced two enforcement actions taken by the Bureau against three individuals and their related entities that sold unregistered securities in national fraudulent schemes.

In the first action, the Bureau, in a six-count lawsuit filed in Superior Court in Bergen County today against two New York residents and their two related companies, alleges that defendants Salvatore Magaraci and A. Kirsten Gallardo targeted elderly individuals and sold unregistered securities for the Woodbridge Group of Companies (“Woodbridge”).  Woodbridge and its former owner were ordered to pay a $1-billion judgement after the U.S. Securities and Exchange Commission sued them for operating a Ponzi scheme that defrauded 8,400 investors across the country by fraudulently offering and selling unregistered securities in the form of fraudulent promissory notes called First Position Commercial Mortgages.

The Bureau alleges that between August 2016 and June 2017, Magaraci, Gallardo, and their related entities sold approximately four of Woodbridge’s unregistered securities, totaling more than $1 million, to at least three New Jersey investors.  According to the Complaint, Magaraci and Gallardo, both residents of Huntington, NY – who have never been registered with the Bureau in any capacity – allegedly told clients that the First Position Commercial Mortgages were safe investments with guaranteed returns of 4.75% or more in annual interest, to be paid to investors on a monthly basis.

“The Bureau’s actions send a strong message to businesses and individuals who think they can disregard New Jersey’s securities laws,” said Acting Attorney General Bruck.  “We have a duty to protect investors around the state and we will continue to hold accountable those who try to operate under the radar by failing to register with the Bureau and illegally selling unregistered securities.”

“As we continue pursuing dishonest individuals and companies that prey on elderly investors we want to remind investors that unregistered securities may be a red flag of fraud,” said Sean P. Neafsey, Acting Director of the Division of Consumer Affairs. “We also urge investors to check with the Bureau before they invest to verify registration information.” 

In the second action today the Bureau entered a Summary Penalty Order against a Warren County resident for selling unregistered securities tied to several alleged fraudulent schemes. 
Stephen Cagnassola of Hackettstown allegedly sold at least $1,035,516 of unregistered securities to at least 15 investors in companies that were engaged in two separate Ponzi schemes.  Cagnassola failed to disclose to his clients that the issuers had paid him at least $96,204.88 for selling the unregistered investments. 

The Bureau found that from approximately May 2012 to July 2014, Cagnassola sold seven unregistered securities issued by Pension Funding, LLC and Pension Income, LLC to six investors in the form of investment contracts totaling at least $275,622.  In August 2015, the Consumer Financial Protection Bureau and the New York Department of Financial Services jointly brought a regulatory action against these entities and certain of its owners and officers, alleging that they deceived the owners of the pensions into borrowing against their pensions, hid high-interest loan rates and fees associated with pension advances, and deceived the pension owners about other terms of the deal. 

The Bureau also found that from approximately October 2012 through at least September 2017, Cagnassola sold twenty unregistered securities in the form of promissory notes issued by companies controlled by Northridge Holdings, Ltd., an alleged $41-million Ponzi scheme, which was sued by the Bureau in 2019.  Cagnassola sold approximately $779,894 worth of the unregistered Northridge securities to at least 12 investors.  These unregistered securities, named in brochures as “CD Notes,” were not certificates of deposit insured and issued by banks.

“We are putting unregistered agents and companies that sell fraudulent investments to New Jerseyans on notice,” said Bureau Chief Christopher W. Gerold.  “Securities and those who offer and sell them to New Jersey investors from or in the state must be registered.  Those who fail to comply with the law should be prepared to face the consequences.”

The Bureau has assessed a $120,000 civil monetary penalty against Cagnassola and denied certain exemptions he may have been able to claim.

Section Chief Victoria A. Manning, Assistant Section Chief Evan A. Showell, Deputy Attorneys General Elisabeth E. Juterbock and Andrew H. Yang, of the Securities Fraud Prosecution Section within the Division of Law’s Affirmative Civil Enforcement Practice Group are representing the State in the matter. The Bureau's investigation was handled by Deputy Chief Amy Kopleton and Investigator Delfin Rodriguez of the Bureau of Securities, within the Division of Consumer Affairs.

* * *

The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey. It is critical that investors “Check Before You Invest.” Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contacting the Bureau toll-free within New Jersey at 1-866-I-Invest (1-866-446-8378) or from outside New Jersey at (973) 504-3600, or by visiting the Bureau’s website at www.NJSecurities.gov. Investors can also contact the Bureau for assistance, or to raise issues or complaints about New Jersey-based financial professionals or investments.

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Last Modified: 12/22/2021 5:42 AM