A New Jersey Superior Court has approved a $5.15 million distribution plan to investors defrauded by Newark, N.J., native Robert Brennan and his firm in a case dating back nearly 15 years.
In August 1995, the New Jersey Attorney General’s Office and the New Jersey Bureau of Securities filed a complaint alleging violations of state securities law and New Jersey’s Racketeer Influenced and Corrupt Organizations (RICO) Act against Brennan and others, including his independent brokerage firm, L.C. Wegard.
L.C. Wegard had offices in states, including New Jersey, Pennsylvania and New York.
New Jersey officials charged Brennan as having orchestrated a massive fraud scheme through his penny-stock provider First Jersey Securities Inc. and other companies.
Brennan, within days of the complaint, filed a voluntary Chapter 11 bankruptcy petition and in June 1999, the securities bureau obtained a non-dischargeable judgment of $45 million against Brennan and his companies.
With Brennan claiming he did not have assets, securities bureau investigators tracked down money he attempted to hide, including a pension fund the former investor set up for himself, according to the New Jersey Attorney General’s Office.
In 2001, he was sentenced to nine years and two months in federal prison for money laundering and bankruptcy fraud, and he was ordered to pay millions in restitution.
As a result of collection efforts by New Jersey’s securities bureau and distributions made in Brennan’s bankruptcy case, officials recovered $5.6 million from claims asserted in the securities litigation.
The attorney general’s office announced that defrauded investors may now submit a claim to the state receiver implementing the distribution plan for $5.1 million of those recovered funds.
“The Bureau of Securities is working with the receiver and other securities industry regulators in the massive undertaking to inform the estimated 27,000 affected investors of this distribution plan,” said Marc B. Minor, chief of the New Jersey Bureau of Securities, in a statement. “We want to get as much of the recovered funds as possible into the hands of these long-suffering investors.”
L.C. Wegard customers during the period of October 1, 1991, to September 1994 may be qualified to file a claim if they purchased a number of securities during this time period, including AGP&Co., Diamond Entertainment Group, Great American Recreation Inc., Metalclad Corp., Officeland Inc. and Sanyo Industries Inc.
The North American Securities Administrators Association has agreed to work with regulators in the states where L.C. Wegard had offices to help publicize information about the distribution plan to affected investors.