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CRE Firm Operated As $650M Ponzi Scheme Signs Consent Order To End Fraud Investigation

Embroiled in bankruptcy proceedings as its former leaders face criminal charges, National Realty Investment Advisors has at least one fewer investigation to worry about this week.

The Robert N. Wilents Court Complex in Newark, New Jersey, home to the office of the New Jersey Bureau of Securities

The New Jersey Bureau of Securities issued an administrative consent order for NRIA on Dec. 8, ending its investigation into the company without punishment as long as it abides by the terms of a cease-and-desist order and does not engage in any securities trading, according to court documents.

In exchange, several counts of fraudulent practices are now a matter of fact in the public record, though NRIA is not required to admit to them. 

Those include:

— NRIA ran a Ponzi scheme through its Partners Portfolio Fund starting in 2018 that had amassed $630M in investments by the time it was shut down at the beginning of this year.

— The company downplayed and actively concealed that Thomas Nicholas "Nick" Salzano, who had been found liable for securities fraud at a previous venture, was in charge of the fund and had a criminal past.

— NRIA's principals took development fees from projects upfront, rather than upon delivery as is standard practice, resulting in $30M of improper revenue for NRIA from 2018 to 2019.

— Salzano improperly steered business contracts to U.S. Construction and Premier Access Property Management, two Philadelphia-based companies co-owned by his son, Dustin Salzano, without disclosing that relationship to investors. 

— Salzano used a forged term sheet to solicit an individual investor to add $250K to her PPF investment and later used a forged letter of credit for $20M in an attempt to obtain a construction loan from TD Bank. Grabato and NRIA did not fully disclose the incidents to investors, one of which led to Salzano's arrest in March 2021. It also failed to remove Salzano from his position until months after his arrest.

— Salzano, NRIA founder Rey Grabato Jr. and Salzano underling Arthur Scutaro used PPF funds for personal gain, including a no-show job for Salzano's wife that paid over $1M.

— NRIA used PPF capital to invest in junk-rated CMBS loans, then leveraged those investments in high-risk repurchase agreements, without fully disclosing the strategy to investors.


Salzano has since been arrested again on federal charges; Grabato has also been charged, but remains at large — presumed to be in the Philippines, the country of his birth. Few employees who were present when the above schemes were active remain with NRIA, which filed for bankruptcy on June 7.

In August, bankruptcy veteran John Fioretti was named chief restructuring officer of NRIA and given primary decision-making power in tandem with a three-member restructuring board of seasoned legal professionals commended by bankruptcy judge John Sherwood. The cooperation of new leadership was central to NJBOS' decision to end its investigation with a consent order, the agency said in its court filing.

In addition to the federal charges against Salzano and Grabato, Scutaro has already pleaded guilty to one federal fraud count.

The Securities and Exchange Commission has filed civil charges against all three, as well as NRIA itself and former co-owner and executive Coley O'Brien. Investigations by securities regulators in Illinois and Alabama are still ongoing.