Close Close

Retirement Planning > Social Security

State Regulator Goes After Unregistered Rep, Fines Funds $250,000

Your article was successfully shared with the contacts you provided.

Massachusetts regulators have charged Charles N. Nilosek and Position Benefits as acting as unregistered investment advisors and selling risky unregistered securities, mainly to seniors. In a related matter, Secretary of the Commonwealth William F. Galvin ordered three California-based mortgage investment funds to pay a $250,000 civil penalty, offer to return money invested by 144 Massachusetts residents and accept censure by the state’s securities division.

The administrative complaint against Nilosek and his firm states that, despite their lack of registration, they “hold themselves out as investment advisors while selling Massachusetts residents an unregistered risky security that they represent as a safe and secure investment.”

“Presenting these mortgages as guaranteed investments is a cruel hoax, especially when older people are encouraged to move into them from retirement accounts or certificates of deposit,” Galvin said in a statement. “Investors need to check that the person presenting himself as an investment advisor is, in fact, registered to be one, not a salesman in investor advisor clothing.”

The state’s complaint alleges that Nilosek and Position Benefits used radio and television advertising, Internet and social media communications, and radio programs such as “Life is Great New England” and “Money Matters. The parties “were paid more than $607,000 over 19 months to solicit investors to purchase the Woodbridge instruments,” it said.

“In reality, Position Benefits and Nilosek lure Massachusetts investors into meetings with the promise of investment advice, and pull a ‘bait and switch,’ offering guarantees and promises of safety on a product that offers neither,” the complaint explained.

In a settlement, Woodbridge agreed to offer to return money to those who invested in Secure Bridge Loans since January 2012. It also will stop offering and selling the Secure Bridge Loans in the commonwealth until they are registered as securities or are considered exempt from Massachusetts securities registration requirements, the regulators add.

“The money invested with Woodbridge was used to extend loans to third-party commercial borrowers who obtained loans from Woodbridge at a higher interest rate than the prevailing rate charged on mortgage loans by traditional lending institutions,” the state noted.

For its part, Woodbridge said in a statement that it “cooperated fully with the Massachusetts Securities Division’s review of this issue and [has] agreed to settle all matters. We know that the factors determining what is a security are subject to regulation by the Securities Division and are quite complex. Based on our discussions we have agreed to discontinue selling any mortgage products in Massachusetts that are not registered or exempted.”

— Check out Mass. Regulator Galvin Issues ‘Emergency’ Crowdfunding Exemption on ThinkAdvisor.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.