White Collar Crime News

Man Indicted on Charges That He Defrauded Investors of $1.7 Million March 25, 2010

Samuel M. Serritella, 65, of Garfield, has been charged with securities fraud, theft by deception, misapplication of entrusted property, money laundering, and misconduct by a corporate official, all in the second degree.

The charges resulted from an investigation by the New Jersey Bureau of Securities and the Division of Criminal Justice. Serritella was initially charged by complaint on July 21, 2009. Deputy Attorney General Francine S. Ehrenberg presented the case to the state grand jury for the Division of Criminal Justice Major Crimes Bureau.

Serritella was president, chief financial officer and chairman of International Surfacing Inc., based at 5 Erie Street in Garfield. Between February 2002 and May 2008, Serritella allegedly obtained in excess of $1.7 million from more than 300 investors by selling them shares of International Surfacing. The shares were not registered with the Bureau of Securities as required by law, and Serritella was not registered as an agent authorized to sell securities in New Jersey.

Most investors were from New Jersey, and many of them were police officers and firefighters. Serritella represented that he was manufacturing therapeutic horseshoes with a cushioning layer of rubber on them. He held investment conferences where he told investors they could get in on the ground floor by purchasing shares in a company he planned to take public. He allegedly told at least one group of investors during a hotel meeting that the venture’s clients included a prince in Dubai who purchased the shoes for his camels. He also falsely claimed that they were being used by Olympic competitors and would be used in the Olympics in Athens, Greece.

Serritella allegedly stole more than $350,000 in investor funds to pay for personal expenses. Although he used some funds for startup costs for the company, including renting a building and paying salaries, he never purchased the necessary equipment and tools to manufacture the horseshoes, and the venture failed.

Serritella allegedly deposited the investors’ funds into several bank accounts that he controlled. He allegedly wrote checks to himself, made cash withdrawals at ATMs, paid credit card bills, and made debit card purchases using investor funds in the accounts. He used the funds to pay for such personal expenses as airline and hotel bills, tavern bills, and medical costs. He also allegedly used investor funds to make personal loans to friends totaling $64,000.
At the time that Serritella was initially charged in July 2009, New Jersey Bureau of Securities Chief Marc B. Minor issued an order assessing a penalty of $20,000 against Serritella for violation of the New Jersey Uniform Securities Law. The Bureau Chief found that Serritella committed securities fraud and sold unregistered securities as an unregistered agent.