New Jersey Builder Draws Attention From FBI and SEC

The FBI and SEC, alongside financial regulators from three states, are investigating Secaucus, N.J real estate developer and landlord National Realty Investment Advisors. Known up and down the East Coast for their unconventional marketing strategy, utilizing talk radio and right-wing personalities like Tucker Carlson and Bill O’Reilly to market projects to investors for the purpose of capital raises. Through these channels, NRIA has raised more than $500 million from investors with promises of high returns and 10% monthly payments from revenue raised from real estate projects- a common arrangement within the world of real estate crowdfunding. 

While no criminal charges or civil complaints have been levied against the firm, a prominent executive at NRIA, Thomas Nicholas Salzano, was recently charged with fraud by the FBI. The FBI alleges that Salzano used fake loan papers in an effort to onboard a new investor. This is not Salzano’s first rodeo- he previously settled with federal authorities in a previous fraud scheme before going on to work in the leadership team at NRIA. 

NRIA itself is under the microscope. Several of its largest projects, such as a former casino site in South Philadelphia in the process of being transformed into three multifamily apartment buildings have yet to generate any cash flow, remaining unbuilt for the time being. This has led the company paying existing investors in a different way- via funds solicited from new investors, according to their prospectus, which was published this past July While such an arrangement is not necessarily indicative of wrongdoing, it has drawn attention from some experts as being a risky way to operate. 

The company was formed in 2006 to build and rehab single-family homes in Philadelphia, primarily due to a new city policy abating the first 10 years of property taxes on new construction, a move to spur development in the then moribund Philly property market. Since opening its doors, NRIA has built more than 1,100 single-family and apartment homes in the city, primarily in South Philadelphia and the Northern Liberties district of the city. 

Since the start of 2019, the company has spent roughly $9 million on TV ads, with the majority of that outlay coming in 2021- with $4 million in TV ad buys. Most of the spend went to Fox News for ads running during Sean Hannity and Tucker Carlson helmed nightly news programs. In these ads, investors were promised steady cash flow, and “safety” as well as an exhortation for viewers to dip into their IRAs or 401(k)s to invest in NRIA projects. Additionally, some advertisements offered investors “targeted returns up to 21%,” a shockingly high number in an industry known for market-beating return targets. 

All of this drew the attention of well-known businessperson and convicted fraudster Barry Minkow, famous for his role in the well-publicized collapse of ZZZZ Best, a massive ponzi scheme started by Minkow while he was still in high school that cost investors north of $100 million. Since reformed, Minkow has set his sights on ponzi schemes and other fraudsters in the financial markets, filing fraud allegations at 11 different companies with the SEC since his release from prison.

Minkow submitted a memo to the SEC alleging fraud at the firm prior to the public reveal of investigations into NRIA, accusing the company of promising returns to investors that were unsustainable given their current and future financial trajectory. The former-fraudster isn’t necessarily motivated by doing a good deed alone- he may be able to claim a bounty on the company via a program initiated by the SEC that rewards whistleblowers for bringing fraud and other financial misdeeds to the attention of the SEC.

While the matter remains under investigation, the Philadelphia Inquirer conducted an investigation of their own, uncovering uncomfortable information about the company and its principals. You can get “the rest of the story” as late-great radio announcer Paul Harvey would say, here, in this excellent long-form investigative piece at the Philadelphia Inquirer.