Livingston Investor to Pay $940,000 for Fraud Scheme
He admitted he defrauded investors out of $850,000 by diverting invested funds for his family's personal expenses and by making unsuitable investments. Now, Jacob Eisenstark, his wife Blanche and their two Livingston-based investment companies have settled with the state Division of Consumer Affairs.
Under the agreement, the Eisenstarks, the firms, Eisenstark Advisory Inc. and J.N.J. Capital management Inc., are required to pay $940,000. Eisenstark and the firms also consented to a permanent bar from the securities industry of New Jersey.
"Jacob Eisenstark convinced victims, including senior citizens, to part with their hard-earned savings, with the false promise of a 15 percent rate of return, only to then misuse their money to pay mortgages and other personal expenses," said Attorney General Jeff Chiesa. "Fraud schemes like this leave victims with pain and heartache and little else. Through this action, we've shut down the defendant's operation and taken a significant step toward providing restitution to victims."
Jacob Eisenstark was a registered investment adviser representative and principal of Eisenstark Advisory, an investment adviser firm previously registered with the Bureau of Securities. Blanch Eisenstark was the secretary for J.N.J. Capital Management, a company controlled by her husband.
Eisenstark admitted he violated the New Jersey Uniform Securities Law by misleading some investors with the claim that he managed a fictitious fund consisting of at least $15 million in assets and that they would earn a 15 percent annual return by investing in the fund. He further misled some investors by giving them monthly "interest distribution payments" that were actually taken right from their own principal payments.
Jacob Eisenstark also admitted that he used invested funds for the family's personal expenses which included mortgage payments on multiple properties.
"As a result of our lawsuit, this defendant is stopped from using deceit and lies to line his pockets with investors' money," said Eric Kanefsky, Acting Director of the New Jersey Division of Consumer Affairs. "Our Bureau of Securities remains vigilant in investigating financial fraud and protecting the hard-earned assets of investors."