NEWARK, N.J. (Legal Newsline) – New Jersey Attorney General Jeffrey Chiesa announced a $100,000 civil penalty Monday against a Haddon Township resident who allegedly defrauded investors who bought promissory notes from him.
Stanley Rosenzweig allegedly violated the state's Uniform Securities Law by offering investors non-exempt and unregistered promissory notes in qNETIQ Inc., a company he founded and controlled. As the president and chairman of the board of qNETIQ, Rosenzweig allegedly started offered promissory notes in 2006 with promised rates of return from 150 percent to 1,000 percent, plus the return of principal.
The company claimed to provide technology and infrastructure platform services and purportedly had a licensing agreement with Omega.
Rosenzweig allegedly used the money raised from investors for personal expenses, including an Audi for his daughter, a family vacation and rent.
On Monday, the state's Bureau of Securities assessed the $100,000 penalty and obtained a court order forcing Rosenzweig to cooperate with the matter after he refused to respond to a subpoena for documents and testimony.
“Financial scams remain the leading white-collar crime across the nation," Chiesa said. "A lifetime of savings can be wiped out in an instant, and we continue our efforts to educate and empower investors against financial frauds."
Rosenzweig allegedly defrauded more than 50 individuals who invested approximately $1 million collectively.
Rosenzweig also allegedly provided executive summaries that failed to disclose several risks associated with investing in the promissory notes, including that qNETIQ generated little to no income by providing its purported technology and infrastructure platform services, that qNETIQ stayed afloat using money it obtained from promissory notes, that prior investors who bought the notes had not been paid interest and/or principal and that he used the money from the notes for various personal purposes.
The summary order against Rosenzweig also requires that qNETIQ and its owner cease and desist from further Uniform Securities Law violations.