A longtime Bronx-based tax preparer and broker who was criminally indicted for allegedly running a multi-million dollar Ponzi scheme must pay a group of investors a total of $2.8 million for money they lost in the scam, a securities arbitration panel ruled.
Robert H. "Bob" Van Zandt, who was indicted by a Bronx County grand jury in New York last year, was liable for misrepresenting investments to his clients and selling them securities that were not appropriate for them, according to a ruling by a Financial Industry Regulatory Authority arbitrator on Wednesday.
Van Zandt, who did not file a response in the FINRA arbitration, did not return a phone call requesting comment. The abitrator's ruling included $1.9 million in punitive damages, which are aimed at punishing parties.
He is also the subject of a civil fraud suit by New York Attorney General Eric Schneiderman filed last year. The case, which is pending, alleges Van Zandt targeted clients of his tax-preparation business, the Van Zandt Agency, and abused his knowledge of clients' finances to lure them into high-risk stocks, as well as securities for sham development ventures that he owned or controlled.
Van Zandt, who was a licensed broker for nearly 40 years, allegedly preyed on clients who were not financially savvy, Schneiderman's suit alleges.
Van Zandt has been free in the criminal prosecution on $500,000 bond, according to the attorney general's office. A trial is set for fall. The civil fraud suit is still pending.
The tax preparation service was a side business Van Zandt ran while working as a licensed securities broker, according to Adam Gana, a New York-based securities lawyer who represented the 10 investors in the FINRA arbitration case.
The investors, who lost their retirement savings in the Ponzi scheme, are "every day working people," ranging from bus drivers to legal assistants, Gana said. "They were decimated," Gana said. The losses "will put their retirement off by at least 10 years, if not indefinitely," Gana said. He plans to ask a court to enforce the FINRA ruling against Van Zandt. While FINRA arbitrators can make monetary decisions and certain findings, they do not have certain broader powers that judges do, such as the ability to enter and enforce judgments.
The investors initially filed the case against Van Zandt and a string of brokerages where he worked between 2004 and 2010, including MetLife Securities Inc., a unit of MetLifeInc, and SagePoint Financial Inc., owned by American International Group Inc., according to the ruling. The investors alleged that the brokerages failed to properly supervise Van Zandt.
Four of the brokerages settled their cases in April, according to the ruling. A MetLife spokesman declined to comment. A SagePoint spokesman was not immediately available.
FINRA barred Van Zandt from the securities industry in 2011, according to a regulatory filing.
© 2016 Thomson/Reuters. All rights reserved.