About This Episode

• National Realty Investment Advisors (NRIA) was a high-profile investment company that advertised heavily on CNBC, Fox News, and billboards at major NYC landmarks like the Lincoln Tunnel and George Washington Bridge during 2017-2019
• The company promised high returns on real estate securities and investments, advertising fixed rates of return with seemingly low risk
• NRIA has now filed bankruptcy and is under a cease and desist order from the New Jersey Bureau of Securities for fraudulent activities
• This episode breaks down the fraud case to show investors how to identify scam warning signs before losing money

Key Red Flags Revealed

• Unrealistic fixed returns - NRIA advertised 21% returns through radio campaigns and promised 6% annual distributions when interest rates were low
• Returns came from investor capital, not profits - The company was simply returning investors' own money back to them at 6% annually, not generating actual returns
• Extensive advertising campaigns - Massive spending on marketing and advertising is often a red flag for investment schemes
• Forged documents - Company principals forged documents to induce investors to increase investments and attempted to defraud TD Bank for $20 million

Criminal History Connection

• Principal Giuseppe Scutaro had previous fraud involvement with a company called "Nor Virgins" that sold fake phone boxes to businesses 20 years ago
• The company spent $400,000 to hide this criminal history through web marketing, fake websites, and search engine manipulation
• Scutaro even changed the spelling of his name from two T's to one T to distance himself from the previous fraud

Internal Company Dysfunction

• Internal conflicts over illegal activities - Executive O'Brien tried to make operations more legitimate while Salzano aggressively pushed to continue illegal practices
• Threatening behavior among partners - Salzano threatened his own business partners to maintain fraudulent operations
• Family nepotism and undisclosed conflicts - Payments to family members for "no-show jobs" and undisclosed business relationships with family-owned companies

Financial Mismanagement

• Direct payments to family - Nearly $2 million in payments to Salzano's wife over three years for unclear services
• Improper fee structures - Company charged development fees upfront on unfinished projects, against accounting standards
• Accountant warnings ignored - Their own accountant explicitly told them in bold letters they couldn't charge certain fees, but they continued anyway
• Unsustainable business model - Company needed upfront fees to pay basic expenses, indicating lack of legitimate cash flow

Due Diligence Lessons

• Never rely solely on company-provided information - Always conduct independent research on investment opportunities
• Check principals' backgrounds - Look for any history of regulatory issues or previous business problems
• Verify documents independently - Don't accept financial statements or projections at face value
• Be wary of high fixed returns - If it sounds too good to be true, especially with "no risk," investigate further
• Look for excessive advertising - Companies spending heavily on marketing may be using investor funds inappropriately

Current Status

• New Jersey Securities Bureau issued cease and desist order - Company can no longer solicit funds or operate
• 63-page regulatory document details the extensive fraud scheme
• Bankruptcy filing means investors will likely recover only a fraction of their investments
• Federal SEC involvement expected - Criminal prosecutions and indictments may follow
• Fifth Amendment invoked over 1,000 times - Company principals repeatedly refused to answer investigator questions

Investor Protection Takeaways

• Perform independent due diligence - Don't rely on fancy presentations or extensive advertising
• Research company principals - Check for any history of regulatory issues or business problems
• Verify all claims independently - Use third-party sources to confirm company representations
• Be skeptical of guaranteed high returns - Especially when combined with claims of low or no risk
• Watch for red flags - Excessive advertising, family nepotism, and pressure tactics are warning signs

This case serves as a comprehensive example of how investment fraud operates and the warning signs that investors can identify before losing money.