The court records were filed this week in a lawsuit filed by the Securities and Exchange Commission against NIR Group LLC and its manager, Corey Ribotsky, 40, of Old Westbury, seeking to bar him from the securities industry and force him to pay back defrauded investors.
Ribotsky's efforts to deceive his investors were extreme, the SEC said.
In one case, he sold assets valued at $43.2 million in exchange for a $700,000 down-payment check drawn on a bank account with only $500 on deposit, the SEC said. Though the buyer, in the end, paid NIR Group nothing for the $43.2 million in assets, Ribotsky still signed over ownership and control of the assets to the buyer, the SEC said. He did so in order to realize a fake, paper profit with which to deceive investors, the agency said.
The purchaser of the $43.2 million in assets, whose name was not disclosed in SEC documents, was known to Ribotsky as a poor risk, the SEC said. Ribotsky hired a private detective who found that the buyer's "character and reputation for honesty were suspect," and had bad debts and judgments in the amount of $270,000, with only $30,000 in assets despite a personal guarantee that he would cover the $43.2 million debt personally if needed, the agency said.
The Roslyn hedge fund manager used Ponzi scheme tactics, using new investors' cash to pay longer-term clients, meanwhile spending investment money on a Rolex watch, a Lexus and a Mercedes while concealing massive losses, the SEC said.
Ribotsky spent more than $1 million of his clients' money for his personal use, the SEC said Thursday. From 2004-2009 Ribotsky wrote checks to "cash", drawn from investment funds, and had his employees redeem the checks at a local bank and give him the money, the SEC said.
Ribotsky could not immediatly be reached for comment Thursday.
The charges against Ribotsky and his firm center on trades in the private investment in public equity, or PIPE, sector. PIPE transactions often involve startups or micro-cap public companies seeking to raise capital.
Ribotsky, according to an SEC complaint filed in U.S. District Court, in Brooklyn, operated what he called the AJW Funds, providing cash financing to distressed, emerging growth, and start-up microcap companies quoted on the Over-the-Counter Bulletin Board or the Pink Sheets.
According to his investment company website, Ribotsky graduated from Stony Brook University and is active in several charities including the Children's Medical Fund of New York. The North Shore/LIJ University Health System lists him as a trustee.