New Jersey brokers busted for ripping off former Mets star Cliff Floyd and other investors | Economy | -- Your State. Your News.

Jul 05th
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New Jersey brokers busted for ripping off former Mets star Cliff Floyd and other investors

Floydcliff120710_optStephen E. Hill and Stephen Kolinsky of Saddle River lose licenses

Three brokers have been disciplined for allegedly violating state securities laws and regulations in their dealings with several current and former Major League Baseball players who were clients, the state Division of Consumer Affairs announced Tuesday.

Officials declined to identify the baseball players but Sports Illustrated reported that former New York Mets' player Cliff Floyd is among those who were stung financially.

The division's Bureau of Securities found that Stephen Elliott Hill, an owner of a Woodcliff Lake-based financial firm, Kolinsky-Hill Financial Group, misappropriated nearly $1.7 million from a client. The bureau's order revoked the broker registrations of Hill, 55, and firm co-owner Stephen Kolinsky, 49, in effect barring them from the New Jersey securities industry. Both are residents of Upper Saddle River.

The order also sanctioned sales representative Roy Glassberg, 56, of Boca Raton, Fla., for failing to disclose his outside business activities to the broker-dealer firm with which he was affiliated, Royal Alliance Associates Inc. The funds misappropriated by Hill benefited a company owned by Glassberg and Hill's wife.

"Clients trusted these industry professionals with their hard-earned savings, and that trust was broken," state Attorney General Paula T. Dow said. "Professional athletes, working toward a financially secure future upon retirement, became victims to those seeking to enrich themselves."

Authorities did not bring criminal charges against the brokers because the securities law is a civil statute.

According to the state order, since 2001, all three brokers were registered at NFP Securities Inc., as agents and investment advisers, and moved to Royal Alliance Associates Inc. in 2008. Hill and Kolinsky built a practice attracting many professional baseball players, who had neither the time nor expertise to manage investments. Over the course of several years, the respondents created private real estate and other investment deals, often undisclosed to NFP Securities and Royal Alliance Associates, and then solicited the players to invest in them.

As the order details, in one such deal dating back to 2005, six Kolinsky-Hill clients invested a total of $5 million for an undeveloped parcel of riverfront land in Hackensack. To date, no development of the property has occurred. Kolinsky and Hill never informed NFP of this business venture, of their relationship to a series of corporations created for the property's development, or of their solicitation of clients to invest in them.

By 2008, Kolinsky-Hill had built relationships with baseball players' accountants, so with just a phone call, they could direct the wiring of the players' funds. Hill coaxed one former player into approving an investment of $103,000 into what was represented to be a dental products company, only to have Hill orchestrate the siphoning away of approximately $1.7 million through fraudulent transfer documents and misrepresentations to banks, broker-dealers, and clearing firms. The funds ultimately benefited Gryphon Hill — a company in which Hill's wife and Glassberg were the managing members.

The order also sets forth the findings that Kolinsky, in addition to failing to disclose his own outside business dealings, never noticed or reported any unusual activity by Hill or other Kolinsky-Hill employees. Kolinsky is alleged to have failed to familiarize himself with his own customer accounts or to reasonably supervise to prevent or detect the violations that occurred while affiliated with NFP and Royal Alliance.

"The inducement of investments through deception and misstatements is outright fraud, which can have a devastating impact on people's lifesavings," state Acting Consumer Affairs Director Thomas R. Calcagni said. "We will bring New Jersey's securities laws to bear on unscrupulous brokers and advisors who seek to take advantage of investors."

The bureau assessed a $210,000 civil penalty against Hill, in addition to ordering the revocation of Hill's and Kolinsky's broker registrations. The bureau suspended Glassberg for two months, for failing to inform Royal Alliance of outside business activities.

"Respondents repeatedly solicited clients in their private deals, hidden from the brokerage firm's view," Bureau Chief Marc B. Minor said. "According to the findings set forth in the summary order, this culminated in Hill's brazen misappropriation, which benefited his wife and his business partner. Kolinsky ignored his supervisory duty to uncover undisclosed dealings and bogus documents that set the stage for Hill's acts."

Royal Alliance terminated its relationship with Hill and Kolinsky earlier this year.

The brokers have 15 days to file written submissions contesting the findings. The matter may then be transmitted to the state Office of Administrative Law or the bureau for a hearing with a full and fair opportunity to contest the action and the findings alleged in the order.

Bureau Deputy Chief Amy Kopleton and Enforcement Chief Rudolph Bassman conducted the investigation of the brokers' actions. Securities Fraud Prosecution Section Chief Anna M. Lascurain and Deputy Attorney General Toral Joshi represent the state.


Comments (1)
1 Thursday, 27 January 2011 14:11
upstanding citizen
the suit was total bullshit! who hasnt lost money in real estate in the last 3 1/2 yrs!!!! these money managers run a very legit biz and b/c it involved celeb baseball players its front page news! --its bullshit and these players need to grow up and be big boys like the rest of us that take risks in all kinds of investments!!!!!!!

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