Westfield-Based Investment Advisor Sentenced To 58 Months In Prison

A Westfield-based investment advisor was sentenced Wednesday to 58 months in prison for defrauding numerous investors - including a union pension fund - of more than $2.4 million, U.S. Attorney Paul J. Fishman announced.

Carlo Chiaese, a 38-year-old resident of Livingston who operated an independent investment firm in Westfield for more than a decade, told clients that he favored a conservative strategy that would not put their money at significant risk, including investments in traditional securities such as bonds and mutual funds.

But instead of investing his client’s money as promised, Chiaese used the millions of dollars he collected to fund a lavish lifestyle that included leases on at least three vehicles; membership fees at two country clubs; stays at luxurious hotels and purchases at high-end retailers, according to statements made and documents filed during the case.  

Chiaese previously plead guilty before U.S. District Court Judge William J. Martini to charges of securities fraud. In October, Chiaese had on accusations of defrauding investors in New Jersey and New York. Martini imposed yesterday’s sentence in federal court in Newark. 

In addition to the 58-month prison term, Martini sentenced Chiaese to three years of supervised release and ordered him to pay approximately $2.5 million in restitution.

According to court documents, Chiaese operated CGC Advisors, LLC – which it said was located in Westfield – from 1999 to 2010. He attracted clients by touting his past investment experience at firms such as Citibank, Merrill Lynch and Bear Stearns & Co. Chiaese admitted that, between November 2008 and September 2010, he raised more than $2.9 million from individuals and entities in New Jersey, New York and abroad. One investment of approximately $1.71 million came from a pension fund containing pensions of more than 850 current and former members of Local 333, United Marine Division, International Longshoreman’s Association – a union of individuals employed in the tugboat and ferry business in New Jersey and New York waterways.

In addition to leases on a Porsche 911 Carrera and an Audi Q7 and purchases at Hermes and Saks Fifth Avenue, Chiaese also made cash withdrawals from the funds in excess of $185,000 and transferred more than $800,000 to his wife and members of her family. In all, Chiaese’s actions included $1.4 million in personal expenses and more than $2 million in losses for his investors, the Wall Street Journal reported.

Chiaese also used at least $280,000 of investor money to repay other investors in Ponzi-scheme fashion. To conceal his fraudulent actions, Chiaese sent many investors fake trade confirmations and account statements to make it appear that he had invested in securities that he actually had not invested in.

An office location for CGC Advisors, LLC in Westfield was not disclosed in the federal complaint. A Google search for the company reveals an address of 53 Cardinal Drive, Suite 1. A website for the company is under construction.

The case by the U.S. Attorney’s Office was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force.