FINRA filed a complaint against Cantone Research Inc. (“CRI”) of Tinton Falls, New Jersey and its President, Anthony J. Cantone, charging fraud in connection with the sales and subsequent extensions of more than $8 million of certificates of participation (“COP”) in five promissory notes. The complaint alleges that four of the five pertinent promissory notes have defaulted, causing over $6 million in losses to investors. Simultaneously, CRI and Cantone received fees, commissions, and other payments of over $1 million. Further, the complaint charges Christine L. Cantone, CRI’s Chief Compliance Officer during the time of the alleged fraudulent misconduct with failing to supervise Catone.

According to the complaint, the promissory notes at issue were executed on behalf of one of several entities controlled by Christopher Brogdon, an individual who worked in the assisted living and nursing home industry. Under the terms of the COP sold by Cantone, Brogdon would use investors’ funds to purchase and/or redevelop a nursing home, assisted living facility or other real-estate that he controlled. In return, investors were promised 10 percent interest in addition to the return of their principal. The complaint alleges that at the time that CRI and Cantone solicited investors to purchase the COP, and later, when CRI and Cantone extended certain of the COP, CRI and Cantone either misrepresented or failed to disclose material information to investors that cast substantial doubt on Brogdon’s ability to successfully make the required principal and interest payments.

FINRA alleges that CRI and Cantone misrepresented and/or failed to disclose material facts to investors and prospective investors, including that:

  • Brogdon had twice been barred from the securities industry, once for “egregious misconduct” involving unauthorized transactions, and later for a separate “scheme” involving financial misconduct;
  • Brogdon had been indicted for racketeering, theft and Medicaid fraud;
  • Brogdon had been found liable for breaching a stock repurchase guarantee agreement; and
  • several entities controlled by Brogdon had filed for bankruptcy.

In addition, the complaint alleges that on numerous occasions, Brogdon (and/or an entity under his control) breached the terms of the promissory notes by failing to make a required principal or interest payment. However, instead of informing the COP investors of these defaults, CRI and Cantone attempted to conceal the defaults from investors by, among other things, secretly “covering” the interest payments on Brogdon’s behalf. CRI and Cantone continued to solicit new COP investors after one or more of these defaults without disclosure to prospective investors.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.