Friday, March 20, 2009
The owner of a New Jersey real estate investment firm has been charged with using $2 million of his company’s money for construction at his home and other projects not related to work.
Gary Klein, owner of the Asbury Park-based REI Group Inc., surrendered himself to police after a Monmouth County grand jury indicted him on one count of theft by deception charges.
The charges were the result of a three-year investigation into his practices. Klein, 45, of Colts Neck Township, faces up to 10 years in state prison if convicted. Klein was released Friday after posting $75,000 bail.
Klein attracted clients by telling them he would invest their money in projects that would result in returns of 12 and 85 percent. Prosecutors said the actions mirrored those of a Ponzi scheme.
Robert Weir, Klein’s attorney, said the operation was not a Ponzi scheme, but legitimate business investments that went bad as the economy declined. Weir also said Klein hired a receiver to try and return the investors’ money once the investments started to go sour.
“It’s a shame that a business that experienced a turn in the real estate market is now being treated as a criminal problem. That was not Mr. Klein’s intent,” Weir said to The Star-Ledger.
Weir said the investments were used for building rehabilitation projects in Asbury Park and the construction of Florida condominium complexes, but authorities said Klein used the money to repay earlier investors who were cashing out, as well to help build his own home.