Truth Tracker: Dean Vagnozzi (Part 1)

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Dean James Vagnozzi, CEO of A Better Financial Plan Capital Management, LLC in King of Prussia, Pennsylvania can be heard marketing his company on KYW 1060-AM Radio from time to time. Considered by some to be a revolutionary investor for his outside of the box investments, Vagnozzi offers four known investments for his clients. These include litigation funding, real estate funds, life insurance, and merchant cash advances. Two investments have been disclosed to the public in a marketing scheme to promote ABFP Income Fund 4, LLC for merchant cash advances along with Atrium Legal Capital 3, LLC for litigation funding. Vagnozzi implores investors to come meet with him and his staff so they can be educated about the investments. If not, investors can spend fifty dollars to access educational videos produced by Vagnozzi and A Better Financial Plan, only to get the money back should they choose to invest.

When dealing with the investment community, most investors would agree that a degree of transparency is necessary to maintain confidence in investing. Vagnozzi prefers to operate behind closed doors, luring clients into his office with promises of high returns and mitigated risk. A handful of videos embedded in Vagnozzi’s website show many of the same consumers reiterating these high returns, specifically from Merchant Cash Advance investments.

Merchant cash advances (MCA) are loans that are given to small businesses who are seeking short term capital for expansion or projects. The companies receiving MCAs are required to pay immense interest rates on these advances, sometimes upwards of 35%. As the interest is paid back, according to Vagnozzi’s testimonials, investors receive their monthly guaranteed interest payments. Depending on the principal investment amount, investors are guaranteed to see a 10%, 12%, or even 14% annual return on MCAs. Vagnozzi has a history of guaranteeing double digit returns, although he refrains from publicly stating a guarantee – unless you go to ABFPIncomefund.com.

Vagnozzi also has a history of negligence in the investment community. Recently in 2019, Vagnozzi was featured in a Philadelphia Inquirer article highlighting an enforcement order that forced him to pay a fine of $490,000 to the Pennsylvania Department of Banking and Securities. He was ordered to pay this fine for not complying with security regulations outlined in the Pennsylvania Securities Act of 1972 and being an unregistered broker in the sale of non-negotiable promissory notes. Among those included in the case was Complete Business Solutions Group, also referred to as Par Funding – a Philadelphia based company who lends small businesses money through merchant cash advances. In December of 2018, Par Funding was given a cease and desist order by authorities in New Jersey for their role in selling unregistered securities to raise capital for merchant cash advances.

According to a 2019 SEC filing, Par Funding and A Better Financial Plan still maintain a working relationship. Considering Par Funding issues MCAs, it is reasonable to believe that individuals who invest with Vagnozzi are having their investments lent to Par Funding to make cash advances, with the returning interest being used to pay investors monthly interest payments. One client of Vagnozzi’s financial business confirmed that their contract is being used to fund such investments.

When looking at Vagnozzi’s SEC filings, several investment and income funds list debt and equity securities as the primary investments being offered since 2018. Currently, all ABFP Income Funds are being advertised for MCAs and have been incorporated in Delaware since April 2018. This fund, along with three others have not been made accessible through an EDGAR or SEC search. Further, according to FINRA, there is no evidence to attest that Vagnozzi has obtained the proper licensing to broker securities in the State of Pennsylvania. It is known that Vagnozzi, through A Better Financial Plan, is paying investors using interest paid from merchant cash advances and at least one of the securities being issued to fund these advances has been confirmed as a promissory note – the same security that caused the Pennsylvania Department of Banking and Securities to issue a final order against Vagnozzi in 2019.

Vagnozzi does not have to register these securities with the State of Pennsylvania due to an exemption. Pursuant to SEC rule 506 of Regulation D, Vagnozzi is exempt from listing and registering the securities he sells. According to the Department of Banking and Securities however, you must be a registered broker-dealer, agent, or issuer to sell securities. According to the same regulation, the State of Pennsylvania Department of Banking and Securities does not require registration of the individual if they obtain exemptions to register the securities they issue. Therefore, although Vagnozzi is not listed on FINRA or IAPD as a registered broker, he is exempt due to the department’s rules.

His involvement with Par Funding is only the tipping point of Vagnozzi’s negligence in the investment community. In 2016-2017 Vagnozzi was listed as a defendant in a bankruptcy case in Texas. Although the case was ultimately dismissed with prejudice, the claims of the case speak for themselves. Specifically dealing with life settlements, an investment avenue that Vagnozzi allegedly continues to promote, defendant licensees were said to have misrepresented life expectancies when conducting sales on behalf of Life Partner Holdings, Inc. in order to force investors to pay premiums for a longer term and eventually abandon the contracts. Defendants in the case were also alleged to have received large amounts of finder’s fees and commissions, more than what Texas regulatory laws deemed as fair.

The question still remains whether or not Dean Vagnozzi is upholding his responsibility to protect consumers and their investments. While FINRA and IAPD are accurate in not listing Vagnozzi as a licensed broker, Pennsylvania securities regulations dictate that he is exempt from registration. Since the securities he sells are exempt, so is he from having to register as a broker, agent, or issuer. Considering the State of Pennsylvania is very lenient in their regulation of merchant cash advances, as well as the licensing thereof, it is especially important that the involved parties remain transparent in their transactions. Transparency issues were raised in a statement from one client of Vagnozzi, as the client was not aware of which Philadelphia based company is involved with the MCAs.

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