Photo of Timothy Kroll (c) New Hope Free Press

Timothy Kroll (Courtesy of New Hope Free Press (c) 2016)

Sentencing of Timothy Kroll of Solebury for $17 million real estate fraud scheme delayed until July

Apple Jack's bar in Point Pleasant, P.A.

By Charlie Sahner

Timothy Kroll, 44, of Solebury, was scheduled to be sentenced Tuesday for participating in a scheme with partner Carlton Cabot to defraud real estate investors by using over $17 million as a personal slush fund, and covering it up with manipulated financial statements.

But U.S. Southern District Judge Jesse M. Furman ordered that sentencing be adjourned until July 19. No reason was given, and public officials didn’t return phone calls seeking comment.

Kroll and Cabot were arrested at their homes last June, and charged with seven counts, including wire fraud, securities fraud, and money laundering. They each face up to 105 years.

Kroll pleaded guilty to all seven counts against him on Oct. 7, 2015, according to court records. He had served as chief operating officer of Cabot Investment Properties (CIP), while Cabot, 52, of Stamford, claimed the title of CEO. All told, public records show that CIP pulled in at least $240 million from hundreds of investors.

The National Law Review on June 5, 2015, referring to Cabot, asked, “Is he the worst fraudster in modern history?“

Kroll has been free on $1 million bail, and said in a recent phone interview that he still owned The Local in Point Pleasant (purchased in 2014), formerly the Apple Jack bar. Kroll would not comment on the case, although he made clear that The Local represented a new chapter in his life.

Among other charges, New York prosecutors said that Kroll spent $50,000 of investor funds on a New York City apartment, $40,000 on a credit card, and more than $22,000 toward a BMW automobile.

Barn fire on Saw Mill Road (Photo: Solebury Police Department)

In an unrelated incident, Solebury police on Oct. 19, 2015, responded to a barn fire at Kroll’s five-bedroom residence at 6581 Saw Mill Road. Two Icelandic show horses perished in the blaze, along with some chickens, and the cause of the fire is still “undetermined,” according to a county fire official.

With regard to Kroll’s business activity, the original complaint filed in the Southern District of New York states, “From 2003 through 2012, CIP – which was controlled by Cabot and Kroll – sponsored and oversaw approximately 18 so-called tenants-in-common (TIC) securities offerings to investors located all over the United States.” TICs are a type of a real estate investment in which investors collectively own a piece of commercial real estate, and are entitled to receive a portion of the rental income from the property.

From 2008 through 2012, say prosecutors, “Cabot and Kroll engaged in a scheme to defraud the TIC Investors by misappropriating funds belonging to the TIC Investments, and concealing their misappropriations by providing false and misleading financial reports and other information to the TIC Investors.

According to the prospectuses for the TIC Investments, CIP was only allowed to collect “excess” rental income from the TIC Investments, but Cabot and Kroll repeatedly transferred money out of bank accounts belonging to the TIC Investments and into CIP bank accounts that they controlled before the TIC Investments could use the funds to pay for operating expenses and disbursements to the TIC Investors. Cabot and Kroll, say investigators, then used these funds to pay for the following three unauthorized purposes, without the knowledge or authorization of the TIC Investors:

1) Cabot and Kroll caused millions of dollars to be transferred from the CIP Operating Accounts to the bank accounts of TIC Investments that had no available funds to cover their operating expenses and investor distributions. In this way, Cabot and Kroll were able to perpetuate the fraud scheme by propping up failing TIC Investments using funds belonging to other TIC Investments.

2) The duo used the funds in the CIP Operating Accounts belonging to the TIC Investments to pay for millions of dollars of personal expenses, including expensive cars, rental apartments, and private school tuition.

3) Cabot and Kroll used the funds in the CIP Operating Accounts belonging to the TIC Investments to pay for CIP business expenses, including an approximately $1.1M civil settlement to certain TIC Investors who had sued Cabor, Kroll, CIP, and a CIP sibsidiary.

To conceal their misappropriation of TIC Investment funds from the TIC Investors, say prosecutors, Cabot and Kroll provided false and misleading financial reports to the TIC Investors that intentionally hid the fact that CIP owed large sums of money to the TIC Investments. Kroll also gave false and misleading information to the TIC Investors about how the TIC Investment funds were managed in order to prevent the TIC Investors from learning the true financial status of their investment.

By the end of 2012, when CIP ceased its day-to-day operations, CIP and principals Cabot and Kroll owed approximately $17 million to the TIC Investments, which has never been repaid.

Investigators who ballyhooed the arrests of Kroll and Cabot had little to say Tuesday about whether victims, many retired and having lost their life savings to defaulted investments, will ever be compensated.

Both the United States Postal Inspection Service and IRS did not respond to queries about the sentencing postponement. A call to the public relations department of the normally publicity-hungry Manhattan U.S. Attorney Preet Bharara was ducked.

Alleged con artist behind bars in N.J. may have New Hope connection

Nydia Luz Vega (aka Nydia Vega Reeves, Nydia Neubauer, Lucy George) passport photo

By Charlie Sahner

Nydia Neubauer, an alleged check bouncer, is behind bars at the Monmouth County Correctional Institution in Freehold, N.J., as a “fugitive from justice” on $100,000 bail, according to a prison spokesperson.

Neubauer was taken into custody by the Monmouth County Sheriff’s Office on Aug. 19, and according to the prison, her listed aliases include “Lucy Micheals,” and “Lucy Micheals George”.

Upper Southampton Township Police Chief Ron MacPherson confirmed that his department was notified of her arrest by New Jersey police because she was identified as the “Lucy George” sought in an outstanding arrest warrant issued by his department. Southampton police subsequently requested on Aug. 30 that she continue to be detained in the Freehold prison in connection with a fraud case involving a limousine company.

A woman using the “Lucy George” name appears to have operated for at least several weeks this spring in New Hope and Lambertville, N.J., allegedly writing bad checks and occupying a $995,000 townhouse at 42 W. Mechanic St. (below) in local builder George Michael’s Canal Street development in New Hope, according to neighbors, alleged victims and law enforcement officials.

The “Lucy George” alias is one that two local jewelers have come to know well.

Dimitri Politicos, owner of Lambertville, N.J. jewelry store Dimitri Designs at 41 Bridge St., said by phone from Greece that he had been taken for $50,000 in merchandise after being given a rubber check from a “Lucy George” around the same time. While at first suspicious of such a large amount, the jeweler claims she reassured him by referring to “expensive homes” she had “bought” from George Michael.

George Zykos, who owns a jewelry store at 34 S. Main St. in New Hope, told a similar story. Two checks accepted from a “Lucy George” in exchange for merchandise later bounced, he said. After contacting her repeatedly to complain, she returned to his store on June 13 and charged more than $42,000 to an American Express card imprinted with the name “Lucyluz George Jr,” claiming to be a second cardholder. Like the incident in Lambertville, she again used Michael’s name, saying he “would back her” financially, said Zykos.

A spokesperson for Michael declined comment on this story.

An American Express receipt shown to this reporter bore the approval date of June 14 with the name “Lucyluz George Jr” and a charged amount of $42,589.30. Zykos says the card was cancelled the following week and he remains unpaid. An American Express spokesperson declined comment on the incident.

New Hope resident Harry Snavely says a woman calling herself “Lucy George” attended an art gallery opening in New Hope in May.

“She plopped down in a chair and announced to the room, ‘My husband just died and I have $200 million,’” Snavely said.

Snavely claims that she is the same woman who lived in New Hope some 30 years ago under the alias “Nina de Vega.”

A passport photo (above) obtained by this reporter from an alleged victim in New York City who requested anonymity bears the name “Nydia Luz Vega.” Three drivers for a limousine service used by “Lucy George” identified her as the individual depicted in the photo, as did the owner of the art gallery where Snavely says he saw her in May, and a neighbor.

“Lucy George” is described by neighbors as a blonde-haired woman who frequently wore sunglasses, and was approximately 5-feet, 4-inches tall and weighed around 160-170 pounds. Neighbors also say she lived and traveled with two small dogs and another woman, whom she introduced as her maid. The entourage appeared in New Hope in May and departed by the end of June.

Interestingly, “Nydia Neubauer” is an alias used by Nydia Vega Reeves, a “con queen” from New York City according to an April article in the New York Post, who said Reeves had been “dishing out bad checks and renting luxury apartments without paying” since arriving at a plush New York City hotel with two small dogs.

The article also reported that Reeves “is said to owe a California-based real-estate developer nearly $50,000 and New York real-estate adviser Paul Ippolito about $60,000. Reeves, 62, who claims she grew up with Ralph Lauren and inherited $100 million from her late husband William Reeves, was exposed in 2002 after writing bad checks under the name of ‘Nydia Neubauer’ to Denise Rich’s cancer research charity.”

Aside from Upper Southampton, prison and police officials involved in Neubauer’s detention also say New York City authorities are currently seeking her extradition. The New York City Police Department declined to comment.

According to a limousine industry association column in the August edition of Black Car News, “Ms. Reeves most recently conned a number of Pennsylvania Businesses this month going by the name ‘Lucy George.’ Among those businesses were limousine companies, jewelers and real estate developers.”

New Hope Police Chief Mike Cummings acknowledged that his department is actively investigating alleged incidences of confidence fraud involving the writing of bad checks.

“Several people in town have been victims,” he said.  “As the investigation is ongoing, I can’t provide further details at this time.”

Alleged Financial Scheme in New Hope PA Under Active Investigation

By Charlie Sahner

New Hope Police are actively investigating alleged incidences of confidence fraud involving the writing of bad checks, confirmed Chief Mike Cummings. "Several people in town have been victims," he said this morning. "As the investigation is ongoing, I can't provide further details at this time."

In recent days, rumors have been circulating in New Hope of an alleged large scale "swindle".

More to come as this case unfolds.