Greenwich businessman fined $100K by Connecticut Banking Commission for investment fraud

The Connecticut Banking Commission has levied a $100,000 fine against Samuel Klein of Greenwich for purposely misleading investors who believed they were investing in distressed real estate debt even after a prior cease and desist order.

The personal fine is compounded with a $100,000 fine given to KF Pecksland LLC, which shares an address with Klein’s home and takes its name from the street it is located on. Through KF Pecksland, Klein also owned Visual Group LLC, which invested in The Bleachers Corp., a stock corporation of which Klein was the president. An additional $100,000 fine was issued to the Visual Group, making him responsible for $300,000 in fines imposed by the State Banking Commission. The companies were all found to have continued offering and selling unregistered securities even after hearings and uncontested cease and desist orders.

These fines were related to a criminal case against Klein, where he entered a guilty plea in May 2022 for charges of transporting property acquired by fraud across state lines and money laundering. He was sentenced to 36 months in prison on both counts, served concurrently, and was also ordered to pay almost $1.5 million in restitution to those he defrauded.

According to court documents, Klein told an investor that “she would double or triple her money if she invested. Klein personally guaranteed that the investor would receive her money back” and received more than $250,000 from her, including $42,000 wired to Visual Group.

The court records noted, “While Visual Group financial records failed to conclusively demonstrate that investor funds were being applied to the purchase of distressed debt, they did reveal personal payments benefiting Klein. At no point during communications with the investor did Klein disclose that money invested would be used for anything other than the purchase of distressed real estate debt.”

Klein also failed to let investors know that he would directly benefit as a result of the advice he gave them. He invested funds from his other venture, The Bleachers Corp., and also encouraged others to invest in the venture without disclosing that he stood to benefit, let alone that he would wind up using the funds for himself.

The Bleachers Corp. was dissolved last year by the Secretary of the State’s office for failure to file any required annual reports since 2013, though operations ceased in 2017 after Klein plead guilty to his offenses at KF Pecksland. According to the charges brought against him, Klein drastically overvalued The Bleachers Corp., telling potential investors that it was worth $25 million and $50 million, “even though board member meetings held at the same time as the purchase indicate the Bleachers Corp. was struggling to stay solvent.”

Klein’s case became a federal matter because one of the checks solicited from a victim was transported across state lines, from New York to Connecticut. This led to his investigation by the IRS and the FBI.

Klein began serving his prison sentence on May 3, 2022. After he exits prison, Klein will serve another three years of supervised release.