Financier Ordered to Pay $71.5 Million in Fraud Case

A federal judge Tuesday ordered financier Robert E. Brennan to pay $71.5 million to settle charges that he defrauded thousands of investors as head of First Jersey Securities Inc.

Judge Richard Owen delivered his review of Brennan’s business activities in a stinging 48-page ruling that brings to an end a civil trial on charges brought by the Securities and Exchange Commission.

Owen said Brennan’s securities laws violations were “flagrant and deliberate,” and he noted that Brennan, through involvement in other companies, had positioned himself to violate securities laws in the future. Owen barred him from doing so.

The SEC has been trailing Brennan since the 1980s, when the financier began appearing in TV commercials promising riches to New Jersey viewers. He sold mostly small-company stocks that typically cost less than $3 a share. He would generally portray the stocks as good investments, but many were in fact risky.

Owen found that evidence produced in a trial last year showed that the risk all fell to the investors, not to Brennan’s company, which stacked the deck by manipulating its accounts and customers.

The SEC had asked for $78 million in restitution, including $27 million it says was gained improperly, plus interest.

Owen said Brennan must pay $22.28 million in penalties and $49.25 million in prejudgment interest. The judge said the amount of interest will end up being higher, and he also left open the possibility that further restitution might be ordered pending a closer review of First Jersey’s finances.

Brennan, 50, of Brielle, N.J., was out of the country and not immediately available for comment, according to his New York office.

David Schraver, Brennan’s attorney, said he had not read the decision but that he was disappointed by the outcome.

“We believe there are substantial grounds for appeal,” he said.