Last week, 16 investors filed a lawsuit against Stephen D. Pizzuti and
Merrimac Corporate Securities, Inc. that alleged gross negligence on the
part of Pizzuti and Merrimac in relation to a $4.1 million investment
scheme allegedly perpetrated by Pizzuti's brother and other brokers
("Investors say brokerage's principal liable for investment-scheme
losses," Orlando Sentinel, April 12, 2011).
The complaint further claimed that Stephen Pizzuti and Merrimac were responsible
for "providing an open platform for rogue brokers to perpetrate one
of the most brazen and egregious investment scams in Central Florida history."
For a period of five years, the complaint alleged, "Merrimac brokers
sold millions of dollars of unregistered securities and
unsuitable investments to elderly and unsophisticated investors, most of whom live
in Central Florida" and "used the Merrimac name and offices
to portray these side businesses as legitimate investment opportunities
that were endorsed by Merrimac."
As reported in the article, many of the scheme's victims were elderly
investors, such as 73-year-old Janet Forsythe, who were promised safe
investments with solid returns if they would roll their retirement savings
accounts into accounts managed by Merrimac brokers. Once the transfer
was complete, the brokers invested the funds into risky real estate ventures.
Many of the investors, including Ms. Forsythe, said they lost their entire
life savings in the scheme.
Richard Pizzuti, Stephen's brother, was accused of misusing investor
funds and expelled from the brokerage industry in 2009 after he refused
to cooperate with authorities. He later filed for bankruptcy. At filing,
he owed $7.5 million to investors and creditors, according to the article.
While Stephen Pizzuti has explicitly denied allegations that he was responsible
for his brother's actions, investors feel otherwise. Investors in
the suit are seeking both compensatory and punitive damages.