ROCHESTER, N.Y. – New York Attorney General Eric T. Schneiderman on Thursday announced that his office has obtained a judgment against the CEO of Rochester–based electronics company CandelTronics Corp. for “intentionally defrauding investors.”
CEO Salvatore Candeloro “repeatedly made fraudulent misrepresentations and omissions to promote the sale of securities to local investors,” according to a news release from Schneiderman’s office. Monroe County Supreme Court Justice J. Scott Odorisi issued a consent order and judgment that holds Candeloro responsible for more than $365,000 in restitution to defrauded investors and $35,000 in penalties.
“This judgment sends a clear message that those who commit fraud will face consequences when they rip off New Yorkers,” Schneiderman said in the release. “There has to be one set of rules for everyone, and that includes those who would peddle a product or idea by misrepresenting the facts to investors.”
CandelTronics, founded in 1998 by Candeloro, developed a product called ExtendIt, an electrical device that allows consumers to draw power from an outlet in a room without having to use an extension cord. Over the course of nearly 17 years, Candeloro raised more than $1.8 million in funding from about 18 investors in the form of loans and from another 20 shareholders, promising that the money would help get the product to market, according to Schneiderman’s office.
These investors began to complain to the state attorney general’s office in 2013 that they had not seen any return on their investment, according to the news release.
Schneiderman’s office launched an investigation that it said revealed that Candeloro made “false and misleading statements to investors and did not disclose that the company lost its corporate status in 2001 for failing to file and pay New York State taxes.” Despite losing its incorporation, CandelTronics continued to raise money from investors and Candeloro made misrepresentations that the product had obtained Underwriters Laboratory listing, which was needed to market the product to large-scale distributors, according to the attorney general’s office.
In March of this year, Schneiderman’s office filed a lawsuit against CandelTronics and Candeloro for “fraud and deceptive acts and practices” in connection with the investment scheme.
In response to the lawsuit, the Monroe County Supreme Court issued an order permanently enjoining Candeloro from owning, operating, or managing a business in New York state and from being involved in any business related to buying and selling investment securities issued in the state, Schneiderman’s office said in the news release. Candeloro must pay more than $365,000 in restitution and damages to compensate defrauded investors, and he will lose his shares of ownership in Candeltronics. Those shares will be redistributed to the defrauded investors as restitution. The court also imposed a $35,000 civil penalty against Candeloro, the release stated.
As part of the investigation, the attorney general’s office said it obtained CandelTronics business records. However, because of “poor recordkeeping” by the company, some investors may not have been properly documented. Any investors who believe they are eligible for restitution and damages may submit a claim with the New York Attorney General’s Office, postmarked or received by Dec. 22, according to the news release.
Contact Rombel at arombel@cnybj.com