State says Winthrop man bilked elderly

Galvin alleges funeral, insurance scams netted more than $1 million.

A Winthrop man has defrauded elderly North Shore residents of more than $1 million by selling them fraudulent life insurance policies and by failing to return some or all of their prepaid funeral expenses, which he persuaded funeral directors to invest with him, according to an administrative complaint filed yesterday by Secretary of State William F. Galvin.

State officials said the case involving Joseph Gennaco, who allegedly carried out the schemes with his sons-in-law, John Langone of Winthrop and Peter Salvitti of Revere, highlights how prone senior citizens can be to financial fraud.

Gennaco targeted his victims when they were emotionally fragile, such as after a family member had died or while they were planning for their own deaths, according to the complaint.

“This is a guy who appears to have deliberately gone after people he thought were vulnerable because of recently having lost a spouse,” said Galvin, who called the case “sinister” and said he may refer it to state or federal prosecutors for possible criminal investigation.

A call to Gennaco was returned by his Quincy lawyer, George Hardiman, who said Gennaco denies the allegations.

Gennaco “feels that he’s a professional with the best of intentions and he’s not some fly-by-night operation,” Hardiman said, adding that the complaint was based on “false and inaccurate information” provided to state officials by someone who “has a very personal agenda.”

Langone and Salvitti did not return calls for comment.

According to the complaint, one of Gennaco’s alleged scams, operated through a firm called Gennaco Associates, involved persuading senior citizens to purchase life insurance policies, and arranging for those investors to receive loans secured by those policies. But the loans carried interest rates of more than 100 percent over two years, which many investors were unable to pay.

In another scheme, the complaint says, Gennaco convinced senior citizens to exchange their old insurance or annuity policies for new ones, which he established through his business entity, GCT Trust. Galvin’s complaint alleges that when the policies matured, Gennaco did not repay the money, and in at least one case invested it without permission in a hedge fund called Oceanview Life Settlements/Life Plus.

Oceanview supposedly pooled investor money to buy and sell life insurance settlement policies on the secondary market, according to the complaint. But Gennaco is alleged to have rarely, if ever, purchased such policies, and instead used new investor money to pay old investors or to pay himself.

Gennaco also preyed on funeral homes that allow people to prepay burial expenses, Galvin’s office said. Funeral home directors are required to invest that prepaid money, so Gennaco allegedly solicited undertakers to invest it with him.

But after people who had prepaid for their funerals died, Gennaco did not immediately return the prepayment money to the funeral homes, and sometimes never returned it, according to the complaint.

Gennaco has been the target of state regulators before.

In 2001, the state Securities Division ordered him to close his Winthrop company, Taurus Capital Investment Group, and return nearly $1.9 million to investors after he allegedly promised them guaranteed returns, but failed to obtain a securities license.

Gennaro is licensed by the Massachusetts Division of Insurance, which is currently investigating him, according to agency spokeswoman Kim Haberlin.
That Gennaco has allegedly continued to defraud investors despite previous action by the state, Galvin said, “shows that when an individual is cunning and unscrupulous, the regulatory process is unsatisfactory to stop their thievery.”

Galvin said he is unsure whether Gennaco’s alleged victims will be able to recoup their investments. But he noted that, in the past, Gennaco’s investors have recovered some or all of their money when he was threatened with regulatory or legal sanctions.

In addition to Gennaco, the complaint names Gennaco Associates, GCT Trust, and Oceanview Life Settlements LLC. Gennaco allegedly operated his schemes under entities including GCT Trust Private Annuity, Oceanview Life Settlements/Life Plus, and Premium Financing Plus, according to the complaint.