Financial Advisor, Former Madoff Employee, Charged by State

State officials say a New Canaan man and former Madoff employee violated Connecticut banking laws through a complicated scheme that saw millions invested in multiple funds not properly registered while he took a percentage fee and misled investigators.

The Connecticut State Banking Commission has issued a Cease-and-Desist against Gregory Richard Imbruce and charged him with fraud, according to the notice to cease and desist as well as a notice of intent to fine. Imbruce faces up to $100,000 per violation.

The documents charged Imbruce with forming a number of Limited Partnerships and Limited Liability Companies, based out of the same office in a Stamford suite, then using a number of those companies to invest in oil and natural gas properties in Oklahoma and Texas. Imbruce allegedly listed a number of "alter-egos"—under company names such as Asym, Hunton and Giddings Genpar—as leaders of the company, but is charged with using these names as placeholders for companies in which Imbruce was in sole control, in exclusion of all other parties. He ultimately used these companies to garner capital contributions from 42 limited partners totaling $14.5 million.

He also failed to disclose to investors that he had been sanctioned by a governing body in the banking industry for his involvement with Madoff, and misled state officials, the cease and desist letter says.

The activity took place over three separate periods between September 2009 and December 2012, the state says.

A number of the investors, including a pair from New Canaan, have brought a civil suit against Imbruce for these charges, officials say. Attorney Jon Whitcomb, partner at Stamford's Diserio, Martin, O'Connor & Castiglioni, LLP, and listed as representation for some of the parties in the civil suit, said the charges from the state validate the civil case against Imbruce.

"This confirms the allegations in our civil lawsuit," said Whitcomb. "We are not surprised. This is an individual who worked under Bernie Madoff, had an adverse [Financial Industry Regulatory Authority] ruling against him and a history of lawsuits being bought against him. The vast majority of these current investors, either directly or indirectly, are suing him right now."

Imbruce was not immediately available for comment. He has two weeks to respond to the allegations, brought in a document dated Dec. 17 and signed by prosecuting attorney Elena Zweifler. The state identifies Imbruce's address as a Thurton Drive home, though that address has proved not to be accurate. New Canaan tax records show that the property, appraised at $1.47 million, has been owned for nearly 20 years by another party.

The state charges that Imbruce never invested in his own companies though he represented to his partners that he had in order to sell them on the idea of investing themselves, and sold to these investors units of the companies while they remained unregistered in Connecticut, though he represented that the companies had been properly registered. Of the companies that were registered, he failed to notify the state of the sales prior to the notice filing deadline, officials say. None of Imbruce's "alter-egos" were registered investment advisors, as per state law. Investors faced further complications when Imbruce failed to provide documentation that would allow them to properly file federal and state income taxes. Similarly, the state charges that Imbruce failed to provide them with documentation they've requested in connection to the case.

Imbruce also is accused of failing to disclose a number of facts to the investors, including that he had worked under Madoff at all, listing only that he had worked in a "family office," on his resume, sources involved with the suit said. He also failed to disclose to his limited partners that FINRA had instituted a regulatory action against him while he was employed with Madoff Securities and was found to have violated the Exchange Act while there, ultimately leading to his suspension from working in the securities industry for 10 days and a total of $8,903.70 in liens and fines levied against him.

This Cease-and-Desist means Imbruce can not act as a financial advisor unless he is registered in the State of Connecticut. If found guilty, he may never be able to act as an advisor again.