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Paula T. Dow,
Attorney General

Division of Consumer Affairs
Thomas R. Calcagni, Director


Bureau of Securities                                     
Abbe R. Tiger, Chief

For Immediate Release:
September 2, 2011
For Further Information Contact:
Jeff Lamm, 973-504-6327
Neal Buccino, 973-504-6327

New Jersey Division of Consumer Affairs' Bureau of Securities Obtains Asset Freeze and Removal of CEO
from Bergen County Companies, In Lawsuit
Alleging Investor Fraud

NEWARK – A State Superior Court Judge has granted injunctive relief sought by the New Jersey Bureau of Securities against an Allendale-based company, its top executive, and two other business entities, as part of a lawsuit the Bureau filed in July alleging that the defendants defrauded nearly 800 investors of approximately $9.5 million. 

Under the Order issued by Judge Harry G. Carroll, an independent monitor will review and evaluate the business entities for such things as management and governance policies and procedures, to ensure compliance with state and federal securities laws.  The monitor must report to the Court within 90 days of the Order and quarterly thereafter.

The Order enjoins Thomas Fagan from, among other things, controlling an issuer of securities or acting as an officer, director, or manager of an issuer; or supervising employees of an issuer.  Two of the three corporate defendants come within the definition of issuer under New Jersey law.  The Order would allow Fagan to act in a consulting capacity to those business entities.  Fagan's wife had previously consented to an order that included injunctive relief and a residential asset freeze.

The Bureau filed suit against Fagan and his wife, Candace Fagan, for allegedly using funds raised from investors for their personal expenses.  According to the lawsuit, Fagan was not registered as an agent with the N.J. Bureau of Securities when he sold approximately $9.5 million in unregistered Energex stock.

In addition to Fagan and his wife, the Bureau's nine-count Complaint also named as defendants Energex Systems, Inc.; Arbios Acquisition Partners, LLC; and Arbios Systems, Inc. ("ASI").  ASI is a public company whose stock is traded on the Over-the-Counter Bulletin Board (OTCBB).

Fagan founded Arbios Acquisition Partners in 2009 to gain control of ASI and then allegedly sold unregistered ASI promissory notes and ASI stock to investors.  According to the Bureau's Complaint, Fagan commingled investors' funds among the entities he controlled and misused approximately $2.3 million for his personal benefit and enrichment.

"The Court has given us additional authority to protect investors and their hard-earned dollars," Attorney General Paula T. Dow said.  "The defendants' assets are frozen and the monitor will work to evaluate the viability of the business entities to continue operating."

The Court's Order freezes the assets of Fagan and the companies.  Fagan also is preliminarily enjoined and restrained from the conduct alleged in the Bureau's Complaint that violates the State's Uniform Securities Law.

The Bureau's lawsuit alleges that Fagan spent investors' monies on political contributions, unreimbursed travel to Las Vegas and Atlantic City casinos and to the Olympics in Europe, jewelry, and home landscaping, among other personal items.

"We intend to hold these defendants accountable for any investor trust that they broke," said Thomas R. Calcagni, Director of the State Division of Consumer Affairs.  "The freezing of assets and appointment of the monitor are major legal steps bringing us closer to that goal."

Energex Systems, Arbios Acquisition Partners, and ASI all listed the same Allendale address as their business location.  Energex Systems, formerly known as Orthomedics and Orthosonix, claims to be in the business of various biotech products, including ones related to blood safety.

"Always check with the Bureau to see if the securities or person offering the securities are registered.  Not being registered should be a red flag for investors, as unscrupulous individuals may try to avoid complying with the investor protections that the State's Uniform Securities Law provides," said Abbe R. Tiger, Chief of the New Jersey Bureau of Securities.  "We continue to go after those who attempt to operate outside our registration requirements."

The Bureau of Securities can be contacted toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600.  The Bureau's website is located at

Rudolph G. Bassman, Chief of Enforcement for the Bureau of Securities, conducted the investigation of this case.  Deputy Attorneys General Victoria A. Manning and Paul E. Minnefor of the Securities Fraud Prosecution Section in the Division of Law, are representing the Bureau.



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