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Paula T. Dow,
Attorney General

Division of Consumer Affairs
Thomas R. Calcagni, Acting Director

For Immediate Release:
December 7, 2010
For Further Information Contact:
Jeff Lamm, 973-504-6327

N.J. Bureau of Securities Revokes Two Brokers and Suspends Another for Multi-Million Dollar Misappropriation and Undisclosed Investment of Funds; Clients Included Major League Baseball Players

NEWARK—N.J. Attorney General Paula T. Dow today announced that three brokers have been disciplined for allegedly violating state securities laws and regulations in their dealings with several current former Major League Baseball players who were clients.

The N.J. Bureau of Securities found that Stephen Elliott Hill, an owner of a Woodcliff Lake-based financial firm, Kolinsky-Hill Financial Group, misappropriated nearly $1.7 million from a client. The Bureau's Summary Order revoked the broker registrations of Hill, 55, and firm co-owner Steven Kolinsky, 49, in effect barring them from the New Jersey securities industry. Both are residents of Upper Saddle River. The Order also sanctioned sales representative Roy Glassberg, 56, of Boca Raton, Florida, for failing to disclose his outside business activities to the broker-dealer firm with which he was affiliated, Royal Alliance Associates, Inc. The funds misappropriated by Hill benefited a company owned by Glassberg and Hill's wife.

"Clients trusted these industry professionals with their hard-earned savings, and that trust was broken. Professional athletes, working toward a financially secure future upon retirement, became victims to those seeking to enrich themselves," Attorney General Dow said.

According to the Summary Order, since 2001, all three brokers were registered at NFP Securities, Inc., as agents and investment advisers, and moved to Royal Alliance Associates, Inc., in 2008. Hill and Kolinsky built a practice attracting many professional baseball players, who had neither the time nor expertise to manage investments. Over the course of several years, the respondents created private real estate and other investment deals, often undisclosed to NFP Securities and Royal Alliance Associates, and then solicited the players to invest in them.

As the Summary Order details, in one such deal dating back to 2005, six Kolinsky-Hill clients invested a total of $5 million for an undeveloped parcel of riverfront land in Hackensack, N.J. To date, no development of the property has occurred. Kolinsky and Hill never informed NFP of this business venture, of their relationship to a series of corporations created for the property's development, or of their solicitation of clients to invest in them.

By 2008, Kolinsky-Hill had built relationships with baseball players' accountants, so with just a phone call, they could direct the wiring of the players' funds. Hill coaxed one former player into approving an investment of $103,000 into what was represented to be a dental products company, only to have Hill orchestrate the siphoning away of approximately $1.7 million through fraudulent transfer documents and misrepresentations to banks, broker-dealers, and clearing firms. The funds ultimately benefited Gryphon Hill - a company in which Hill's wife and Glassberg were the managing members.

The Order also sets forth the findings that Kolinsky, in addition to failing to disclose his own outside business dealings, as the branch supervisor and the broker of record on the above-referenced account, never noticed or reported any unusual activity by Hill or other Kolinsky-Hill employees. Kolinsky is alleged to have failed to familiarize himself with his own customer accounts or to reasonably supervise to prevent or detect the violations that occurred while affiliated with NFP and Royal Alliance.

"The inducement of investments through deception and misstatements is outright fraud, which can have a devastating impact on people's lifesavings," said Thomas R. Calcagni, Acting Director of Consumer Affairs. "We will bring New Jersey's securities laws to bear on unscrupulous brokers and advisors who seek to take advantage of investors."

The Bureau assessed a $210,000 civil penalty against Hill, in addition to ordering the revocation of Hill's and Kolinsky's broker registrations. The Bureau suspended Glassberg for two months, for failing to inform Royal Alliance of outside business activities.

"Respondents repeatedly solicited clients in their private deals, hidden from the brokerage firm's view," said Bureau Chief Marc B. Minor. "According to the findings set forth in the Summary Order, this culminated in Hill's brazen misappropriation, which benefited his wife and his business partner. Kolinsky ignored his supervisory duty to uncover undisclosed dealings and bogus documents that set the stage for Hill's acts."

Royal Alliance terminated its relationship with Hill and Kolinsky earlier this year.

Respondents have 15 days from notice of the Bureau Chief's Summary Order to file written submissions contesting the findings. The matter may then be transmitted to the Office of Administrative Law or the Bureau for a hearing with a full and fair opportunity to contest the action and the findings alleged in the Order.

Bureau Deputy Chief Amy Kopleton and Enforcement Chief Rudolph Bassman conducted the investigation of this matter. Securities Fraud Prosecution Section Chief Anna M. Lascurain and Deputy Attorney General Toral Joshi represent the state.

Kolinsky-Hill Summary Order


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