SEC fines Dean Vagnozzi and his firm A Better Financial Plan about $500,000
Ubiquitous on Philly radio ads, Vagnozzi was fined for selling unregistered funds. He did not admit wrongdoing.
The Securities and Exchange Commission on Wednesday said it fined businessman Dean Vagnozzi and his financial firm, A Better Financial Plan, roughly $500,000 for securities violations, and ordered him to cease certain investment activities.
Vagnozzi, 51, established a series of investment funds named Pillar 1 through 8 to sell a portfolio of life insurance policies — also known as “life settlements.” From April 2013 through August 2017, Vagnozzi sold five funds, none of which was registered with the SEC, the agency said.
As part of the settlement, Vagnozzi did not admit wrongdoing and is suspended from acting as a broker for 12 months. His lawyer, John Pauciulo, did not respond to requests for comment by email and phone.
A Better Financial Plan is Vagnozzi’s company based in King of Prussia. Vagnozzi is president and sole owner, and raised more than $32 million for the Pillar Funds from 339 investors, with individuals averaging an investment of $97,233, the SEC said.
About 46% of investors were nonaccredited, meaning they didn’t meet certain net worth requirements, the SEC found. The agency’s order did not indicate whether investors lost money.
Vagnozzi encouraged the public to “invest like the big boys,” and touted A Better Financial Plan as a way to buy life settlements, claiming they are the “highest yielding, safe” investments in the market, the SEC said.
One of Vagnozzi’s principal marketing techniques was to broadcast radio advertisements on Philadelphia stations. He promoted “double-digit returns without the volatility of Wall Street,” and invited listeners to call a toll-free number to learn about “an extremely secure investment that guys like Warren Buffet and other institutional investors have been using for decades,” the SEC order said.
He also hosted free dinner seminars to prospect for new clients, videotaped at least two, and posted them online for public viewing on his Vimeo channel.
In an April 2013 video, titled Flemings Steakhouse Presentation, Vagnozzi stated that he paid for dinners “because a bunch of you are going to become clients.” He then described life settlements as “an asset class” and a “private placement” opportunity where “the money is all pooled together” and invested across several policies.
In fact, Vagnozzi wasn’t selling life settlement policies, but rather, limited partnership interests in the Pillar Funds which, in turn, acquired fractionalized interests in life settlement policies, whole life settlement policies, or some combination of both, the SEC said.
Vagnozzi resides in Collegeville and is currently licensed with the Pennsylvania Insurance Department as an insurance producer. He was fined in 2019 — a state-record $490,000 — to settle accusations by the state securities agency that he was selling some investments without a license.
“This is the largest settlement with an individual in department history,” a spokesman for the Pennsylvania Department of Banking and Securities said at the time.
From May 2018 through September 2018, Vagnozzi also worked as an unregistered broker-dealer and earned transaction-based fees by raising funds for a separate entity, Fallcatcher Inc., the SEC said. Fallcatcher purportedly sold biometric devices and software to track patients receiving treatment for substance addiction.
Vagnozzi negotiated a flat fee of $500,000, so long as Vagnozzi raised at least $4 million from his investors, and also received 7.5% of shares in Fallcatcher, the SEC said. Vagnozzi ultimately raised more than $4.9 million dollars for Fallcatcher, the agency found.
This month, Vagnozzi returned the Fallcatcher shares to that company, as part of the SEC settlement.