Lawsuit: ‘Grandfatherly tax accountant’ Joseph Pezzano scammed Peco retirees out of $18.5 million

Joseph Pezzano had pitched his investment plan to potential clients as a conservative, low-risk option, the perfect choice for retirees looking to safely invest their life savings.

“You’re not going to make a killing on it, but you’ll be consistently getting money,” Pezzano told a former Peco employee in 2021, according to a recent court filing. That man decided to roll his 401(k) and a lump-sum cash distribution in lieu of a Peco pension into what he believed to be a self-directed IRA.

Those former clients are now questioning whether Pezzano had invested their money at all, or whether it was simply stolen. And, if it’s gone, how will they pay their bills?

Fourteen investors, many of whom are retired Peco employees or their relatives, have filed a federal lawsuit alleging that Pezzano scammed them out of $18.5 million in savings and inheritances, leaving some “without the necessary money that they need to survive.”

The lawsuit sheds new light on an expanding investment debacle that has affected 70 or more clients in four states. Some lost everything.

“At the heart of this fraud scheme is Joseph Pezzano, a grandfatherly tax accountant turned purported investment broker,” the lawsuit states.

Pezzano, a South Philadelphia native and longtime trusted figure in his Montgomery County community, died last Christmas Day at the age of 73. He is believed to have been handling as much as $30 million in investments through his company JPA R/E Associates. That estimate, however, has been growing throughout the year as new investors come forward.

» READ MORE: ‘Ponzi scheme’ or bookkeeping error? The FBI is probing a Collegeville investment firm.

Lawyers representing a separate cohort of former clients have been filing claims in Montgomery County Orphan’s Court, seeking to recover investments ranging from $12,000 to $3 million each. The FBI is also investigating, sources have told The Inquirer.

The federal lawsuit, which was filed last week in Philadelphia and first reported by Financial Advisor Magazine, accuses Pezzano, his Collegeville accounting firm, Bond, Pezzano & Etze, his widow, Paula Pezzano, and others of participating in or benefiting from a fraudulent investment scheme. The suit was filed in the U.S. District Court for the Eastern District of Pennsylvania.

The plaintiffs’ lawyer, Thomas Fiddler, did not return requests for comment.

The suit alleges that Joseph Pezzano misappropriated his clients’ “life-savings and retirement funds by, among other things, transferring funds to family members and business partners, purchasing real estate for himself and family members, and/or failing to invest the funds at all.”

Paula Pezzano, who is the executor of Joseph Pezzano’s estate and its sole heir, is “believed to be in possession of the Investor-Plaintiffs’ funds and/or assets purchased with their funds and to have been unjustly enriched by the fraud schemes of her late husband,” the complaint contends.

Reached at her home Wednesday, Paula Pezzano said: “I have no comment, none. You can talk to the attorney.” She then hung up the phone.

Thomas Boulden, a lawyer representing the estate, has not responded to requests for comment from The Inquirer over the last month. Nor have representatives for Bond, Pezzano & Etze, where Pezzano’s daughter is a partner.

» READ MORE: Lawyers for late Collegeville accountant can’t find where he invested millions for dozens of trusting clients

The lawsuit does not specify what real estate that lawyers say they believe might have been purchased with JPA investment funds, but former Pezzano clients and their attorneys have raised questions about several properties in Ocean City, N.J.

Cape May County records show a flurry of activity in recent years involving condominiums and parking spaces owned by Joseph and Paula Pezzano — most recently just 10 days before his death.

On Dec. 15, 2023, Paula Pezzano sold a condo for $585,000. It is described on Redfin as having “million-dollar views.”

“Ocean, boardwalk and pool front condo with incredible direct panoramic ocean views!” the site states.

Another condo co-owned by Joseph and Paula Pezzano was sold the same day for $500,000.

It is unclear what funds were used to purchase those and other New Jersey properties owned by the Pezzanos. Some of the deed transfers were notarized by Michele Gibson, the office manager at Pezzano’s accounting firm, who is also named in the federal lawsuit.

Pezzano’s investment arm, JPA, shared an address and phone number with Bond, Pezzano & Etze. But soon after his death, Gibson began informing Pezzano’s clients in e-mails that the accounting firm “has no affiliation” with JPA.

The federal lawsuit says that is a lie, and notes that when investors went to the accounting firm seeking answers, the JPA book of investment options was still sitting on the coffee table in the accounting firm’s reception area. The suit also alleges that Pezzano offered free tax preparation services to his investor clients in order to prevent a review from an outside accountant “who may have recognized obvious red flags.”

Some of Pezzano’s friends and clients have held out hope throughout the year that Pezzano had simply failed to craft a succession plan for how JPA would be managed after his death, and that the money could still be recovered.

“I think all the money is there and somewhere there is paperwork,” Earl Peacock, a friend of Pezzano’s who said he is out at least $3 million, told The Inquirer last month. “He wouldn’t have stiffed me like this.”

Many investors, however, now believe they were conned in some sort of Ponzi-like scheme.

In a court filing last month, lawyers representing Pezzano’s estate said they had been “unable to locate or identify investments made by JPA that would correspond to investments shown on the statements the decedent prepared and delivered to investors.”

Experts say investors should always search the BrokerCheck database run by the Financial Industry Regulatory Authority to get information on potential financial brokers. Pezzano is not in the database, and does not appear to have had an active public accountant license in Pennsylvania.

Pezzano’s estate lawyers have asked a Montgomery County judge to appoint a receiver to handle investor claims.