By Joseph B.A. Marzan
The son of the mayor of Mina, Iloilo was indicted for allegedly defrauding thousands of investors and for alleged tax evasion in the United States.
Rey E. Grabato II was one of the two respondents charged by the U.S. Attorney’s Office of the District of New Jersey, and one of four charged by the U.S. Securities and Exchange Commission (SEC).
The exact charges include 18 counts of conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, wire fraud, and conspiracy to defraud the United States.
The U.S. SEC case accused Grabato and three others of violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the commission.
These charges stemmed from an alleged “Ponzi-like” scheme to defraud 2,000 investors amounting to US$650 million (P38.34 billion according to the Bangko Sentral ng Pilipinas’ October 21 foreign exchange rate), via their company, the National Realty Investment Advisors LLC (NRIA).
The first charge also includes conspiring to evade $26 million (P1.53 billion) in tax liabilities with the U.S. Internal Revenue Service.
The NRIA’s website and WordPress sites are both unavailable as of this writing.
An Oct 13, 2022 news release from the U.S. Department of Justice on the case indicated that Grabato was being used as a “stand-in” Chief Executive Officer to avoid investor scrutiny, as his co-accused Thomas Salzano, had a prior guilty plea.
The U.S. SEC’s October 14 Litigation Release stated that starting in 2018, NRIA and its executives raised funds by promising investors that their money would be used to buy and develop real estate properties, with profits generated through a fund that NRIA set up for the investments.
It alleged that the money was used to “pay distributions to other investors, to fund an executive’s family’s personal and luxury purchases, and to pay reputation management firms to thwart investors’ due diligence of the executives.”
The Justice Department’s news release said that Grabato, a resident of Hoboken, New Jersey, was at large.
The 43-year-old Filipino’s LinkedIn profile indicated that he had been with the NRIA since 2006 and had studied at the De La Salle College of Saint Benilde under its Bachelor of Business Administration program, but his graduation year was not indicated.
His father, former mayor Rey Grabato, declined to comment, citing the nature of the cases as an “active investigation”.
The ex-mayor told Daily Guardian via phone call that his wife and incumbent Mayor Lydia Encarnacion-Grabato would be holding a press conference tomorrow, October 25, to clear matters.
The only known involvement of the younger Grabato in Mina was receiving an award on his mother’s behalf, being a Hall of Fame awardee as a top taxpayer in the town, according to a 2016 news item on the local government unit’s website.
The current mayor was cited in the same news item as the owner and proprietor of several businesses, including RPG Rice Mill, Royal Grains, Inc., Halkyon Agrifarm, and RL Memorial Haven.
