Includes $365,000 In Restitution For Victims, $35,000 In Penalties, And Bars CEO From Owning, Operating, Or Managing A Business In New York State
ROCHESTER – Attorney General Eric T. Schneiderman today announced that his office obtained a judgment against the chief executive officer of Rochester-based electronics company CandelTronics for intentionally defrauding investors. CEO Salvatore Candeloro repeatedly made fraudulent misrepresentations and omissions to promote the sale of securities to local investors. Monroe County Supreme Court Justice J. Scott Odorisi issued a consent order and judgment that holds Candeloro responsible for more than $365,000 in restitution to defrauded investors and $35,000 in penalties.
“This judgment sends a clear message that those who commit fraud will face consequences when they rip off New Yorkers,” said Attorney General Schneiderman. “There has to be one set of rules for everyone, and that includes those who would peddle a product or idea by misrepresenting the facts to investors.”
CandelTronics Corporation, founded in 1998 by Candeloro, developed a product called ExtendIt, an electrical device that allows consumers to pull power from an outlet in a room without having to use an extension cord. Over the course of nearly 17 years, Candelboro raised over $1.8 million from approximately 18 investors in the form of loans and from another 20 shareholders, promising that the money would help get the product to market. These investors began to complain to Attorney General Schneiderman’s Office in 2013 that they had not seen any return on their investment.
The Attorney General’s office launched an investigation and revealing that Candeloro made false and misleading statements to investors and did not disclose that the company lost its corporate status in 2001 for failing to file and pay New York State taxes. Despite losing its incorporation, the company continued to raise money from investors. Candeloro also made misrepresentations that the product had obtained Underwriters Laboratory (UL) listing, which would be required to market the product to large-scale distributors.
In March 2014, the Attorney General’s Office filed a lawsuit against CandelTronics Corporation and Candeloro for fraud and deceptive acts and practices in connection with the investment scheme. As a result of the lawsuit, the Monroe County Supreme Court issued an order permanently enjoining Candeloro from owning, operating, or managing a business in New York State and from engaging in any business relating to the purchase or sale of, or offer to purchase or sell -- as principal, broker or agent, or otherwise -- any securities issued within New York State. In addition, Candeloro must pay more than $365,000 in restitution and damages to compensate defrauded investors, and he will be divested of his shares of ownership in Candeltronics. Those shares will also be redistributed to the defrauded investors as restitution. Additionally, the court imposed a $35,000 civil penalty against Candeloro.
As part of the investigation, the Attorney General’s Office obtained CandelTronics business records. However, due to poor recordkeeping by the company, some investors may not have been properly documented. Any investors who believe they are eligible for restitution and damages may submit a claim with the Attorney General’s Office, postmarked or received by December 22, 2014.
The case is being handled by Assistant Attorney General Benjamin Bruce and Volunteer Assistant Attorney General Shannon O. Pozzuolo. The investigation is being handed by Senior Investigator Christopher Holland. All staff work in the Rochester Regional Office is led by Debra Martin, Assistant Attorney General-in-Charge. The Rochester Regional Office is a part of the Division of Regional Offices, led by Marty Mack, Executive Deputy Attorney General for Regional Offices.