Since founding his business called A Better Financial Plan in 2004, Dean Vagnozzi has marketed himself as a financial iconoclast, offering ways to “invest like the big boys,” but in alternatives to conventional index funds, stocks, and bonds.
Here is a guide to the investments he has championed as he’s attracted clients through radio ads, seminars, and free steak dinners. Some of his investment funds mix more than one approach.
Merchant cash advances. These companies lend cash to small businesses that can’t borrow from banks, charging them high interest.
Vagnozzi’s clients have invested more than $100 million since 2016 with a Philadelphia merchant-cash lender known as Par Funding. It charged merchants average interest rates of 50%, federal regulators say. At the same time, the investors were sent checks yielding a 8% to 17% return.
In the spring, Vagnozzi halted checks for two months and later resumed them at a lower rate of 4%. He said loan paybacks from merchants had trailed off because of the coronavirus.
In July, the U.S. Securities and Exchange Commission filed civil fraud charges against Par Funding’s owners, Vagnozzi, and others, saying they had kept investors in the dark about risks — and about the criminal record of a Par Funding founder. In rebuttal, Vagnozzi says that if Par has done anything wrong, he is also a victim.
Life settlements. A busy trade exists in life insurance policies for people who aren’t dead yet. Middlemen pay people, often elderly, for their policies up-front and at a discount, then resell them to investor groups. The investors pick up the burden of premiums, but profit by collecting the full face value of the policies upon the death of the seller.
Vagnozzi has raised more than $50 million for funds invested in life settlements.
He and his company paid about $95,000 earlier than year to resolve complaints from the SEC about how he raised money for this. He did not admit wrongdoing.
Litigation funding. Vagnozzi has raised more than $10 million since 2017 for four Atrium Legal Capital funds, which invest in personal-injury lawsuits. The funds give the injured upfront cash, betting they can recoup the money and more once a case is resolved.
In July, he told clients he raised an an additional $11 million from investors for a fund that invests in medical liens from doctors who treat injured uninsured patients, in hopes that the fund can collect later from lawsuits and settlements in personal-injury lawsuits.
Real estate. Vagnozzi has offered investors ways to invest in commercial development. In June, he urged callers responding to his radio ads to invest in a Princeton-area project for a New Jersey firm. He previously helped to raise cash for a successful office development in Cherry Hill.
Private companies. Vagnozzi also promoted investments in private firms not listed in the stock market. In 2019, he drummed up $4 million from investors for Fallcatcher, a company run by a convicted felon who claimed to be developing an app for substance-abuse treatment. The SEC sued Fallcatcher for fraud, and reached a settlement with the founder in February, though he still hasn’t paid.
In July, Vagnozzi agreed to give up $495,000 he collected in Fallcatcher commissions and interest, and he and his firm paid the SEC $103,000 for acting as an unregistered broker, while admitting no wrongdoing.