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Rye Executive Charged With Stealing Investor Funds

Thomas Fagan of Rye was charged in New Jersey with stealing $230,000 in investor funds for his personal use.
Thomas Fagan of Rye was charged in New Jersey with stealing $230,000 in investor funds for his personal use. Photo Credit: Courtesy of the New Jersey Attorney General's office

RYE, N.Y. -- A Rye executive was indicted in New Jersey Tuesday on charges that he stole $230,000 in investor funds for his personal use, according to New Jersey Attorney General Jeffrey S. Chiesa.

Thomas Fagan, 57, of Rye was charged with misapplication of entrusted property, theft by unlawful taking, money laundering, and misconduct by a corporate official. He was also charged with three counts of failure to file personal income tax returns in New Jersey for 2007 through 2009, and with filing a fraudulent state tax return in 2010.

Fagan is accused of diverting funds from his two New Jesery-based biotechnology/medical device companies and using them for his personal use, including tens of thousands of dollars for casino gambling as well as payments to his sister and personal legal settlements, according to Chiesa. He attempted to disguise the source of the company funds he stole through a series of inter-company cash transfers, according to the Attorney General's office.

Fagan was president and CEO of Energex System, Inc. and acquired Arbios Systems, Inc. He was previously sued by the Attorney General's office for defrauding nearly 800 investors out of $9.5 million. According to Chiesa's office, Fagan sold $9.5 million in unregistered Energex stock and $1.6 million in unregistered Arbios Systems stock.

Misapplication of entrusted property, theft by unlawful taking, money laundering and misconduct by a corporate official are all second-degree crimes, and carry a sentence of five to ten years in prison and a fine of up to $150,000. The money laundering charge carries an enhanced fine of up to $500,000. The failure to file property taxes are third-degree crimes, and carry sentences of three to five years in prison and a fine of up to $15,000.

The indictment was handed up to Superior Court Judge Thomas W. Sumners in Mercer County. Fagan will be ordered to appear in court in Mercer County at a later date for arraignment.

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