A Ridgefield, Connecticut investor is trying for the fourth time to collect a half-million-dollar debt from a disgraced South Salem investment adviser.
Michael E. Breede sued Brandon D. Gioffre on Sept. 30 in U.S. Bankruptcy Court in White Plains to stop Gioffre from using Chapter 11 reorganization to avoid paying a $515,559 debt.Gioffre’s actions constituted “willful and malicious injury,” according to Breede’s lawsuit, “that is not dischargeable under … the bankruptcy code.”
Gioffre had persuaded Breede to invest in TMG Energy Systems Inc., a Rye company that was formed to design and sell custom heat, power and cooling systems.
Gioffre pitched Breede on the TMG Energy investment in 2014. He allegedly said he had examined the company in detail, according to court records, and there was no need for Breede to do any due diligence.
Gioffre and TMG CEO Edward F. Miller allegedly asserted that the company was worth as much as $140 million, would be valued at several billion dollars in a few years, and would be extraordinarily successful once short-term funding was obtained.
Breede invested nearly $900,000.
In 2015, he discovered that many of the TMG Energy claims were false. There was no $600 million credit line. There was no deal with Walgreens to install equipment at hundreds of stores for more than $1 billion. TMG had defaulted on its office lease in Rye and was being run out of Miller’s home in Ridgefield.
Breede sued Gioffre and Miller in Supreme Court in Manhattan for $881,657, accusing them of fraud, conspiracy, deceptive trade practices and theft.
In 2016, Breede and Gioffre settled the case with Gioffre agreeing to pay Breede $100,800 over nine years. But Gioffre defaulted, according to court records, after making only two $400 payments.
The default triggered liquidated damages of $440,000 plus 9% interest. Gioffre signed a confession of judgment acknowledging the debt.
Breede and other investors complained to the Financial Industry Regulatory Authority, a nongovernmental organization that oversees financial advisers, in 2016. The investors had lost their entire investments, $2 million, on which Gioffre had received $100,000 in commissions.
FINRA found that Gioffre had created the false impression that Constellation Wealth Advisors, where he worked was behind the TMG securities. He had met with investors at the Constellation office and used the firm’s email address to communicate with them.
Gioffre neither admitted nor denied the findings, but he consented to a permanent bar from acting as an investment adviser.
In 2017, Breede filed Gioffre’s confession of judgment in Westchester Supreme Court.
In January, Gioffre filed for Chapter 11 protection in bankruptcy court in White Plains. He declared $491,115 in assets – mostly a house in South Salem – and nearly $1.8 million in liabilities.
He cited a foreclosure sale scheduled for Jan. 10 as the reason for filing the petition.
Except for $855,000 owed to Citimortgage, he attributed most of the liabilities to “prior employments and business interest” and loss of employment in 2015.
He claims he owes Breede $100,000. Breede has filed a claim for $515,559, which includes the $440,000 judgment and interest.
Gioffre also lists a $715,000 debt to Morgan Stanley in Purchase, where he worked from 2009 to 2014. Morgan Stanley filed a claim for more than $1 million.
Gioffre said in a bankruptcy filing that he intends to use his and his wife’s future income to fund a Chapter 11 plan to reinstate the home mortgage and “make some distribution to other creditors.”
Breede is represented by Scarsdale attorney Dawn Kirby.