Investors have to be wary

Old Bridge man arrested in $80M real estate scheme

The head of a defunct real estate investment company accused of bilking investors and mortgage lenders out of $80 million was arrested today in Manalapan, authorities said.

FGI agents and Manalapan police officers pulled over Wayne Puff, the owner of NJ Affordable Homes, while he was driving. He is charged with wire fraud and obstruction of justice, charges that carry maximum penalties of 20 years in prison and a $250,000 fine, according to the U.S. Attorney's Office in Newark.

The charges come more than two and a half years after securities regulators filed civil charges against Puff, 60, and his firm, alleging he took millions of dollars from investors with the promise of outsized returns through real estate.

Federal prosecutors today said Puff, an Old Bridge resident, caused investors to lose about $55 million and lenders to lose about $25 million.

"This was a classic Ponzi scheme, on a large scale," U.S. Attorney Christopher Christie said in a statement. "Investors have to be wary of anyone offering such lofty, guaranteed returns."

Since October 2006, four former NJ Affordable employees and two property appraisers who did work for the company have pleaded guilty to participating in the scheme, which included falsifying loan applications, inflating property appraisals and lying to investors.

The company went into liquidation bankruptcy in November 2005. Since then, a trustee overseeing the case has sold more than 300 properties through an auction and abandoned dozens more.

More than 500 investors gave Puff money, some of them their entire life savings.