ING pays $1m in "affinity fraud" case

ING Financial Partners Inc. has agreed to pay $1 million in restitution for failing to adequately supervise a broker-dealer who defrauded investors, the office of Massachusetts Secretary of State William F. Galvin said today.

According to Galvin's office, Peter Tzamalas of Norwood used his contacts in the Greek community in Eastern Massachusetts to build up a client base while he was a registered agent of ING, but money he borrowed from investors went to his personal account and to accounts at casinos in Connecticut and Atlantic City.

Tzamalas disappeared just over a year ago and his whereabouts are currently unknown, Galvin's office said.

"This is, unfortunately, a classic case of affinity fraud where someone builds up trust in a specific ethnic or religious group and then betrays that trust," Galvin said in a statement. "While the fraud was committed by an individual, it is always incumbent on the broker-dealer community to adequately supervise its members in a timely fashion."

ING Group is a Dutch company that provides a range of insurance, banking, and asset management services.

In addition to paying restitution to defrauded investors, ING agreed to pay a $100,000 fine, a Galvin spokesman said.

An ING spokesman told the Associated Press that he's pleased his company is putting the matter behind it, the AP reported.
(By Chris Reidy, Globe staff)