New Jersey court says restitution and disgorgement can both be used in securities fraud cases 

In a decision that could expand the legal toolkit for securities regulators, a New Jersey appeals court has ruled that the state can seek both restitution and disgorgement in the same enforcement action. The ruling, delivered on May 7 by the Superior Court of New Jersey’s Appellate Division, reinstates part of a high-stakes case involving more than $16 million raised from investors through unregistered and misrepresented securities.  

At the heart of the case is Owusu A. Kizito, who ran two entities—Investigroup LLC, a Hawaiian limited liability company, and Investigroup NP, a New Jersey nonprofit. From 2016 through 2020, Kizito and his companies allegedly sold investment contracts to at least 69 investors, raising over $16.1 million without registering the offerings or himself as a securities agent.  

According to the Bureau of Securities, Kizito told investors their money would be used to grow Investigroup’s business. But court documents show that at least $1.5 million was quietly diverted to the nonprofit arm and used to pay personal debts, litigation expenses, and other undisclosed obligations. None of this was shared with investors, who were also left in the dark about existing lawsuits and tax penalties involving the company.  

In August 2022, following an eight-day proof hearing, the trial court found Kizito and Investigroup LLC liable for violating multiple provisions of the state’s Uniform Securities Law. The court awarded more than $15 million in restitution to investors and levied $1.5 million in civil penalties. However, it denied the Bureau’s attempt to secure an additional $1.5 million in disgorgement from Investigroup NP, arguing that the statute did not permit both restitution and disgorgement in the same case.  

The Bureau appealed, and the appellate court reversed. In its May 7 ruling, the Appellate Division found that the law’s wording allows for multiple remedies—particularly when both serve distinct purposes. Restitution is meant to compensate victims. Disgorgement is intended to strip wrongdoers of profits obtained through misconduct.  

The court noted that this interpretation aligns with how similar enforcement statutes are read in other jurisdictions and in federal securities cases. It also pointed out that New Jersey’s securities law includes language allowing courts to issue “any other order within [their] power,” reinforcing the flexibility of available remedies.  

The case now returns to the lower court to decide whether disgorgement should be imposed on Investigroup NP. The appellate judges stopped short of ordering it outright, leaving the trial court to determine if the record is sufficient or if further hearings are needed to establish the basis for such an order—while cautioning that any relief must avoid duplicate recovery.  

For financial professionals, the decision underscores the serious consequences of failing to comply with registration and disclosure obligations. It also signals the increasing assertiveness of state regulators, who now have clearer judicial backing to pursue layered penalties when investor harm is significant.  

While this case does not involve a household-name firm, the conduct—unregistered sales, misrepresentations, and the misuse of investor funds—is exactly the type of activity that state regulators are watching closely, especially in smaller private offerings and among unregistered promoters. The ruling provides a roadmap for how enforcement agencies might pursue full financial accountability, even in cases that involve complex legal distinctions between restitution and profit forfeiture.  

In an environment where investor trust is central and compliance risks are rising, this case offers a timely reminder: regulators have the green light to pursue more than one route to justice.