(Finance) – The United States Securities and Exchange Commission (SEC) today filed charges against Raymond J. Pirrello, Jr., Marcello Follano, Robert Cassino, Anthony DiTucci, Joseph Rivera and their companies based in New Jersey or New York Prior 2 IPO Inc., Late Stage Asset Management, LLC, Pre IPO Marketing Inc. and JL Rivera Enterprises Ltd. for making fraudulent offers relating to investments in pre-initial public offering (pre-IPO) companies.
According to the SEC complaint, the defendants used a nationwide network of unregistered sales agents to raise at least $528 million in unregistered offerings of pre-IPO securities from over 4,000 investors worldwide. The complaint alleges that the defendants falsely told investors that there were no upfront commissions on the offerings and that the defendants would only make a profit after the pre-IPO companies went public; However, all investors were charged undisclosed initial markups, some as high as 150%, from which the defendants and their network of unregistered sales agents took pocketed more than $88 million.
“As stated in our complaint, the defendants have sold unregistered securities to investors based on false promises of no upfront fees when they have siphoned off tens of millions from those undisclosed fees for themselves,” said Sheldon L. Pollock, Associate Regional Director in the SEC’s New York Regional Office. “We continue to closely scrutinize the sale of unregistered pre-IPO investments to retail investors“:
The SEC also pointed out that the accused individuals have did everything to hide investors and potential employees the identity of one of the scheme’s ringleaders, Pirrello, to hide the fact that he had been barred from associating with brokers in a previous administrative proceeding by the SEC, after a jury found him liable Of insider trading in August 2019.