SEC Charges Three New Yorkers for Raising More Than $184 Million Through Pre-IPO Fraud Schemes
- Written by Newsfile
June 07, 2024 12:41 PM EDT | Source: Newsfile SEC Press Digest[1]
Washington, D.C.--(Newsfile Corp. - June 7, 2024) - The Securities and Exchange Commission today charged three individuals with fraud for selling unregistered membership interests in LLCs that purported to invest in shares of pre-IPO companies, first on behalf of StraightPath Venture Partners LLC, the subject of the Commission’s emergency action[2] in May 2022, and, later, on behalf of Legend Venture Partners LLC, the subject of the Commission’s emergency action[3] in June 2023. Both StraightPath[4] and Legend[5] are now under court-ordered receiverships.
In this new action, the SEC alleges that New York residents Mario Gogliormella, Steven Lacaj, and Karim Ibrahim directed an unregistered sales force of more than 50 callers in boiler rooms to pressure investors into making investments without telling them that the shares had been substantially marked up—between approximately 19 and 105 percent on average above the prices that StraightPath or Legend had paid for the underlying shares. As a result of these tactics, the defendants and their sales force allegedly pocketed more than $45 million in fees from unsuspecting investors from 2019 to 2022.
“We allege that the fraud in this case is like a Hollywood movie where the defendants ran boiler rooms using scripts they referred to as the ‘Bible,’ engaged in high-pressure sales tactics, and employed outright falsehoods to defraud investors,” said Sheldon L. Pollock, Associate Director of the New York Regional Office. “After the SEC shut them down the first time, they simply rebranded their outfit, and today through our action we are seeking to ensure that they are held accountable for enticing and lying to investors.”
The SEC’s complaint charges the defendants with violating antifraud and other provisions of the federal securities laws. The complaint seeks permanent injunctive relief, return of allegedly ill-gotten gains, and civil penalties. The SEC also charged Adam Ibrahim, Karim Ibrahim’s brother, as a relief defendant.
The U.S. Attorney’s Office for the Southern District of New York today unsealed an indictment charging Gogliormella, Lacaj, and Karim Ibrahim with securities fraud, among other offenses, in connection with their work for StraightPath and Legend.
The SEC’s ongoing investigation is being conducted by Joshua D. Tannen and Lee A. Greenwood of the Asset Management Unit and Sushila P. Rao, Suzanne M. Bettis, Megan Genet, Tiantong Wen, Douglas Smith, Kerri L. Palen, Patricia Schrage, Daniel Loss, Alistaire Bambach, and Steven G. Rawlings of the New York Regional Office. It is being supervised by Mr. Pollock. The litigation will be led by Ms. Rao, Mr. Tannen, and Ms. Bettis and supervised by Mr. Loss and Mr. Pollock.
The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the U.S. Postal Inspection Service.
Investors can learn more about the risks of investing in pre-IPO offerings in this Investor Alert[6].
The pre-IPO space remains a priority area for the Division of Enforcement and the New York Regional Office. In addition to the prior StraightPath and Legend actions, the New York Regional Office has also filed other charges in other matters, including:
- In December 2023, the Commission charged[7] five individuals and four companies in a $528 million pre-IPO fraud.
- In March 2023, the SEC charged[8] three StraightPath sales agents with fraud and unregistered broker activity.
- In December 2020, the SEC charged[9] a boiler room operator with defrauding retail investors in the sale of pre-IPO shares.
SOURCE: Newsfile SEC Press Digest[10]
References
- ^ Newsfile SEC Press Digest (www.newsfilecorp.com)
- ^ action (api.newsfilecorp.com)
- ^ action (api.newsfilecorp.com)
- ^ StraightPath (api.newsfilecorp.com)
- ^ Legend (api.newsfilecorp.com)
- ^ Investor Alert (api.newsfilecorp.com)
- ^ charged (api.newsfilecorp.com)
- ^ charged (api.newsfilecorp.com)
- ^ charged (api.newsfilecorp.com)
- ^ Newsfile SEC Press Digest (www.newsfilecorp.com)