Men busted 'for touting Facebook and Twitter shares'
Groupon, Bloom Energy etc: These guys owned it all
The US Securities and Exchange Commission has closed down an investment scam that was touting pre-IPO shares in Facebook, Twitter, Zynga and Groupon.
The SEC alleges that Florida resident John Mattera and others set up a new hedge fund named The Praetorian Global Fund. The Commission alleged that the suspects had claimed to potential investors that they, and other entities, had tens of millions of dollars worth of shares in the tech firms before their initial public offering.
Mattera and his partners Brad Van Siclen, David Howard, Joseph Almazon and John Arnold, allegedly encouraged the investors to part with their cash to be put into an escrow fund to purchase the shares when the time came, and the SEC said they had managed to bag $12m from investors all over the US in the last 15 months.
According to the SEC, none of the individuals ever had any shares in the companies, which also included firms like Bloom Energy and Fisker Auto. The money that was supposed to be going into escrow was actually just going into the personal accounts of Mattera and Arnold, the SEC said.
The Commission asserted that after Arnold had taken his cut, Mattera then grabbed the rest of the dosh to "afford his lavish personal expenses" and to pay the rest of the gang.
“By conjuring up a seemingly prestigious hedge fund and touting the safety of an escrow agent, these men exploited investors’ desire to get an inside track on a wave of hyped future IPOs,” George Canellos, director of the SEC’s New York office, said in a canned statement.
“Even as investors believed their funds were sitting safely in escrow accounts, Mattera plundered those accounts to bankroll a lifestyle of private jets, luxury cars, and fine art.”
The US attorney's office for the southern district of New York, which was carrying on a parallel investigation, has now filed criminal charges against Mattera and arrested him.
The SEC is now looking for the courts to freeze the assets of all five men and eight different corporate entities listed in the complaint (PDF).
Apparently, it's not the first time some of these guys have been involved in white-collar crime. Mattera has been in trouble with the SEC before and been "the subject of several state criminal actions", while Howard was charged by the commission earlier this year for his part in a boiler room operation (a busy and slick telephone operation to sell questionable goods or go the whole hog and do some outright stock fraud). ®