SEC Targets Pre-IPO Scam, Charges Five Brokers and Companies

Key Points:

• SEC charges individuals and companies for a nationwide scheme.
• Fraudulent offerings misled 4,000+ investors with hidden markups.
• Defendants pocketed over $88 million from undisclosed fees.

The Securities and Exchange Commission (SEC) has filed charges against individuals and companies involved in fraudulent offerings tied to Pre-IPO scam investments.

The accused, namely Raymond J. Pirrello, Jr., Marcello Follano, Robert Cassino, Anthony DiTucci, Joseph Rivera, and their associated entities – Prior 2 IPO Inc., Late Stage Asset Management, LLC, Pre-IPO Marketing Inc., and JL Rivera Enterprises Ltd., allegedly orchestrated a nationwide scheme.

According to the SEC’s complaint, the defendants utilized an unregistered network of sales agents to secure over $528 million from more than 4,000 global investors in unregistered pre-IPO offerings. Investors were allegedly misled with assurances of zero upfront fees, only to be charged undisclosed markups reaching as high as 150 percent. The defendants and their unregistered agents allegedly pocketed over $88 million from these hidden fees.

SEC Pursues Legal Action!

Sheldon L. Pollock, Associate Regional Director in the New York Regional Office, remarked, “As alleged in our complaint, the defendants sold unregistered securities to investors based on false promises of no upfront fees when they siphoned off tens of millions from such undisclosed fees for themselves.”

The SEC claims that the defendants went to great lengths to conceal the identity of one ringleader, Pirrello, who had a previous SEC ban for insider trading. The complaint, filed in the U.S. District Court for the Eastern District of New York, charges the individuals and entities with violations of antifraud, securities, and broker-dealer registration laws.

The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains with pre-judgment interest, and civil penalties against all defendants. Additionally, officer and director bars are sought against Pirrello, Follano, Cassino, DiTucci, and Rivera.

The ongoing investigation is conducted by the New York Regional Office, with assistance from the U.S. Attorney’s Office for the Eastern District of New York and the FBI.

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