The Securities and Exchange Commission (SEC) today announced charges against Raymond J. Pirrello, Jr., Marcello Follano, Robert Cassino, Anthony DiTucci, Joseph Rivera and their New Jersey or New York based companies, Prior 2 IPO Inc., Late Stage Asset Management, LLC, Pre IPO Marketing Inc. and JL Rivera Enterprises Ltd. for fraudulent offers related to investments in initial public offering (IPO) companies.
According to the SEC’s complaint, the defendants used a nationwide network of unregistered sales agents to raise at least $528 million in unregistered pre-IPO securities offerings from more than 4,000 investors worldwide.
The complaint alleges that the defendants falsely told investors that there were no upfront fees for the offerings and that the defendants would only make profits after the companies went public before the IPO. However, all investors were charged undisclosed advances, some as high as 150 percent, from which the defendants and their network of unregistered sales agents earned more than $88 million.
The SEC alleges that the defendants made every effort to conceal the identity of one of the scheme’s ringleaders, Pirrello, from investors and potential employees to conceal the fact that he had been barred from associating with brokers in a previous administrative proceeding by the U.S. SEC after a jury found him liable for insider trading in August 2019.
The SEC’s complaint, filed in the Eastern District Court of New York, charges the five individuals and four entities with violations of anti-fraud, securities and broker-dealer registration and other provisions of the federal securities laws. The SEC is seeking permanent injunctive relief, disgorgement with prejudgment interest and civil penalties against all defendants, as well as officer and director bars against Pirrello, Follano, Cassino, DiTucci and Rivera.