A room full of people making calls to convince potential investors. Aggressive scripted sales tactics. Investments in the Stock Market. Private jets. Rolex watches, Bentley and Rolls Royce cars. Mansions in Miami… and a million-dollar scam. These ingredients may seem like they were taken straight from the Wolf of Wall Street, but they are some of the facts compiled by the United States Securities and Exchange Commission (SEC) in its latest major investigation against fraud in the American markets. According to details from the United States markets supervisor, three people, Mario Gogliormella, Steven Lacaj and Karim Ibrahim, have been the alleged masterminds of a plot that has obtained 184 million dollars using as an excuse the opportunity to invest early in companies. that were about to go public.
The market prior to the IPO, pre IPO market Due to its name in English, it is a common practice in the United States. In it, companies that are supposedly preparing a next leap into the markets place packages of shares among professional investors willing to acquire a significant number of shares at once. Companies that hope to go public obtain a source of financing prior to the jump, while professional investors who trust in the company access these shares at a lower price than they will later have when they begin trading. It doesn’t have to be something fraudulent, but on this occasion it was.
“In this new operation, the SEC accuses New Yorkers Mario Gogliormella, Steven Lacaj and Karim Ibrahim of running a network of more than 50 unregistered telemarketers who, from an office, were dedicated to pressuring potential investors to invest through them without tell them that the prices at which they were selling the shares were substantially inflated, approximately 19% to 105% more expensive than the average prices they had paid for them. As a result of these tactics, the defendants and their sales team pocketed more than $45 million between 2019 and 2022 from unsuspecting investors,” the SEC writes in the official statement of the case.
The swindled money, dedicated in part to paying the salaries of the team of more than 50 telemarketers, was also used for other, even more spurious purposes. “The defendants used investors’ money to support their lavish lifestyles and make numerous purchases of luxury items, including trips on private jets, Rolex and Audemars Piguet watches, Rolls Royce and Bentley cars, as well as mansions on Long Island and Miami,” says the expanded version of the document.
The SEC explains that the three defendants first operated under the name StraightPath Venture. When in May 2022 the supervisor already took action against the firm, in order to continue operating, they simply changed their logo and name and founded another fraudulent company, Legend Venture Partners, which was not detected until 2023.
“Over the period they were in operation, the defendants raised a total of more than $184 million from investors through deceptions, including that StraightPath Venture and Legend would only collect money when investors earned it, and that they would not have to pay no commission until then. In reality, investors paid exorbitant prices for the shares, allowing the defendants and their sales team to pocket millions of dollars before investors had earned a single cent,” the SEC adds. Authorities point out that regardless of the name they adopted, the sellers deceived people with aggressive sales tactics.
“This fraud case is worthy of a Hollywood movie. Salespeople used a script they called the Bible and used high-pressure techniques as well as blatantly false arguments to convince investors,” said Sheldon L. Pollock, deputy director of the SEC’s New York regional office. “When we closed them down the first time, they simply changed their name, our investigation today aims to ensure that they will not be able to fool any more investors,” he adds.
In the expanded investigation document, the SEC compiles an excerpt from that scam bible that Pollock talks about. “The script to which we had access stated that one of the companies that was preparing to go public had planned to do so during the first quarter of 2023. It was said that it would reach a valuation of up to 50,000 million dollars, which would give a price of $100 per share, four times higher than the price at which they were selling the shares to investors. They stated all this without any basis. As of today, the company has not yet gone public,” the document clarifies.
For this entire network of scams, the SEC appreciates that in its opinion 15 crimes have occurred. Among the measures that the market supervisor requests from the court are the prohibition of the accused, their employees and anyone related to the plot from having professional activities related to the investment market, the return of the swindled money, the imposition of fines on the masterminds of the plot, as well as the application of any other punitive measure that the court “considers fair and appropriate.” The ingredients were similar to those of the Wolf of Wall Street. The ending, too.
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