US regulators bust pre-IPO tech stock scam
A Florida man was arrested on Thursday for running a scam in which he allegedly offered private shares in Internet firms such as Facebook and Groupon ahead of their going public, officials said.
John Mattera, 50, of Boca Raton, and his co-defendants raised at least $12 million from investors seeking stock in firms expected to soon hold initial public offerings, the US Securities and Exchange Commission (SEC) said.
"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," said George Canellos, director of the SEC's New York Regional Office.
Mattera, who was convicted in 2003 of selling securities he falsely claimed to own, and the other defendants carried out the scam using a hedge fund called The Praetorian Global Fund, the SEC said in a statement.
They claimed to hold shares worth tens of millions of dollars in privately-held companies such as Facebook, Groupon, Twitter and Zynga.
Groupon recently held its IPO while Zynga has filed for one and Facebook is expected to go public at some point.
"Mattera and his cohorts never owned the promised pre-IPO shares in these companies," the SEC said.
It said they transferred funds received from investors to personal accounts controlled by Mattera and another defendant, John Arnold.
"After Arnold took a cut of the money for himself, Mattera stole most of the remaining funds to afford his lavish personal expenses and pay others for their roles in the scheme," the SEC said.
Mattera, Arnold, Joseph Almazon of Hicksville, New York, David Howard II, of New York City, and Bradford Van Siclen of Montclair, New Jersey, were charged with various violations of US securities law.
Explore further
(c) 2011 AFP
