The trio behind a “pre-IPO” boiler room investment scheme have pleaded guilty to a series of fraud and conspiracy charges.
The scheme revolved around various private investment funds — first known as the StraightPath Funds and later as the Legend Funds — which were pitched to investors as providing access to invest in companies ahead of their planned initial public offerings.
Three men behind the firms, Legend Venture Partners LLC and L&G Capital Corp. — Mario Gogliormella, Steven Lacaj and Karim Ibrahim — each pleaded guilty to one count of conspiracy to commit securities fraud, wire fraud and investment adviser fraud, and to one count of investment adviser fraud.
According to court filings, the scheme raised approximately US$185 million from investors, without disclosing large markups on the shares or the fees investors would be charged. Those allegedly resulted in US$28 million being diverted to the firms, and another US$17.5 million in undisclosed fees being paid out to boiler room reps.
The firms first operated as a marketing arm for another firm, StraightPath Venture Partners, Inc., which allegedly raised more than US$400 million from investors starting in 2017, before being shut down in 2022, after the U.S. Securities and Exchange Commission (SEC) began investigating. At that point, Legend Venture Partners continued the same scheme.
In 2023, the SEC obtained an injunction imposing an asset freeze and later a court-appointed receiver for Legend Venture Partners and its funds, which remains in effect.
The three men are expected to be sentenced in May.