Another Accusation by SEC
The Securities and Exchange Commission filed charges against Scott Hollender, Gabriel Migliano, Jr., and Frank Vecchio today for selling interests in shares of pre-IPO companies on behalf of StraightPath Venture Partners LLC, despite the fact that they were not registered broker-dealers, and for misleading investors about the fees that were associated with those investments.
The charges allege that the three individuals sold interests in shares of pre-IPO companies. In May of 2022, the Securities and Exchange Commission filed charges against StraightPath Venture Partners, StraightPath Management LLC, and the company’s four principals in connection with a fraud involving $410 million.
In the complaint filed by the SEC, it is alleged that between November 2017 and November 2021, Hollender, Migliano, and Vecchio actively solicited investments for interests in funds that were established as series LLCs. Each of these funds was purported to acquire shares of a single pre-IPO company.
Despite the fact that they were not registered as brokers, the defendants are accused of providing investors with marketing materials, advising investors on the presumed merits of the investments, and receiving compensation that was based on the transactions themselves.
These are all hallmarks of a broker. According to the allegations made in the complaint, the defendants collectively solicited at least $13 million in investments from at least 115 investors. Furthermore, despite the fact that each of the defendants received upfront commissions of approximately 10 percent on investments they successfully solicited, the defendants allegedly told investors in a misleading manner that there were no upfront fees associated with their investments.
According to the allegations made in the complaint, the defendants collectively received compensation based on transactions totaling at least approximately $3.7 million.
According to Antonia M. Apps, Director of the New York Regional Office, “StraightPath Venture Partners could not have cheated investors without the unregistered sales agents who fraudulently solicited them.” This information was provided by Ms. Apps. The Securities and Exchange Commission will continue to hold individuals accountable for their wrongdoing, including failing to register as required by law.
The complaint that was submitted by the SEC in the U.S. The defendants are accused of breaking antifraud and other provisions of the federal securities laws, according to the complaint filed in the District Court for the Southern District of New York. The complaint asks for a permanent injunction of relief, the return of gains that were allegedly obtained illegally, and civil penalties.
The relief defendants named in the complaint are GSH Empire Inc. and 21st Century Gold & Silver Inc., both of which are controlled by Hollender and Vecchio, respectively. This is done for the purpose of recovering ill-gotten gains that Hollender and Vecchio are alleged to have generated as a result of their alleged conduct.
The current investigation being conducted by the SEC is being led by Megan R. Genet, Tian Wen, Douglas J. Smith, Lee A. Greenwood, Patricia Schrage, Alistaire Bambach, and Steven G. Rawlings of the New York Regional Office (NYRO), with assistance from Suman Beros. Megan R. Genet, Tian Wen, Douglas J. Smith, Lee A. Greenwood, Daniel Loss, and Patricia Schrage are also assisting with the investigation.
Sheldon L. Pollock is the one in charge of supervising it. In the pending legal action, Mr. Loss, Ms. Wen, and Ms. Genet will serve as the primary leaders. The NYRO Broker-Dealer and Exchange Program’s Ronald Krietzman, Michael McAuliffe, and Stephen DeBella were the ones who helped out.
The Securities and Exchange Commission (SEC) would like to express its gratitude to the Financial Industry Regulatory Authority, the Office of the Montana State Auditor, the Commissioner of Securities and Insurance, and the New Jersey Bureau of Securities for their assistance.
Investors can learn more about the risks associated with working with unregistered investment professionals by reading SEC investor bulletins such as 10 Red Flags That An Unregistered Offering May Be A Scam and Private Placements Under Regulation D. These investor bulletins are available to investors on the SEC’s website.
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