Securities Arbitration Lawyers BlogSEC Halts Fraud by New Jersey-Based Fund Manager of Investments in Pre-IPO Tech Companies
The Securities and Exchange Commission announced fraud charges and asset freezes obtained in a case filed on March 21, 2016 against a New Jersey-based fund manager and two firms he controls for orchestrating a Ponzi-like scheme that marketed shares in promising pre-IPO technology companies in the Bay Area.
The SEC alleges in its complaint that John Bivona raised over $53 million through Saddle River Advisors and SRA Management Associates (collectively, the “SRA Funds”) and used the assets to pay off earlier investors, establish and fortify other funds, and pay family-related expenses. The complaint also alleges that Bivona stole over $5.7 million from investors and diverted millions more to other improper and undisclosed uses.
According to the complaint, much of the funds were diverted to Bivona’s nephew, Frank Mazzola, who was barred from the securities industry in a prior SEC enforcement action and is also charged in the complaint. The diverted funds were used to pay, among other things, credit card bills, income taxes, a car loan, unrelated defense attorney fees, and the mortgage on a Jersey Shore vacation home, according to the complaint.
The complaint alleges that Bivona preyed on investors seeking to invest in popular pre-IPO technology companies, including Square Inc., Box Inc., Bloom Energy, Twitter Inc., Dropbox Inc., and Palantir Technologies Inc. Lying to investors and using the funds to pay earlier investors and fund other inappropriate ventures, the SRA Funds were short several million dollars two months into the fraudulent venture, the complaint alleges.
According to the complaint, Bivona hid the scheme by transferring money to more than a dozen bank accounts associated with a variety of different entities. Bivona told investors they would receive financial statements for the funds on an annual basis, but no financial statements were ever prepared.
Additionally, Bivona and Mazzola failed to register the offering with the SEC and thereby violated bad actor rules of the federal securities laws, which prohibit exemptions under Rule 506 of Regulation D if a promoter or investment manager like Mazzola has a disqualifying event like his fraud-based injunction.
If you invested in any of the aforementioned SRA Funds or in anything related to John Bivona or Frank Mazzola, you may be entitled to recover some of your investment losses. Please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345 to speak to an attorney to find out how we may be able to help you recover some of your investment losses.