The Securities and Exchange Commission (SEC) today announced charges against Raymond J. Pirrello, Jr., Marcello Follano, Robert Cassino, Anthony DiTucci, Joseph Rivera, and their New Jersey or New York-based companies Prior 2 IPO Inc., Late Stage Asset Management, LLC, Pre IPO Marketing Inc., and JL Rivera Enterprises Ltd. for making fraudulent offerings relating to investments in pre-initial public offering (IPO) companies.

According to the SEC’s complaint, the defendants employed a nationwide network of unregistered sales agents to raise at least $528 million in unregistered offerings of pre-IPO securities from more than 4,000 investors around the world.

The complaint alleges that the defendants falsely told investors that there were no upfront fees on the offerings and that the defendants would only make a profit after the pre-IPO companies went public; however, all investors were charged undisclosed upfront markups, some as high as 150 percent, from which the defendants and their network of unregistered sales agents pocketed more than $88 million.

The SEC alleges that the charged individuals went to great lengths to conceal the identity of one of the scheme’s ringleaders, Pirrello, from investors and potential employees to hide the fact that he was barred from associating with broker-dealers in an earlier administrative proceeding by the SEC, after a jury found him liable for insider trading in August 2019.

The SEC’s complaint, filed in the New York Eastern District Court, charges the five individuals and four entities with violations of the antifraud, securities and broker-dealer registration, and other provisions of the federal securities laws. The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains with pre-judgment interest, and civil penalties against all of the defendants, as well as officer and director bars against Pirrello, Follano, Cassino, DiTucci, and Rivera.