SEC Charges Three New Yorkers for Raising More Than $184 Million Through Pre-IPO Fraud Schemes

Washington D.C., June 7, 2024 — The Securities and Exchange Commission (SEC) has charged three individuals with fraud for selling unregistered membership interests in LLCs claiming to invest in pre-IPO company shares. Initially, these sales were made on behalf of StraightPath Venture Partners LLC, which was the subject of the Commission’s emergency action in May 2022. Later, sales were made on behalf of Legend Venture Partners LLC, targeted by the Commission’s emergency action in June 2023. Currently, both StraightPath and Legend are under court-ordered receiverships.</p>

Allegations Against New York Residents

In this new action, the SEC alleges that New York residents Mario Gogliormella, Steven Lacaj, and Karim Ibrahim directed an unregistered sales force of over 50 callers in boiler rooms to pressure investors. These investors were not informed that the shares were substantially marked up—between 19% and 105% above the prices that StraightPath or Legend had paid for the underlying shares. Due to these tactics, the defendants and their sales force reportedly pocketed more than $45 million in fees from unsuspecting investors from 2019 to 2022.

High-Pressure Sales Tactics and Misleading Information

Sheldon L. Pollock, Associate Director of the New York Regional Office, stated, “We allege that the fraud, in this case, is like a Hollywood movie where the defendants ran boiler rooms using scripts they referred to as the ‘Bible,’ engaged in high-pressure sales tactics and employed outright falsehoods to defraud investors. After the SEC shut them down the first time, they rebranded their outfit, and today, through our action, we are seeking to ensure that they are held accountable for enticing and lying to investors.”</p>

Charges and Legal Actions

The SEC’s complaint charges the defendants with violating antifraud and other provisions of the federal securities laws. The complaint seeks permanent injunctive relief, return of allegedly ill-gotten gains, and civil penalties. Additionally, the SEC has charged Adam Ibrahim, Karim Ibrahim’s brother, as a relief defendant.

Indictment by the U.S. Attorney’s Office

The U.S. Attorney’s Office for the Southern District of New York has unsealed an indictment charging Gogliormella, Lacaj, and Karim Ibrahim with securities fraud, among other offenses, in connection with their work for StraightPath and Legend.

SEC’s Ongoing Investigation

The SEC’s ongoing investigation is being conducted by Joshua D. Tannen and Lee A. Greenwood of the Asset Management Unit, along with Sushila P. Rao, Suzanne M. Bettis, Megan Genet, Tiantong Wen, Douglas Smith, Kerri L. Palen, Patricia Schrage, Daniel Loss, Alistaire Bambach, and Steven G. Rawlings of the New York Regional Office. The investigation is supervised by Mr. Pollock. The litigation will be led by Ms. Rao, Mr. Tannen, and Ms. Bettis, under the supervision of Mr. Loss and Mr. Pollock.

Risks of Investing in Pre-IPO Offerings

Investors can learn more about the risks of investing in pre-IPO offerings in this Investor Alert</a>.

Priority Area for Enforcement

The pre-IPO space remains a priority area for the Division of Enforcement and the New York Regional Office. In addition to the prior StraightPath and Legend actions, the New York Regional Office has also filed charges in other matters, including:

• In December 2023, the Commission charged five individuals and four companies in a $528 million pre-IPO fraud.
• In March 2023, the SEC charged three StraightPath sales agents with fraud and unregistered broker activity.
• In December 2020, the SEC charged a boiler room operator with defrauding retail investors in the sale of pre-IPO shares.

SEC Press Release

SEC Complaint

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