Compliance
Florida Businessman Faces 11 Years In Jail Over $13 Million IPO Scheme
A Boca Raton, FL-based businessman has been sentenced in Manhattan federal court to 11 years in prison for his role in a $13 million scheme to defraud investors via false ownership claims of stock in Facebook and Groupon, as well as other private firms, ahead of their initial public offerings.
John Mattera, 51, pled guilty to securities fraud and wire fraud charges in October 2012. He has agreed to recompense the victims of his offense and consented to the entry of a $13 million forfeiture order, the US Department of Justice said on Friday.
According to the charging instruments filed and statements made during court proceedings, Mattera and others began offering investors in the late summer of 2010 the opportunity to invest in special purpose entities ("G Power Entities") related to Praetorian Global Fund - where Mattera was responsible for day-to-day management decisions and also served as chairman of the advisory board.
“Ownership of stock in these private companies was particularly attractive to certain investors because, as Mattera and others communicated, there was an expectation that initial public offerings would soon occur, thereby potentially increasing the value of the shares. In reality, neither Mattera, Praetorian, nor the G Power Entities held these shares of stock,” the US Attorney for the Southern District of New York said in a statement.
Mattera reassured investors that their money – totaling over $11 million - would be held in escrow accounts until the offering was completed or until another triggering event, at which point they would receive their ownership interest in the special purpose entity. However, the funds were transferred by Mattera into other entities with which he was associated. He spent nearly $4 million on personal items for himself and his family.
In addition to the prison term, District Judge Richard Sullivan sentenced Mattera to three years of supervised release. He was also ordered to forfeit $11.8 million and pay restitution to be determined, as well as a $400 special assessment fee.
