Posted on June 1, 2022 by Alan Rosca
Contact Us : 888-998-0530
Posted on June 1, 2022 by Alan Rosca
The investment fraud lawyers at Rosca Scarlato LLC law firm have launched an investigation into potential investment loss recovery options on behalf of investors who are concerned they lost money invested in SP Fund Ventures securities offerings by StraightPath Venture Partners LLC and StraightPath Management LLC.
The Rosca Scarlato investment fraud lawyers aim to try and obtain compensation for StraightPath / SP Ventures investors in addition to any recovery that those investor may obtain through the pending receivership proceedings. Concerned investors in StraightPath’s securities offerings may contact attorneys Rosca or Scarlato for a free case evaluation and discussion of potential options, or to provide any useful information, toll free at 888-998-0530, via email at arosca@rscounsel.law, or by completing the contact form on this webpage.
StraightPath allegedly engaged in “illegal sales of unregistered securities” according to a complaint filed by the Securities and Exchange Commission (“SEC”) on May 13, 2022. The complaint filed in the United States District Court for the Southern District of New York accused StraightPath Venture Partners LLC, StraightPath Management LLC, Brian K. Martinsen, Michael A. Castillero, Francine A. Lanaia and Eric D. Lachow of “ongoing securities violations” allegedly involving the sale of pre-Initial Public Offering (“IPO”) shares they did not own.
In addition, the Commission alleges that StraightPath and its principals pocketed undisclosed fees, commingled investor funds, and made Ponzi-like payments to investors.
According to the complaint, the scheme managed to raise at least $410 million from over 2200 investors from 17 countries. Much of the investors’ money appears to have been misused and/or spent on excessive sales commissions and referral fees for the agents who referred investors to that program, based on revelations in the SEC’s action. Also, the SEC indicated that many of the pre-IPO investments were sold at substantially-inflated prices. Thus, it appears that a substantial portion of the investors’ money may be lost.
In its action, the Commission sought permanent injunctive relief, return of allegedly ill-gotten gains, and civil penalties. On May 13, 2022, the Court issued an order freezing the assets of StraightPath entities and their principals and scheduled a hearing about the appointment of a receiver for May 26, 2022. There has not been a finding of liability as to any of the allegations reported in this article, and the Commission’s case against StraightPath and its principals is still pending.
During the course of their case-related investigation, the Rosca Scarlato investment fraud lawyers Alan Rosca and Paul Scarlato discovered evidence that suggests certain financial services businesses and investment advisory firms played a role in the alleged scheme, including by recruiting or referring investors to invest in the StraightPath programs. The Rosca Scarlato attorneys are investigating to determine whether such entities may be held liable for investor losses, in connection with their role in referring investors to the SP Ventures Funds. The Rosca Scarlato law firm often takes cases like this on a contingency fee basis. The firm advances the case costs, and only gets reimbursed if and when there is a recovery; no fees or costs if no recovery. Claims that are not timely pursued may expire or otherwise be lost, generally speaking. StraightPath / SP Ventures investors interested to explore options to recover their losses should consider taking action promptly.
StraightPath investors were allegedly never informed that two StraightPath control persons were permanently barred from securities industry, the Commission alleges in its complaint.
Michael Alejandro Castillero, one of the three founders, was reportedly the subject of a FINRA investigation into whether Castillero engaged in unauthorized trading in a customer’s account. According to a Letter of Acceptance, Waiver and Consent (AWC), Michael Castillero refused to appear for on-the-record testimony requested by FINRA and consented to being permanently barred from being a licensed stockbroker. A review of Castillero’s FINRA Brokercheck Report reveals that between 2016 and 2019, he was the subject of a dozen customer dispute disclosures, the majority of which concluded in settlement.
The second StraightPath co-founder reportedly barred from securities industry is Francine Ann Lanaia. In 2018, she reportedly failed to properly update her Form U4 to disclose three outstanding civil judgments against her totaling more than $286,000. Lanaia consented to being barred, without admitting or denying FINRA’s allegations. The Brokercheck Report for Francine Lanaia indicates she has been the subject of at least five customer complaints, and reportedly filed for two separate bankruptcy petitions in 2017 and 2018 respectively.
Brian Keith Martinsen and Eric Daniel Lachow are also formerly registered brokers who no longer have an active securities license.
Brian Martinsen is allegedly the third founder of StraigthPath. He has been registered with FINRA for more than 20 years and his last registration was with SW Financial. While he was an active broker, Martinsen was reportedly subject to seven customer dispute disclosures. His FINRA Brokercheck also reveals that in 2014 Martinsen consented to being sanctioned by NASD for unauthorized trading, without admitting or denying regulator’s findings.
Eric Daniel Lachow acted as the nominal manager of the StraightPath Venture Partners and became the managing member of StraightPath Management in 2019. According to his Brokercheck report, between 1997 and 2003 Lachow was registered with nine different broker-dealers, most recently being affiliated with Raymond James & Associates.
Publicly available records filed with the SEC indicate that Martinsen, Castillero, Lanaia and Lachow, and StraightPath raised money from investors through at least nine funds, called SP Ventures Funds.
According to several Regulation D notices filed with the SEC, between 2017 and 2019, SP Ventures Fund LLC raised $5,330,745 of private equity securities.
SP Ventures Fund 2 LLC raised at least $17,856,937 of private equity securities.
SP Ventures Fund 3 LLC, SP Ventures Fund 4 LLC, SP Ventures Fund 5 LLC, and SP Ventures Fund 6 LLC, each filed Regulation D notices disclosing the intention to raise $100 million in investment funds.
SP Ventures Fund 7 LLC attempted to raise at least $75 million in membership interests in private companies.
SP Ventures Fund 8 LLC and SP Ventures Fund 9 LLC each filed Regulation D notices disclosing the intention to raise $50 million in membership interests in private companies.
All SP Ventures Funds enlisted the help of promoters who reportedly received substantial sales compensation for recruiting investors.
Investment fraud attorneys Alan Rosca and Paul Scarlato have developed a nationwide practice assisting investors around the country to seek compensation for their losses arising out of investment fraud and Ponzi schemes. They and their team are currently evaluating potential claims for compensation on behalf of victimized investors against certain financial industry entities that may be responsible for any losses they suffered as a result of investing in StraightPath / SP Ventures Funds.
“Financial industry businesses typically have a duty to monitor their operations and supervise their associated persons,” said attorney Rosca. “Investment advisory firms must adequately vet new investment programs before recommending that their customers invest in those programs,” said attorney Rosca. When financial industry businesses fail in their duties, they may be held liable to victims of their associated persons, depending on the particular facts specific to each case, attorney Rosca indicated.
The Rosca Scarlato investment fraud lawyers are preparing to take action on behalf of StraightPath investors. Their goal is to supplement whatever recovery may be available from the SEC’s lawsuit, by going after third party financial companies that may have assisted in or enabled the StraightPath alleged fraud. If you invested in StraightPath at the recommendation of a financial adviser please contact attorneys Alan Rosca or Paul Scarlato for a free, no-obligation evaluation of your loss recovery options, toll-free at 888-998-0530, via email at arosca@rscounsel.law, or through the contact form on this page.
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