Mutual fund operator pleads guilty to selling bogus Facebook stock
- 02 October, 2012 20:25
The operator of a mutual fund has pleaded guilty in U.S. court to charges that he operated a US$13 million scheme to sell shares of Facebook and Groupon stock before their initial public offerings.
John Mattera, who served as chairman of the advisory board of Praetorian Global Fund in 2010 and 2011, has pleaded guilty in U.S. District Court for the Southern District of New York to charges of securities fraud, wire fraud and conspiracy to commit securities fraud and wire fraud, the U.S. Department of Justice announced Tuesday.
Mattera faces a maximum sentence of 20 years in prison on each of the two fraud counts, and a maximum sentence of five years in prison on the conspiracy charge. He also faces a fine $5 million or more.
Mattera is scheduled to be sentenced on Feb. 1.
The defendant was responsible for the day-to-day management decisions at Praetorian, the DOJ said. Beginning in mid-2010, Mattera and others offered investors the opportunity to invest in companies set up by Praetorian. Mattera falsely told prospective investors that the companies, called the G Power Entities, owned shares in companies including Facebook and Groupon when they were still private.
Mattera told investors to expect that initial public offerings would soon happen, the DOJ said.
"With false promises of profitable investments in high-profile stock, John Mattera lured unsuspecting investors into a meticulously orchestrated, multi-million dollar fraud scheme, and used their money to fund his lavish lifestyle," Preet Bharara, U.S. attorney for the Southern District of New York, said in a statement. "With today's guilty plea, we begin the process of holding him to account for his crimes."
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is email@example.com.