The Securities and Exchange Commission today charged Stephen A. Colangelo, Jr. a purported investment adviser in New York with defrauding investors who he convinced to invest in his start-up businesses while in reality he was spending their money on illegal drugs and gambling.
According to the SEC Complaint, From 2009 through 2011, Colangelo solicited and obtained over $4 million from investors by making material misrepresentations and omissions concerning Colangelo's prior trading activity and historical rates of return, Colangelo's criminal history and educational background, and the use of investor funds. Colangelo also misappropriated at least $1 million of investor funds, using investor funds to pay for, among other things, illegal narcotics, gambling, and personal travel.
Colangelo, who had been charged with fraud-based felonies on two prior occasions, also misrepresented or failed to disclose his criminal history to investors. In June 2009, Colangelo was sentenced to probation (adjudication withheld) in the state of Florida in connection with 2007 felony charges for burglary, theft, and engaging in a scheme to de fraud.
In March 2009, Colangelo, who had no prior professional experience buying and selling securities, began soliciting investments and founded and controlled three start up funds the - Hedge Community, L LC ("Hedge Community"), Start a Hedge Food, L LC (" Start a Hedge Fund"), and Under the Radar SE O, LLC (" Under the Radar").
Instead of using the money to buy and sell securities as he had promised, transferred a substantial amount of investor money to his personal bank account almost immediately after receiving it. Colangelo used most of these funds to pay for personal expenses, including, among other things, travel expenses for Colangelo and his family, cigars, gambling, illegal narcotics, and Colangelo's personal federal income taxes.
In support of his scheme, Colangelo created a profile on LinkedIn, a web site used for professional networking, in which Colangelo represented that he had studied finance at Nyack College from 1986 to 1989. Colangelo provided a link to this profile to potential and existing Hedge Community investors. Colangelo's representation that he studied finance at Nyack College was false and misleading because Colangelo never attended Nyack College and had not even graduated from high school.
Nicholas J. Guiliano, Esquire, The Guiliano Law Firm, P.C.
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