A federal jury has convicted Michael Castillero, Francine Lanaia, and Brian Martinsen of securities fraud, wire fraud, and investment adviser fraud related to their activities at StraightPath Venture Partners. The verdict follows allegations that the defendants defrauded retail investors who were looking to invest in private companies before their initial public offerings.
United States Attorney Jay Clayton commented on the outcome: “Our pre-IPO markets are important to investors, entrepreneurs, and our economy. Their integrity is critical to our continued leadership in technology, healthcare, energy, and other key industries. A unanimous jury has found that Michael Castillero, Francine Lanaia, and Brian Martinsen committed securities fraud, wire fraud, and investment adviser fraud through their firm, StraightPath Venture Partners. The defendants used high-pressure sales tactics, false and misleading disclosures, and hidden exorbitant fees to defraud retail investors seeking to invest in private companies that had not yet had initial public offerings. I commend the career prosecutors and law enforcement agents for their work to protect investors in this important marketplace. We and our law enforcement partners are focused on our pre-IPO markets and our listed small cap markets. Our message is clear: marketing and trading in less well-known securities does not give you a pass to commit fraud.”
The case highlights ongoing efforts by authorities to monitor activity in pre-IPO markets as well as smaller public company sectors.
