United States Attorney for the Southern District of New York, Jay Clayton, announced on May 20 that the founders and operators of StraightPath Venture Partners LLC and its affiliated entities have been sentenced to lengthy prison terms for defrauding investors. Michael Castillero, also known as Michael Alejandro, received an 11-year sentence; Brian Martinsen was sentenced to 10 years; and Francine Lanaia received an eight-year sentence. The sentences were imposed by U.S. District Judge Jesse M. Furman following their conviction in November 2025 after a two-week jury trial.
The case is significant because it involves large-scale fraud in private markets that play a key role in supporting small and medium-sized businesses as well as future major companies. U.S. Attorney Jay Clayton said, “Our private markets are the lifeblood of small and medium-sized businesses as well as tomorrow’s global giants.” He added that these companies contribute greatly to domestic employment and national welfare.
According to allegations presented at trial and statements made in court proceedings, from 2017 through April 2022 Castillero, Lanaia, and Martinsen defrauded investors through nine related private funds called the StraightPath Funds. They used aggressive sales tactics via call centers to market investments in privately held companies before anticipated public offerings but charged undisclosed markups on shares sold to investors. The defendants also misled investors about their roles—hiding prior industry bans—and obstructed investigations by destroying records when under scrutiny by the Securities and Exchange Commission.
Authorities say the scheme raised nearly $400 million from investors; approximately $130 million was misappropriated for personal use including luxury goods, homes, vehicles, watches, and a boat. Each defendant reportedly pocketed around $25 million during this period.
The StraightPath entities are no longer operational and are now managed by a court-appointed Receiver who is responsible for recovering assets with plans to return value to affected investors.
In addition to their prison terms—Castillero (48), Lanaia (61), Martinsen (49)—the three were each given three years of supervised release after incarceration. They must pay restitution totaling $115 million along with specific forfeiture amounts: Lanaia ($24,259,128.80), Martinsen ($25,355,714.43), Castillero ($24,279,516.80). They must also surrender property acquired through fraudulent activities.
Clayton praised the work of the U.S. Postal Inspection Service on this case while also thanking the Securities and Exchange Commission for filing parallel civil actions against those involved.
This prosecution was led by Assistant U.S. Attorneys Adam Hobson, Allison Nichols, and Matthew Shahabian from the Office’s Securities and Commodities Fraud Task Force.
The Department of Justice recently created a National Fraud Enforcement Division focused on investigating fraud against Americans—a move aligned with President Trump’s Task Force to Eliminate Fraud chaired by Vice President J.D. Vance.
