Manager Who Claimed to Own Facebook Shares Charged With Alleged Fraud

November 19, 2011

The New York Times on November 17, 2011 released the following:

“BY KEVIN ROOSE

It may be the new, new thing in fraud.

John A. Mattera, 50, a Florida-based investment manager, was arrested Thursday on charges of running an $11 million, two-year fraud that falsely promised investors access to coveted shares of Groupon, Facebook and other private companies.

Mr. Mattera, the head of the Praetorian Global Fund, claimed to own more than a million shares each of Facebook and Groupon, according to a complaint filed in Federal District Court in Manhattan. He represented to investors that those holdings, bought on the private markets, would surge in value after the companies went public, the complaint said. Prosecutors allege the fund didn’t have such investments.

Instead, Mr. Mattera used millions of dollars of investor money to finance his lavish lifestyle, the complaint alleges. Among Mr. Mattera’s expenses: more than $245,000 for home furnishings and interior design services, more than $11,000 for tailored clothing and more than $17,000 for “boat-related expenses.”

Prosecutors have charged Mr. Mattera with one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, one count of wire fraud and one count of money laundering. The Securities and Exchange Commission is also taking civil action against Mr. Mattera.

“As alleged, John Mattera duped investors into believing they had bought rights to shares of coveted stock in Facebook and other highly visible and attractive companies which had not yet gone public,” Preet S. Bharara, the United States attorney in Manhattan, said in a statement. “With today’s charges, his charade is exposed and he will be held to account for his alleged crimes.”

Carl F. Schoeppl, Mr. Mattera’s lawyer in the criminal case, declined to comment.

The charges against Mr. Mattera come as investors clamor for shares of newly public Internet companies, a frenzy that echoes the early days of the last dot-com boom in the 1990s. Getting into a company early can be lucrative. Groupon, the daily deals site, jumped more than 30 percent on its first day of trading.

To attract clients, Mr. Mattera allegedly enlisted the help of Joseph Almazon, an unregistered broker with Spartan Capital Partners on Long Island, who solicited investments for Mr. Mattera’s Praetorian funds using LinkedIn advertisements that offered customers “the opportunity to buy pre-I.P.O. shares” in Facebook, Groupon, Twitter, Zynga and other companies. Mr. Almazon promised that “unlike most of the other investment banking firms, we let you sell your shares right at the open” — referring to the first day the company goes public, according to the civil action.

After investors signed up, their money was transferred to an escrow service headed by John R. Arnold. Mr. Arnold, in turn, passed the money along to himself and to Mr. Mattera, as well as to accounts registered to Mr. Mattera’s mother and wife, the complaint said.

Mr. Mattera is no stranger to the law. In 2009, he was accused by the Securities and Exchange Commission of evading registration requirements by backdating certain promissory notes. He paid a penalty of $140,000 and was barred from trading penny stocks, shares of smaller public companies that are worth less than $1 apiece.

Three of the current criminal charges against Mr. Mattera, who was arrested at his home in Fort Lauderdale, Fla., on Thursday, carry a maximum sentence of 20 years in prison each. He faces a maximum sentence of five years on the conspiracy charge.

Mr. Mattera and his associates “exploited investors’ desire to get an inside track on a wave of hyped future I.P.O.s,” George S. Canellos, the S.E.C.’s New York regional director, said in a statement. “Even as investors believed their funds were sitting safely in escrow accounts, Mattera plundered those accounts to bankroll a lifestyle of private jets, luxury cars, and fine art.””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Christopher Coke Pleaded Guilty in Federal Court to Trafficking Large Quantities of Marijuana and Cocaine, as well as Approving the Stabbing of a Marijuana Dealer in New York

September 1, 2011

The New York Times on September 1, 2011 released the following in print:

“Jamaican Kingpin Seized After Violent Manhunt Pleads Guilty in Manhattan

By JOSEPH GOLDSTEIN

Christopher Coke, a Jamaican drug trafficker whose arrest last summer came after a monthlong manhunt that left scores dead in Kingston, pleaded guilty on Wednesday to racketeering conspiracy charges in Federal District Court in Manhattan.

The guilty plea emerged during an hour of quiet dialogue between Mr. Coke and a federal judge, a proceeding that stood in sharp contrast to the violence generated last year as the Jamaican authorities searched for Mr. Coke, a neighborhood don, at the request of American prosecutors.

Mr. Coke, a short, balding man of 42, pleaded guilty to trafficking large quantities of marijuana and cocaine, as well as approving the stabbing of a marijuana dealer in New York. He faces a maximum sentence of 23 years in prison; the plea deal does not require him to cooperate or to testify on behalf of the government in any proceeding.

“I’m pleading guilty because I am,” he told Judge Robert P. Patterson Jr.

In seeking Mr. Coke’s extradition, Preet Bharara, the United States attorney in Manhattan, charged that for more than a decade Mr. Coke had controlled an international drug ring from his stronghold of Tivoli Gardens in Kingston.

His organization often transported cocaine to Miami and New York, prosecutors said. A portion of the profits, they said, went to buy guns in the United States, which were shipped back to Mr. Coke, who wielded considerable political influence in Jamaica. His organization was so well armed that it “rendered the Tivoli Gardens area virtually off-limits to the local police,” prosecutors wrote in a recent court filing.

The extradition and prosecution of Mr. Coke’s father, a leader of the same criminal organization, had been sought by the United States, but he died in a mysterious fire in a Jamaican prison cell in 1992.

The manhunt for Christopher Coke last year led to more than 70 deaths; in some instances, the police executed unarmed men, according to relatives of victims. In the months before the Jamaican prime minister, Bruce Golding, acted on the extradition request, Jamaican leaders warned officials in the American Embassy that any move to arrest Mr. Coke could result in widespread violence or civil unrest because Mr. Coke was well fortified in Tivoli Gardens and had a measure of popular support, according to a review of secret State Department cables released by WikiLeaks.

His plea deal came together in recent days after prosecutors told Mr. Coke’s lawyers that various confidential informers were prepared to testify that Mr. Coke had been involved in five murders, one of Mr. Coke’s lawyers, Stephen H. Rosen, said. One witness was prepared to testify that Mr. Coke used a chain saw to kill someone who had stolen drugs from him, according to a filing.

Under the original indictment, Mr. Coke could have faced a life sentence if convicted.

Mr. Coke’s lawyers described him as a well-spoken man who had never cursed in their presence; they said he had approached his new life in federal custody, where he is held under unusually restrictive conditions, with stoicism. “He’s never been in bad spirits,” one of the lawyers, Frank A. Doddato, said. “Let’s just say he’s one of the last tough guys.”

Dressed in a blue smock and orange socks, Mr. Coke was one of the first in the courtroom to stand when Judge Patterson entered on Wednesday, and he was the last to sit down. During a lengthy hearing in which he was asked routine questions, like whether his lawyers had provided effective assistance and whether he had recently consumed drugs or alcohol, Mr. Coke remained perched attentively on the edge of his seat, answering each question carefully.

In giving a statement of his guilt, Mr. Coke remained vague as to the specific crimes he had committed. He said that “a person gave someone narcotics on my behalf, on my instructions,” without offering any further details other than the year, 2007.

Initially, Judge Patterson voiced skepticism that the vaguely described crimes to which Mr. Coke was pleading guilty met the standard for racketeering.

When Mr. Coke pleaded guilty to approving the stabbing of a marijuana dealer in the Bronx in 2007, Judge Patterson asked whether the person had sustained serious injury — a component of the charge. Mr. Coke said he believed the person was stabbed in the face.

“Was it something that required hospitalization or was it something he could go home and brag about?” the judge asked.

Mr. Coke said that he was in Jamaica at the time and did not know the details, but that he was sure it would have required medical attention. He did not offer the name of the person who was stabbed. Asked for details about the violence, Ellen Davis, a spokeswoman for Mr. Bharara, refused to name the victim or the attacker.

Mr. Coke acknowledged involvement in the distribution of more than three tons of marijuana and more than 30 pounds of cocaine.

In addition to the confidential informers, prosecutors built the case using wiretaps the Jamaican authorities had been collecting since 2004, when they started eavesdropping on Mr. Coke’s cellphone conversations and on those of other members of his drug trafficking enterprise, according to a court filing.

Mr. Rosen said that some 50,000 conversations had been intercepted in the investigation. Of those, he said, “there was only one in which there was discussion of violence, and I can tell you it wasn’t murder.””

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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