February 24, 2025
Fraud
At ChapmanAlbin LLC, we are dedicated to exposing fraudulent investment schemes and protecting investors from financial misconduct. The Securities and Exchange Commission (SEC) has charged seven individuals and five companies in connection with a $70 million fraudulent pre-IPO stock scheme, which misled more than 550 investors across the United States.
Overview of the Allegations
According to the SEC’s complaint, filed in the U.S. District Court for the Eastern District of New York, John S. Cangialosi, Jr., Peter N. Girgis, and Gene “Jerry” Sarabella orchestrated the fraud through a network of entities, including:
These firms claimed to sell shares in private companies before their initial public offerings (pre-IPO stocks). However, instead of offering legitimate pre-IPO investments, the defendants inflated prices and pocketed enormous commissions while misleading investors about the risks involved.
How the Fraud Worked
The SEC alleges that Cangialosi, Girgis, and Sarabella hired unregistered sales agents, including Enrico A. “Ed” Carini, Caner “John” Otar, Chester E. “Chett” Scotland, and Franz H. Lambert II, who engaged in high-pressure sales tactics and made false promises to investors, including:
In reality, a significant portion of investor funds was diverted to pay undisclosed commissions and enrich the defendants rather than being used for legitimate pre-IPO stock purchases.
Regulatory History of Key Defendants
The SEC also highlights that Cangialosi and Girgis had been suspended multiple times by the Financial Industry Regulatory Authority (FINRA), including during part of the scheme’s operation. Their involvement was intentionally concealed from investors to maintain credibility.
SEC Charges and Legal Consequences
The SEC’s complaint charges all defendants with violating antifraud, securities registration, and broker-dealer registration provisions of federal securities laws. The Commission seeks:
What Investors Should Know About Pre-IPO Scams
Investing in pre-IPO stock can be highly speculative and ripe for fraud. Investors should be cautious of:
To learn more about the risks of investing in pre-IPO offerings, visit the SEC’s Investor Alerts for guidance.
ChapmanAlbin Can Help
If you or someone you know invested in Max Infinity Fund, Max Infinity Venture Partners, or any affiliated firms and suffered losses, you may have legal options to recover your funds.
At ChapmanAlbin LLC, we specialize in securities fraud cases and have a proven track record of holding bad actors accountable.
Contact us today for a free consultation, and stay informed by visiting our website for the latest investor alerts. We are committed to protecting investors and pursuing justice against fraudulent financial schemes.
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