Monday, 26 January 2015
Last updated 1 hour ago
Jun 22 2010 | 12:05pm ET
As if intentionally playing into the borough’s reputation, Staten Island’s very own hedge fund fraud allegedly included a member of the Mafia.
Federal prosecutors have charged nine more people in the Gryphon Holdings case, bringing the total number of people charged in the case to 14. Among the new indictments is that of Michael Scarpaci, who already faces racketeering charges in a separate federal case. Scarpaci is allegedly an associate of the Gambino crime family, which was once led by arch-mobster John Gotti.
According to prosecutors, Gryphon defrauded investors of $17.5 million. Among the many lies that Gryphon allegedly told its victims was that it managed a $1.4 billion hedge fund and had received the imprimatur of hedge fund billionaire George Soros.
According to prosecutors and the Securities and Exchange Commission, which filed a parallel civil suit, Gryphon garnered clients—many of them elderly—through unsolicited e-mails and telephone calls. Once they had contact information, the firm’s employees allegedly used high-pressure sales tactics and a variety a fraudulent tactics to get between $99 and $250,000 for its investment advice.
In addition to its fictitious hedge fund, authorities say Gryphon had fictitious offices in Manhattan, London and Sydney, Australia—it was actually run from a Staten Island strip mall—and fictitious traders, Michael Warren and Kenneth Maseka, who the SEC say were “figments of” Gryphon president Kenneth Marsh’s imagination.
In addition to Scarpaci, the others newly charged are Richard Borrello, John Degliuomini, Christopher Perrotta, Gregory Rossomando, Robert Seidor, Dominic Spinelli, Paul Stokes and William Vecchione.
All 14 of those indicted have pleaded not guilty; each faces up to 20 years in prison if convicted.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…