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SEC charges alleged investment adviser with investor fraud, after spending seed capital on drugs and gambling

Tuesday, November 20, 2012

amb
Stephen A. Colangelo
Bailey McCann, Opalesque New York: The Securities and Exchange Commission (SEC) today charged Stephen A. Colangelo, Jr., a purported investment adviser in New York with defrauding investors who he convinced to invest in his start-up businesses while in reality he was spending their money on illegal drugs and gambling. Colangelo raised $3m from investors for four companies, and also took another $1m from three investors as a fake investment adviser based on a fake securities trading record. According to the SEC, $1m of that money was subsequently funneled into Colangelo's drug and gambling habits.

According to the complaint, Colangelo’s fraudulent scheme began in 2009 when he induced investors to invest more than $750,000 in the Brickell Fund LLC, a pooled investment vehicle that he created, advised, and controlled. In March of that year, the fund had no investment and no money, so Colangelo started emailing potential investors about how great his trades were going when in reality he was making no trades. After spending or losing all of the money invested in the Brickell Fund, Colangelo continued to fraudulently raise funds from investors for three other startup businesses he created – Hedge Community LLC, Start a Hedge Fund LLC, and Under the Radar SEO LLC.

The SEC further alleges that Colangelo set up a misleading LinkedIn profile which said he studied finance at Nyack Col......................

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