The United States’ Securities and Exchange Commission (SEC) today charged two unregistered brokers with pocketing investor money raised for limited liability companies owned and controlled by them which supposedly held warrants to purchase the common stock of a technology startup company.
Brokers Attracted Investors By Showcasing Their Wealth
According to the SEC, James Trolice and Lee Vaccaro are alleged to have raised around $6 million from over 100 investors by creating a false sense of urgency and exclusivity around the offering. They claimed that only a limited amount of warrants were available and that they could eventually be exercised at a very profitable price.
Trolice was also alleged to have lured investors by hosting elaborate investor parties and touting his purported track record of bringing startup companies public and obtaining high returns for investors. He then used investor funds to pay his mortgage and various other bills. Vaccaro, meanwhile, allegedly spent at least a quarter-million dollars in investor funds at Las Vegas casinos. Both Trolice and Vaccaro are reported to be unregistered with the SEC or any state regulator
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Andrew Calamari, Director of the SEC’s New York Regional Office commented: “We allege that Trolice and Vaccaro lied to investors about the nature of the investment, created a phony aura of success, and ultimately funded their own lifestyles rather than investing all the money as promised. The SEC continues to pursue and investors should continue to be aware of unregistered brokers selling investments.”
Stockbroker Collaborated With Brokers
The SEC’s complaint also charges former stockbroker Patrick Mackaronis, who received commissions for bringing prospective investors to Trolice and Vaccaro so they could close the sales.
Mackaronis ignored fraud risks and touted the opportunity to family members, friends and brokerage clients. He has agreed to settle the SEC’s charges by paying up the $85,000 in commissions he received as well as $8,486.91 in interest and a $50,000 penalty. Mackaronis has also received a three-year bar from the securities industry.
In parallel actions, a New Jersey court today announced criminal charges against Vaccaro. The New Jersey Bureau of Securities has also announced civil charges against Trolice, Vaccaro, and Mackaronis.