Source: Office of United States Attorneys
Defendants Lied to Investors Regarding Hidden Markups and Fees and Stole Millions of Dollars in Investor Funds for Themselves
Earlier today, at the federal court in Brooklyn, a superseding indictment was unsealed charging Robert Cassino, also known as “Bobby Cassino,” Joseph Passalaqua and Joseph Rivera with securities fraud conspiracy, wire fraud conspiracy and securities fraud. The defendants were arrested today and are being arraigned this afternoon before United States Magistrate Judge James R. Cho. Raymond John Pirrello, Jr., also known as “Ray John,” was previously indicted for his involvement in the scheme.
John J. Durham, United States Attorney for the Eastern District of New York and James E. Dennehy, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI) announced the charges.
“The defendants repeatedly lied to investors about the costs associated with their investments and diverted millions of dollars in undisclosed mark-up fees to their sales offices,” stated United States Attorney Durham. “My Office will vigorously prosecute those who seek to take advantage of individual investors for their own greed.”
Mr. Durham expressed his appreciation to the Securities and Exchange Commission (SEC), New York Regional Office, for its significant cooperation and assistance during the investigation.
“At the behest of the company’s leadership, three defendants allegedly enticed investors with material misinformation to steal millions of their dollars through undisclosed upfront fees. This alleged scheme allowed the defendants’ respective sales offices to unlawfully profit at the expense of their clients’ trust and money. The FBI will never permit any individual to engage in hypocritical financial practices to covertly divert investments for personal enrichment,” stated FBI Assistant Director in Charge Dennehy.
As detailed in the superseding indictment, Pirrello, Cassino, Passalaqua and Rivera engaged in a scheme to defraud investors and prospective investors in securities offered by the company Late Stage Management, LLC (Late Stage). Late Stage was a New Jersey based manager of investment funds that offered investors “no fee” opportunities to invest in “Pre IPO” stocks, i.e., shares of stock in companies that anticipated an initial public offering (“IPO”) in the near term. Late Stage worked with several sales offices throughout New Jersey, New York and Florida to promote the investments, including Pre IPO Marketing, Inc. (“Pre IPO Marketing”), Prior2IPO and B4IPO.
Pirrello worked as the partner to the leadership of Late Stage, and Cassino, Passalaqua and Rivera led operations at Pre IPO Marketing, Prior2IPO and B4IPO, respectively. Pirrello and co-conspirators communicated with Cassino, Passalaqua, Rivera and others about how to market Late Stage to investors. Cassino, Passalaqua and Rivera then made material misrepresentations and omissions to investors and potential investors in Late Stage relating to, among other things, the existence and amount of fees paid by investors in stock offered by Late Stage. For example, they claimed that the only time Late Stage profited was on exit, when the company made its IPO or sold to a larger company, in which case it would be entitled to a 20% share of the investor’s profits. In reality, however, Late Stage charged fees in the form of upfront markups ranging from 10-50% of each investment. In total, between approximately March 2019 and July 2022, sales offices working on behalf of Late Stage raised approximately $528 million from investors and diverted approximately $88.6 million in undisclosed upfront markups to Pirrello, Cassino, Passalaqua, Rivera and their co-conspirators.
The charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.
If you believe that you or someone you know was victimized by Pirrello, Cassino, Passalaqua, Rivera or their co-conspirators, please inform the FBI at the following website: www.fbi.gov/Pirrello or by calling 1-800-CALL-FBI.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Jessica K. Weigel is in charge of the prosecution with assistance from Special Agent Martin Sullivan and Paralegal Specialist Sarah Burn.
The Defendants:
ROBERT CASSINO (also known as “Bobby Cassino”)
Age: 62
Long Beach, New York
JOSEPH PASSALAQUA
Age: 36
Sparta, New Jersey
JOSEPH RIVERA
Age: 45
Elmont, New York
Previously Indicted Defendant:
RAYMOND JOHN PIRRELLO, JR. (also known as “Ray John”)
Age: 48
Sparta, New Jersey
E.D.N.Y. Docket No. 23-CR-499 (S-1) (KAM)