Skip to main content

At first, the allegations against “boutique private equity firm” StraightPath Venture Partners sounded very serious, indeed. There was an alleged $73 million in investor cash pocketed. There were allegedly millions more in Ponzi scheme payments. And, finally, there were allegedly none of the once highly-coveted pre-IPO shares that StraightPath was selling.

Then, it seemed all of that may have been a bit of puffery from the Securities and Exchange Commission, which all of a sudden seemed content to settle for about $15 million. Since then, however, things sound terribly serious once again, including from the mouths of the defendants themselves, and even more so from the court-appointed receiver attempting to sort through the mess. Especially now that the Justice Department has asked everyone else to stand aside and let it handle things.

Prosecutors Allison Nichols and Jason Richman said in a court filing Tuesday that three of the defendants in the civil case, Brian Martinsen, Michael Castillero and Francine Lanaia, have used the proceeding’s discovery process to seek documents related to meetings between the Securities and Exchange Commission and Justice Department investigators…. [The prosecutors] added that the SEC’s civil fraud complaint alleges that Messrs. Martinsen and Castillero “deleted subpoenaed emails” of StraightPath sales agents “to thwart regulators….”

In their filing for a stay, the prosecutors said that the underlying facts in the civil case are substantially the same as those involved in the criminal investigation, so putting the civil case on hold would avoid a duplication of court proceedings if criminal charges are brought. The lawyers said the defendants have asked to be heard in the criminal probe before any indictments are sought, and that hearing won’t happen until later this month at the earliest.

Federal Prosecutors Intervene in StraightPath Fraud Case [WSJ]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.

Related

(Getty Images)

$15 Million Escrow Account Enough To Make $410 Million Fraud Allegations Go Away

There may be less than meets the eye in the SEC’s case against p.e. firm StraightPath Venture Partners.

By Chris Potter (Flickr: 3D Judges Gavel) [CC BY 2.0], via Wikimedia Commons

Private Equity Execs Decide To Help SEC’s Case Against Them

Everything the regulators says is true, apparently, but only to a not-illegal extent.

car dealer

Maybe It Wasn’t Such A Great Idea To Fire A Guy Who Knew About The Ponzi Payments You Were (Allegedly) Making

Because in addition to “unemployed,” he can also now call himself “whistleblower.”

By Chris Potter (Flickr: 3D Judges Gavel) [CC BY 2.0], via Wikimedia Commons

Second Trial Avoided Rather Less Auspicious For Private Equity Firm Than The First

It doesn’t sound like Merrick Garland is looking as kindly on the GPB boys as Bill Barr.

atlanta

Hotlanta A Hotbed Of Hedge Fund, Private Equity Fraud

Allegedly. What I can tell you from on-the-ground reporting is that it is also very, very hot in a literal sense.

By Chris Potter (Flickr: 3D Judges Gavel) [CC BY 2.0], via Wikimedia Commons

Older Brother Sells Out Younger Brother In Alleged Crypto Hedge Fund Fraud, But Notes That Real Villain Is SEC

If they’d just unfreeze those assets, his little bro would quickly get them back to his alleged victims, he’s pretty sure.

gavel-money-bills-law-legal-litigation-finance-300x221

Texas Real Estate Executives Guilty Of Proving Kyle Bass Right

And, also, relatedly and with the prospect of decades in prison attach, conspiracy and fraud.