STATEN ISLAND, N.Y. \u2014 A Staten Island man and two alleged co-conspirators pleaded guilty Thursday in Brooklyn federal court to orchestrating a multimillion-dollar investment fraud scheme that targeted investors nationwide, including senior victims, prosecutors announced.<\/p>\n
Peter Girgis, 44, of Pleasant Plains; John Cangialosi, 44, of Manalapan, New Jersey; and Gene Sarabella, 37, also known as \u201cJerry,\u201d of Monroe, New Jersey, admitted to all counts of a five-count indictment before U.S. District Judge Carol Bagley Amon, according to court documents.<\/p>\n
Prosecutors said the defendants were charged with conspiracy to commit securities fraud, conspiracy to commit wire fraud, securities fraud, investment adviser fraud and money laundering conspiracy, exposing each to a potential sentence of up to 60 years in prison. The men had been scheduled to stand trial Jan. 12.<\/p>\n
\u201cThe defendants were the architects of a vast fraud scheme targeting investors here in the Eastern District of New York and all throughout the country,\u201d U.S. Attorney Joseph Nocella said in a statement. <\/p>\n
He said the men concealed excessive fees, misrepresented securities and used investor funds to enrich themselves, largely through the purchase of luxury watches.<\/p>\n
Court filings show the defendants operated Max Infinity Management LLC and Elder Fund Management LLC, which marketed investments in privately held companies purportedly preparing for initial public offerings. <\/p>\n
The businesses functioned as a boiler-room-style call center (a high-pressure sales operation) that made repeated misrepresentations about both the investments and the firms themselves.<\/p>\n
Prosecutors said the defendants falsely told investors that Max Infinity would profit only through a 20% share of gains following an IPO. In reality, they secretly charged markups exceeding 95% of an investment\u2019s value and paid sales commissions of up to 15% using investor funds, while concealing those fees.<\/p>\n
Court documents describe multiple layers of deception. The defendants claimed they acquired shares directly from companies or employees but instead purchased most interests from other investment funds or through publicly available online platforms. <\/p>\n
They also allegedly told investors shares were \u201cin inventory\u201d and that funds would be held in escrow, though the interests often had not been purchased and investor money was largely spent.<\/p>\n
Prosecutors said the defendants diverted millions of dollars through undisclosed distributions to themselves. They also falsely claimed Max Infinity had invested in Palantir, Facebook and Airbnb \u2014 all of which went public before the company was founded \u2014 and never returned a profit to any investor.<\/p>\n
According to court filings, the defendants misled clients about Max Infinity\u2019s regulatory status by sending a link to a website that falsely suggested registration with the Securities and Exchange Commission. <\/p>\n
The defendants also allegedly concealed that Girgis and Cangialosi had each been suspended for nine months by the Financial Industry Regulatory Authority and had extensive disciplinary histories.<\/p>\n
Prosecutors said the operation relied on scripted, high-pressure sales tactics that specifically targeted elderly investors. Scripts promised \u201ctriple digit returns,\u201d described securities as \u201cdirt cheap\u201d and falsely claimed they spent millions on research before recommending investments.<\/p>\n
Court documents show the defendants laundered millions of dollars in proceeds from the scheme, including through the purchase of dozens of high-end watches.<\/p>\n