The Securities and Exchange Commission (SEC) has filed an emergency action against PreIPO Corp., John A. Mattera, and David P. Grzan, accusing them of conducting an offering fraud. The SEC alleges that the Florida-based company, led by Mattera and Grzan, raised over $4.2 million from investors under the pretense of developing an online platform for pre-IPO shares but instead used the funds for undisclosed payments. The SEC’s complaint also implicates Boss Global Advisory Group Inc., a company controlled by Mattera, as a relief defendant.
SEC Cracks Down on Alleged Fraud Scheme by PreIPO Corp. and Associates
The Securities and Exchange Commission (SEC) has taken decisive action against PreIPO Corp., a Florida-based company, and two of its key personalities, John A. Mattera and David P. Grzan, by filing an emergency motion. But why should this matter to you as an investor? Let’s break it down.
What’s the Story?
According to the SEC’s complaint, PreIPO Corp. and Mattera and Grzan allegedly raised approximately $4.2 million from investors from March 2022 onwards. The company promised investors that their funds would be used to create an online platform offering access to private company shares before they go public.
However, the SEC alleges that contrary to these promises, only a small fraction of the funds raised were used for the said purpose. Instead, undisclosed payments totaling around $1.7 million were made to Mattera, Grzan, and other company officers from the investors’ money.
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What’s the Catch?
The catch here is that PreIPO, Mattera, and Grzan are accused of making significant misrepresentations and omissions to investors about the company’s management. The aim? To hide Mattera’s involvement and control over the company.
What Does it Mean for Investors?
As an investor, you might be wondering, “Why should I care?” The answer is simple: trust. When investing your hard-earned money, you expect transparency and honesty from the companies you invest in. Cases like these serve as a stark reminder of the importance of due diligence in investment decisions.
What Happens Next?
The SEC’s complaint charges the defendants with violations of federal securities laws, including the antifraud and securities registration provisions. The SEC seeks preliminary and permanent injunctions, disgorgement plus prejudgment interest, and civil penalties against all defendants.
Additionally, the SEC aims to impose officer and directors bars against Mattera and Grzan. A company controlled by Mattera, Boss Global Advisory Group Inc., is also named as a relief defendant, with the SEC seeking disgorgement plus prejudgment interest.
Who’s Behind the Investigation?
The SEC’s investigation was spearheaded by David Staubitz and Mark Dee from the Miami Regional Office. It was supervised by Chedly C. Dumornay, Fernando Torres, and Glenn S. Gordon. The litigation will be led by Russell Koonin and supervised by Teresa Verges.
Final Thoughts
This case underscores the SEC’s commitment to protecting investors and maintaining the integrity of the securities market. As investors, it’s crucial to stay informed about these developments to safeguard your investments and ensure a fair and transparent market.
