Masqueraded Lies Cost Small Businesses More Than $4 million

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False promises and masqueraded lies cost a handful of small businesses more than $4 million. According to a recent Securities & Exchange Commission (“SEC”) press release, Nicholas Lattanzio, a New Jersey resident has been accused of “posing as a hedge fund manager and defrauding small companies.”

Lattanzio apparently touted a historical track record of double- digit returns and boasted that his Black Diamond Capital Appreciation Fund had $800 million assets. However, the SEC complaint alleges “the fund never had more than approximately $5 million in assets” and that he used the hedge fund’s assets to purchase a million-dollar home, luxury cars, paid off debts and even paid for his children’s private school tuition.

“As alleged in our complaint, Lattanzio masqueraded as a sophisticated hedge fund manager to capitalize on small businesses’ legitimate need for financing.  He falsely reassured his investors they were earning profits while he was swiping their money to bankroll his affluent lifestyle that he otherwise could not afford,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.

According to the SEC’s press release, “The SEC’s complaint charges Lattanzio, Black Diamond Capital Appreciation Fund, and three other Lattanzio-controlled entities with securities fraud in violation of the Securities Act of 1933 and Securities Exchange Act of 1934.  The complaint also charges Lattanzio and some of the entities with investment adviser fraud in violation of the Investment Advisers Act of 1940.”

While the SEC is cracking down on advisers who make fraudulent claims, they continue to issue alerts geared toward investor awareness. Check out last week’s blog, Investor Alert: Beware of False or Exaggerated Credentials.

For more information on this and other related subjects, please contact us at info@corecls.com or (619) 278-0020.