Money From Alleged Ponzi Scheme Stays Put

     SAN FRANCISCO (CN) — A federal judge Wednesday refused to unfreeze the assets of a former investment fund manager who allegedly pocketed millions of dollars from a Ponzi scheme involving pre-IPO tech company shares.
     Frank Mazzola, a 49-year-old New Jersey man who was barred from the securities industry in 2014 for running a similar scheme, received the “lion’s share” of misappropriated funds from his uncle, New Jersey-based investment fund manager John Bivona, the SEC says.
     It sued Bivona, Mazzola and the investment funds Saddle River Advisors and SRA Management Associates in March.
     Bivona, 75, raised more than $53 million from investors in pre-IPO tech companies, but stole $5.7 million of it and diverted millions more to other “improper and undisclosed uses,” according to the SEC.
     U.S. District Judge Edward Chen issued a temporary restraining order in March, which barred Bivona and his investment funds from trading and froze the assets of Bivona, Mazzola and their spouses.
     Bivona agreed to abide by the conditions of the restraining order, which the SEC also sought to impose through a preliminary injunction, but the Mazzolas objected.
     The Mazzolas asked the judge to unfreeze $13,280 per month to cover their living expenses and $35,450 to pay off debt.
     But because the Mazzolas invoked their Fifth Amendment right to avoid self-incrimination and refused to disclose their assets or income, Chen said he could not determine whether they lack the means necessary to pay their living expenses.
     “Because the Mazzolas decline to provide the Court with evidence of need, the Court will not modify the asset freeze,” Chen wrote.
     In 2014, Mazzola was ordered to repay undisclosed fees and commissions he allegedly pocketed while acquiring shares of Facebook, Twitter and other pre-IPO tech firms. He was also barred from the securities industry for at least three years.
     In the most recent scheme, investors were told they would receive annual financial statements on the funds, but no financial statements were ever prepared. Bivona used investors’ money to pay Mazzola’s credit card bills, income taxes, car loan, attorneys’ fees and mortgage on a Jersey shore vacation home, the SEC says.
     Mazzola’s attorney, Edwin Prather, did not immediately return a phone call seeking comment on the ruling and the SEC allegations.

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