Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Wednesday, July 17, 2024 | Back issues
Courthouse News Service Courthouse News Service

One Lie After Another, SEC Says

MANHATTAN (CN) - An "investment adviser" lied his head off to take $4 million from investors, and blew at least $1 million of it on gambling, drugs and other fripperies, the SEC claims in Federal Court.

The U.S. Attorney's Office filed parallel criminal charges against Stephen A. Colangelo Jr., the SEC said in a statement announcing its own lawsuit.

According to the SEC lawsuit: From 2009 through 2011, Colangelo solicited and obtained over $4 million from investors by making material misrepresentations and omissions concerning Colangelo's prior trading activity and historical rates of return, Colangelo's criminal history and educational background, and the use of investor funds. Colangelo also misappropriated at least $1 million of investor funds, using investor funds to pay for, among other things, illegal narcotics, gambling, and personal travel."

Colangelo's fraud began in 2009, when he suckered investors into giving him $760,000 to invest in "the Brickell Fund LLC, a pooled investment vehicle that he created, advised, and controlled," the SEC said in a statement.

He stole-"misappropriated"-$200,000 of that money, and although he "had been charged with fraud-based felonies on two prior occasions, [he] also misrepresented or failed to disclose his criminal history to investors," the SEC says in its complaint.

Next, he took $1.2 million from three investors and swiped $185,000 of it, according to the complaint.

Finally, he took $2.2 million, ostensibly to put into "three startup entities that Colangelo founded and controlled-Hedge Community LLC , Start a Hedge Fund LLC, and Under the Radar SEO LLC," according to the SEC complaint. He stole at least $800,000 of that, according to the SEC complaint.

So blatant was Colangelo, the SEC said in its statement, that "In March 2009 when the Brickell Fund did not have any investors and Colangelo was not buying and selling securities on behalf of the fund, he sent numerous e-mails to potential investors boasting phony information. For instance, one e-mail claimed, 'BEST TRADING DAY OF MY LIFE!!!!!!!. ... Up over 400% and documented. Mind boggling to say the least.' In reality, Colangelo did not make any trades that day."

He also created a profile for himself on LinkedIn and claimed that he had studied finance at Nyack College from 1986 to 1989, the SEC says. However, the agency claims, "he never attended Nyack College and has not graduated from high school."

Colangelo, 44, lives in Congers, N.Y.

"In June 2009, Colangelo was sentenced to probation (adjudication withheld) in the state of Florida in connection with 2007 felony charges for burglary, theft, and engaging in a scheme to defraud," according to the SEC complaint. (Parentheses in complaint). "In May 2003, Colangelo entered a pre-trial diversion program in Florida in connection with 2002 felony charges that Colangelo issued a worthless check and deposited or cashed an item with a bank or depository institution with intent to defraud."

The SEC seeks disgorgement, restitution and penalties.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.