New York – Florida Man Charged In NY Investment-Fraud Case

New York – A mutual fund executive was arrested on Thursday and accused of promising investors early shares in companies such as Facebook and Groupon even as he spent some of the more than $11 million they invested with him on cars and jewelry.

John Mattera, 50, was arrested at his home in Fort Lauderdale, Fla. He was accused of duping people who invested millions of dollars with his British Virgin Islands-based Praetorian Global Fund Limited.

A criminal complaint filed in U.S. District Court in Manhattan accused him of telling investors in May that their money would be held in escrow until it was invested in a mutual fund that contained early shares in not-yet-public firms such as Facebook Inc. and Groupon Inc., which went public Nov. 4. Mattera claimed he owned more than a million shares of each company, according to the complaint.

Mattera transferred the vast majority of investors’ money to other entities associated with him, the complaint said.

He is accused of then misappropriating millions of dollars, spending nearly $4 million on personal items for himself and his family, including expensive jewelry, interior decorating, private jets, tailored clothing, a boat and luxury cars. Some of the money also was used to pay Mattera’s personal tax liability to the Internal Revenue Service and to pay a settlement in a private civil fraud case brought against Mattera, the complaint said.

“The allegations against Mr. Mattera show that the appearance of success can be a tangled web of financial lies,” said Victor W. Lessoff, special agent-in-charge of the IRS New Jersey office.

It was not immediately clear who would represent Mattera in court.

Charges against him, which include conspiracy to commit securities fraud and wire fraud and money laundering, carry a potential prison term of 65 years.

The complaint relied in part on information provided by a cooperating witness, who it said had worked as Praetorian’s managing director and had pleaded guilty to fraud and obstruction of justice charges.

According to the complaint, the Securities and Exchange Commission in 2009 charged Mattera and others with fraudulently attempting to avoid registration requirements by backdating promissory notes. It said Mattera consented to a permanent injunction barring certain securities violations and an order requiring him to pay disgorgement and penalties of $140,000 plus interest.