Fund manager charged in Groupon, Facebook scam

NEW YORK Fri Nov 18, 2011 11:17am IST

An online coupon sent via email from Groupon is pictured on a laptop screen November 29, 2010 in Los Angeles. REUTERS/Fred Prouser/Files

An online coupon sent via email from Groupon is pictured on a laptop screen November 29, 2010 in Los Angeles.

Credit: Reuters/Fred Prouser/Files

Related Topics

NEW YORK (Reuters) - A fund manager accused of running an $11 million scam promoting phony access to coveted shares of Facebook and Groupon Inc before their public debut was arrested on criminal charges Thursday.

John Mattera, who ran the Praetorian Global Fund registered in the British Virgin Islands, spent nearly $4 million of the misappropriated money on personal expenses, including leasing luxury cars, buying jewelry, paying personal taxes and settling a private civil fraud lawsuit, according to a criminal complaint unsealed in Manhattan federal court.

Mattera, 50, was arrested at his home in Fort Lauderdale, Florida, by Internal Revenue Service agents. The U.S. Securities and Exchange Commission said in a statement that it also filed civil charges against Mattera and several of his associates.

Mattera's lawyer, Carl Schoeppl, could not immediately be reached for comment. Mattera made an initial appearance in federal court in Florida, said the Manhattan U.S. Attorney's office, which brought the charges.

The criminal complaint charged Mattera with securities fraud, wire fraud and money laundering. He faces up to 20 years in prison if he is convicted on charges involving false representations including those about Groupon, the daily deals website, social-networking company Facebook, and others. The companies are not accused of any wrongdoing.

Facebook is private but the popular website is being closely watched by investors as a potential candidate for an initial public offering next year. Groupon made its stock market debut on Nov. 4, closing up 31 percent on its first day of trading. On Thursday, the stock rose 0.9 percent to $24.25.

According to court documents, investors sent more than $11 million into what Mattera and others described as escrow accounts at a Florida bank. He is accused of telling investors that their money would be held until the IPO was completed.

But instead, Mattera transferred most of the money into entities that he controlled with an associate.

"As the complaint describes, Mattera told elaborate lies about stock he did not own and about how he would keep investors' money safe," Manhattan U.S. Attorney Preet Bharara said in a statement. "Instead, Mattera took the investors' money to fund his own extravagant lifestyle."

The case is USA v John A. Mattera, U.S. District Court for the Southern District of New York, No. 11-mag-2947.

(Reporting by Grant McCool; Editing by Gerald E. McCormick and Richard Chang)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Pharma

REUTERS SHOWCASE

Jan Dhan Yojna

Jan Dhan Yojna

Modi: Banking for all to end "financial untouchability".  Full Article 

Power Outage

Power Outage

India may face blackouts as coal shortage cuts power output  Full Article 

Moody's on Inflation

Moody's on Inflation

Persistent inflation hurting India's sovereign ratings - Moody's  Full Article 

Tracking Monsoon

Tracking Monsoon

Monsoon forecast to be better for crops next week  Full Article 

Carmichael Project

Carmichael Project

Adani buys Australia coal mine royalty rights from Linc for $145 million  Full Article 

GDP Preview

GDP Preview

Economy likely grew faster in June quarter: Reuters poll.  Full Article 

India-Japan Meet

India-Japan Meet

Modi eyes breakthrough nuclear pact on Japan trip   Full Article 

Monetary Policy

Monetary Policy

BofA says RBI may cut rates by 75-100 bps starting early 2015  Full Article 

Rare Earth Output

Rare Earth Output

India to chip in with 5 pct of global rare earth output  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage