NEW YORK 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)
Fed's Yellen offers dose of uncertainty to markets hungry for a clue
JACKSON HOLE, Wyoming To markets hungry for direction from the U.S. Federal Reserve, Fed Chair Janet Yellen offered a sobering dose of uncertainty for monetary policy and the global economy on Friday, suggesting interest rates could rise faster than expected in coming months or just as easily crater back to zero.
Yellen's case for rate hike boosts dollar; stocks surrender gains
NEW YORK U.S. equities gave up early gains on Friday, hurt by a surging U.S. dollar after Federal Reserve Chair Janet Yellen said that the case for raising U.S. interest rates has strengthened in recent months.
Castrol India says not aware of any stake sale by BP unit
MUMBAI Castrol India Ltd said on Friday it was not aware of any stake sale in the company by Castrol Ltd, a unit of oil major BP Plc, and said recent news reports that such a transaction would take place were based on market speculation.