Securities

SEC Brings Another Offering Fraud Case

 The Commission filed another in what appears to be an unending series of offering fraud actions. Unlike many of its prior cases, this action centers on a Respondent who kept shifting his scheme to continually raise more money at the expense of innocent investors. In the Matter of Anthony Coronti, Adm. Proc. File No. 3-161203 (October 17, 29014).

Respondent Coronti controls, Bidtoask LLC, also named as a Respondent in the proceeding. He claims to be the chairman and CEO of Corsac Inc., an investment adviser to a fund. Corsac Group Ltd, sometimes called, Corsac Fund, is also controlled by Mr. Coronti.

From 2008 through 2011 Mr. Coronati offered investors units in Corsac Fund. In the first iteration of this offering, investors were told the fund invested in U. S. equity securities. The fund was looking for a 30% return with minimal risk.

Eleven investors purchased units. There was no fund, according to the Order. When the money ran out, Mr. Coronati moved on.

In another iteration of the scheme, Mr. Coronati offered investors shares in Corsac at a price of $5 per share. This time investors were told that the funds would be invested in a fund that would hold an IPO in the third quarter of 2012. Investors were assured the IPO price would be higher than what they paid. When the investor funds were drained, Mr. Coronati move on.

In early 2012 Mr. Coronati began soliciting investors to purchase shares in a fund that held pre-IPO Facebook shares. This investment was offered through Bidtoask. Approximately $1.75 million was raised from 44 investors.

While Mr. Coronati misappropriated portions of the money, in fact investor funds were used to acquire interests in a fund that actually owned pre-IPO Facebook shares. After the IPO, the funds were distributed to the investors, but portions were again misappropriated by Mr. Coronati.

Finally, for about one year beginning in mid-2013, Respondents offered investments in two privately-owned technology companies. One was going to conduct an IPO investors were told. Rather than invest the funds as represented however, Respondents misappropriated the money.

As the schemes unraveled Mr. Coronati attempted to placate investors by using portions of their money to pay others. False account statements were also distributed.

The Order alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Advisers Act Sections 206(1), 206(2) and 206(4). Respondents resolved the proceeding, each consenting to the entry of a cease and desist order based on the Sections cited in the Order. Mr. Cononati was also barred from the securities business and will pay disgorgement of $292,646.36, prejudgment interest and a civil penalty of $100,000. A fair fund will be created for investors.

 For more news and commentary on developing securities issues, visit SEC Actions, a blog by Thomas Gorman.

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