Man poses as billionaire Harvard MBA to defraud investors Loop Cayman Islands
Black Immigrant Daily News
A complaint filed on September 29, 2022 with the US District Court alleges that Justin Costello (“Costello”) and David Ferraro (“Ferraro”) engaged in schemes to defraud investors of millions of dollars.
According to the complaint, Costello gained investors’ trust by allegedly posing as a billionaire with a Harvard MBA, falsifying statements and making incorrect representations in regulatory filings.
For example, Costello submitted a Form 8-K for GRNF (a Nevada corporation) stating that Costello was a graduate of the University of Minnesota and the Harvard Business School.
However, the Securities and Exchange Commission (SEC) says that Costello graduated from Winona State University, and not the University of Minnesota.
In addition, Costello did not graduate from Harvard Business School. Instead, Costello took one class through Harvard University’s Division of Continuing Education.
Further, the SEC said that Costello allegedly mispresented that his wholly owned Washington limited liability company, GRN Funds, was a private equity and hedge fund. In fact, Costello’s company was never registered with the SEC as a hedge fund.
The complaint also alleges that Costello misled the public on the GRN Funds’ website, claiming that GRN Funds had $1.15 billion in assets under management. According to the SEC, this statement was false.
The allegations then go further downhill, describing an event where Costello allegedly told a 65-year-old real estate agent and her husband, a 68-year-old retiree, that he had served in the military with the Special Forces and was licensed to manage money and investments in order to get them to trust him to become the manager of their joint brokerage account.
The brokerage account was funded with $4,000,600 in July 2019, which Costello allegedly used to purchase stock in his other company, GRNF, a Nevada corporation.
After the elderly couple transferred their money to a new brokerage account, they gave Costello full authority.
By the end of June 2022, however, the value of those securities had declined by approximately 97 per cent.
Costello and Ferraro also allegedly engaged in stock promotion schemes in which Ferraro recommended to his Twitter followers and the public at least five microcap stocks that Costello owned. Ferraro failed to disclose that he and Costello intended to sell shares of those stocks as the price of those stocks rose, or that Costello would pay Ferraro a portion of his profits from those sales.
Costello and Ferraro allegedly used Ferraro’s Twitter account to perpetrate at least five stock promotion schemes whereby Ferraro recommended a penny stock that he and/or Costello owned to Ferraro’s Twitter followers and the public.
As allegedly written in a January 2020 email to Costello summarizing their schemes, Ferraro understood that his “announce[ments]” on Twitter would cause the stock to “run[ ] on hype,” i.e., cause the stock price to increase. In his promotional tweets, Ferraro did not disclose that he and/or Costello intended to sell their own holdings of those stocks into the inflated market that Ferraro’s tweets.
The SEC is now asking the court for the following orders in relation to the alleged acts:
Order that Costello and Ferraro pay civil monetary penalties under the Securities Act Permanently prohibiting Costello from serving as an officer or director of any company that has a class of securities registered under the Exchange Act Section or that is required to file reports under the Exchange Act Permanently prohibiting Costello and Ferraro from participating in any offering of a penny stock, including engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock, under the Securities Act
The SEC’s complaint was filed in the Western District of Washington.
The SEC also confirmed that, in a parallel action, the US Attorney’s Office for the Western District of Washington announced criminal charges against Costello.
The SEC’s investigation was conducted by Jordan Baker, Samuel Kalar, and Tian Wen with assistance from Stanley Husband. It was supervised by Celeste Chase and Mr. Pollock, of the New York Regional Office. The litigation will be led by Pascale Guerrier of the New York Regional Office and Mr. Kalar and Ms. Wen.
The SEC’s Office of Investor Education and Advocacy (OIEA) encourages investors to use the free resources on Investor.gov to check the background of anyone selling or offering investments.
NewsAmericasNow.com
