Fund manager gets 11 years for Facebook, Groupon shares scam

Fri Jun 21, 2013 1:50pm EDT
 
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By Bernard Vaughan

NEW YORK (Reuters) - Former fund manager John Mattera was sentenced to 11 years in prison on Friday, after pleading guilty of defrauding investors of $13 million with a story that he put their money in Facebook Inc and Groupon Inc shares before the companies went public.

U.S. District Judge Richard Sullivan said the sentence, at the high end of what prosecutors requested, was warranted because Mattera devastated his clients' savings, and also because of four prior convictions related to fraud and theft. Mattera had requested a sentence of less than four years.

"You hurt a lot of people in a very serious way," Sullivan said, after delivering the sentence. "You've left a lot of wreckage in your path."

Mattera, 51, former chairman of the advisory board for mutual fund Praetorian Global Fund Ltd, pleaded guilty in October to charges of securities fraud, wire fraud, money laundering and conspiracy to commit securities fraud and wire fraud in connection with the scheme.

He admitted transferring $11 million from investors into an escrow account instead of safeguarding it ahead of the highly anticipated initial public offerings.

He also admitted taking $2 million more from investors who thought he was investing in Facebook and Groupon while they were still private. Instead, prosecutors said Mattera spent nearly $4 million of it on luxury cars, jewelry, personal taxes and a lawsuit settlement.

Mattera had two Rolls Royces and a Ferrari when he was arrested, Assistant U.S. Attorney Eugene Ingoglia said.

"It's just blatant fraud," Ingoglia said.   Continued...