Three former principals of a so-called "Pre-IPO" investment fund have admitted their roles in a scheme to defraud investors out of $65 million. John Cangialosi, Peter Girgis, and Gene Sarabella, known as "Jerry," pleaded guilty to all counts including securities fraud, investment adviser fraud, and money laundering conspiracy. The charges could land each of them up to 60 years in prison, according to the U.S. Attorney’s Office for the Eastern District of New York.
The federal prosecutors laid out that the three men knowingly orchestrated a fraud scheme, promising investors hefty returns on pre-IPO shares. They were meant to appear in court for a trial on January 12, 2026, but instead chose to quickly plead guilty. United States Attorney Joseph Nocella described the defendants as "architects of a vast fraud scheme," targeting innocent investors and concealing their deceitful tactics. Their methods included promising to make money only if investors did, while in reality charging huge, hidden fees and paying out significant sales commissions with the capital.
The fraud was perpetrated through entities Max Infinity Management LLC, Elder Fund Management LLC, and a series of related funds. The defendants utilized high-pressure sales tactics and preyed particularly on elderly victims, utilizing scripted language that guaranteed outsized returns and misrepresented the true nature of their investments. It was uncovered that the majority of the shares sold were not directly acquired from issuers, but rather from other funds or online platforms, directly contradicting what they told their clients.
Moreover, Cangialosi and Girgis sought to hide their involvement in the fund from regulators and investors, due to previous suspensions by the Financial Industry Regulatory Authority (FINRA). They had instructed their employees to falsely claim Max Infinity was registered with the SEC, even setting up a sham website to support their lies. They proceeded to launder their ill-gotten profits by purchasing luxury items such as high-end watches.
Prosecutors Sarah M. Evans, Nicholas M. Axelrod, and Eric Silverberg led the case, with Paralegal Specialist Liam McNett and Assistant United States Attorney Michael Castiglione handling forfeiture matters.
