A Long Island-based investment broker who was previously barred from the industry was arraigned Wednesday in federal court for allegedly stealing $436,000 from four individuals who believed they were investing in shares of pre-initial public offerings (IPOs) for a number of well-known companies, including Peloton and AirBnB.
According to the Nassau County District Attorney’s office, the SEC referred the case against Peter Quartararo earlier this year. Both he and business partner Paul Casella were charged with a number of grand larceny and conspiracy counts, and each faces as many as 15 years in prison, according to the Nassau Daily Voice. The SEC has also filed charges against him in federal court.
“These defendants allegedly conned investors to give them hundreds of thousands of dollars promising high returns from prominent companies, but instead they pocketed the funds to support their lavish lifestyles,” Nassau County DA Madeline Singas said.
Starting in July 2019, Quartararo met with the four separate victims, saying he could access pre-IPO stock in WeWork, Peloton and AirBnb, according to the Nassau County DA’s office. He allegedly touted the investments at $2.00 per share, assuring investors he’d return the profits to them when the companies went public.
The four investors responded by giving him between $72,000 and $200,000 in checks to purchase the shares, but there was one problem, according to the SEC; Quartararo and Casella never purchased any shares in those three companies. Instead, the funds went into accounts controlled by Casella and Leonard Quartararo, who is Peter Quartararo’s father, according to the Nassau County DA. In its own complaint, the SEC argued that Quartararo never had access to the pre-IPO shares in question.
Both Quartararo and Casella had history with industry regulators, according to the SEC; in 2013, Quartararo was barred after he solicited acquaintances with a penny stock tip, but did not invest the funds and created false documents for those investors. Casella had been barred from associating with any registered brokerage firms in 2008 and he was convicted of federal racketeering three years later, according to the commission’s complaint.
After the checks were deposited in Casella and the elder Quartararo’s account, “a significant amount of funds” were transferred to accounts held by Quartararo and Lisa Eckart, Quartararo’s girlfriend. The money was used for personal expenses, including for payments on a Maserati registered to Eckart and owned by Quartararo, according to the SEC complaint.
According to the complaint, Quartararo did not return the funds to his victims even after Peloton and Airbnb completed their IPOs, in Sept. 2019 and Dec. 2020, respectively (WeWork announced it would be cancelling its own planned IPO in Sept. 2019).
“Instead, Quartararo, knowingly, or with reckless disregard, concealed and perpetuated his fraud by periodically promising the investors that he would sell the shares in the investments and give them their profits,” the complaint read.
In addition to the potential prison sentence, the Commission’s seeking disgorgement of ill-gotten gains with prejudgment interest from Quartararo, as well as his father, Casella, Casella’s company and Eckhart, who are listed as relief defendants. It’s also seeking an injunction and a civil penalty against Quartararo.