A South Florida man charged with running an $11 million scam involving non-existent shares in companies including Facebook Inc. (FB:US) and Groupon Inc. (GRPN:US) was taken into custody after pleading guilty to criminal charges.
John Mattera, 50, who operated Praetorian Global Fund Ltd., pleaded guilty today in Manhattan to three criminal counts -- conspiracy, securities fraud and wire fraud -- and tried to plead guilty to a fourth, money laundering. U.S. District Judge Richard Sullivan declined Mattera’s request to remain free on bail, ordering him jailed after a two-hour hearing.
During the proceeding, Sullivan questioned Mattera repeatedly about the facts surrounding his guilty pleas. After criticizing Mattera’s “stream-of-consciousness” explanation of the crimes, Sullivan said he needed additional time to consider whether to accept Mattera’s guilty plea to money laundering. Sullivan accepted Mattera’s plea on the other counts.
The hearing was rescheduled from yesterday, after Mattera told his lawyer he had accidentally locked himself out of his apartment and missed the flight they were to take together from Fort Lauderdale, Florida, to New York. Sullivan yesterday called the excuse “pretty pathetic.”
Sullivan cited Mattera’s four prior fraud convictions and a civil contempt ruling against him last week in a case filed by the U.S. Securities and Exchange Commission, in his decision to jail Mattera until he’s sentenced Feb. 1.
In a plea agreement between Mattera and prosecutors, both sides agreed that federal sentencing guidelines call for him to receive from 10 years to more than 12 years in prison. Sullivan may disregard the guidelines in sentencing Mattera.
In the SEC case, U.S. District Judge Kevin Castel in New York found that Mattera sold a Lamborghini automobile for $28,000, which he passed to his mother, Ann Mattera, in violation of a court-ordered asset freeze. Mattera also borrowed $114,000 and transferred money to his mother to pay his expenses, also in violation of the court order, Castel said.
Carl Schoeppl, Mattera’s lawyer, declined to comment on the case after the hearing.
Prosecutors said in court filings in the criminal case that Mattera controlled a group of 10 Delaware limited liability companies, the special-purpose vehicles that were to hold the investments.
Investors sent more than $11 million into “escrow accounts” maintained by a Florida company, First American Service Transmittals Inc., the government said. Instead of holding the money, First American transferred it to bank accounts controlled by Mattera within three days of deposit, prosecutors said.
Prosecutors said Mattera used investors’ money to pay for jewelry, luxury cars and interior decorating.
The case is U.S. v. Mattera, 11-cr-2947, U.S. District Court, Southern District of New York (Manhattan).
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