Unregistered Investment Adviser Accused of $53M Ponzi Scam Involving Pre-IPO Companies

New Jersey adviser John Bivona is facing U.S. Securities and Exchange Commission charges accusing him of raising over $53M from investors in a Ponzi-like scam that involved the selling of investments in pre-IPO tech companies. However, contends the SEC, instead of investing the funds as intended, he used investor money to pay taxes, legal fees, a car loan, a vacation house mortgages, and cover his nephew’s credit card bills.

The regulator, in its complaint, said Bivona funneled millions of dollars into earlier funds that he and his company managed, while at least $5.7M went to family members, including nephew Frank Mazzola, who also is dealing with SEC charges for a previous investment scam.

The Commission alleges that Bivona raised the money through Saddle River Advisors, which has not registered with the regulator since 2013, and SRA Management. Because he purportedly took the money for his own spending, to pay family bills, and keep different funds running, his firms often never had enough money to buy the shares investors had been promised.

The SEC believes that Bivona was able to keep his Ponzi scam going because he kept transferring funds between over a dozen bank accounts associated with a number of entities. Meantime, investors never received financial statements they were promised.

In its press release announcing the charges, the SEC linked to one of its bulletins that identifies the possible warnings signs that the unregistered offering you are thinking of investing in may be a scam. The Commission noted that unregistered securities are

typically called private placement offerings or unregistered securities offerings. Such investments don’t have to abide by the regulations and laws set up to protect investors. While there are many legitimate unregistered offerings that exist, there are those that that are not legitimate. Here are a few of the red flags:

1) The promise of high returns with few or no risks.

2) The investment professional is not registered with the SEC or a U.S. state.

3) The sales person is pressuring you to invest.

4) There is no documentation to accompany the investment or security.

5) There is no requirement regarding an investor’s income or not worth.

Our securities fraud lawyers represent retail investors, high net worth individual investors, and institutional investors in recouping their losses.

Read the SEC Complaint (PDF)

Investor Alert: 10 Red Flags That an Unregistered Offering May Be a Scam, SEC