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Brian Ferraioli, 40, of Sayville, N.Y., Pleads Guilty to Securities Fraud Scheme
In a shocking turn of events, Brian Ferraioli, a 40-year-old man from Sayville, N.Y., has pleaded guilty to conspiracy and tax offenses stemming from his role in a securities fraud scheme that caused $19.5 million in losses to investors.
According to court documents, Ferraioli conspired with others, including Christian Meissenn, William Lieberman, Damian Delgado, and Thomas Heaphy, to defraud investors through a stock “pump and dump” scheme. The scheme involved inducing investors to purchase securities by making false and misleading representations in calls, emails, and press releases.
The issuing companies, which were essentially shell companies with virtually no legitimate business activities, included Terra Energy Resources Ltd. (stock symbol “TRRE”); Mammoth Energy Group, Inc. (stock symbol “MMTE”), a company that later became Strategic Asset Leasing Inc. (stock symbol “LEAS”); Trilliant Exploration Corporation (stock symbol “TTXP”); Hermes Jets, Inc. (stock symbol “HRMJ”), which later became Continental Beverage Brands Corporation (stock symbol “CBBB”); Dolat Ventures, Inc. (stock symbol “DOLV”), and Fox Petroleum, Inc. (stock symbol “FXPT”).
Ferraioli’s numerous misrepresentations induced investors to purchase securities, causing the share price of the securities to become artificially inflated. Certain of Ferraioli’s co-conspirators then sold their own preexisting positions in the securities at a profit. They then allowed the price of the securities to fall, leaving investors with worthless and unsalable stock.
Ferraioli received approximately 25 percent of all money that he induced individuals to invest, netting him a personal gain of approximately $1.25 million. He disguised the income by having the funds flow through the trust accounts of various attorneys, including Corey Brinson in Connecticut, into bank accounts in the name of various shell entities under Ferraioli’s control.
Ferraioli’s failure to pay taxes on approximately $1.1 million in income from this scheme, as well as unrelated income, during the 2010, 2012, 2015, and 2016 tax years resulted in a loss of $305,733 to the Internal Revenue Service.
Ferraioli pleaded guilty to one count of conspiracy to commit mail and wire fraud, which carries a maximum term of imprisonment of 20 years, and one count of tax evasion, which carries a maximum term of imprisonment of five years. He is scheduled to be sentenced by U.S. District Judge Jeffrey A. Meyer on November 6, 2017.
At sentencing, Ferraioli will be ordered to pay restitution to his victims, as well as back taxes, interest, and penalties to the Internal Revenue Service.
Key Facts
- State: Connecticut
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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