Generates 0% Return for Investors.

[ by Howard Haykin ]

A purported investment adviser, sporting a phony professional and educational background while hiding his past criminal activities, persuaded 3 other investors to provide $3 million that he represented would fund 4 start-up companies that he created.  The money, instead, was allegedly spent on illegal drugs and gambling.

Profile of Defendant.   Stephen Colangelo, Jr., 44, residing in Congers, NY, formed the Brickell Fund, a pooled investment vehicle he offered to investors.  He was solely responsible for making investment decisions on behalf of the fund.  Colangelo also founded and offered interests to investors in "Hedge Community", "Start a Hedge Fund", and "Under the Radar".

In June 2009, he was sentenced to probation - adjudication withheld - in the state of Florida in connection with 2007 felony charges for burglary, theft, and engaging in a scheme to defraud.  In May 2003, Colangelo entered a pre-trial diversion program in Florida in connection with 2002 felony charges that he issued a worthless check and deposited or cashed an item with a bank or depository institution with intent to defraud.

SEC Findings and Allegations.   Colangelo is alleged to have repeatedly misled investors while raising $3 million in investments for 4 start-up companies that he created.  His plan was aided by his ability to persuade 3 other investors to let him act as their investment adviser  - and so, they gave him more than $1 million to invest in the markets on their behalf.

Colangelo boasted, and he falsely claimed to have historically achieved extremely high returns buying and selling securities.  Meanwhile, Colangelo was siphoning off at least $1 million in investor funds to pay personal expenditures - like his federal taxes, illegal narcotics, gambling, cigars, and travel for him and his family.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Colangelo.

The scheme supposedly began in 2009 when he Colangelo induced investors to invest more than $750,000 in the Brickell Fund LLC.  In March 2009 when the Brickell Fund did not have any investors and Colangelo was not buying and selling securities on behalf of the fund, he sent numerous e-mails to potential investors boasting phony information - e.g.,  an email claimed, “BEST TRADING DAY OF MY LIFE!!!!!!!. . . . Up over 400% and documented. Mind boggling to say the least.” In reality, Colangelo never made any such trades.

After Colangelo allegedly had spent or lost all of the money invested in the Brickell Fund, he continued to fraudulently raise funds from investors for 3 other startup businesses he created.  Some individuals provided Colangelo with funds directly to invest on their behalf.  With replenishment of funds, Colangelo continued to do what he did best - used investor funds for a variety of personal purposes.

Colangelo apparently created a profile on the LinkedIn website, that he used to network.  The information was erroneous, noting that he had studied finance at Nyack College from 1986 to 1989.  He never attended Nyack College and never graduated from high school.

SEC Charges.   Colangelo is charged with violations of the anti-fraud provisions of the federal securities laws.  The SEC seeks permanent injunctions, financial penalties, and disgorgement of ill-gotten gains plus prejudgment interest.

SEC Staff Credits.   Investigation by NYRO's Senior Attorney Christina McGill and Assistant Regional Director Wendy Tepperman.  Litigation will be led by Senior Trial Counsel Kevin McGrath. 

Relevant Entities.  

Brickell Fund, LLC formed in 2009 as a New York LLC with its principal place of business in New City, NY.  Colangelo founded and controlled the Brickell Fund and was solely responsible for making investment decisions on behalf of the fund. Only Colangelo had access to and control over investor funds. He had several hourly employees at the Brickell Fund used for administrative tasks and personal errands. Brickell Fund was dissolved on 1/29/10.

Hedge Community, LLC formed in 2009 as a New York LLC with its principal place of business in New City, NY.  Colangelo founded and controls all aspects of Hedge Community and was the only individual with access to and control over investor funds. Retained 3rd parties to provide operational and other services to Hedge Community.

Start a Hedge Fund, LLC formed in 2009 as a New York LLC with its principal place of business in New City, NY.  Colangelo founded and controls Start a Hedge Fund and was the only individual with access to and control over investor funds. Retained 3rd parties for operational and other services.

Under the Radar LLC formed in 2010 as a New York LLC with its principal place of business in New City, NY.  Colangelo founded and controls Under the Radar and was the only individual with access to and control over investor funds. Retained 3rd parties for operational and other services. 

For further details, go to:   [ SEC PR 12-235, 11/19/12 ]   [ SEC Complaint ].