Man sentenced to 63 months in prison for $2.8 million securities fraud

A Monmouth County, New Jersey, man was sentenced to 63 months in prison for committing securities fraud to obtain over $2.8 million from victim investors.

Mark Marchi, 55, of Red Bank, New Jersey, previously pleaded guilty before U.S. District Court Judge Claire C. Cecchi to an information charging him with one count of securities fraud. Judge Cecchi imposed the sentence on Jan. 4, 2023, in Newark federal court.

According to U.S. Attorney Philip R. Sellinger, Marchi, who was previously barred from the securities industry, purported to provide investment advisory services to clients.

Beginning in December 2015, he managed and controlled Precipio Capital LLC, after previously managing and controlling a different investment company called Global Alliance Capital, LLC.

Through Global Alliance, Marchi solicited investments from multiple investors, and when he ceased operating Global Alliance, Marchi represented to those investors that he rolled over their accounts into Precipio.

Marchi also solicited investors to invest directly into Precipio. 

Instead of using the funds on legitimate investments, Marchi diverted approximately $2.8 million of those funds from victim investors for other purposes, including paying back previous Global Alliance investors and his own use.

Marchi made repeated misrepresentations to the victim investors, which included false claims about the status and performance of investments and false assurances to victims that their investments were profitable.

Marchi also provided victims with falsified records, including trading records, performance reports, and K-1s. 

In addition to the prison term, Judge Cecchi sentenced Marchi to three years of supervised release and ordered him to pay restitution of $2.87 million. 

The Securities and Exchange Commission also charged Marchi with defrauding investors in his fund Precipio Capital, LLC.

According to the SEC’s complaint, between February 2016 and September 2020, Marchi solicited over $2.8 million of investments in Precipio from at least 22 investors by falsely telling them he was profitably trading securities in Precipio’s accounts.

In order to conceal his fraud, Marchi allegedly falsified investment documentation, including entering thousands of fake trades into an electronic portal accessed by investors.

The complaint alleges that Marchi misappropriated investor funds by secretly paying over $1.4 million in Ponzi-like disbursements to earlier-in-time investors and by diverting cash from Precipio’s bank accounts to his own bank accounts.

The SEC said Marchi is a recidivist who pleaded guilty in 1998 to felony charges of conspiracy to violate the federal securities laws, was barred by the New York Stock Exchange in 1999, and was subject to an Administrative Consent Order imposed by the New Jersey Bureau of Securities in 2015.

The SEC’s complaint, filed in the U.S. District Court for the District of New Jersey, charges Marchi with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940, and Rule 206(4)-8 thereunder.

Without admitting or denying the complaint’s allegations, Marchi has consented to the entry of a judgment that enjoins him from violating the charged provisions and imposes an officer-and-director bar.

The judgment also provides for the court to order, upon motion of the SEC, disgorgement with prejudgment interest and/or a penalty against Marchi, if deemed appropriate. The proposed settlement is subject to court approval.

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