The Securities and Exchange Commission (“SEC”) filed a complaint in the U.S. District Court for the Northern District of New York in Buffalo against Cygnus Capital Management and the estate of Richard Ventrilla (“Ventrilla”) alleging that they had defrauded 22 investors of $989,000. The complaint alleges that Ventrilla made false and misleading statements to advisory clients promising returns of 7-8% by trading in publicly traded securities and repaying them in trading profits. The SEC further alleges that Ventrilla led investors to believe that he would manage their assets is separately managed accounts and pay himself an advisory fee. Instead, Ventrilla misappropriated their funds to support his lifestyle for ATM cash withdrawals, food, healthcare and transportation. Ventrilla was only able to pay investors their quarterly returns by using money from other investors in a Ponzi-like manner. It should be noted that neither Ventrilla or Cygnus Capital Management were registered with the SEC or any state as an investment advisor or in any other capacity. Lastly, the SEC alleges that Ventrilla violated the antifraud provisions of the Securities Act of 1933, the Securities and Exchange Act of 1934 and the Investors Advisors Act of 9140.

Factual Allegations and Charges:

 In the period of at least September 2015 through at least March 2020, Ventrilla defrauded investors by two methods;

 Ventrilla sold notes and/or investment contracts to at least six investors using false and misleading information and then misappropriated their funds;

 Ventrilla made false and misleading statements to sixteen investors who became investment advisory clients and then misappropriated their funds;

 Ventrilla sold the notes promising a fixed rate of return to be paid in regular installments;

 Ventrilla’s statements were false and misleading because he had no basis for telling investors that his investments would yield profits sufficient to generate the promised return or that he would primarily use the funds for trading when in fact he transferred those funds to a bank account or brokerage account in his name;

 Ventrilla told his advisory clients that he would manage their money in separately managed accounts, and he would be paid an investment advisory fee;

 Ventrilla lied to his advisory clients about their investment portfolios by sending them false periodic statements showing their funds had been invested in specific publicly traded securities and that the returns were generally positive and coming led advisory client funds with the Cygnus bank account and his personal bank and brokerage accounts; and

 Violations of Section 17(a) of the Securities Act & Violations of the Exchange Act and Rule 10(b) & Violations of Sections 206(1) and 206(2) of the Advisors Act.

The SEC is seeking disgorgement plus prejudgment interest against Ventrilla’s estate, and permanent injunctive relief, civil penalties and disgorgement plus prejudgment interest against Cygnus.

Click here to review the complaint against Ventrilla.