Manager Of Investment Firm Charged With Defrauding Investors In “Pre-IPO” Scheme

 

Giovanni Pennetta Fraudulently Sold Millions of Dollars’ Worth of Shares in Non-Public Companies That He Didn’t Own

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation, Christopher G. Raia, announced today the unsealing of an Indictment charging GIOVANNI PENNETTA, the manager of Sestante Capital LLC (“Sestante”), a Manhattan-based investment adviser and private equity firm, with securities fraud, wire fraud, and aggravated identity theft. The charges in the Indictment arise from an alleged scheme by PENNETTA to fraudulently induce multiple investment clients to part with millions of dollars in exchange for economic exposure to shares of non-public companies.  PENNETTA was arrested on Sunday afternoon at John F. Kennedy International Airport and will be presented today before U.S. Magistrate Judge Gary Stein.  The case has been assigned to U.S. District Judge Jed S. Rakoff. 

“As alleged, Giovanni Pennetta took advantage of investors by promising access to private, pre-IPO companies he did not control and never had access to,” said U.S. Attorney Jay Clayton.  “American investors deserve honesty in all markets, including the private investment markets.  When someone lies to investors and pockets their money instead, this Office and our law enforcement partners will step in to protect investors and the integrity of our markets.” 

“Giovanni Pennetta allegedly stole millions of dollars from clients attempting to expand their own businesses with lies about his economic access and influence,” said FBI Assistant Director in Charge Christopher G. Raia.  “Pennetta allegedly abused his managerial position to attract potential victims before moving their intended investment funds from their wallets to his own.  The FBI maintains its unwavering stance against any business managers deceiving others to selfishly enrich themselves.”

As alleged in the Indictment unsealed today in Manhattan federal court:

PENNETTA is the managing member of Sestante, which is based in Manhattan.  Sestante, in turn, is the managing member of, and an investment adviser to, NextGenTech Investments LLC (“NextGenTech”), a private fund that purports to offer investors economic exposure to equity securities through membership interests in series controlled by the fund.

From 2019 through the present, PENNETTA repeatedly misrepresented to victims that he had access to shares of private companies and could offer investment interests in those shares through NextGenTech.  When investors transferred money to PENNETTA, however, he accepted the victims’ funds but did not provide them with the investment interests he had promised because, in fact, PENNETTA did not have access to the shares and had intentionally misled investors when he had told them otherwise.

Many of PENNETTA’s misrepresentations centered around his access to shares of Anduril Industries, Inc. (“Anduril”), a private defense technology company.  Invoking supposed connections with individuals associated with Anduril, PENNETTA represented to victims that he had access to Anduril shares and offered to sell his victims economic exposure to those shares by having them purchase membership interests in particular series of NextGenTech.  In furtherance of this scheme, PENNETTA provided his victims with falsified documents purporting to show his access to Anduril shares and that particular series of NextGenTech offered exposure to Anduril shares.

PENNETTA’s representations were false.  In fact, PENNETTA did not have access to Anduril shares, and NextGenTech did not have exposure to Anduril shares. The victims who paid NextGenTech millions of dollars based on PENNETTA’s promises received no economic exposure to Anduril shares whatsoever. Instead, PENNETTA transferred much of the victims’ funds to his personal bank account.

PENNETTA, 50, of New York, New York and Italy, is charged with securities fraud and wire fraud, each of which carries a maximum sentence of 20 years in prison, and aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison. 

The maximum and minimum sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Clayton praised the outstanding work of the FBI and the U.S. Securities and Exchange Commission.