An Old Bridge man was indicted on Aug. 15 by a federal grand jury for running a multi-year investment fraud scheme that caused millions of dollars of losses.
Sandy John Masselli, 57, is charged in a superseding indictment with one count of bank fraud, two counts of wire fraud, two counts of securities fraud and one count of aggravated identity theft. Masselli was originally indicted on two counts of bank fraud and three counts of wire fraud on Sept. 19, 2018, according to information provided by Attorney for the United States Rachael A. Honig.
According to the documents filed in this case, from September 2011 through October 2017, Masselli allegedly solicited millions of dollars in investments from retail investors by fraudulently touting the prospect of his online gaming company, Carlyle Entertainment Ltd., formerly Carlyle Gaming & Entertainment Ltd. (Carlyle), to conduct a lucrative initial public offering (IPO) of its stock on either the NASDAQ or the New York Stock Exchange (NYSE). Masselli allegedly induced investors to purchase shares of Carlyle stock by promising them steeply discounted prices in advance of the purported IPO and assuring them that the stock price would increase significantly after the IPO. Masselli allegedly further represented that the IPO would occur within weeks of the investors’ stock purchases, according to the statement.
However, as Masselli allegedly knew, Carlyle was not prepared to conduct an IPO, given that neither Masselli nor anyone else on behalf of Carlyle ever filed an application with the NASDAQ or the NYSE to list Carlyle stock on either exchange, or filed with the Securities and Exchange Commission (SEC) a registration statement to list Carlyle shares on a national exchange, according to the statement. Masselli further allegedly misrepresented to the investors how he would use their investments, for example reportedly telling them that he would allocate investment funds toward improving Carlyle’s online platform and paying legal fees in connection with preparing Carlyle for a looming IPO, according to the statement. Contrary to these claims, however, Masselli allegedly misappropriated these funds to pay for his and his family’s own personal expenses.
Within days or weeks of receiving investor funds, Masselli allegedly deposited the monies into bank accounts he controlled, many of which were opened under names of fictitious corporate entities in an effort to conceal the source of the funds. Masselli allegedly typically used the funds to pay for personal expenses, including paying credit card balances and financing or leasing luxury automobiles, according to the statement.
Masselli also allegedly opened a credit card account under the assumed identity of another person, without that person’s authorization, made purchases with the account until he had almost reached or exceeded the credit limit, and then purported to send payments from a bank account that he knew did not have sufficient funds to cover the purchases, according to the statement. Before the fraudulent payments were rejected for insufficient funds, the credit card company temporarily credited the fraudulently opened account based on those payments, allegedly providing Masselli access to additional credit and allowing him to continue to make purchases. Masselli reportedly ultimately failed to pay the balance and the credit card company sustained a loss, according to the statement.
The bank fraud counts each carry a maximum potential penalty of 30 years in prison and a $1 million fine. The wire fraud counts each carry a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. The securities fraud counts each carry a maximum potential penalty of 20 years in prison and a $5 million fine. The aggravated identity theft count carries a mandatory sentence of two years in prison that must run consecutively to the sentence imposed for any other count.
