A Manhattan federal jury on Tuesday delivered a dramatic end to the StraightPath Stock-Sale Fraud saga, convicting the firm’s three founders of defrauding hundreds of investors in a $400 million web of deceit involving pre-initial public offering (pre-IPO) shares.
After just four hours of deliberation, the 12-member jury — eight men and four women — found Michael Castillero, Francine Lanaia, and Brian Martinsen guilty on all counts following a two-week trial before U.S. District Judge Jesse M. Furman.
Prosecutors described the scheme as a “well-orchestrated mirage” that preyed on everyday investors’ dreams of early access to booming tech stocks, when in fact, the founders were lining their own pockets.
“This was not a mistake. It was a calculated web of lies designed to extract every dollar possible from hardworking investors,” prosecutors told the jury during closing arguments.
Founders Convicted on Multiple Federal Charges
The trio was convicted on securities fraud, wire fraud, investment adviser fraud, and conspiracy to commit fraud, with Castillero and Martinsen also found guilty of obstruction of justice and conspiracy to obstruct justice.
Each defendant stood motionless as the verdict was read — a sharp contrast to the high-flying image they projected while running their Jupiter, Florida-based private equity firm.
According to the U.S. Attorney’s Office for the Southern District of New York, the defendants raised $400 million between 2017 and 2022, selling investors on promises of access to lucrative pre-IPO shares of major companies. Instead, prosecutors said, they lied about fees, misrepresented stock availability, and commingled client funds across multiple StraightPath accounts.
