Andrew Franzone, a former race car team owner and an investment adviser of FF Fund Management, LLC (FFM), is facing fraud charges filed by the Securities and Exchange Commission (SEC).
In its complaint, the SEC alleged that Franzone and FFM defrauded multimillion dollars from investors who acquired limited partnership interests in FF Fund I LP, a private fund managed by the defendants.
Misrepresentations regarding a private fund sold to investors
According to the Commission, Franzone, the sole owner, and officer of FFM, made false representations and omitted material facts about FF Fund’s investment strategy, valuation, and performance.
Additionally, the SEC alleged that Franzone and his firm did not remove or disclose serious conflicts of interests. He also lied that the private fund will be audited every year.
The defendants falsely told investors that FF Fund will maintain a highly liquid portfolio primarily focused on options and preferred stock trading. In reality, Franzone and FFM allegedly invested in illiquid investments such as private start-ups, early-stage companies, and real estate ventures by the end of 2014. Franzone’s friends and associates started some of these companies/ventures.
