U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25891/ November 9, 2023
Securities and Exchange Commission v. John A. Masanotti, Jr. et al., Civil Action No. 3:23-cv-01481 (D. Conn. filed Nov. 9, 2023)
SEC Charges Connecticut Investment Adviser with Stealing Clients’ Money
The Securities and Exchange Commission today charged Darien, Connecticut-based investment adviser John A. Masanotti, Jr. and his company, Middlesex Mortgage Group, LLC, with fraud for lying to investors while taking at least $5.9 million from investors from 2016 to the present. The defendants also allegedly used investor money to make Ponzi-like payments back to investors and stole some of their money for Masanotti’s own personal purposes.
The SEC’s complaint, filed in federal court in Connecticut, alleges that, from at least January 2016 through the present, Masanotti deceived multiple investors – mainly seniors – into giving him hundreds of thousands of dollars each. Masanotti promised to invest the money in a pooled investment vehicle that he called the “Middlesex Fund” or the “MMG Fund” (the “Fund”), which was to be advised by Masanotti and Middlesex. Many of the Middlesex investors liquidated securities they held in retirement accounts to invest in the Fund. According to the complaint, Masanotti did not invest his clients’ money in the way he promised. Rather, as the complaint further alleges, Masanotti was actually using most of the investors’ money to make Ponzi-like payments to investors or to enrich himself, paying personal expenses such as mortgages on properties in his wife’s name in Darien, Connecticut and Bonita Springs, Florida, personal credit card debt, luxury vehicle payments and a country club membership.
The complaint charges Masanotti and Middlesex with violating Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The Complaint names as a relief defendant Masanotti’s spouse, Mary A. Ferrara, who allegedly received proceeds from the investor funds. The Commission has also sought certain preliminary relief to safeguard client and investor assets.
The SEC’s case is being handled by William J. Donahue, Alexandra B. Lavin, Rory J. Alex, Rua M. Kelly, and Colin D. Forbes of the Boston Regional Office. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Connecticut.