SEC Charges Unregistered Adviser with Running $5.9 Million Ponzi Scheme

The Securities and Exchange Commission charged Connecticut-based unregistered 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 them beginning in 2016.

The SEC alleges that the defendants also allegedly used investor money to make Ponzi-like payments back to investors and stole some of their money for Masanotti’s “extravagant personal expenses,” including mortgages on his wife’s properties in Darien, Connecticut and Bonita Springs, Florida, paying down credit card debt, and making payments for luxury vehicles and a country club membership.

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,” 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.

The complaint names as a relief defendant Masanotti’s spouse, Mary A. Ferrara, who allegedly received proceeds from the investor funds. The commission has sought certain preliminary relief to safeguard client and investor assets and is pursuing disgorgement of all “unjust enrichment” from Masanotti and Ferrara, as well as civil penalties.

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