A former New Jersey broker was sentenced to 63 months in prison for duping investors out of more than $2.8 million in a securities fraud scheme, according to the U.S. Attorney's Office for the Distrcit of New Jersey.
Mark Marchi, 55, of Red Bank, N.J., previously pleaded guilty before U.S. District Court Judge Claire C. Cecchi to one count of securities fraud. Cecchi imposed the sentence on Wednesday in Newark federal court. Marchi also was sentenced to three years of supervised release and ordered to pay restitution of $2.87 million.
Beginning in 2015, Marchi owned and operated Precipio Capital LLC., and before that, Global Alliance (GAC), and claimed to provide investment advisor services to clients through the companies. He solicited investments from multiple investors, and upon ceasing operation of GAC, investors were told that their accounts would roll over into Precipio. He also solicited investors to invest directly into Precipio, prosecutors said.
Marchi lied about Precipio’s trading and investment performance, telling investors that he was profitably trading securities in Precipio’s accounts, according to a civil complaint filed in May 2022 by the Securities and Industry Commission. The SEC complaint also said Marchi marketed Precipio as a company that “employed a disciplined trading methodology with a particular focus on risk management that strived to earn investors net monthly returns of 1% to 2%.”
But those were all empty promises, prosecutors said. Marchi did not use the investors’ money on legitimate investments and instead diverted about $2.8 million of the funds for other purposes, including paying back previous GAC investors, prosecutors said. The complaint said he forged documents, including entering thousands of bogus trades into an electronic portal accessed by investors. Investors were provided with fake records, including trading records, performance reports, and K-1s.
“Marchi misappropriated the vast majority of investor funds by secretly using Precipio investor money to pay over $1.4 million in disbursements to earlier-in-time investors,” the SEC complaint said. He also used the funds for personal expenses, including rent, credit card bills, and monthly automobile payments to Mercedes-Benz Financial Services, the complaint said.
Marchi, also pleaded guilty in 1998 to felony charges of conspiracy to violate the federal securities laws, was barred by the New York Stock Exchange in 1999 and was subject to an administrative consent order imposed by the New Jersey Bureau of Securities in 2015, according to the SEC.
Marchi, who had been an unregistered broker since 1989, was previously registered in the industry, starting with Randolph Brown Securities Corporation in 1988, according to BrokerCheck. He was registered simultaneously with two other firms, F.D. Roberts Securities Inc., and Revcon (USA) Limited, until 1989, when he moved to Fossett Corporation and left after six months. All four firms are no longer registered with the Financial Industry Regulatory Authority.