Investor Lawyers Blog
On June 5, 2018, the SEC filed a Complaint in U.S. District Court in the Central District of California (Case 2:18-cv-05008), charging Ralph T. Iannelli and Essex Capital Corporation (“Essex”) with violations of the antifraud provisions of the federal securities laws. The SEC has alleged that Mr. Iannelli — acting through his equipment leasing company, Essex — perpetrated a long-running fraud in connection with an $80 million securities offering involving approximately 70 investors. The Complaint is accessible below:
As alleged by the SEC, from 2014 – 2017, Mr. Iannelli attracted investor capital through the sale of promissory notes that paid a high rate of return (typically 8.5%, but as high as 10% per annum). In certain of its marketing materials, Essex claimed that 100% of investor funds would be utilized to purchase equipment, and that investors would be paid back on their investment within a 3-year time frame. In actuality, however, the SEC has alleged that Essex’s business was anything but profitable: “Unbeknownst to the investors… the representations Iannelli made about their investment were materially false and misleading.” By 2014, the SEC has alleged that Essex spent only $2.3 million, or approximately 9% of capital it had raised that year through the sale of promissory notes ($20 million) and certain bank loans ($6 million), to actually purchase equipment.