Estate of Richard Ventrilla and Cygnus Capital Management, LLC

SEC Charges Private Company with Fraud

Litigation Release No. 24901 / September 16, 2020

Securities and Exchange Commission v. Estate of Richard Ventrilla and Cygnus Capital Management, LLC, No. 1:20-cv-01310-CCR (W.D.N.Y.) filed September 14, 2020

The Securities and Exchange Commission today announced charges against Cygnus Capital Management, LLC and the Estate of Richard Ventrilla, Cygnus's former owner, for defrauding at least 22 investors who invested a total of nearly $1 million.

According to the SEC's complaint, from at least September 2015 through March 2020, Cygnus and Ventrilla, a Clarence, New York resident who died on September 2, 2020 and was previously convicted of extortion in 1999, made false and misleading statements to investors and misappropriated assets from investment advisory clients. The complaint alleges that Ventrilla told investors that he would invest their funds in publicly traded securities and repay them with trading profits, promising a guaranteed rate of return between 7% and 8%. The complaint alleges that, in reality, Ventrilla had no basis for these statements and used only approximately ten percent of total investor funds to trade securities, spending the majority of investor funds to support his lifestyle or to repay other investors. The complaint also alleges that Ventrilla led at least sixteen investors who had become investment advisory clients to believe that he would manage their assets using separately managed accounts and pay himself a reasonable investment advisory fee. Instead, Ventrilla allegedly misappropriated a significant amount of their funds to support his lifestyle and lied to the clients about their purported portfolio holdings.

The SEC's complaint, filed in federal district court in Buffalo, New York, charges Cygnus and, for Ventrilla's misconduct, the Estate of Ventrilla, with violations of the antifraud provisions of 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) and 206(2) of the Investment Advisers Act of 1940. The SEC is seeking against Ventrilla's estate disgorgement plus prejudgment interest thereon, and against Cygnus, permanent injunctive relief, civil penalties, and disgorgement plus prejudgment interest thereon.

The SEC's investigation has been conducted by Gerald Gross, James Hanson, and Alexander Vasilescu of the New York Regional Office, and the litigation will be handled by Messrs. Vasilescu and Hanson. The case is being supervised by Sanjay Wadhwa.

Last Reviewed or Updated: May 31, 2023