Litigation Releases (Nicholas A. Palazzo, 4TA Sports, Inc., NP Ventures Holdings, LLC and Play Caller Sports Gaming LLC)

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26117 / September 20, 2024

Securities and Exchange Commission v. Nicholas A. Palazzo, 4TA Sports, Inc., NP Ventures Holdings, LLC and Play Caller Sports Gaming LLC

, No. 5:24-cv-6602 (N.D. Cal. filed September 20, 2024)

SEC Charges Former Harvard Football Player and his Companies with Orchestrating Two Fraudulent Schemes

The Securities and Exchange Commission charged former Harvard football player Nicholas A. Palazzo and three of his sports-related companies with defrauding investors through two securities fraud schemes. Through these schemes, the SEC's complaint alleges, Palazzo stole more than $2 million from investors, including Palazzo's former football teammates, a former professional athlete, and others.

According to the SEC's complaint, in the first scheme, Palazzo, through 4TA Sports Inc., raised investor funds for the purported repurchase of the assets of a sports media company. The complaint alleges that in the second scheme, Palazzo, through NP Ventures Holdings, LLC and Play Caller Sports Gaming LLC, raised investor funds to develop and launch a sports betting app. In both schemes, Palazzo allegedly misled investors about how their funds would be used before misappropriating their funds to pay personal expenses, including his children's private school tuition, his personal rent, and a trip to Disneyland. According to the complaint, Palazzo and 4TA Sports raised $900,000 from three investors and misappropriated nearly all of these funds, while Palazzo, NP Ventures, and Play Caller allegedly raised $2.2 million from 22 investors and misappropriated more than three quarters of those funds.

The SEC's complaint, filed in the United States District Court for the Northern District of California, charges the Defendants with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. Palazzo is also charged with control person liability under Section 20(a) of the Exchange Act. The SEC seeks permanent injunctions, civil penalties, and disgorgement with prejudgment interest against all Defendants and also seeks a conduct-based injunction and officer and director bar against Palazzo.

The SEC's investigation was conducted by Brittany Frassetto, Lauren Poper, and Jeffrey Anderson, with assistance from Carina Cuellar, who will lead the litigation. The case was supervised by Pei Chung, Christopher Bruckmann, and Stacy Bogert.