South Carolina Man Sentenced to Six Years in Prison for Securities Fraud, Bank Fraud, and Wire Fraud Schemes

TRENTON, N.J. - A South Carolina man was sentenced today to72 months in prison for engaging in several bank and wire fraud schemes and a securities offering fraud scheme that spanned six years and caused losses of millions of dollars, U.S. Attorney Philip Sellinger announced.

Sandy John Masselli, 63, of Columbia, South Carolina, previously pleaded guilty before U.S. District Judge Michael A. Shipp to nine counts of a superseding indictment charging him with bank fraud, wire fraud, and securities fraud. Masselli was initially charged by complaint in October 2017. Judge Shipp imposed the sentence today in Trenton federal court.

"Sandy Masselli used a web of lies to dupe victims into investing millions of dollars in his company, promising them substantial returns from an initial public offering that was never going to happen. Instead of investing the money as promised, Masselli fraudulently spent it on himself and his family. The significant sentence handed down today holds him accountable for greedily profiting at the expense of innocent investors."

According to the documents filed in this case and statements made in court:

From September 2011 through October 2017, Masselli solicited millions of dollars in investments from retail investors by fraudulently touting the prospect of his online gaming company, Carlyle Entertainment Ltd., formerly Carlyle Gaming & Entertainment Ltd. (Carlyle), to conduct a lucrative initial public offering (IPO) of its stock on either the NASDAQ or the New York Stock Exchange (NYSE). Masselli induced investors to purchase shares of Carlyle stock by promising them steeply discounted prices in advance of the purported IPO, assuring them that the stock price would increase significantly after the IPO. Masselli further represented that the IPO would occur within weeks or months of the investors' stock purchases.

However, as Masselli knew, Carlyle was neither poised nor prepared to conduct an IPO on either the NASDAQ or the NYSE, given that, among other deficiencies, neither Masselli nor anyone else on behalf of Carlyle ever filed an application with the NASDAQ or the NYSE to list Carlyle stock on either exchange, or filed with the Securities and Exchange Commission (SEC) a registration statement to list Carlyle shares on a national exchange. Masselli further misrepresented to the investors how he would use their investments, for example telling them that he would allocate investment funds toward improving Carlyle's online platform and paying legal fees in connection with preparing Carlyle for a looming IPO. Masselli did not invest these funds in Carlyle, as he had promised investors he would, but instead misappropriated these funds to pay for his and his family's own personal expenses.

Within weeks and often days of receiving investor funds, Masselli quickly deposited them into and throughout a web of bank accounts he controlled, many of which were opened under names of fictitious corporate entities in an effort to conceal the source of the funds. After disguising the provenance of the investor funds, Masselli typically went to work quickly misappropriating the funds.

Masselli also opened multiple credit card accounts, made purchases on those accounts until he had almost reached or exceeded the credit limit, and then purported to send payments from accounts that he knew did not have sufficient funds to cover those payments. Before the fraudulent payments were rejected for insufficient funds, the credit card companies temporarily credited the accounts based on those payments, providing Masselli access to additional credit and allowing him to continue to make purchases. Masselli ultimately failed to pay the balances and the credit card companies sustained a loss. On two occasions, Masselli contacted the victim credit card companies falsely claiming that the accounts had been opened fraudulently by others who had stolen his personal identifiable information.

In addition to the prison term, Judge Shipp sentenced Masselli to three years of supervised release and ordered restitution of $3.2 million and $1 million in forfeiture.

The SEC previously filed a civil complaint against Masselli based on the securities fraud conduct.

U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Special Agent in Charge James E. Dennehy in Newark, with the investigation leading to today's guilty plea. He also expressed appreciation for the SEC Division of Enforcement, under the direction of Gurbir S. Grewal.

The government is represented by Assistant U.S. Attorneys Eric A. Boden, Attorney-in-Charge of the Trenton Office, and Alexander E. Ramey of the U.S. Attorney's Trenton Office.