Three men admitted guilt this week in a Brooklyn federal court for a complex pre-IPO securities fraud that siphoned roughly $88 million from investors, part of a much larger $528 million fundraising tied to Late Stage Management.
In federal court, three defendants pleaded guilty to conspiracy to commit securities fraud, securities fraud, and conspiracy to commit wire fraud. The case centers on marketing and sales operations that promoted so-called “no fee” pre-IPO stock investments while concealing upfront markups and diversion of funds.
The defendants are Raymond John Pirrello, aka Ray John, 49, of Sparta, New Jersey; Joseph Passalaqua, 37, of Sparta, New Jersey; and Robert Cassino, 63, of Long Beach, New York. Co-defendant Robert Cassino pleaded guilty earlier on February 18, 2026, and another co-defendant, Joseph Rivera, previously entered a guilty plea.
“For years, the defendants brazenly lied to investors all over the country about the fees associated with their investments,” stated United States Attorney Nocella. “The defendants diverted millions of dollars in undisclosed mark-up fees to pay themselves and their coconspirators. Our Office will vigorously prosecute those who lie to innocent investors and deprive them of their hard-earned money to benefit themselves.”
The scheme took place through Late Stage Management, LLC, a New Jersey manager of funds that sold access to shares in companies expected to go public. Sales offices across New Jersey, New York and Florida — including firms known as Prior2IPO and Pre IPO Marketing, Inc. — handled marketing and outreach to investors nationwide.
Pirrello, despite having no official title listed, acted as a partner to Late Stage leadership and deliberately hid his involvement because of a significant regulatory history, including a permanent bar by the SEC. Passalaqua ran Prior2IPO as CEO and Cassino managed operations at Pre IPO Marketing, with heads of the sales offices taking direction from the conspirators on how to present the investments.
Investors were told Late Stage earned only on successful exits, when an IPO or sale would trigger a 20 percent share of profits, but the reality differed. Late Stage and its sales network assessed upfront markups ranging from 10 to 100 percent on each investment; those markups generated immediate revenue that was then diverted to pay principals and sales staff.
Between about March 2019 and July 2022, the sales offices working with Late Stage raised roughly $528 million from investors and diverted about $88 million through undisclosed upfront markups. The indictment and related court filings lay out how material misrepresentations and omissions about fees and compensation were central to the scheme.
The guilty pleas were announced by the United States Attorney for the Eastern District of New York and the FBI’s New York Field Office. Proceedings were held before United States District Judge Kiyo A. Matsumoto, and when sentenced Pirrello and Passalaqua face a maximum of 45 years in prison while Cassino faces a maximum of 20 years.
The government’s Business and Securities Fraud Section is handling the prosecution, led by Assistant United States Attorneys Jessica K. Weigel and James R. Simmons, with assistance from Paralegal Specialists Melina Piatti-Chayan and Liam McNett. The SEC’s New York Regional Office also assisted in developing the case and related evidence.
Victims of the scheme included individual investors and prospective clients who relied on sales representations that downplayed or omitted the true cost structure. The filings show how undisclosed markups and misleading assurances about when and how managers were paid formed the backbone of the alleged fraud.
