SEC Says CEO Raised $11.5 Million for Cycling Investments But Never Actually Made Them

By:
Chris Gaetano
Published Date:
Jul 23, 2021
iStock-932463446 Bicycle Bike

The Securities and Exchange Commission (SEC) has charged an investment company and its CEO, Samuel J. Mancini, with raising $11.5 million that was meant to be used toward buying a controlling interest in three Italian cycling companies but simply pocketing the money instead.

The company, Outdoor Capital Partners, is alleged to have started raising money in 2019 specifically to invest in a bike company, a helmet company and an apparel company, all connected with cycling. The idea would be that, once the firm had a controlling take in the companies, it would boost revenue by implementing a turnaround plan focused on a direct-to-customer sales strategy and digital branding and marketing for the U.S. cycling market. As a way to build faith, Mancini said that he had invested millions of dollars of his own money into the venture as well. Additionally, backers received numerous documents about the effort, including financial statements, bank statements and emails, which apparently showed that the deal was ongoing. 

The SEC said these documents were fraudulent and that no actual acquisitions had been made using investor funds. Additionally, it said that Mancini, despite statements otherwise, never actually put his own money into the venture and that, further, he wasn't even in a financial position to do so to the extent he was claiming. Instead, the SEC believes he pocketed about $400,000 and gave $800,000 to early investors in a Ponzi-like series of payments. 

“As we allege, Mancini repeatedly lied to investors, sent investors falsified bank documents, and misappropriated investor funds,” said Kurt L. Gottschall, director of the SEC’s Denver regional office.“ The SEC has significant expertise in rooting out investment fraud by tracing the uses of investor funds even where, as we allege happened here, some funds were transferred to foreign accounts.”

The complaint, filed in the U.S. District Court for the District of New Jersey, charges Mancini and Outdoor Capital Partners with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks emergency relief as well as permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties. The SEC also seeks a conduct-based injunction and an officer-and-director bar against Mancini. In addition, the complaint seeks disgorgement of ill-gotten gains with prejudgment interest from several relief defendants, including the OCP Italia Fund LLC, OCPITALUS LLC, and Mancini’s wife.

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