The Securities and Exchange Commission last week said it had settled charges for $125,000 against Philadelphia attorney John W. Pauciulo in connection with his role in the multimillion dollar unregistered offering of securities by Par Funding, an allegedly fraudulent scheme that raised nearly half a billion dollars from an estimated 1,200 investors nationwide.
The SEC charged Par Funding and other two years ago. According to a report in The Philadelphia Inquirer, Pauciulo provided the legal approval for years for commercials pitching the unregistered Par Funding investments. In those ads, Pauciulo sat next to Dean Vagnozzi, a former financial adviser in the Philadelphia area, as the pair talked up Par Funding, a lender founded in Philadelphia.
Pauciulo made material misstatements and omissions in private placement memoranda he prepared for many investment funds that offered and sold securities to raise money for Par Funding's unregistered securities offering, according to the SEC's order, which was released July 7.
The order alleges that Pauciulo also made material misstatements and omissions to prospective investors and investors in in-person meetings and video presentations. Among other things, Pauciulo misrepresented that the securities offerings did not need to be registered with the SEC and that they complied with the securities laws, and he failed to disclose that Par Funding's undisclosed control person had a criminal history.
Pauciulo neither admitted to nor denied the SEC's findings. He could not be reached to comment.
Pauciulo, 56, was a partner for 12 years at Eckert Seamans Cherin & Mellott in Philadelphia, where he chaired the firm’s financial transactions group, according to the Inquirer. Eckert was not charged by the SEC.
Along with agreeing to pay the $125,000 penalty, Pauciulo agreed to the imposition of a cease-and-desist order, and an order denying him the privilege of appearing or practicing before the SEC as an attorney, which includes the right to apply for reinstatement after five years.
Earlier this year, Vagnozzi settled with the SEC and agreed to pay $5 million, including $4.5 million in disgorgement, $161,000 in interest and a $400,000 civil penalty, according to The Philadelphia Inquirer.
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