Robert Cassino, of Long Beach, Joseph Rivera, of Elmont, among group charged with securities fraud

Three sales executives, including two from Long Island, were arrested Thursday and charged in a wide-scale securities fraud investigation, with federal prosecutors contending the men lied to investors regarding hidden fees while stealing millions for themselves.

A superseding indictment, unsealed in Brooklyn federal court Thursday, charged Robert Cassino, 62, of Long Beach, Joseph Rivera, 45, of Elmont, and Joseph Passalaqua, 36, of New Jersey, with securities fraud conspiracy, wire fraud conspiracy and securities fraud, according to the Eastern District of New York U.S. Attorney's Office.

A fourth defendant, Raymond John Pirrello Jr., 48, of Sparta, New Jersey, previously was indicted for his role in the scheme.

"The defendants repeatedly lied to investors about the costs associated with their investments and diverted millions of dollars in undisclosed mark-up fees to their sales offices,” interim Eastern District U.S. Attorney John Durham said in a statement.

In court Thursday, U.S. Magistrate Judge James R. Cho held Cassino and Rivera on $250,000 bond apiece while Passalaqua was held on $500,000 bond.

Randy Zelin, Cassino's Manhattan-based defense attorney, said Friday the indictment "does not speak to a particular thing that my client said that was not true or did that was not true ... We're going to wait and see what the discovery looks like. But I am going to ensure that Bobby has a vigorous defense and we look forward to trying this case in a courtroom."

Peter Quijano, Rivera's Manhattan-based defense attorney, declined to comment on Friday 

Marjan Moussavian, Passalaqua's Newark-based attorney, didn't immediately respond to a request for comment on Friday. 

Prosecutors contend the four men engaged in a scheme to defraud current and prospective investors in securities offered by Late Stage Management LLC, a Montclair, New Jersey, company that managed investment funds where they all worked.

Late Stage, prosecutors said, offered investors "no fee” opportunities to invest in pre-initial public offering stocks.

Pirrello worked as the partner to the leadership of Late Stage, authorities said. Cassino, Passalaqua and Rivera led operations at sales offices — including ones based in Lindenhurst and Westbury — that were affiliated Late Stage, prosecutors said.

The indictment contends that between March 2016 and March 2023, the four defendants made "material misrepresentations and omissions” to investors related to the existence and the amount of fees they would pay in stocks offered by Late Stage.

For example, the defendants claimed Late Stage would only profit when the company made its IPO or if it was sold to a larger company — in which case they would be entitled to a 20% share of their profits, prosecutors said.

But, in fact Late Stage was charging fees in the form of upfront markups, ranging from 10% to 50% of each investment, the indictment contends.

Between March 2019 and July 2022, sales offices working on behalf of Late Stage raised about $528 million from investors and diverted approximately $88.6 million in undisclosed upfront markups to the defendants and their yet unnamed co-conspirators, prosecutors said.

"At the behest of the company’s leadership, three defendants allegedly enticed investors with material misinformation to steal millions of their dollars through undisclosed upfront fees,” James Dennehy, assistant director in charge of the FBI’s New York field office, said in a statement. "This alleged scheme allowed the defendants’ respective sales offices to unlawfully profit at the expense of their clients’ trust and money.”

By Robert Brodsky

robert.brodsky@newsday.com@BrodskyRobert

Robert Brodsky is a breaking news reporter who has worked at Newsday since 2011. He is a Queens College and American University alum.