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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

Thursday, December 19, 2013

Manhattan U.S. Attorney Announces Indictment Of Political Consultant For Defrauding The New York Democratic Senate Campaign Committee

Preet Bharara, the United States Attorney for the Southern District of New York, today announced that STEPHEN COLANGELO, Jr., pled guilty to two counts of securities fraud and two counts of wire fraud in connection with two separate schemes that defrauded investors out of more than $2.7 million. COLANGELO’s first scheme involved a hedge fund he controlled called the Brickell Fund, LLC (the “Brickell Fund”), and his second scheme involved three companies he created and controlled called “Hedge Community,” “Start A Hedge Fund,” and “Under the Radar SEO” (collectively, the “Business Ventures”). COLANGELO misled investors in the course of both of these schemes by making numerous misrepresentations, which included issuing fraudulent performance statements, private placement memoranda, and other business documents. COLANGELO pled guilty in Manhattan federal court before U.S. Magistrate Judge James Cott.

Manhattan U.S. Attorney Preet Bharara said: “Investors deserve fair and honest services from their money managers. Stephen Colangelo, Jr. and others like him who fraudulently pocket investor money undermine confidence in the markets.”

According to the Indictment and related court proceedings:

From March 2009 to February 2011, COLANGELO represented that he was an investment manager and solicited funds from private investors for the Brickell Fund, a purported hedge fund he operated. In the course of soliciting funds from investors, COLANGELO made numerous misrepresentations. Specifically, he told potential investors that his compensation for managing their investments in the Brickell Fund would be a nominal management fee and a certain percentage of trading profits, thus ensuring his compensation would be dependent on his trading success. In reality, COLANGELO regularly misappropriated large amounts of investor money for his own personal benefit and to support unrelated business ventures. He also regularly made false claims to investors about investment strategy and alleged profits. Based on these and other fraudulent statements and misrepresentations, COLANGELO defrauded investors out of more than $1.6 million in connection with the Brickell Fund.

From August 2009 to October 2011, COLANGELO also solicited investments in the Business Ventures. In doing so, COLANGELO represented that investment money would be used for legitimate business expenses, when in reality, he misappropriated a large amount of the investments for his own personal benefit. COLANGELO defrauded investors of well over $1.1 million in connection with the Business Ventures.

COLANGELO, 46, pled guilty to two counts of securities fraud and two counts of wire fraud. The securities fraud and wire fraud charges each carry a maximum term of 20 years in prison. The sentencing before U.S. District Judge Robert W. Sweet is scheduled for April 3, 2014 at 4:30 p.m.

Mr. Bharara praised the investigative work of the Federal Bureau of Investigation and also thanked the Securities and Exchange Commission for its assistance.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive,

coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20

federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition

of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases

against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For

more information on the task force, please visit

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Steve Lee is in charge of the prosecution.

US v. Melvin Lowe Indictment

Press Release Number: 
Updated May 18, 2015