The agents worked for The Spaventa Group (TSG), a Long Island financial firm founded by Andrew Spaventa, a former broker who spent years selling pre-IPO investments before founding TSG in 2020. 

More than 800 people bought in. Most were retail investors, and more than 650 put in $100,000 or less, while over 100 were retirees, according to the Securities & Exchange Commission. The alleged boiler room raked in more than $74 million for 11 private funds run from offices on Long Island and New Jersey over the course of four and a half years from December 2020 to June 2025. 

Despite the promise of no rip offs from “unnecessary fees,” investors paid on average 46% more for their positions than Spaventa’s own companies paid to get them, the SEC alleged in a complaint filed on Friday in the Southern District of New York. In some cases, the premium ran as high as 91%. Investors allegedly had no idea the markups were so high. 

 “Unsolicited calls and high-pressure sales tactics are the calling cards of so-called boiler room operators. They get you on the phone and then hit you with the hidden fees,” said Sheldon L. Pollock, associate director of the SEC’s New York regional office.

All told, the SEC claimed the accused companies and Spaventa collected $23 million in undisclosed fees. More than $12 million of that went to pay commissions to the sales agents who made the calls, the complaint stated, while Spaventa made at least $4 million. He allegedly spent it on a home purchase, renovations, personal travel, and luxury car payments. 

Reached by phone, Spaventa, 40, denied the allegations in the complaint and said he planned to defend himself against the SEC’s accusations. The SEC charged Spaventa along with three entities he controls—TSG, TSG Capital Advisors, and TSG Alpha Partners—with fraud and violating securities and broker-dealer registration provisions. 

The alleged scheme

According to regulators, the investments all flowed through Spaventa. TSG and another company Spaventa owns called TSG Invest Ventures allegedly bought the positions first, then resold them to Spaventa’s funds at a higher price, which the funds then passed on to investors.

For example, the complaint states that Fund 8 held Anthropic, acquired at $32.62 to $41.53 per share and sold for $58.50, a 41% to 79% markup that raised $5.8 million in 2024. Funds 10 and 11 held Perplexity AI, bought between $340.72 and $389 and sold at $495 for a markup between 27% and 45%. Fund 2 held SpaceX, which Spaventa purchased for $595 and sold for $975. Anduril appeared across three funds at markups between 29% and 57%. (None of the companies are accused of any wrongdoing and none immediately responded to a request for comment.) The more than 13 pre-IPO companies listed in the complaint also included Stripe, Rubrik, Epic Games, and Impossible Foods. 

The SEC said Spaventa was the sole owner of the company selling the shares to the funds, and the funds buying them were managed and advised by entities he owned and controlled. Because of that structure, Spaventa needed written client consent, which he allegedly never got, according to the SEC.

The funds also had no board of directors that could have consented to certain transactions, and no third party evaluating the purchases and transfers to ensure the funds got an arm’s length deal. The SEC also claimed that Spaventa allegedly backdated some of the fund equity transfer agreements after SEC staff began an inquiry in 2023. 

According to the complaint, Spaventa allegedly coached his sales squad, many of whom were not registered while several had been previously suspended or barred by regulatory agency Finra. They earned commissions of about 10%, but a handbook Spaventa allegedly approved told them never to use that word, and to say “referral fee” instead. 

If a sales prospect asked what the fund paid for the shares, agents were allegedly coached to tell investors, “I’m not sure, but that’s not information I’m privy to.”

The handbook also allegedly directed sales agents to offer up phony descriptions of how the fees worked. 

“Unlike other firms, we have no hidden fees,” the agents were told to tell investors, according to the complaint. “So the price we tell you is the price of the investment.”

The script for selling Anduril told agents to say, “When you make money, we make money. If you don’t make money, we don’t make money.”

However, the markup was allegedly collected from the investor’s money as soon as the investment in the funds closed. Agents also allegedly cited returns of 200% to 1,000% and a track record of success in Airbnb, Palantir, and SoFi, when the funds had never held any of those investments, the complaint states. 

TSG’s marketing allegedly said the firm bought existing shares directly from shareholders and insiders looking to sell, and that there would be no dilution to the company. The SEC said that more than 90% of the funds’ holdings were stakes in other private pre-IPO funds that claimed to hold these shares. The allegedly undisclosed arrangement added a second layer of fees on top of the initial layer, and layered in additional risk to the funds, the complaint stated.

Spaventa has not yet filed a response in court. The SEC is seeking disgorgement, civil penalties, and a permanent bar from the securities industry. The majority of investors have not recouped their investments in the funds, according to the complaint.