On July 24, a jury in the Southern District of New York found James Tagliaferri, the former President of TAG Virgin Islands and registered investment adviser, guilty of investment adviser fraud, violations of the Travel Act, securities fraud and wire fraud.
U.S. v. Tagliaferri, No. 1:13-cr-0115 (S.D.N.Y. Verdict July 24, 2014).
Since 2007, TAG began offered investment advisory services based out of the U.S. Virgin Islands. Mr. Tagliaferri formerly worked out of Connecticut with the Taurus Advisory Group.
The government had charged that Mr. Tagliaferri placed $40 million of client funds in a horse-racing company located in Garden City, New York. Mr. Tagliaferri was secretly paid at least $1.6 million in undisclosed kickbacks. Mr. Tagliaferri used an attorney to divert the undisclosed fees from a trust account to a TAG account in the Virgin Islands that he controlled.
The government had also charged that client funds were used for improper purposes including Ponzi-scheme-like payments to other clients who were demanding their funds. He also paid entities with which he was affiliated. The transactions were similarly disguised through convoluted routes.
Mr. Taglaiferri also caused clients to invest in something he called “sub-notes.” The sub-notes were supposedly obligations of a Pennsylvania company. The notes were entirely fictitious.
The SEC also filed a parallel action. It’s probably safe to say that Mr. Taglaiferri won’t be dealing securities or investment advice any time soon.