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In a deal made public Monday, NASCAR superfan Andrew Franzone pleaded guilty to securities fraud.
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Franzone tricked 100 people, many in the racing community, into investing in his Miami hedge fund.
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His lawyers would have been barred from telling jurors the fund turned out to be highly profitable.
Former Miami hedge fund founder and NASCAR team owner Andrew Franzone has pleaded guilty to federal securities and wire fraud, scuttling a jury trial that had promised to play out against a racing backdrop.
Franzone’s plea was made public hours before jury selection was to begin in a Manhattan courtroom on Monday.
Sentencing is set for July 15. He faces up to 20 years in prison, though a lesser sentence is likely.
Prosecutors had said Franzone tricked more than 100 victims — including fellow drivers and racing fans — into investing $40 million in his Miami-based hedge fund.
The NASCAR superfan and vintage race car collector lied about his fund’s liquidity and performance, assuring investors their money was in high-performing but safe stocks while actually locking up their cash in risky ventures.
Franzone had hoped to argue at trial that his picks turned out to be extremely successful — particularly a $250,000 investment in CoreWeave from 2019 that grew to a worth exceeding $55 million.
A judge’s decision on Thursday barred that line of defense, while also allowing prosecutors to argue that Franzone used the NASCAR community to find victims and indulge his expensive racing hobby.
Victim investors included Franzone’s own race team partner, champion NASCAR truck series racer Mike “The Gunslinger” Skinner, according to court documents.
It was Thursday’s decision barring jurors from learning of the fund’s eventual gangbuster success that prompted Franzone to wave the red flag on going to trial, his lawyer, Joseph R. Corozzo, told Business Insider on Monday.
“The judge’s decisions were limiting a great deal of the evidence,” Corozzo explained of the decision to take a plea.
The success of CoreWeave, a Nvidia-backed cloud computing startup, will now be an issue at sentencing, as a victim restitution plan is ironed out, he said.
“Everybody’s going to be made whole, maybe as much as 10 times over,” Corozzo said of investors.
Franzone had been trying to buy his fund out of bankruptcy in 2021, and to make investors whole using the CoreWeave windfall, when he was arrested in Fort Lauderdale, Corozzo said.
“He was right about his investments in the end,” the lawyer added. “That’s always been his reputation — quirky, but brilliant.”
Read the original article on Business Insider
