Linqto founder charged in $450 million pre-IPO fraud scheme

The founder of a bankrupt platform that let retail investors buy shares before initial public offerings was arrested in California on Wednesday and charged in New York federal court with running a $450 million markup scheme. William Sarris, who built Linqto into a gateway for pre-IPO investing, faces securities fraud, broker-dealer fraud, wire fraud and conspiracy counts after prosecutors alleged he manufactured false scarcity of private company shares and pushed price markups beyond what his own lawyers flagged as unlawful.

"Mr. Sarris is innocent of these charges and intends to fight them," his lawyer said.

The indictment accuses Sarris of marketing investments in pre-IPO companies to tens of thousands of investors while fabricating scarcity to drive up prices and boost Linqto's revenue. The government's case is reinforced by former Linqto executive Joseph Endoso, who pleaded guilty in connection with his role in the scheme and is cooperating with prosecutors. The Wall Street Journal reported last summer that the Securities and Exchange Commission and the Justice Department were examining Linqto and its founder over what the paper called "guerrilla" tactics in selling pre-IPO shares.

The charges arrive as regulators intensify scrutiny of the broader private-market investing boom. SEC examiners have begun asking registered investment advisers to prove their funds actually own or hold exposure to the private company shares they claim, the Journal reported this week. One fund that marketed pre-IPO exposure to SpaceX later disclosed the shares were sold before the company went public, capping investors' expected gains. Linqto filed for bankruptcy protection last year to shield customer assets, citing the investigations and questions about what its customers owned, and has been under new management since January 2025, when it began cooperating with the SEC probe. The Justice Department opened its criminal investigation in early 2025.

The enforcement action marks a potential inflection point for a segment of finance that has expanded rapidly as everyday investors seek access to private technology companies ahead of their listings. Platforms marketing pre-IPO shares have multiplied, yet the Linqto case exposes how opaque the sourcing, pricing and custody of those shares can be. If prosecutors prove that fabricated scarcity and inflated markups defrauded tens of thousands of investors, the consequences could reach beyond one bankrupt firm. Registered investment advisers claiming private-company exposure now face a documentation burden to verify actual ownership, a shift that could reshape how funds market pre-IPO stakes and how successor platforms price them.

The case also casts a shadow over valuation claims in private markets, where companies such as SpaceX carry enormous implied valuations without the disclosure regime that governs public equities. A conviction would hand the SEC and DOJ a playbook for pursuing similar conduct across the sector, and Endoso's cooperation suggests investigators may be looking beyond Sarris at other executives and platforms. No trial date has been set, and Sarris's lawyer has signaled he will contest the charges.

This article is for informational purposes only and does not constitute investment advice.