Former Linqto CEO Arrested for Alleged Fraud Scheme
The former CEO of an investment platform allowing investor access to pre-IPO private market options lied about the securities prices to boost the company’s revenue at the expense of customers, according to the Justice Department.
Linqto founder William Sarris was arrested in California and accused of fraud and conspiracy, according to an indictment unsealed this week. According to Deputy U.S. Attorney Sean Buckley, Sarris “exploited the ‘pre-IPO’ market” as a part of the alleged scheme.
“In the private markets, which lack the pricing transparency of a public exchange, investors rely on the honesty of those offering access,” Buckley said. “The defendants allegedly lied about what the ‘market’ price was, fabricated scarcity to inflate prices, and imposed staggering markups that in some cases exceeded 200%.”
Sarris is being represented by Timothy Treanor, a managing principal with the New York-based law firm Treanor Devlin Brown; in a statement to Wealth Management, Treanor said Sarris is innocent of the charges and “looks forward to his day in court.”
Sarris co-founded Linqto in 2010 and later launched a trading platform for accredited investors, on which they could trade on startups and other pre-IPO companies.
Linqto didn’t sell shares outright, but sold customers units in “special purpose vehicles,” each of which offered exposure to a company’s stock. Sarris capped customers in a single SPV at 99, and would create new SPVs when demand exceeded that number (some popular pre-IPO companies had hundreds of SPVs, according to the indictment).
According to the DOJ, Sarris knew from early on that charging customers “undisclosed excessive markups” was unlawful (which the indictment described as “particularly those above 10%”). The company’s median markup was 60%, with over a quarter exceeding 80%, and some exceeding 200%. Sarris also allegedly inflated the markups by misrepresenting the inventory the firm could sell, attempting to create “FOMO” (or “fear of missing out”) among customers.
Additionally, starting in 2023, Sarris directed the company to price some offerings using a purportedly automated system that sets prices based on supply and demand. But according to the DOJ, the system was never fully automated, with Sarris joking that pricing “would be set by ‘a little Wizard of Oz…don’t pay attention to that man behind the screen.’”
Allegedly, Sarris was also warned on several occasions that the firm would need to register as a broker/dealer to meet regulatory requirements, but he allegedly demurred. According to the DOJ, even after Linqto registered with brokerage regulators, the entity “sat largely unused” while Linqto continued to filter most trades to capture markups.
The DOJ argued that Sarris did all this to boost the company’s revenue for his own benefit. In October 2023, the company’s board granted Sarris about 1.9 million in Linqto stock, which would vest only if Linqto completed an IPO, acquisition or capital raise valued at $500 million or more by the end of 2025.
“Sarris understood that outcome depended on Linqto’s revenue—and Linqto’s revenue depended on the unlawful and exorbitant markups Sarris was charging,” the indictment read. “Sarris continued to pursue an ‘exit’ for his position in Linqto with mounting urgency, brushing aside warnings along the way.”
Linqto announced plans to go public in 2024, but by the middle of the following year, the firm had filed for bankruptcy. By then, the approach had drawn in over $450 million from more than 13,000 customers, according to the DOJ.
According to Treanor, more than 13,000 people invested in vehicles through Linqto, enabling access to private companies such as Ripple, SpaceX and Anthropic. He said Sarris resigned on January 2, 2025, with the portfolio “intact,” and that the $450 million the DOJ is citing is what came into the platform, not what left it.
“Linqto’s customers do face real questions about what they will get back, but those questions come from a bankruptcy filed six months after Bill stopped running the company—not from the investments themselves,” Treanor claimed.
The DOJ claimed that Sarris’s former second-in-command at the company pleaded guilty late last month and is cooperating with the government’s investigation.
Sarris was charged with two counts of securities fraud and one count each of broker/dealer and wire fraud (each of which carries a maximum sentence of 20 years), and was also charged with one count of conspiracy to commit securities and b/d fraud, as well as conducting unregistered investment company transactions (with potential maximum five-year sentences).
