The founders and operators of StraightPath Venture Partners LLC (StraightPath) and its affiliated entities have been sentenced to a combined 29 years in prison for defrauding their investors, skimming money off the top, and violating their fiduciary duties.
United States Attorney for the Southern District of New York, Jay Clayton, announced their sentencing on Wednesday in a statement.
Michael Castillero and Brian Martinsen, who were also convicted of obstruction of justice, were each sentenced to 11 and 10 years in prison, respectively.
Francine Lanaia was sentenced to eight years. Messrs Castillero, Martinsen and Ms Lanaia were convicted in November 2025 following a two-week jury trial before district judge Jesse Furman, who imposed the sentences.
According to the allegations contained in the Indictment and statements made in public filings and public court proceedings, from 2017 through April 2022, Messrs Castillero, Martinsen and Ms Lanaia engaged in a scheme to defraud investors in nine related private funds known as the StraightPath Funds.
Using “boiler room”-style call centers, the defendants marketed the funds as opportunities to invest in privately held companies at favorable prices before anticipated public offerings.
Despite representing to investors that no upfront fees would be charged, the defendants acquired pre-IPO shares and resold them to investors at arbitrarily inflated markups without disclosure.
The defendants also misled investors regarding the nature of their investments and hid the involvement of Mr Castillero and Ms Lanaia, who had been previously barred from the securities industry by the Financial Industry Regulatory Authority.
Moreover, to evade detection of their scheme, Mr Castillero and Mr Martinsen destroyed records and otherwise obstructed the efforts of the United States Securities and Exchange Commission to uncover the defendants’ fraud on investors.
Through the scheme, Messrs Castillero, Martinsen and Ms Lanaia acquired nearly $400 million from investors. They pocketed approximately $25 million each over the course of the fraud and also diverted investor funds to pay their associates.
Altogether, the defendants and their associates misappropriated approximately $130 million in investor funds and spent the money on luxury goods, houses, cars, watches, and a boat.
The StraightPath entities and StraightPath Funds are no longer operational and are under the control of a court-appointed receiver tasked with taking possession of StraightPath’s assets and overseeing a plan to return value to investors.
In addition to the prison term, Mr Castillero, 48, of Palm City, Florida; Ms Lanaia, 61, of Northport, New York; and Mr Martinsen, 49, of Palm City, Florida, were each sentenced to three years of supervised release.
They were also ordered to pay restitution of $115 million. The defendants were also ordered to forfeit specific real and personal property they obtained as a result of the fraud and to pay the following forfeiture amounts: Ms Lanaia: $24,259,128.80; Mr Martinsen: $25,355,714.43; and Mr Castillero: $24,279,516.80.