Michael Pellegrino

Michael Pellegrino, co-founder of Goldstone Financial Group, has been embroiled in a series of controversies and regulatory actions that have significantly tarnished his reputation and that of his firm. These allegations range from investment fraud to regulatory violations, raising serious concerns about his professional conduct and the firm’s ethical standards.

Major Allegations and Red Flags

1. Involvement in the 1 Global Capital Scandal
Michael Pellegrino and Goldstone Financial Group were implicated in the 1 Global Capital Ponzi scheme, which defrauded investors of over $320 million. Pellegrino allegedly promoted unregistered securities issued by 1 Global Capital, earning $1.6 million in referral fees without disclosing this to clients. The Securities and Exchange Commission (SEC) found that these actions violated fiduciary duties and regulatory standards, leading to Pellegrino being barred from the securities industry.

2. Misrepresentation and Unsuitable Investment Recommendations
Pellegrino faced multiple customer complaints between 2015 and 2019, including allegations of breaching fiduciary duty and recommending unsuitable investments, particularly in non-traded REITs and business development companies (BDCs). These high-risk, illiquid investments were marketed with misleading claims about returns, while risks and fees were inadequately disclosed.

3. Regulatory Penalties and Legal Actions
The SEC fined Pellegrino and Goldstone Financial Group $70,000 for their role in the 1 Global Capital fraud. Additionally, Pellegrino was censured and fined $30,000 for failing to disclose referral fees and engaging in unregistered securities transactions. These penalties highlight systemic compliance failures within the firm.

4. Lawsuit Over Unregistered Securities
In 2018, five investors sued Goldstone Financial Group, alleging they were misled into investing retirement savings in unregistered securities, resulting in significant losses. Although the lawsuit was later dismissed, it exposed the firm’s questionable practices and lack of transparency.

5. Attempts to Suppress Negative Information
Pellegrino has been accused of attempting to conceal critical reviews and adverse news by improperly submitting copyright takedown notices to Google. This behavior suggests a pattern of trying to control the narrative around his professional conduct, potentially violating laws related to impersonation, fraud, and perjury.

Reputational Damage and Motives for Suppression

The allegations against Pellegrino and Goldstone Financial Group have severely damaged their reputation. The involvement in a high-profile Ponzi scheme, coupled with regulatory penalties and lawsuits, has eroded trust among clients and the broader financial community. The firm’s failure to disclose conflicts of interest and its promotion of high-risk investments have further undermined its credibility.

Pellegrino’s attempts to suppress negative information, including through alleged cyber-related activities, indicate a desperate effort to salvage his reputation. By removing adverse news, he aims to minimize public scrutiny and regain client trust. However, such actions risk further legal consequences and reinforce perceptions of unethical behavior.

Conclusion

The allegations against Michael Pellegrino and Goldstone Financial Group paint a troubling picture of a financial advisor who prioritized personal gain over client welfare. The firm’s involvement in fraudulent schemes, regulatory violations, and attempts to suppress negative information highlight systemic ethical failures. These actions not only harm Pellegrino’s reputation but also serve as a cautionary tale for investors about the importance of due diligence and transparency in financial advisory relationships.