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Investment Whiz Charged with Fraud

"Then came the million-dollar homes, the collectors' edition and the $300,000 donation to the Republican National Committee.

"Now 23, the college dropout may soon find himself behind bars. Federal authorities have charged him with securities fraud, saying he defrauded investors to finance his extravagant lifestyle.

"Yagalla started out as a successful money manager, with timely investments in Internet and high-tech stocks. But as the stocks took a dramatic dive early this year, his financial empire crumbled.

"Prosecutors say that in mid-October, days before federal agents arrested him at his Delaware mansion, he tried to raise cash to pay off investors and attempted to borrow $500,000 from a Las Vegas casino against his overdrawn brokerage account.

"…Perry Scarfo, a Delaware hair salon owner, invested $750,000, according to a lawsuit filed on his behalf. His lawyer Francis Pileggi described Scarfo and other Yagalla investors as "hardworking people who are in shock that their money has disappeared."

"…the SEC says Yagalla lied when he told investors this year that his fund was profitable. Instead, the SEC said, it was running out of money, and Yagalla was using some of the cash on his homes and cars, including two Ferraris and a $310,000 Bentley.

"The SEC says the fund is now almost entirely gone.

"Yagalla, who was arrested Oct. 18, is free on $250,000 bond. His lawyers initially said he would fight the charges…"

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