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Sand Hill venture capitalist Boots Del Biaggio swindled investors and lenders out of $65 million in 2007 and 2008, according to the Securities and Exchange Commission and the U.S. Attorney's Office for the Northern District of California.
William J. "Boots" Del Biaggio III, a 41-year-old San Jose resident, paid for gambling debts and luxury home mortgages and bought an interest in the Nashville Predators NHL franchise with funds he obtained through two illegal scams.
In one scheme, Del Biaggio worked with a managing director of a San Francisco brokerage to take out the mother of all margin loans on securities that belonged to unsuspecting brokerage clients. Del Biaggio used forged documents to use the securities as collateral for $45 million in loans from several institutions and private lenders.
The other scheme played on Del Biaggio's reputation as a venture capitalist and financier. He co-founded San Jose's Heritage Bank of Commerce and started his own venture capital fund, Sand Hill Capital, in 1996. (He resigned from Sand Hill this year.) Del Biaggio solicited investments in funds with names similar to that of his venture capital fund, but he actually squandered the capital or invested it in stock he used as collateral for personal loans. One of the companies he used in this fashion was Heritage Bank of Commerce.
A civil complaint filed by the Securities and Exchange Commission alleges about $65 million in losses to investors, but the U.S. Attorney’s office takes a different view.
According to criminal charges in an indictment filed by the U.S. Attorney in San Francisco, Del Biaggio’s fraudulent activities involving about $104 million in illegal loans and guarantees from 13 lenders could earn him as much as 25 years in prison.
Del Biaggio filed for bankruptcy in June, leaving in doubt whether victims will receive restitution.
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