(Reuters) – The U.S. Securities and Exchange Commission on Friday sued a Florida firm it said raised at least $410 million by fraudulently promising investors access to private companies that had potential to conduct initial public offerings.

In a civil complaint filed in Manhattan federal court, the SEC also sought asset freezes against StraightPath Venture Partners LLC and its three founders, to help arrest "ongoing fraud" at the firm.

The SEC said StraightPath raised the $410 million from more than 2,200 investors in 14 countries between November 2017 and February 2022, when it agreed to stop soliciting investments.

U.S. District Judge Lewis Kaplan said at a hearing that he will grant much of the SEC's requests temporarily "to preserve the status quo," pending another hearing on May 26.

The SEC said StraightPath pitched its investment vehicles as a way for ordinary investors to own "highly coveted," hard-to-find pre-IPO shares in such companies as plant-based burger maker Impossible Foods and cryptocurrency exchange Kraken.

But the SEC said the Jupiter, Florida-based firm often did not have the shares, made "Ponzi-like" payments to some investors, and commingled investors' assets with its own.

It also said StraightPath charged "exorbitant, undisclosed fees," allowing founders Michael Castillero, Francine Lanaia and Brian Martinsen and fund manager Eric Lachow to pay themselves about $75 million and their sales agents nearly $48 million.

"The defendants have profited handsomely," SEC lawyer Lee Greenwood told Judge Kaplan.

StraightPath says it charges investors a one-time 5% "due diligence" fee, plus 2% management and 1% expense fees.

StraightPath's lawyers called the SEC requests "wholly unwarranted," citing the firm's years of cooperation with the regulator.

"They're running into court with an incomplete picture," Samson Enzer, one of the lawyers, told Judge Kaplan.

The lawyers also said the SEC "apparently prompted" the U.S. Department of Justice to open a grand jury probe into StraightPath, and that asset freezes could make it harder for the individual defendants to defend against that criminal probe.

The Justice Department did not immediately respond to a request for comment.

According to the SEC, StraightPath funds hold more than $200 million of securities but are short $14 million of pre-IPO shares for seven companies, including Impossible Foods and Kraken. The SEC is also seeking a receiver for the firm.

The case is SEC v. StraightPath Venture Partners LLC et al, U.S. District Court, Southern District of New York.