EF Hutton Says Its Fired CEO Stole Millions

What You Need to Know

A lawsuit alleges Joseph Rallo falsified expense reports, using the money to cover gambling debts and other expenses.
Authorities seized Rallo’s phone in connection with a securities fraud probe, the suit says.
EF Hutton contends he wrote off reimbursed expenses on his tax return.

EF Hutton, an investment bank carrying the name of a storied Wall Street brokerage, alleges co-founder and dismissed CEO Joseph Rallo stole millions from the firm by falsifying his expense reports and caroused at a “gambling den” during the workday.

Rallo, whose LinkedIn profile identifies him as the current CEO, used company funds on extravagant personal expenses, writing at least some off on his tax return despite the reimbursements, and has a “severe gambling problem,” EF Hutton LLC and EF Hutton Partners allege in a lawsuit filed Tuesday in the commercial division of the New York Supreme Court in New York County.

EF Hutton also reports that federal agents seized Rallo’s phone at his home in May in connection with a U.S. attorney’s office investigation seeking records related to potential securities and wire fraud.

The firms soon learned that Rallo is a “subject” of the investigation, meaning his conduct falls within the scope of a grand jury probe, according to the complaint.

The investment bank, formerly Benchmark Investments, alleges Rallo’s gambling problem involves six- and seven-figure bets, and “he typically loses.” He has incurred several million dollars in gambling losses since 2021, including losses from wagers made through a bookie with an illegal sports book, the lawsuit states.

Rallo also frequented the bookie’s “gambling den” in a New York apartment during the workday “to gamble and carouse” and would return to the office “in a state that was not conducive or becoming of a CEO of an investment bank,” the firms allege.

“This lawsuit arises from Joseph Rallo’s egregious corporate theft and self-dealing” while EF Hutton CEO and EF Hutton Partners managing member, the complaint states.

The firms allege Rallo caused them to reimburse him for:

Private jets and hotel rooms for family vacations
Tickets for premium seats at sporting events he attended with his bookie
Lavish personal meals
Charitable contributions to his children’s private school
Intravenous drips used to treat hangovers from excessive alcohol and drug usage.

While the damages amount will be presented at trial, these personal expenses exceeded several millions of dollars from January 2022 through May 2024, the firms allege.

Among other allegations, the plaintiffs allege that on May 21, when the firm’s general counsel called Rallo and told him he needed to go on administrative leave pending the U.S. attorney’s office investigation, the CEO threatened to “burn [EHF] down.”