‘Investors should be wary of pitches promising IPO riches from companies with minimal operations and track records,’ the SEC says
The SEC settled fraud charges yesterday against a Silicon Valley entrepreneur who funneled millions from investors by making false promises.
The fraudster Benedict Van allegedly lured investors into believing his two internet start-ups, hereUare and eCity, were on the verge of launching successful IPOs and would become the ‘next Google’, according to the SEC. The California-based man took $6.2 mn from investors for hereUare alone, the commission says.
According to the SEC’s complaint, Van told prospective investors the companies were involved in lucrative deals and patents, and that he had retained Goldman Sachs and an international law firm to help take the companies public within six months.
In fact, Van had no plans to take the companies public and his main source of income was the investors’ funds, which dried up in 2008 when his business was forced to close its virtual doors.
‘Van played on the hopes of investors, tricking them into believing his companies were on the verge of becoming the next Silicon Valley success stories,’ says Marc Fagel, director of the SEC’s San Francisco regional office. ‘Investors should be wary of pitches promising IPO riches from companies with minimal operations and track records.’
Van, hereUare and eCity have agreed to settle the charges against them without admitting or denying the SEC’s allegations, and Van agreed to a permanent bar from serving as a public company officer or director.
This article originally appeared on the website of Corporate Secretary, the sister publication of IR magazine.
