Dive Brief:
- The Securities and Exchange Commission (SEC) on Friday charged Trustify Inc., an online marketplace to connect customers to a network of private investigators, with fraudulently offering and selling over $18.5 million of securities, according to a court filing.
- The company's founder and CEO, Daniel Boice, was also charged.
- More than 90 corporations and individuals invested in the company.
Dive Insight:
The SEC's complaint, filed in federal court in the Eastern District of Virginia, alleges between 2015 and 2018, Trustify and Boice falsely presented Trustify as a successful startup with lucrative corporate clients, thousands of investigators in its network, and growing revenues.
According to the complaint, Trustify's number of investigators and revenue were far lower than represented. The company was unable to pay its employees and vendors and effectively ceased operations.
Boice allegedly misappropriated at least $8 million of investor funds to pay for personal expenses for himself and his then-wife, also a Trustify executive, including private jet charters, vacations, a luxury car, jewelry, and mortgage payments. Boice also allegedly diverted hundreds of thousands of dollars to his purported consulting company, GoLean DC LLC.
"Boice and Trustify lied to investors about their failing business to give the appearance of a thriving technology startup, while misappropriating investor funds to support an extravagant lifestyle," said Kelly Gibson, director of the SEC’s Philadelphia regional office. "The scheme resulted in millions of dollars in investors losses, and the SEC will do all it can to hold the defendants accountable."
The complaint charges Boice and Trustify with violating antifraud provisions of federal securities laws, and seeks permanent injunctive relief, disgorgement with prejudgment interest and civil penalties.
The SEC also named GoLean and former Trustify executive Jennifer Mellon as relief defendants, seeking the return of proceeds of the fraud to which they had no legitimate claim.
In a separate action, the U.S. Attorney’s Office for the Eastern District of Virginia, and the Fraud Section of the U.S. Department of Justice, announced the filing of criminal charges against Daniel Boice for wire fraud, securities fraud, and money laundering.
