A Silicon Valley startup and its CEO have been charged by the US regulator with defrauding investors.
E-commerce player Benja and co-founder Andrew Chapin told investors that the firm made millions by selling popular clothing brands and retailers. However, the truth is that it never did business with the companies, according to the Securities and Exchange Commission (SEC).
The SEC further alleged that Chapin persuaded associates to impersonate representatives from these brands, as well as those from a major venture capital company that had supposedly made a large investment in the firm.
The complaint also alleged that Chapin showed an investor forged contracts and bank statements.
“We allege that Chapin violated the federal securities laws by deceiving investors about the most fundamental aspects of Benja’s business by falsely portraying it as a successful e-commerce technology company that in a short period of time had generated significant revenue from several high-profile clients,” said Erin Schneider, director of the SEC’s San Francisco regional office.
“We will continue to pursue companies and executives who mislead investors.”
The online marketplace for branded goods was apparently founded back in 2014 and headquartered in San Francisco.
However, its future looks uncertain after the SEC charged Benja and Chapin with violating anti-fraud provisions in federal securities laws. It is seeking permanent injunctions, civil penalties, disgorgement with prejudgment interest and an officer-and-director bar against Chapin.
On the same day of the SEC complaint, criminal charges were also filed against Chapin, in the US Attorney’s Office for the Northern District of California.
The SEC investigation is said to be ongoing.
This isn’t the biggest SEC investigation in recent memory: three men were charged last December in connection with a cryptocurrency conspiracy which defrauded investors out of at least $722m.
