"In a civil complaint, the SEC has charged Luckey with violating securities laws for using millions of dollars of company funds to pay for her home, Super Bowl tickets, and a destination wedding in the Caribbean. The SEC alleges she painted a rosy picture of the company's booming revenue when ComplYant never brought in more than $620 in monthly revenue."
"Startups face far less regulatory scrutiny than public companies, and founders sometimes present overly optimistic growth stories while VCs rush to fund hot companies with limited diligence. After high-profile scandals like Theranos and FTX, regulators have taken a tougher line. "Startup founders cannot fake it until they make it by falsifying revenue metrics," SEC regional director Monique Winkler warned in a statement. Recent cases, including the seven-year prison sentence for Charlie Javice and fraud charges against Mozaic Payments' former CEO Marcus Cobb, show that regulators are increasingly willing to pursue criminal and civil penalties for these founders."
Shiloh Luckey founded ComplYant in 2019 to help small businesses navigate state tax regulations. The company raised more than $13 million from venture capitalists, including a $5.5 million seed round led by Craft Ventures. Federal prosecutors are investigating alleged securities and bank fraud, and the SEC has filed a civil complaint accusing Luckey of using millions in company funds for personal expenses, including a home, Super Bowl tickets, and a Caribbean destination wedding. The SEC alleges ComplYant never exceeded $620 in monthly revenue despite claims of booming revenue. Regulators have increased enforcement after scandals such as Theranos and FTX.
Read at Business Insider
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