SEC Charges Fintech Company Founder with Fraudulent Scheme to Defraud Investors and Misappropriate Funds
Litigation Release No. 24092 / April 4, 2018
Securities and Exchange Commission v. Michael A. Liberty, et al., Civil Action No. 2:18-cv-00139-DBH
The Securities and Exchange Commission has charged Michael Liberty, the founder of the fintech startup now known as Mozido, Inc., with a fraudulent scheme to trick hundreds of investors into investing in his shell companies instead of Mozido. Michael Liberty and his accomplices then stole most of the more than $48 million raised to fund a lavish lifestyle that included private jet flights, multi-million dollar residences, expensive cars, and movie production ventures.
The SEC's complaint, filed March 30, 2018, alleges that Michael Liberty, his wife, Brittany Liberty, his cousin, Richard Liberty, Paul Hess, and attorney George Marcus induced investors to purchase unregistered interests in shell companies controlled by Michael Liberty that supposedly owned transferrable interests in Mozido. In reality, the shell companies either did not own, or were not permitted to transfer, interests in the company. The SEC also alleges that Michael Liberty and his accomplices lied to investors about Mozido's valuation and finances, the amount Michael Liberty had personally invested in Mozido, and the use of their funds. According to the complaint, Michael Liberty and his accomplices later orchestrated a series of transactions in which they used investors' own money to heavily dilute their interests and duped investors into trading securities for those worth more than 90% less.
The SEC's complaint, filed in federal court in Maine, charges Defendants with violating the anti-fraud and registration provisions of the federal securities laws. Specifically, the complaint alleges that Michael Liberty; Brittany Abbass Liberty ("Abbass"); Richard Liberty; Hess; Marcus; Brentwood Financial, LLC ("Brentwood Financial"); BRTMDO Investments, LLC ("BRTMDO"); Family Mobile, LLC ("Family Mobile"); and Mozido Invesco, LLC ("Mozido Invesco") violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and, in the alternative Abbass, Richard Liberty, Hess, Marcus, Brentwood Financial, BRTMDO, Family Mobile, and Mozido Invesco aided and abetted those violations. It also alleges that Liberty, Abbass, Richard Liberty, Hess, Marcus, Brentwood Financial, BRTMDO, Mozido Invesco, Family Mobile, and TL Holdings Group, LLC violated Sections 5(a) and 5(c) of the Securities Act, and, in the alternative, Liberty, Abbass, Richard Liberty, Hess, and Marcus aided and abetted those violations. Finally, the complaint alleges that Hess and Richard Liberty violated Section 15(a) of the Exchange Act. Xanadu Partners, LLC has been named as a relief defendant.
The litigation is being led by Marc Jones, Peter Bryan Moores, Trevor Donelan, and Kevin Currid of the SEC's the Boston Regional Office.