SEC Charges Former CEO of Silicon Valley Start-Up with Defrauding Investors
Litigation Release No. 24440 / April 3, 2019
Securities and Exchange Commission v. Daniel Mattes, No. 5:19-cv-01689 (N.D. Ca.)
The Securities and Exchange Commission charged the founder and former chief executive of a Silicon Valley start-up with defrauding investors in Jumio Inc., a private mobile payments company. The former CEO, Daniel Mattes, agreed to pay more than $17 million to settle the charges.
According to the SEC's complaint, filed in federal court in California, Mattes grossly overstated Jumio's 2013 and 2014 revenues and then sold shares he held personally to investors in the private, secondary market. The complaint alleges that Mattes made approximately $14 million by selling his Jumio shares and hid these sales from Jumio's board. According to the complaint, Mattes also falsely told an investor that he didn't want to sell any of his shares because there was "lots of great stuff coming up," and that "he'd be stupid to sell at this point." Jumio restated its financial results in 2015, wiping out most of its revenue, and after it filed for bankruptcy in 2016, the shares became worthless.
The SEC's complaint charges Mattes with violations the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. Mattes, an Austrian citizen who now heads a private Austria-based company, has agreed to be enjoined from future similar violations, to be barred from being an officer or director of a publicly traded company in the U.S., and pay more than $16 million in disgorgement and prejudgment interest, plus a $640,000 civil penalty. The settlement is subject to court approval.
The SEC's investigation was conducted by Ruth Hawley, Christina Filipp, and Crystal Boodoo, and supervised by Jeremy Pendrey of the San Francisco Regional Office.