SEC Charges Fintech Company Founder With Scheme to Defraud Investors and Misappropriate Funds

The Securities and Exchange Commission has charged Michael Liberty, the founder of the fintech startup now known as Mozido Inc., with a scheme to trick hundreds of investors into investing in his shell companies instead of Mozido.  Liberty and his accomplices then allegedly 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 Liberty, his wife Brittany Liberty, his attorney George Marcus, his cousin Richard Liberty, and his cousin’s friend Paul Hess 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 percent less. 

“As alleged in our complaint, these investments were sold as a chance to get in early with a seemingly promising fintech company,” said Paul Levenson, Director of the SEC’s Boston Regional Office.  “The prospect of investing in a non-public start-up company may hold considerable allure, but buyers need to understand what they are buying.  Unscrupulous operators make it difficult for ordinary investors to assess such ‘investment opportunities.’”  

The SEC’s complaint, filed in federal court in Maine, charges the defendants with violating the antifraud and registration provisions of the federal securities laws. 

The litigation is being led by Marc Jones, Peter Bryan Moores, Trevor Donelan, and Kevin Currid of the Boston office.