The founder of a San Francisco-based AI startup called On Platform was arrested last week after prosecutors charged that he and his wife had blown millions of dollars worth of investor funds on real estate, jewelry, a Tesla, and even the social club that hosted their wedding.
Prosecutors allege that the pair defrauded investors out of more than $60 million, as SFGate reports.
Founder Alex Beckman and his lawyer Valerie Lau, who he recently married, appeared in San Francisco court last week after being charged with “conspiracies to commit wire, bank and securities fraud, as well as aggravated identity theft and obstruction of justice,” per SFGate.
It’s a particularly outlandish allegation of tech fraud, highlighting the ludicrous degree of buzz surrounding AI — and the potential for greedy investors to get scammed as a result.
Beckman allegedly lied to investors about having $13 million in the bank — despite only showing an actual account balance of $25.93. Bank statements also showed that Beckman wired a family member $320,000.
On its website, ON Platform describes itself as an “industry-leading enterprise-grade conversational AI platform, trusted by the world’s leading brands in retail, sports, and media & entertainment.”
But judging by the allegations, investors are unlikely to ever see their money again.
The alarm bells were already ringing by July, when GamesBeat reported that ON, formerly known as GameOn Technology, had laid off all of its 50 staff members after discovering that $11 million in cash was missing.
At the time, Beckman resigned, with the remaining company executives telling shareholders in a letter what had happened.
“To our shock and horror, we discovered that, in reality, the account balance in that bank was only 37 cents,” the letter reads. “This discovery left the company in a liquidity crisis, and the board and management were forced to act quickly, hoping to stave off bankruptcy.”
Despite Beckman denying the allegations at the time, federal investigators say they’ve since found that he and Lau spent $4.2 million on two San Francisco properties, on top of his children’s private school education.
The fantasy Beckman and his wife spun to deceive investors sounds eyebrow-raising, to say the least.
Last week, the Securities and Exchange Commission accused Beckman of having “provided investors with fictitious customer revenue reports reflecting millions of dollars in recurring revenue from dozens of high-profile customers,” including the NBA, NHL, and even Coca-Cola.
“In reality, GameOn was generating very little (if any) revenue from many of these supposed top customers and was instead paying those entities significant fees for using their branded content,” the SEC’s documentation reads.
“But in reality, GameOn’s annual revenue never exceeded $500,000, the company was never profitable, and GameOn was losing millions of dollars every year,” the agency wrote. “In addition, Beckman repeatedly provided investors with fictitious company balance sheets reflecting millions of dollars in cash when the true cash position was a tiny fraction of what was represented — and at times close to zero.”
The pair are facing serious charges and could soon be forced to give up their San Francisco properties — on top of a Tesla Model X, according to SFGate.
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