Regulation

SEC Charges Founder Of Mozido With Defrauding Investors

The Securities and Exchange Commission (SEC) announced news on Monday (April 2) that it charged Michael Liberty, the founder of Mozido, the FinTech startup, with scamming investors out of their money.

According to a press release issued by the SEC, the regulator contends Liberty engaged in a scam to trick hundreds of investors into funding his shell companies instead of Mozido. The SEC believes Liberty and fellow conspirators stole most of the $48 million raised to bankroll an expensive lifestyle that included private jet flights, million-dollar homes, expensive cars and movie production ventures. The SEC complaint alleges that Liberty, his wife Brittany Liberty, his attorney George Marcus, his cousin Richard Liberty and his cousin’s friend Paul Hess convinced investors to purchase interests in shell companies, which would transfer that ownership interest into Mozido. The shell companies either did not own or weren’t allowed to transfer interests, contends the SEC.

The SEC also claims Liberty and his accomplices lied to investors about the valuation and finances associated with Mozido, the amount Liberty had personally invested in the company and how the funds would be used. Later, they supposedly pulled off a series of transactions with investors’ money to dilute their interests, tricking investors into trading securities for ones that were worth 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, in a press release announcing the charges. “The prospect of investing in a non-public startup 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.’”

Under the complaint, which was filed in federal court in Maine, Liberty and his accomplices were charged with violating the antifraud and registration provisions of the federal securities laws.

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