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Peter RudegeairThe Wall Street Journal
- Biography
- @rudegeair
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The founder of Mozido Inc., one of the most highly-valued U.S. financial-technology startups as recently as a few years ago, was accused of defrauding the company’s investors and using their dollars to fund a luxurious lifestyle for himself and his associates.
In charges filed Monday, the Securities and Exchange Commission said Michael Liberty and four others misled investors about Mozido’s worth and its financial results. The SEC also said Mr. Liberty directed investors to put money into a series of shell companies under his control that didn’t actually have any ownership stakes in Mozido.
An attorney for Mr. Liberty had no immediate comment.
A onetime real-estate, clothes-making and beverage-sales executive, Mr. Liberty formed Mozido in 2008 to develop technology that would provide mobile wallets and other financial services to individuals without bank accounts. He convinced a bevy of big Wall Street names, including Wellington Management Co.,
Julian Robertson
and
Mastercard Inc.,
to invest millions of dollars into Mozido. As a result of a 2014 fundraising, Mozido was valued at $2.4 billion.
Not long after Mozido was founded, Mr. Liberty enlisted his attorney, his cousin, his cousin’s friend and his then-girlfriend to offer investors unregistered interests in a series of shell companies, according to Monday’s complaint. Mr. Liberty and the others diverted money from those shell companies to pay for things including chartered flights, a dairy cow farm and a movie his then-girlfriend was producing, according to the SEC.
“They tricked investors into believing that they were funding fast-growing startup companies. They were not,” the SEC said in its complaint. It added that at one time Mozido was valued at less than 10% of what Mr. Liberty and his associates told investors it was.
Mozido’s struggles have already caused headaches for some investors.
Nick Adams,
a portfolio manager at Wellington, apologized to investors and agreed to refund some fees after bets on Mozido and other tech startups contributed to losses at funds he ran, The Wall Street Journal previously reported.
This isn’t the first time that Mr. Liberty has run into trouble with authorities. He pleaded guilty in 2016 to making illegal contributions to a presidential campaign. He was sentenced to four months in prison and fined $100,000, according to court documents.
Write to Peter Rudegeair at [email protected]
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