The founder and chief executive of Trustify, the online platform connecting clients to a network of private investigators, has been charged with fraudulently offering and selling more than $18.5 million in securities to 90 corporate and individual investors.
Daniel Boice misrepresented Trustify as a fast-growing startup with thousands of investigators and robust revenues to corporate clients, according to the Securities and Exchange Commission (SEC), which announced parallel actions against Boice and the company recently.
The SEC said the Arlington, Virginia-based company falsely inflated its financial performance and the number of investigators it had on its roster, and then shut its doors when it was unable to pay its employees and vendors.
“As alleged in our complaint, Boice and Trustify lied to investors about their failing business to give the appearance of a thriving technology startup, while misappropriating investor funds to support an extravagant lifestyle,” said Kelly L. Gibson, Director of the SEC’s Philadelphia Regional Office.
“The scheme resulted in millions of dollars in investors losses, and the SEC will do all it can to hold the defendants accountable.”
The charges follow the news Trustify went bankrupt last year. Just two years prior the company moved into a plush new office and was heralded by the Virginia governor’s office for its plan to create 184 new jobs in Arlington.
The SEC seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties from Boice. A former Trustify executive, Jennifer Mellon, Boice's wife, has also been charged by the SEC for receiving fraudulent funds.
One New York investment firm invested twice in Trustify. In 2017, it invested $4.75 million after receiving allegedly fraudulent financial statements. In 2018, it invested an additional $2 million in a “Series B” fundraising round after receiving emails that purported to confirm investments made by other banks. The confirmation email was actually sent by Boice, who used a fraudulent email handle to mimic another’s account, the Justice Department found.
Instead, the authorities said, Boice used about $8 million of funds support his and his then-wife’s own extravagant lifestyle. The money was allegedly used for private jet charters, vacations, a luxury car, jewelry, and mortgage payments. Another $500,000 also allegedly went to his own consulting company, GoLean DC.
Founded in 2015, Trustify, Inc. described itself the first technology platform to connect clients across the United States to the only nationwide network of highly trained, vetted private investigators. In 2016, Washington Business Journal named the company one of its Startups of the Week, and Trustify got a lot of attention for its forward-thinking business model.
But then the company stopped paying its bills and quickly disintegrated.
Virginia-based Private Investigator John Morse of Morse Investigation Services explained, “They had little to no desire to get in compliance, and they imploded from corporate culture that they bred. It’s as much about delivering client expectations as the final product, and I don't think they were successful at either.”
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