The Securities and Exchange Commission has finally tracked down a con man who courted naive investors with “the next Google” and promises of quick IPOs, tricking them out of a grand total of $7 million — or more.
The fraudster’s name is Benedict Van. For at least the past seven years, Van has been going around California, preying on unsophisticated consumers with get-rich-quick claims. Now, the SEC has filed a lawsuit against Van, who agreed to settle the case out of court. One of the conditions of the settlement is that Van may not act as an officer or director at any public company ever again.
Van’s name has been linked to tech startup investment scams for some time. There is even some indication that Van might have been a lifelong con man with a career spanning other verticals, other cities, and other decades, as well.
About a year ago, the California Corporations Commissioner issued a cease and desist order to Van’s companies, HereUAre (previously known as PeopleNet) and ECity. Van had been selling stock in the Palo Alto-based companies since before May 2007 (one of the companies was founded back in 1997).
“Benedict Van said that investors could expect to receive returns of 20 percent in the first 12 months,” the letter reads. “HereUare, ECity and Benedict Van omitted to disclose material facts, specifically that HereUare had never been profitable, had successive years of net losses, lacked revenue history and did not have a proven business model to generate revenue, had few capital resources and was dependent upon future financing to generate the cash necessary to operate its business.”
All these red flags are things that experienced investors would have known to look for, but Van’s victims were hardly what you might call experienced investors.
Seven years ago, an anonymous duped investor set up a blog to warn the world about Van. Calling Van a “super scammer,” the blog’s single post goes on to estimate that Van may have stolen as much as $10 million from investors as of 2005, and that he also may have been involved in a Southern California real estate scam in the late 1990s.
One commenter on the site describes Van as “a scam artist who preys barely English-speaking people. This guy will tell you lies after lies to get your money. This guy has stole [sic] millions of dollars from unacredited investors who had lost their entire life savings. I know several people who even had to pay off 30 percent to a credit card company because they borrowed money to invest in his fake company.”
The SEC brought its lawsuit against Van on Monday, the New York Times reports. The suit stated that Van, contrary to his own claims, had no venture capital credentials and was hardly running a search engine “three times more powerful” than Google’s.
Van sold shares for $9 each, claiming they would be worth as much as $100 each when HereUAre/ECity went public. Altogether, the SEC tracked down 100 individuals in California and Illinois who had been duped by Van and his schemes.
While the SEC can bar Van from participating in public companies, it waived any fines it could have assessed because Van is apparently too broke to pay any such punitive fees.
We’re a bit surprised that, given the fact Van had already been told by the state to cease and desist selling shares in his fake startups, the federal authorities are letting him roam the streets and only barring him from participation in public companies. Frankly, this is the kind of guy we’d love to see behind bars. But we’ll be satisfied as long as we never again have to write another sad story containing Benedict Van’s name.
Image courtesy of J. Helgason, Shutterstock