Jesus Rodriguez, cofounder and former CEO of mobile backend as a service (MBaaS) company KidoZen, has been sentenced to two years in federal prison on one count of wire fraud after admitting earlier this year that a hedge fund transferred $5 million to the company based on false information, according to a court document filed earlier this month.
In addition to the prison time, Rodriguez, who pled guilty in February following a grand jury indictment, owes more than $5.5 million in restitution. Officials have already seized a diamond ring from Rodriguez, and they are also entitled to more than $61,000 in Rodriguez's bank accounts, according to an order from Judge Robert Scola Jr. in the U.S. District Court for the Southern District of Florida.
After serving his prison time, Rodriguez will be on supervised release for three years, during which time he must disclose specified financial information and is not permitted to take on any new debts.
Rodriguez had claimed that KidoZen had more than 58 customers, was consistently profitable, had more than $1.2 million in reserve, and had received a letter from a major tech company conveying the company's intent to buy KidoZen for around $50 million, according to the indictment filed in September.
KidoZen was acquired last year by Mad Mobile. KidoZen started in 2011 and was based in Tampa, Florida. Third Point Ventures invested $5 million into KidoZen in 2013.
The company's core cloud-based service let companies build native, hybrid, and HTML5 mobile applications that can draw data from their existing software. KidoZen faced many competitors, including Parse, which Facebook acquired in 2013 and will discontinue next year.
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The Information first reported on the issue between Third Point and KidoZen last year. Hat tip to the South Florida Business Journal for reporting today on the sentencing.