HALL OF FAME
22 casesDocumented startup fraud by celebrated founders
22 cases
Ruja Ignatova
OneCoin · 2017
Crypto Ponzi scheme
This founder created a cryptocurrency that turned out to have no real blockchain. She convinced millions of people worldwide to invest $4 billion in a currency that did not exist, marketed through an MLM network as 'the Bitcoin killer.' She disappeared before authorities could arrest her and remains one of the world's most wanted fugitives.
🏃 Fled
View full case →Sam Bankman-Fried
FTX · 2022
Crypto exchange fraud / customer fund misappropriation
A crypto exchange founder secretly funneled billions in customer deposits to his affiliated trading firm, which used the funds for venture investments, political donations, and personal expenses. When customers attempted to withdraw in November 2022, the exchange collapsed within days. At peak, the founder was considered one of the 40 wealthiest people in the world.
🔒 Prison
View full case →Elizabeth Holmes
Theranos · 2015
Blood testing technology fraud
A biotech founder raised nearly $1B claiming her proprietary device could run hundreds of medical tests from a single finger-prick. The technology did not work. She concealed this from investors, partners, and patients for years — secretly running tests on conventional third-party machines while claiming results came from her own device. Patients received inaccurate diagnoses.
🔒 Prison
View full case →Sean Lane
Olive AI · 2023
Healthcare AI product misrepresentation (alleged)
A healthcare automation startup raised $902M at a $4B valuation, claiming its AI could dramatically reduce administrative burden across hospital systems. After mass layoffs and sudden shutdown, customers and investors alleged the AI product had been materially oversold — real-world results far below what investor materials promised.
💸 Fined
View full case →Jenny Qian Zhiya
Luckin Coffee · 2020
Revenue fabrication / accounting fraud
A Chinese coffee chain that IPO'd on the NASDAQ and was marketed as a Starbucks competitor fabricated approximately $310M in sales over multiple quarters, inflating reported revenue by up to 40%. The fraud was first exposed by an anonymous short-seller report and confirmed by the company's internal investigation. The chain was delisted from NASDAQ.
💸 Fined
View full case →Trevor Milton
Nikola Corporation · 2020
Securities fraud / product demonstration fraud
A founder of an electric truck company made dozens of false statements to investors about his technology. Most notoriously, a promotional video appeared to show a functional hydrogen-electric semi-truck driving under its own power — when in reality the truck had been towed to a hilltop and rolled down. The company briefly reached a $34B market cap.
🔒 Prison
View full case →Parker Conrad
Zenefits · 2016
Insurance licensing regulatory violations
An HR software startup allowed unlicensed brokers to sell health insurance across dozens of states, violating licensing laws. The company built an internal cheat tool — a software macro — that let sales reps bypass mandatory licensing training and pass required state exams. Millions in premiums were sold by unlicensed agents before regulators intervened.
💸 Fined
View full case →Rishi Shah
Outcome Health · 2017
Healthcare advertising metrics fraud
A health-tech company sold digital advertising screens placed in doctors' offices, promising pharma clients their ads would reach millions of patients. The company systematically inflated screen counts and patient impressions, charging clients for advertising never shown. The founders raised nearly $500M from top-tier investors on fabricated metrics.
🔒 Prison
View full case →Zac Prince
BlockFi · 2022
Unregistered securities offering / customer fund mismanagement
A crypto lending platform offered retail customers high-yield interest accounts on crypto deposits without registering the product as a security, violating federal law. The platform also lent hundreds of millions in customer funds to a crypto hedge fund that subsequently collapsed. 600,000 customers were ultimately unable to withdraw their funds.
💸 Fined
View full case →Michael Liberty
Mozido · 2017
Securities fraud / investor fund diversion
A mobile payments startup founder raised approximately $300M from investors, then secretly diverted tens of millions to personal use — purchasing art, luxury real estate, and a film production company — while lying to investors about the company's financial health and prospects.
🔒 Prison
View full case →Kyle Robertson
Cerebral · 2022
Healthcare regulatory violations / patient data misuse
A mental health telehealth startup valued at $4.8B allegedly violated the Controlled Substances Act by prescribing stimulants through telehealth without proper evaluations, and violated HIPAA by sharing protected patient health data with Facebook and TikTok for advertising — without patient consent.
💸 Fined
View full case →Charlie Javice
Frank · 2023
Fabricated customer database to inflate acquisition price
A fintech founder sold her student financial aid platform to a major US bank for $175M. To justify the price, she fabricated a customer database claiming 4.25 million users. The true user count was approximately 300,000. She paid a data scientist to synthetically generate millions of fake records to pass due diligence. The fraud was discovered only after the deal closed.
🔒 Prison
View full case →Abraham Shafi
IRL · 2023
Fake user metrics / investor fraud
A social networking app claimed 20 million monthly active users — the figure investors relied on to justify a $1.17B valuation and $170M raise. An internal board investigation found that over 95% of purported users were bots or fake automated accounts. The company shut down immediately after the SEC launched an investigation.
⚖️ Awaiting Trial
View full case →Laura Tyler Perryman
Stimwave Technologies · 2022
Medical device fraud / wire fraud
A wireless neurostimulation device startup founder was charged with wire fraud for misrepresenting the capabilities and safety profile of a pain management implant to investors and healthcare providers. The FDA issued a safety alert about the device. Patients received implanted devices alleged to be unsafe, while the company raised $170M based on fraudulent representations.
⚖️ Awaiting Trial
View full case →Domm Holland
Fast · 2022
Investor misrepresentation about revenue (alleged)
A one-click checkout startup raised $124M from prominent investors on the premise of rapid growth and merchant adoption. When the company shut down abruptly in April 2022, it emerged that it had generated only approximately $600K in annualized revenue at the time of its $102M Series B, while burning $10M per month.
💸 Fined
View full case →Manish Lachwani
HeadSpin · 2020
Revenue inflation / fabricated financial metrics
A mobile testing startup founder raised $117M at a $1.1B unicorn valuation by inflating revenue figures and fabricating financial data shown to investors. Actual ARR was approximately $3.9M — versus the reported $18.4M. The founder fabricated customer contracts and doctored financial statements used in investment due diligence.
🔒 Prison
View full case →Jessica Richman
uBiome · 2019
Healthcare billing fraud / investor fraud
A microbiome testing startup billed insurance companies for clinical tests that were not medically ordered by physicians, fabricating or reusing physician authorization codes to generate revenue. The company also misrepresented its revenue to investors. FBI agents raided the company's HQ, the company filed for bankruptcy, and both founders were indicted on federal fraud charges.
⚖️ Awaiting Trial
View full case →Carlos Watson
Ozy Media · 2021
Wire fraud / investor fraud / identity impersonation
A digital media company founder fabricated audience metrics, revenue figures, and business deals to attract investors. During a due diligence call, his COO impersonated a YouTube executive to fraudulently vouch for the company's partnership and viewer numbers. The founder also fabricated television streaming deals and vastly inflated viewership figures.
⚖️ Awaiting Trial
View full case →Mike Rothenberg
Rothenberg Ventures · 2016
Investor fund misappropriation / wire fraud
A venture capital fund manager raised tens of millions from limited partners to invest in startups, but secretly diverted millions to finance lavish lifestyle events, a VR media company he secretly controlled, and personal expenses. The firm became notorious for extravagant SXSW parties — events funded with LP capital.
🔒 Prison
View full case →Andrew Jeong
Delve · 2026
SOC 2 compliance certification fraud
A compliance automation startup allegedly helped client companies fraudulently obtain SOC 2 security certifications without implementing the required controls. Rather than ensuring genuine security practices, the startup provided a process that generated certification paperwork without the underlying security posture — a rubber stamp used to win enterprise and government contracts.
⚖️ Awaiting Trial
View full case →Billy McFarland
Fyre Festival · 2017
Event fraud / wire fraud
A young entrepreneur sold tickets to a supposedly luxury music festival on a private Bahamian island, promising headline artists, gourmet dining, and villa accommodations at prices up to $250,000. Attendees arrived to find disaster-relief tents and cheese sandwiches. The founder had known for months the event was impossible to execute, yet continued selling tickets.
🔒 Prison
View full case →Marcus Weller
Skully Technologies · 2016
Crowdfunding fraud / misappropriation of backer funds
A motorcycle helmet startup raised $15M from over 2,500 crowdfunding backers to build a heads-up display AR helmet. The founders spent backer funds on personal expenses — Las Vegas trips, a BMW, and personal rent — while the product was never shipped. The company abruptly shut down, leaving all backers empty-handed.
💸 Fined
View full case →