Federal prosecutors have charged the chief executive of a Nashville technology startup with orchestrating a scheme to defraud a private equity firm out of $20 million. The company touted a revenue-sharing app for the entertainment industry. But authorities allege the platform never worked, and investor funds were instead diverted for personal extravagance.
False Promises and Fabricated Finances
The indicted executive — along with a co-founder — lured a Boston-based private equity investor into pouring $20 million into their company by claiming their app facilitated royalty-sharing among artists, labels, and distributors. The pair reportedly backed up these claims with falsified financial statements and staged customer testimonials.
Once funds were secured in September 2023, they allegedly continued submitting fraudulent quarterly reports to disguise mounting losses. Rather than using capital for product development or legitimate operations, the money was spent on extravagant travel, entertainment, and other personal expenses.
Collapse of the Startup, Arrest, and Charges
By February 2025, nearly all investor money had reportedly been spent. Once the fraud was uncovered, the startup collapsed. In light of the charges, the CEO was arrested — then released on a $125,000 bond. The indictment filed in federal court accuses him of conspiring to commit wire fraud.
Authorities say the case underscores enduring risks for investors in early-stage ventures, particularly when companies claim high-growth potential without demonstrable performance.
