(Reuters) - The founder and former chief executive of Jumio Inc will pay $17.4 million to settle U.S. Securities and Exchange Commission charges that he defrauded investors in the mobile payments and identity verification start-up before it went bankrupt, the regulator said on Tuesday.
Daniel Mattes was accused of overstating the Palo Alto, California-based company’s revenue more than tenfold, making $14.6 million by selling his shares from April 2014 to February 2015, hiding the sales from Jumio directors, and falsely telling Jumio lawyers that the directors approved the sales.
Mattes, 46, who lives in Wels, Austria, also told at least one investor he was not selling his shares because there was “lots of great stuff coming up” at the privately held company and “he’d be stupid to sell at this point,” the SEC said.
The SEC said Mattes agreed to disgorge $16.76 million including interest and pay a $640,000 civil penalty.
Former Chief Financial Officer Chad Starkey will pay $421,000 to settle SEC charges related to Jumio’s financials and Mattes’ stock sales.
Neither Mattes nor Starkey admitted or denied wrongdoing.
“Company executives must provide investors with accurate information irrespective of whether their companies are publicly or privately traded,” Erin Schneider, the SEC associate regional director in San Francisco, said in a statement.
Jumio filed for Chapter 11 protection in March 2016, after restating its financials the prior September, and was bought by the venture capital company Centana Growth Partners. Airbnb, Coinbase and WeWork are among Jumio’s current clients.
Mattes is now chief executive of 42.cx, an artificial intelligence startup he founded that is based in Vienna.
In a phone interview, Mattes said he was “a little bit emotional about this whole topic” because he was no longer with Jumio, but wanted to “move on with my life” and agreed to settle.
“I created a market over the years, ramped the company up,” Mattes said. “The company was worth a lot, then it was worth nothing, and now it’s thriving and even better than ever.”
A lawyer for Starkey did not immediately respond to a request for comment.
Reporting by Jonathan Stempel in New York; Editing by Leslie Adler