Eran Eyal, a South African technology entrepreneur, has been charged in the USA by the New York Attorney General, Barbara Underwood, with fraudulently soliciting investors, making false representations, and computer crimes from his time when he was CEO and Founder of Springleap (a South African online marketplace of creative talent). Eyal served as CEO of Springleap from 2012 to 2016, during this time, the New York Attorney General's office alleges that he stole as much as $600,000 from investors by convincing them to purchase convertible notes through false representations of his company, Springleap.
Photo of Eran Eyal when he was CEO at Springleap.
Underwood has stepped in because some of the investors that Eyal supposedly stole from, are from New York. If convicted, Eyal could serve anything from 5 to 15 years in prison.
“As we allege, this massive securities fraud scheme bilked investors out of hundreds of thousands of dollars, Defrauding New Yorkers through false representations and fabrications about a business will not be tolerated by my office – and we’ll continue to do what it takes to root out and prosecute securities fraud,” said Attorney General Underwood.
In 2014, Springleap raised $400,000 from various investors and at the time Eyal stated that they were expecting more funding within 6 months. However, according to the New York Attorney General's office, between 2014 and 2015, Eyal allegedly attracted investors to Springleap through "a series of false representations about the company’s management team, advisory board, creative professionals, and client base." The New York Attorney General's office has also stated that, through an investigation, it has identified additional Springleap investors located in Australia, South Africa, and the United Kingdom that invested a total of over $1.3 million in Springleap.
One of the startling "false representations" relates to Springleap's supposed community of approximately 180,000 creative professionals, which Eyal and other management in the startup at the time had said was vetted and had agency-level experience. It turns out that this claim was nowhere near the reality. Eyal, in a bid to inflate the value of Springleap, allegedly hired a freelance computer hacker to scrape computer data from a legitimate online portfolio website in order to "obtain pedigree information for creative professionals to falsely inflate his existing list." This is interesting considering that in 2015, Trevor Wolfe, ex-Managing Director and Head of Commercialisation at Springleap in 2015, in a chat with iAfrikan said that the startup had approximately 22,000 creative professionals on its database, a far cry from the 180,000 Eyal used to lure investors.
Eyal allegedly bragged that the “project”, of scraping the data and inflating Springleap's database, had cost him a total of $25.
Springleap subsequently disappeared, without much fanfare around 2015/2016. After that, Eyal resurfaced in cryptocurrency circles as the Founder and CEO Shopin – an online platform that claims to be "the world’s first decentralized shopper profile built on the blockchain.” Like most blockchain based startups, Shopin chose the ICO route for raising funds and on 27 January 2018, it went on to raise $10 million and has gone on to report that it raised a further $32 million through its public token pre-sale by 30 March 2018.
"Springleap allegedly advertised that it had a prestigious management team – including Chief Technology Officers (CTO) with impressive biographies – when, in reality, the company did not have a CTO. While the names of the fabricated CTOs in the investment materials belonged to real individuals, Eyal allegedly inflated their credentials to state that they were previously CTOs at major companies before joining Springleap, in order to claim that high-profile executives were part of Springleap’s management team. Similarly, Eyal allegedly misrepresented to the investors the existence of an Advisory Board, consisting of well-known successful and respected businessmen – though no such Board ever met," reads a statement from the New York Attorney General's office.
At this stage, it is not clear whether other Springleap management knew or were part of Eyal's plan to lure investors using false information. However, the Attorney General's office has invited anyone with any information related to the charges against Eyal to call them on +1 212-416-8846.
Cover image credit: Eran Eyal