Tech company founder gets eight years for stock fraud

ALEXANDRIA, VANCOUVER (AP) — Whether Daniel Boice’s idea for a company was any good is debatable — he billed it as a sort of “Uber for private investigators” called Trustify — but his timing was impeccable.

He launched in 2015, just when the cheating-spouse website Ashley Madison was hacked and its customer base was released.

Trustify’s revenue jumped from USD33,000 in July 2015 to USD374,000 in August, as suspicious spouses who had learned their loved ones were on the list led to a spike in demand for private eyes.

But it was a one-time blip, and the company never turned a profit. Boice, meanwhile, portrayed his company as a big success, lying to his investors about the company’s finances, and lavishly funded his lifestyle with their money, spending at least USD3.7 million on items such as private jet travel, a seaside vacation home in Florida, and USD10,000 on a personal yoga instructor, prosecutors said.

Piles of Amazon boxes showed up daily at his home a few miles from George Washington’s Mount Vernon estate.

Boice, 41, was sentenced to eight years in prison on Friday in United States (US) District Court in Alexandria. Judge TS Ellis III initially imposed a nine-year sentence at the hearing but then lowered it to the 97-month term requested by prosecutors, saying he rarely exceeds a prosecutor’s recommendation.

“I was a bit surprised by the government’s suggestion. I thought it would be higher,” Ellis said. “It’s an egregious fraud.”

Boice raised more than USD18 million from more than 250 investors for Trustify.

Prosecutors said that from the moment the company launched in 2015 until its demise in late 2018, Boice treated the company like his personal piggy bank. Boice admitted he used at least USD3.7 million of the money for personal expenses, but prosecutors said that is a conservative estimate of the money he stole.

During Trustify’s four years of operation, about 15 per cent of its revenue came from actual work, while about 85 per cent came from individuals and companies duped into investing, prosecutor Russell Carlberg said. One venture fund alone invested nearly USD2 million.

“It’s hard to imagine that Trustify was anything other than a startup fraud” from the outset, Carlberg said.