Tech startups, by nature risky ventures, usually seek capital from sophisticated and institutional investors.
But one Victorian tech firm allegedly promised the world to everyday investors, then never produced any income — and now the Federal Court has ordered the company to be wound up.
Liquidators have been appointed for Uglii Corporation Limited and its related companies, following legal action by the Australian Securities and Investments Commission (ASIC).
“During its existence Uglii made various representations to its investors over a number of years concerning the alleged value of intellectual property it was in the process of developing. Uglii did not generate any trading income during its existence,” ASIC said in a statement.
Uglii, established in 1998, is an unlisted public company with approximately 2,500 shareholders. The company claimed to produce search engine and related products.
Its operations came into the spotlight last December after a Fairfax Media investigation found that $25 million had been taken from 3,600 mostly unsophisticated investors. That group allegedly included pensioners, bushfire victims and truck drivers who lost their life savings putting money into a venture that never generated any income, let alone return.
Former chief executive John Knorr allegedly convinced investors that Uglii possessed intellectual property that would change the world, claiming the startup would compete with Google and increase China and India’s GDP by 1%.
Knorr had told Fairfax that the stock value is borne out of the firm’s patents and future lucrative deals.
ASIC started legal action against Uglii in June, saying it was “concerned that the Uglii companies are unable to pay their debts” and that it lacked “confidence in the management of the companies”.
The Federal Court in Melbourne appointed Robyn Erskine and Adrian Hunter of Brooke Bird as liquidators on Tuesday.