GodTube Caught Up In Stanford Financial Scandal


The latest financial fraud that had US Marshals raiding a Texas office yesterday has thrown a net over GodTube.com, the religious based video-driven social network. The video site is just one of perhaps dozens of start-ups and venture capital companies with potential exposure to the alleged “massive fraud” run by famed financier “Sir” Allen Stanford.

GodTube is financed, in part, by VCE Capital Partners, a small venture firm in Louisiana that listed one of Stanford’s companies as a limited partner on its Web sites today before the name was removed, according to the Wall Street Journal. Stanford has a “sir” appended to his name because he is, apparently, a knight of Antigua.

Other companies sponsored by VCE Capital include Archmail, an email archive solutions business, and a handful of small biopharma, energy and agricultural start ups. (For the full list of VCE’s portfolio companies click here.)

Russell Vernon, co-founder of VCE Capital, told the Wall Street Journal that his firm does not know much about Stanford’s situation. It’s not clear how large of a stake in VCE Capital Stanford had. But the loss of a limited partner, who may have capital committed but not yet contributed, would likely be a blow to any venture capital firm in this environment. Since the SEC has frozen Stanford Financial’s funds, any VC firm would be unable to call down committed capital.

Stanford Financial also committed at least $5m in Catalyst II Fund, a late stage Israeli private equity fund. Stanford was the lead investor of the fund’s first closing. Catalyst II’s investments include Commtouch, an email services provider traded on the NASDAQ, and Mainsoft, which develops technologies to allow Microsoft software to operate with open systems such as Linux. (A full list of Catlyst II’s portfolio companies here.)

The journal reports that the Stanford Financial Group directly in a handful of start-ups, including medical device maker Luminetx Corp. and drug developer KineMed Inc.