Food startup Hampton Creek is now facing a criminal investigation from The US Justice Department, Bloomberg’s Olivia Zaleski and Tom Schoenberg reported on Friday. The Justice Department is looking into whether Hampton Creek broke any laws when buying back its “Just Mayo” product in stores.
This follows an SEC inquiry into Hampton Creek, which was prompted by concerns that the purchases could have had an impact on the company’s bottom line. CEO Josh Tetrick rejected that suggestion earlier this month, saying the purchases “had no impact at all” on sales.
Bloomberg reports that federal investigators have already contacted Hampton Creek’s former contractors about the buyback campaign. Officials will be looking into whether the company buying back its own product violated fraud and securities statutes.
Hampton Creek is said to be
looking to raise $200 million at a $1.1 billion valuation earlier this year, so the program could possibly have made the company look better to potential investors than it actually is, according to Bloomberg.
The purchases reportedly began in early 2014, about eight months before Hampton Creek closed a $90 million round of venture-capital financing.
Tetrick did not immediately return a request for comment.
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