Jon Mills, founder and former CEO of real-world analytics startup Motionloft, has been arrested by the FBI.
TechCrunch first reported the news.
The arrest follows allegations that Mills lied to investors about the acquisition of his company while spending lots of money “on private jets, expensive dinners, and parties with celebrities,” Techcrunch says:
That didn’t stop Mills from going on a series of expensive trips with friends, according to our sources, even booking private jets and a penthouse suite in Las Vegas for one particularly extravagant weekend that involved a private performance by R&B singer Miguel.
But at the same time that Mills was partying in Vegas and at music festivals like Coachella, things were coming undone at the company he was seeking investment for.
Mills previously denied the allegations back in December:
We’ve spoken with Mills, and the former CEO admits to leaving the company in November. But he also says that all money he took as investment from friends was legitimate and used for company expenses, and he denies telling friends the company was going to be acquired.
Mills is being charged for allegedly bilking an investor of $US210,000 after lying that Cisco was planning on acquiring Motionloft for $US760 million. Cisco confirms there were no plans for an acquisition, according to the SFExaminer.
Beginning as early as March 2013, payroll was slipping regularly, with Mills offering up cashiers checks and even handwritten checks as payment to employees. According to one source who had been employed at Motionloft, the company even had some of its furniture disappear one day, although it’s unclear if it had been sold or repossessed.
Things came to a head after a Vegas trip in November, in which several of the friends who invested in Motionloft began to question when they would get their piece of the acquisition. But after questioning investor and board member Mark Cuban, they were told that there was no acquisition in place.
A hearing will take place at District Court this morning. Mills in currently in custody in San Francisco. He faces up to 20 years in prison if convicted, according to the Department of Justice.