Eran Eyal, SA tech entrepreneur, facing US fraud charges

August 29, 2018 Siyabonga Mtangana

Eran Eyal. Image via Twitter

Eran Eyal, a South African-educated technology entrepreneur who now lives in the US, is facing criminal charges in the New York for allegedly stealing more than US$600 000 from investors.

New York attorney-general Barbara Underwood on Tuesday said Eyal, 43, is facing a felony indictment for allegedly fraudulently soliciting at least four investors to buy convertible notes through false representations of his former business, Springleap. Eyal is the former CEO of the company.

If convicted, Eyal, who studied law at Unisa and who went to Carmel College in Durban, could serve as much as 15 years in prison, Underwood said.

Underwood emphasised that the charges are merely accusations and Eyal is presumed innocent unless and until proven guilty in a court of law.

“As we allege, this massive securities fraud scheme bilked investors out of hundreds of thousands of dollars,” the attorney-general said in a statement. “Defrauding New Yorkers through false representations and fabrications about a business will not be tolerated by my office — and we’ll continue to do what it takes to root out and prosecute securities fraud.”

According to statements made by the prosecutor, between 2014 and 2015, Eyal allegedly attracted investors to Springleap through a series of false representations about the company’s management team, advisory board, creative professionals and client base.

“Springleap allegedly advertised that it had a prestigious management team — including chief technology officers with impressive biographies — when, in reality, the company did not have a CTO,” Underwood said.

“While the names of the fabricated CTOs in the investment materials belonged to real individuals, Eyal allegedly inflated their credentials to state that they were previously CTOs at major companies before joining Springleap, in order to claim that high-profile executives were part of Springleap’s management team. Similarly, Eyal allegedly misrepresented to the investors the existence of an advisory board, consisting of well-known successful and respected businessmen — though no such board ever met.”

‘Misled investors’

Eyal allegedly further misled investors by falsely claiming that Springleap had built a community of approximately 180 000 vetted creative professionals with agency-level experience. “In reality, Eyal allegedly hired a freelance computer hacker to Web-scrape computer data from a legitimate online portfolio website in order to obtain pedigree information for creative professionals to falsely inflate his existing list.”

According to the prosecutor, after obtaining this computer data, Eyal allegedly bragged that the “project” had cost him a total of $25, she said.

“Eyal also allegedly misrepresented to investors that Springleap had high-profile corporations as clients — including a prestigious computer corporation and a multination semiconductor design company. In fact, neither company was ever a client of Springleap. In additional, Eyal allegedly fabricated that Springleap was featured as the seventh most innovative company in the world by a prestigious business and technology magazine.”

The indictment pertains to four “victim investors”, who invested more than $600 000 in Springleap and never received any of their money back. “While the current charges pertain to four investors, the attorney-general’s investigation has identified additional Springleap investors located in Australia, South Africa and the UK that invested a total of over $1.3-million in Springleap.”

Eyal has been charged with three counts of grand larceny in the second degree, one count of grand larceny in the third degree, one count of unlawful duplication of computer-related material in the first degree, one count of criminal possession of computer-related material, one count of scheme to defraud in the first degree and four counts of securities fraud under the Martin Act.

Eyal was arraigned in Kings County supreme court in New York on Tuesday.

He co-founded crowd-sourcing social media platform evly.com and mobile phone maker iDea. His most recent venture is Shopin, a retail technology company focused on blockchain technology.