MA MasterCard Incorporated

The founder of one of the most highly-valued U.S. financial-technology startups pleaded guilty this week to making illegal contributions to a presidential campaign five years ago.

Michael A. Liberty, the founder of Austin, Texas-based mobile-payments company Mozido Inc., faces up to two years in prison and a fine of up to $250,000 for violating campaign fundraising laws between May and June 2011, according to federal prosecutors in Maine. Although Mr. Liberty is a large shareholder in Mozido, he doesn't currently sit on the company's board and isn't a member of its management team.

At that time, Mr. Liberty, now 56 years old, gave $22,500 to the primary campaign of an unnamed presidential candidate through nine family members, associates and employees "when, in fact, [Mr.] Liberty paid for all of the contributions," the prosecutors said. Although the presidential candidate isn't named in court filings, Federal Election Commission records indicate that in May 2011 Mr. Liberty gave $2,500 under his own name to the campaign of the eventual Republican nominee Mitt Romney.

Sentencing will occur after the completion of a "presentence investigation report" by the U.S. Prosecution Office, according to the prosecutors. Attorneys for Mr. Liberty didn't immediately respond to a request for comment.

Mozido and Mr. Liberty are also suing a former director for defamation and wrongful "interference," and Mr. Liberty is involved in a separate legal dispute with the U.S. Securities and Exchange Commission.

Previously a real-estate, clothes-making and beverage-sales executive, Mr. Liberty launched Mozido in 2008 to provide mobile wallets and related technology to the roughly two billion people around the world who lack bank accounts.

Mozido was valued at $2.4 billion in a 2014 fundraising that attracted investors including Wellington Management, MasterCard Inc. and hedge-fund veteran Julian Robertson.

Last year, Mr. Robertson passed on a chance to invest more money in Mozido, a decision that has become the subject of a legal battle between Mr. Liberty, the company and Philip Geier Jr., a former chairman and chief executive for Interpublic Group of Cos. who had previously served on Mozido's board. In a civil complaint filed in New York state court earlier this month, attorneys for Mr. Liberty and Mozido accused Mr. Geier of telling Mr. Robertson that Mozido was a "fraud" that would go out of business.

Attorneys for Mr. Geier said in court documents that they intend to file a motion to dismiss Mr. Liberty and Mozido's complaint.

Meanwhile, the SEC accused Mr. Liberty in a September court filing of "intentionally mislead[ing]" the agency and making " materially fraudulent" statements related to a settlement of a 2006 lawsuit the agency brought against him. In that suit, the SEC accused Mr. Liberty and others of engaging in a "fraudulent scheme to misappropriate more than $9 million from a private venture capital fund and its investors, the majority of which were public pension funds."

Mr. Liberty agreed to pay the SEC around $6 million to resolve the matter without admitting any wrongdoing, but the agency waived nearly all of that amount after Mr. Liberty documented that his net worth was negative $29 million in 2009. Ultimately, he wound up paying the agency $600,000.

In a filing in Pennsylvania federal court, the SEC pointed to emails that were unearthed in a recent court case to demonstrate its view that Mr. Liberty "had access to tens of millions of dollars which he concealed." The filing described one email in which Mr. Liberty "boasted to potential investors" that he owned Mozido shares worth $127 million. The email was sent in November 2009 before the SEC entered into a final judgment with Mr. Liberty.

Attorneys for Mr. Liberty asked the Pennsylvania court last month to deny the SEC's attempt to reopen the case, arguing in part that the government "does not point to a single line in Mr. Liberty's financial disclosures that it claims is fraudulent, inaccurate, or incomplete."

Write to Peter Rudegeair at Peter.Rudegeair@wsj.com

(END) Dow Jones Newswires

November 29, 2016 09:45 ET (14:45 GMT)

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