Mozido Founder Pleads Guilty to Making Illegal Campaign Contributions
November 29 2016 - 10:00AM
Dow Jones News
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)
Copyright (c) 2016 Dow Jones & Company, Inc.
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