Startup CEO accused of blowing through millions in investor funds at casinos
A Florida man who started a company that planned to compete against Groupon and LivingSocial is accused of burning through most of his investors’ money by paying high commission rates to his sales agents and blowing millions of dollars at casinos.
The Securities and Exchange Commission filed an eight-count complaint against 76-year-old Gerald Parker of Juno Beach, Fla. this week related to his time as the president and CEO of Social Voucher.
The now-defunct company had claimed to be a “mobile coupon solutions provider” that would let businesses promote themselves to customers over social media including Facebook, Twitter, Google+ and LinkedIn.
Parker, using a network of unregistered sales agents who cold-called potential investors, raised $20.5 million from about 400 people for his unregistered, fraudulent securities offering in the form of “common stock” between 2013 and 2018, according to the SEC’s complaint.
In the company’s offering materials provided to potential investors, bold claims about Parker’s experience in business were touted to attract funds. Those "experiences" included the purported co-founder of a company that was acquired by Yahoo. However, left out of the sales pitch was that three states — North Dakota, Colorado and Massachusetts — had issued cease-and-desist orders against Parker and Social Voucher, SEC officials said.
The money was purported to be used to develop and launch a Social Voucher app. But the SEC said investors weren’t informed that between 35 and 50 percent of their investments were actually being used to pay commissions to the sales agents who recruited them. At least $9.6 million went to paying commissions.
Parker also misappropriated at least $4.6 million, according to the SEC. He used more than $2 million to pay off his expenses at two Seminole casinos, took out another $2 million through cash withdrawals and used about $590,000 for personal expenses.
Altogether, 68% of the investors’ cash went to “undisclosed, non-business purposes,” the SEC said in the complaint.
“With much less money available to develop and launch the purported mobile coupon application, the likelihood that Social Voucher would be successful diminished significantly,” officials wrote.
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