SA entrepreneur Eran Eyal charged with fraud in the US over startup Springleap

SA entrepreneur and former CEO of Springleap Eran Eyal, who currently resides in the Brooklyn in the US, has been charged with fraud.

The charges were contained in a statement on Saturday (25 August) by New York State Attorney General Barbara Underwood.

Eyal, who is the founder of US-based Shopin, has been charged with allegedly stealing $600,000 from investors by fraudulently soliciting investors to purchase convertible notes through false representations of his company, Springleap.

There has been no comment from Eyal so far via his social media channels and he did not respond immediately to Ventureburn attempts to get hold of him tonight via the telephone number listed on his Facebook and via his email address.

If convicted of the top count charged, he faces up to 15 years in prison.

Eyal appeared before the Honorable Judge Danny Chun in Kings County Supreme Court last Friday (24 August).

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

If convicted of the top count charged, former Springleap CEO Eran Eyal faces up to 15 years in prison

Springleap, which Eyal founded in 2008 with Eric Edelstein (who has since moved to Israel), was a global crowdsourcing company that offered marketing, digital media, and platform design services to clients.

The two ran the company together until 2012 when MyBroadband reported a rumoured deal which involved Eyal buying out Edelstein’s shares.

On his LinkedIn account Eyal lists himself as Springleap CEO from September 2012 until January 2016. He founded blockchain retail startup Shopin in October 2016.

‘False representations’

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.

Underwood’s office said Springleap allegedly advertised that it had a prestigious management team – including chief technology officers (CTO) with impressive biographies – when, in reality, the company did not have a CTO.

“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.

Underwood’s office says 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.

‘Misrepresented to investors’

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

Eyal also allegedly misrepresented to investors that Springleap had high profile corporations as clients – including a prestigious computer corporation and a multinational semiconductor design company.

“In fact, neither company was ever a client of Springleap. In additional, Eyal allegedly fabricated that Springleap was featured as the 7th most innovative company in the world by a prestigious business and technology magazine,” said Underwood.

The charges pertain to four victim investors who invested a total of over $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 United Kingdom that invested a total of over $1.3 million in Springleap,” said Underwood.

Underwood called on anyone with additional information regarding the matter to contact the Attorney General’s office at +1 212-416-8846.

Featured image: US based SA entrepreneur Eran Eyal (via Facebook)