back to article 'Unicorn' startup CEO faked sales figures, deals to trick investors, prosecutors claim

The US Department of Justice and the SEC on Wednesday charged the former CEO and co-founder of mobile development testing biz HeadSpin with defrauding investors. The government's complaint [PDF], filed in a federal district court in San Jose, California, contends that Manish Lachwani, who helped found HeadSpin in nearby Palo …

  1. redpawn

    If I had a Dollar for...

    every dollar I didn't have, and a dishonest accountant, I'd be rich. He hired the wrong accountant.

  2. Anonymous Coward
    Anonymous Coward

    Robinhood?

    Robinhood Financial

    3200 Ash St Palo Alto, CA 94306-2239

    Headspin

    https://www.headspin.io/company/

    3200 Ash St Palo Alto, CA 94306-2239

    RealtyTrac

    3200 Ash St Palo Alto, CA 94306-2239

    Kaplan Attorneys

    BAYSHORE PROPERTY MANAGEMENT

    Bill.com

    I notice its the same office, that old magazine HQ. Red flags here. I always made the assumption that all those people in that building were Robinhood people, but it seems to be a coworking space or split offices or something.

    The bigger problem is an overinflated economy with so money slushing around that investors have zero incentive to do any research. You really should put a critical eye on things like this. At least take a look at their offices and ask yourself if that is a billion dollar company.

    1. bombastic bob Silver badge
      Devil

      Re: Robinhood?

      without a suite number in the address it looks the same.

      But a NORMAL company address WOULD include the suite number.

      I used google maps to zoom in on it. It is a simple two story office building that looks a bit like a house, as far as I can tell, a kind of "semi-posh looking" rich neighborhood "homey" kind of building in my opinion. And it's not that big. You need 'street view' to see what I mean.

      Google maps flagged 'Robinhood Financial' on the map. I do not think it is a mailbox place, but actual office space. Maybe it comes with a limited office staff (phones, mail) and internet service? That would make having an office space and a physical address convenient, especially for an intarweb company.

      Interesting observation though. It's worth following up.

      1. abcdgoldfish

        Re: Robinhood?

        I think it's actually the office on the corner which is a newer build - try looking at it from the Portage Ave side.

        Parts of the area are industrial, although getting less so - there were plans to knock down the old cannery (RIP Frys) and build housing.

  3. Ace2 Bronze badge

    He was the CEO of a company doing $50m revenue a year, and losing $10m/yr is trivial in a world where Uber exists. All he had to do to get rich was to not cheat!

    I will never understand businesspeople.

    1. bombastic bob Silver badge
      Devil

      I will never understand UNSCRUPULOUS businesspeople.

      I think I fixed that for you. Most business people are honest, and are the kind of people who hire you and pay you well if you do a good job, charge fair prices and service customers well, and report expenses and earnings honestly to investors.

      1. Version 1.0 Silver badge

        But most "Investors" ask about the amount of money you are making and refuse to talk to you if you are not making at least five million dollars a year. So if you are trying to get investments then you either need to be in a situation where you don't really need them or else you need to invent income...

        Q: "Did you make $5M this year?"

        A: "Yes we have $6M in the bank now" ...

        Internal Accountant: "The bank called about your $8M line of credit" ...

      2. Snowy Silver badge
        Joke

        <quote>charge fair prices and service customers well</quote>

        So not Apple then

  4. Potemkine! Silver badge

    "Companies and their executives must tell the truth when speaking about financial metrics that are material to the value of the business."

    Of course, It's understood they can lie about anything else, when speaking to their workers or customers.Only investors matter.

    1. Timo

      Collecting logos for that one slide

      Many silicon valley jobs involve collecting logos from other companies for their slides, as a way to attempt to demonstrate that they're one of the movers and shakers there, and pump up the assumed value of their contributions.

      It quickly turns into a hollow exercise, but it's almost the only thing they know how to do.

  5. Aristotles slow and dimwitted horse Silver badge

    Lawyerspeak...

    So he defrauded investors and such like, but he "acted in good faith".

    Ahh, it's all ok then as long as your intentions are good while doing it.

    Weird logic.

  6. Howard Sway Silver badge

    boosted HeadSpin's valuation above $1bn

    So, an operation where the boss can tap out a few fake invoices in his office and give them to the "person who does the accounts" is a billion dollar company?

    Obviously far too much money sloshing round there in the vain hope of finding the next big thing. Probably a good time to start looking elsewhere for genuinely good stuff to invest in, if so many chancers who've scented an easy way to fleece the gullibly greedy have heard the words "billion dollar valuation" too many times to be able to resist.

    1. Blank Reg Silver badge

      Re: boosted HeadSpin's valuation above $1bn

      it's easy to achieve a billion dollar valuation. If I have a billion shares in my company and sell you one for a dollar then suddenly I have a billion dollar company. The fact that you were the only one dumb enough to pay a dollar for 1 billionth of my company seems not to matter when the VC hype machine gets going

  7. Anonymous Coward
    Anonymous Coward

    Unicorn?

    Isn't part of the definition of a Unicorn company one thats valued at a billion or more, but not really turning a profit or actually making a decent amount?

    Like many high-profile startups.

  8. xyz

    Fixed it for ya...

    We allege that Boris misled people into believing that BrexitSpin had achieved a 'unicorn' valuation by winning hundreds of lucrative deals.

    1. Anonymous Coward
      Anonymous Coward

      Re: Fixed it for ya...

      Yawn

  9. martinusher Silver badge

    Any idea what their product was?

    They've got offices, a CEO, investors and so on. I wonder what their product was? I looked it up and I'm stil none the wiser. See what you make of it:=

    "HeadSpin was founded to address the need for a global testing, performance monitoring, and QoE management platform to help organizations assure optimal digital experiences across mobile and web delivery channels.

    "The HeadSpin platform is an industry first, providing a powerful, easy-to-use solution that enables development, QA, product, and operations teams to accelerate release cycles, build for complex real-world user environments, and know whenever any component of the system degrades or breaks—whether at the code, device, or network layer—anywhere in the world.

    "Since inception, the platform’s extensive on-prem and cloud-hosted global device infrastructure has been expanded with machine learning-driven performance and quality of experience analytics to proactively test and monitor mobile, web, audio and video applications in real-time."

    Sounds as if one of their primary products is a buzzword generator.

  10. disgruntled yank

    HeadSpin?

    Inspired by the 1970s movie The Exorcist?

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