Fraudulent fundraising for a pale copy of Netflix

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The platform has convinced investors for a staggering amount. But the policeman of the American stock market is keeping watch…

Fraudulent fundraising for a pale copy of Netflix

This is an incredible story reported by The Register. The English-language media explains how the SEC is currently suing a Florida-based startup for lying to its investors in order to raise $1.3 million. A substantial sum, therefore, that the CEO would have even largely diverted for his own benefit while lying about the capabilities of his company.

Originally, the value proposition of Oi2Go Media Technologies Incyet has something to seduce. The firm wants to be a choice alternative to Netflix, focused on Latin American content. This is enough to convince a significant part of the population in the United States, where this origin still represents 23% of births according to the CDC. Except that in reality, the app promised by the publisher is largely not functional. However, the least you can do when a company wants to attract new shareholders is to offer an MVP or some growing base of loyal customers. But neither was apparently on the mend, according to the Securities and Exchange Commission…

Totally unjustified expenses

Among what is reproached to the leader of Oi2go, namely Anthony Michael Hernandez, we therefore find funds used for personal purposes. Among the moves in question, the CEO notablytransferred more than $18,000 to his girlfriend. With this, the company's bank cards paid for meals, coffees, refueling, trips and jewelry for a total of approximately $170,000. But that's not all, since it is a bonus that the application – which nevertheless boasted as one of the most effective on the market – hid many secrets from its investors.

Fraudulent fundraising for a pale copy of Netflix

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Indeed, the pitch deck intended for the latter mentioned, for example, income from many sources such as licenses, user subscriptions or even the campaigns of certain advertisers. But there again, wind: the SEC has serious doubts on all these assertions, not to mention the fact that the organization assures that the Oi2Go platform was generally out of service. Even Salto, with very limited market share in France, will have done much better.

A positioning that is too good to be true

Among the other slides of the deck that won over investors, we also find the traditional comparison with other key players in the market. Each column then corresponds to a platform: Netflix, Hulu, YouTube, Amazon Prime Video and Oi2Go. Along the ordinate is the list of competitive advantages, fourteen in total. Of course, only Oi2Go ultimately ticks all the boxes, including “significant mobile presence, “live TV” or “User Generated Content”. But here again, these arguments do not hold water: the app presented is in fact only a simple concept. Not enough to compete with catalogs as extensive as the competition.

For the moment, the victims of this scam have not been compensated. But the SEC is asking for a proper refund to take place. Penalties are also planned, payment of which is still pending at the time of this writing…

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