Silicon Valley Hustle: Former Motionloft CEO Accused Of Defrauding Investors

I've seen exact scam before. Young people flying on private jets with so-called hot shot young entrepreneurs, only to find all the expenses on their credit cards. There is no such thing as a free lunch.

This is a case of fraud and theft. I don't get why your takeaway is that it's somehow unsafe, as a founder, to take legitimate investments from friends. Were you planning on ignoring your company bylaws, pumping money into a secret account, not papering the investments, and hiring an R&B star to serenade you? Because otherwise I think you'd be OK.

A good reason not to take money is you'll probably fail, lose your friends' money, weaken friendships, and feel like a douche. I don't think there is much legal risk if you aren't totally nutso, and the board approved the investments.

Why? Perhaps because he's a sociopath, perhaps because it was a case of irrational escalation of commitment, perhaps because he was a childish idiot. Lots of possible reasons. Why is it so difficult to consider the possibilities? :-)

A company apparently so weak financially that it couldn't even keep its office rent paid up, isn't about to be acquired for ... $100x million. It wouldn't have been difficult to properly capitalize the company to get it through an acquisition period - ie they wouldn't have run the finances to the last minute of operating cash even if an acquisition were imminent.

More likely is that Mills saw the writing on the wall, that his opportunity with MotionLoft was crashing and burning, and he chose to go out with a fraudulent bang.

In this case the Latin verb is defraudare, and the French verb is defrauder so this may be a different usage. In general de- can mean both to take something away and to be of or about something. So this could be seen as about, of the taking of money through deception, i. E., through fraud.

So they just wait for the company to magically get healthy? And does Mills get to start another company with VC Money?

Seems like he could very well trick more investors in the future and if I read an article on TechCrunch about him founding a new start-up I'd be extremely upset that a douchebag like him gets a second chance while harder working and more honest folks don't succeed because of a combination of lack of connections and "shyness". That's an awful read to end the year.

Honestly, it's the right move if they want even a chance at getting their money back. Best case if they go to the police: a long court battle with Mills in which they get a tiny fraction of their investment. At least this way has a chance, and they can always go to the police down the road.