CEO of smartphone company charged with fraud

CEO of smartphone company charged with fraud
Remember the Saygus V2 (V-Squared)? The device won a CES 2015 Innovation Award and was announced in November 2014 with dual-boot capabilities, water resistance, and KitKat 4.4 pre-installed. Harman Kardon Sound Technology was on board with 3D Movie Audio, and two microSD card slots for up to 256 GB of extra storage space to add to the 64GB of native storage. Back in January 2015, we were able to share with readers our hands-on experience with the phone

A previous model, the QWERTY equipped Saygus Vphone, was canceled just before a scheduled launch via Verizon

At the time, no one seemed suspicious about the V-Squared even though the previous model, the QWERTY-equipped Saygus Vphone, was canceled at the last minute just before it was supposed to be launched by Verizon. Today, the U.S. Justice Department announced that Chad Sayers, CEO of the company that was supposed to be producing the Saygus Vphone and V2, was charged with one count of Securities Fraud.

A release issued by the U.S. Attorney's Office in the District of Utah alleged that Sayers, from 2012 and continuing to 2020, solicited approximately 300 investors to invest a total of approximately $10 million in securities representing investments in Saygus. Sayers promised his investors that Saygus was the next billion-dollar smartphone company capable of delivering a 100 times return on investors' funds.

Instead of using the money he raised to create the revolutionary smartphone he touted, court filings say that Sayers spent the money instead on personal loans, credit card bills, personal rent, personal legal fees, and personal car payments (more on that below). He also failed to disclose to investors that he had been raising money to produce a smartphone since 2006, an endeavor that had been unsuccessful.

Sayers is accused of running a Ponzi scheme paying older investors off with money scammed from new investors

Sayers also was telling investors that his phone was in the final stages of production and was ready to be launched any day. He also never pointed out that he had defaulted on notes that he had previously issued. You can read all about the alleged charges against the defendant by checking out the filing made by the U.S. Attorney's office back in April.

The accused used $2.7 million that he raised from new investors to repay older investors in a Ponzi scheme. The court filing explains that $2.17 million was spent on office rent, $10,000 per month for an office sign, $42,000 per month for office space that was used by 10 employees, and $800,000 to settle previous lawsuits. A whopping $1.7 million was sent to pay American Express, $500,000 covered legal fees, $145,000 was used for shopping, entertainment, food, and personal care, and approximately $30,000 was paid to Sayers' personal credit card.

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The filing, made in U.S. District Court, District of Utah, Central Division, seeks "A MONEY JUDGMENT in the approximate amount of $10,000,000 representing the value of any property, real or personal, constituting or derived from proceeds traceable to the scheme to defraud."

Perhaps the most interesting thing about this whole affair is how the Saygus V-Squared won the CES Innovation Award back on November 19th, 2014. A press release issued on that date said, "The Saygus V² was created to be one of the world’s leading smartphones highlighting numerous exclusive features packed into a 1080p FHD 5" borderless screen. The V² is housed in a hardened anodized aluminum protective edge with durable brushed aluminum sides, a strong lightweight magnesium mid-frame and a resilient soft touch back coating in a tough fiberglass body of less than 10mm in width.

The V² employs various exclusive high-end components and materials, including Wireless HD (60 GHz), and premium OIS, auto-focusing front and rear cameras, high capacity power extending battery technology, speaker/receiver with mics using 3D audio technologies from Harman Kardon and a 320 GB storage capacity, among others, at a competitive price. These high-end components make the V² a powerful smartphone designed to satisfy any value-conscious, tech-savvy consumer."

Now scheduled to appear in court on August 30th for the beginning of his seven-day jury trial, Chad Sayers said at the time, "We are honored that Saygus has been recognized by mobile industry experts for its innovation in design and functionality."

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