SA tech entrepreneur facing US charges in $600k fraud scheme

Eran Eyal (Twitter)
Eran Eyal (Twitter)

South African tech entrepreneur Eran Eyal, former CEO of Springleap and founder of Shopin, is facing fraud charges in the US over allegedly soliciting investors through false representations.

And while he's been accused of stealing $600 000 from investors, a much larger amount could be involved, US authorities have said. Eyal founded a number of tech companies in South Africa, and worked for a time as a technology radio journalist before moving to the US. 

A release from New York Attorney General Barbara Underwood announced a felony indictment charging Eyal with fraud for allegedly getting $600 000 from investors by convincing them to purchase convertible notes through misrepresenting Springleap's management team, advisory board, creative professionals and clients.

Eyal was also charged with computer crimes for allegedly hiring a computer hacker to webscrape a database of creative professionals. If convicted, he faces up to 5 – 15 years in prison.

"As we allege, this massive securities fraud scheme bilked investors out of hundreds of thousands of dollars," Underwood said.

Could involve up to $1.3m

While the indictment filed pertains to four investors who invested over $600 000 in Springleap and never received their money back, the Attorney General's investigation identified additional investors in Australia, South Africa and the United Kingdom who invested a total of over $1.3m in the company, she added.

She vowed to "do what it takes to root out and prosecute securities fraud".

Speaking to Fin24, one of the South African investors, who did not wish to be named, spoke of the investors being "duped to the tune of R8m" (around $600 000). Investors had walked away from Eyal's initiatives "licking [their] wounds and very much poorer", the investor said.

Springleap was a purported global crowdsourcing company offering marketing, digital media, and platform design services.

According to statements from the prosecutor, between 2014 and 2015, Eyal allegedly attracted investors to Springleap by making false representations, advertising that it had a prestigious management team including Chief Technology Officers with "impressive" biographies. The company did not have a CTO, Underwood's statement contends.

"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."

Fin24 reached out to Eyal for comment, who had not responded by the time of publication.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
16.76
(-0.05)
ZAR/GBP
21.18
(-0.23)
ZAR/EUR
18.94
(-0.09)
ZAR/AUD
11.65
(-0.04)
ZAR/JPY
0.16
(+0.04)
Gold
1798.11
(+0.03)
Silver
18.69
(+0.17)
Platinum
824.50
(+0.30)
Brent Crude
43.14
(+2.10)
Palladium
1961.36
(+0.61)
All Share
55417.89
(-0.66)
Top 40
51154.08
(-0.74)
Financial 15
10472.31
(+1.28)
Industrial 25
76134.69
(-1.67)
Resource 10
52483.78
(-0.20)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1968 votes
I am taking a hit, but should be able to recover in the next year
23% - 2579 votes
My finances have been devastated
34% - 3826 votes
It's still too early to know what the full effect will be
25% - 2757 votes
Vote