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

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
ZAR/USD
16.19
(-0.10)
ZAR/GBP
21.11
(-0.12)
ZAR/EUR
19.19
(-0.12)
ZAR/AUD
11.55
(-0.13)
ZAR/JPY
0.15
(-0.14)
Gold
1901.55
(+0.01)
Silver
24.57
(+0.10)
Platinum
902.03
(+0.40)
Brent Crude
41.85
(-1.66)
Palladium
2378.04
(+0.61)
All Share
55339.58
(+0.99)
Top 40
50692.28
(+0.83)
Financial 15
10790.70
(+3.99)
Industrial 25
74905.70
(+1.05)
Resource 10
52561.57
(-0.49)
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
Yes, and I've gotten it.
24% - 68 votes
No, I did not.
52% - 148 votes
My landlord refused
24% - 70 votes
Vote