AI Startup GameOn Founders Indicted in $60 Million Fraud Scheme

San Francisco AI startup founder and wife indicted in $60 million fraud scheme

In brief: The founder of an AI startup and his wife were indicted this week on charges of defrauding investors in a scheme spanning six years. If convicted, they could face decades in prison and the forfeiture of assets obtained through the alleged scheme. Alexander Beckman, founder of the AI startup GameOn Technology (now ON Platform), and his wife, attorney Valerie Lau Beckman, were indicted on 25 charges, including conspiracy, wire fraud, and identity theft. According to the US Attorney's Office, the couple allegedly defrauded investors out of $60 million over six years. If convicted, Alexander faces more than 60 years in prison, while Valerie could get over 80 years. Beckman founded GameOn in 2014, which gained early recognition for its customer service chatbot technology. The company had several high-profile clients, including the NBA, Riot Games, and Armani Exchange. However, prosecutors allege that the company's business model was unsustainable, with free pilot programs and revenue-sharing agreements that rarely generated income. Investigators claim GameOn even paid some clients extravagant fees without receiving payments in return. Beginning in 2018, Beckman allegedly orchestrated an elaborate scheme to secure millions in investor funding to cover business and personal expenses. The lengthy indictment (below) claims he exaggerated revenue figures, inflated cash balances, and fabricated customer relationships to mislead investors. The indictment also accuses his wife of forging documents, including audits and bank statements, and stealing sensitive information from her former employer, a venture capital firm. One indictment detail alleges Lau falsified a bank account statement to show a balance of $13 million when the account had just $26. While GameOn's annual revenues never exceeded $1 million, Beckman reportedly told investors the company earned $72 million in a single quarter of 2023. Prosecutors say the couple used investor funds for personal expenses, including a $4.2 million San Francisco home, a Tesla Model X, and their 2023 wedding. Meanwhile, GameOn employees sometimes went unpaid as the company struggled to meet payroll and other financial obligations. The scheme reportedly began unraveling in 2023 as investors questioned the company's financials. Beckman allegedly admitted to inaccuracies in an audit but continued fabricating documents and creating fake email accounts for real people to cover his tracks. In June 2024, after an investor sought to verify a bank statement in person, Lau allegedly planted a fake statement at the bank, an incident captured on security cameras. She resigned from GameOn the following month. ON Platform, the rebranded version of GameOn, declined to comment on the charges. High-profile clients like the NFL, Valentino, and Live Nation also failed to respond to requests for comment. If convicted, Alexander Beckman could face over 60 years in prison, while Valerie Lau Beckman's potential sentence exceeds 80 years. The couple will also have to forfeit all assets obtained through the fraud.

AI startup founder, wife indicted over $60M fraud claims

The co-founder and former CEO of AI startup GameOn is in a pickle. After exiting the top job last year under a cloud, he's now in court - along with his wife - for allegedly bilking his company and its investors out of more than $60 million. Federal prosecutors in California announced this week a 25-count indictment of Alexander Beckman and his wife Valerie Lau Beckman, with charges ranging from wire and securities fraud to identity theft and obstruction of justice. It is claimed the pair screwed GameOn, now known as ON Platform, out of millions of dollars between 2018 and July 2024, when ON finally parted ways with Beckman after months of concerns over the financial state of the business. The pair, of San Francisco, were arrested following a FBI investigation, and appeared in federal court in the city on Thursday morning for an initial hearing. They are presumed innocent unless and until convicted. Per its website, ON offers what's said to be an enterprise-grade AI chat service, for things like customer support and inquiries, which it claims is used by brands including Live Nation, Spectrum, Armani Exchange, and dozens of sports teams and leagues. According to the indictment [PDF], Beckman, 41, not only allegedly fraudulently fabricated revenue and inflated bank account balances to impress GameOn's investors, successfully convincing them into giving the biz more than $60 million, he also impersonated "at least" seven real people from banks, sports leagues, and one of the Big Four accounting firms to legitimize those fake statements, it is claimed. Lau, 38, whom prosecutors identified as working as a lawyer at a venture capital firm, has been accused of providing Beckman with genuine audit reports from her employer that were used to create fake audit reports for GameOn. She is also accused of delivering a fake GameOn bank account statement to a bank branch for distribution to an investor in order to falsify the balance in an account. The prosecution alleges the true balance of the account was a mere $25.93, while the falsified statement allegedly claimed the account held over $13 million. Why go to all this trouble, as alleged by the Feds? So that they could take at least some of the money invested in GameOn, stemming from those faked statements, and spend it on themselves, it is claimed. "Beckman and Lau allegedly used over $4 million of GameOn investor funds on personal expenses, including purchases of residences in San Francisco, payments to private schools, and payments to their wedding venue," the US Dept of Justice alleged in a press statement. Lau earned the obstruction charge by allegedly deleting files related to her work with the San Francisco-based GameOn from her employer's records while a grand jury was investigating the matter. If convicted, the pair may face lengthy jail sentences. The case involves nine counts of wire fraud, three counts of securities fraud, and one count of wire fraud conspiracy, with each charge carrying a maximum sentence of 20 years. There's also additional possible sentences of five years for securities fraud conspiracy, ten years for using stolen proceeds to make purchases, and 30 years for each of two charges of making false statements and bank fraud. Six counts of identity theft carry a maximum penalty of two years each, and Lau's obstruction charge is worth up to 20 years. The charges vary between the pair. "The [San Francisco] Bay Area is home to incredible innovation and hard-working entrepreneurs, but innovation cannot grow through fraud," first assistant United States attorney Patrick D. Robbins said of the charges. "This indictment should serve as a reminder that we will investigate and hold fraudsters accountable." It's not clear what has happened to ON since Beckman's departure, but judging from an internal letter to shareholders reported in July following his exit, the business's prospects didn't look good. According to the letter, Beckman quit under pressure from the board following concerns over the state of the upstart's financial situation. "After Beckman's resignation, we conducted a thorough investigation into the status of the company's bank accounts," the letter said, adding that those accounts had been a "subject of consternation for months." That probe concluded the board had been assured ON had about $11 million in an account used to fund company operations, yet it apparently only contained $0.37. "After a series of meetings over the weekend, the board and management determined that the company would need to pause operations and lay off nearly all of its workforce," the company wrote. That move was effective July 8, 2024. ON's current status is unclear. Its website is still up and functional, and several LinkedIn profiles of employees indicate they're still with the company. ON hasn't posted an update to the site since last June, however, and the company's social media channels have been languishing for even longer. We contacted ON and several employees to learn more about the status of the outfit, and haven't heard back. ®

AI startup founder allegedly faked profits to trick investors, buy fancy houses

The founder of an AI startup in San Francisco was indicted this week for allegedly conspiring with his wife for six years to defraud investors out of $60 million. According to a press release from the US Attorney's Office in the Northern District of California, Alexander Beckman -- founder of GameOn Technology (now known as ON Platform) -- and Valerie Lau Beckman -- an attorney hired by GameOn who later became his wife -- were charged with 25 counts, including conspiracy, wire fraud, securities fraud, identity theft, and other offenses. Lau also faces one charge of obstruction of justice after allegedly deleting evidence. If convicted, the maximum penalties for Beckman, 41, could exceed 60 years and for Lau, 38, potentially 80 years. GameOn was founded in 2014 and later became known for developing a popular customer service chatbot functionality that today is used by major sports leagues like the NFL and high-end luxury brands like Valentino and Armani Exchange. In the indictment, it's alleged that Beckman's business plan for GameOn was unsustainable. The AI startup initially offered its chatbot as a "free pilot without any contract" and seemingly only rarely benefited from revenue-sharing agreements. GameOn even sometimes would pay large annual fees to customers without receiving anything in return, including in one year paying "hundreds of thousands of dollars" to a sports league while receiving "no payments and no revenue sharing," an FBI investigation found. To keep the business afloat, Beckman depended entirely on investors, the indictment alleged. Seeking millions to cover both business and personal expenses, Beckman allegedly dreamed up a "brazen and wide-ranging" scheme to defraud investors starting in 2018, the indictment said.

FBI: GameOn Founder Cheated AI Investors Out of $60 Million | PYMNTS.com

The founder of artificial intelligence (AI) firm GameOn has been charged with defrauding his company's investors. The FBI last week charged Alexander Beckman, the company's former CEO, with offenses including conspiracy, wire fraud, securities fraud and identity theft. Also charged was Valerie Lau Beckman, who is married to the founder and also worked as an attorney for GameOn. According to a news release from the U.S. Attorney's Office, Northern District of California, GameOn makes AI chatbot software for customers that include professional sports leagues and high-profile retail brands. The company raised more than $60 million from investors between September 2018 and last July, with Beckman and Lau allegedly using $4 million of those funds for personal expenses. "The Bay Area is home to incredible innovation and hard-working entrepreneurs, but innovation cannot grow through fraud. Schemes like the ones that defendants are charged with threaten our financial markets and cheat investors," First Assistant United States Attorney Patrick D. Robbins said in the release. "This indictment should serve as a reminder that we will investigate and hold fraudsters accountable." Prosecutors allege that Beckman's statements to investors often included nonexistent revenue, inflated cash balances, and fake or exaggerated customer relationships. He allegedly used the names of several real people without their consent, including his own CFO, bank employees and an employee "of a major professional sports league," the release added. For her part, Lau is accused of providing Beckman with audit reports from a venture capital firm where she worked that he used to craft phony audit reports for GameOn. Prosecutors say she later knowingly shared a fake bank account statement showing GameOn with $13 million in the bank, when it actually only had $25.93. Both Beckman and Lau face decades in prison if convicted. In other fraud-related news, PYMNTS last week explored the use of geolocation technology in fraud prevention in an interview with Radar CEO and Co-Founder Nick Patrick. "Geolocation is central to modern fraud detection across a number of industries," Patrick told PYMNTS. "Understanding any sort of anomalous geolocation data coming from a particular device or inconsistent location data across devices for the same account can help detect fraud and stop bad actors." Geolocation has for years been associated with consumer engagement, such as push notifications when entering a mall or personalized messages at a drive-thru. But its transformation into fraud prevention could be a boon for digital security, the report said. "Fraudsters are always going to fraud," Patrick said. "But with the right tools, businesses can stay one step ahead."