Saverin sued in fight over bankrupt start-up

Facebook co-founder Eduardo Saverin extolled Jumio in 2012 as growing faster in its infancy than the social media network he helped create in 2004, and predicted the company would be highly profitable.
Facebook co-founder Eduardo Saverin extolled Jumio in 2012 as growing faster in its infancy than the social media network he helped create in 2004, and predicted the company would be highly profitable.

SAN FRANCISCO • An investor in Jumio has sued Facebook co-founder Eduardo Saverin and other directors of the mobile-payment company, accusing them of mismanaging the start-up and duping shareholders about its prospects.

Bad management drove the California-based company into bankruptcy after it was forced in 2015 to restate two years' worth of earnings, shareholder Bloso Investments said in the complaint filed in Delaware Chancery Court.

Mr Saverin, who became a billionaire through Facebook's initial public offering, extolled Jumio in 2012 as growing faster in its infancy than the social media network he helped create in 2004, and predicted the company would be highly profitable.

His statements and ones made by other directors misled Bloso officials about Jumio's operations and duped them into investing US$5 million in the company, according to the lawsuit filed on Sept 29.

"There is no merit to these baseless allegations," Mr Ian Campbell, a spokesman for Mr Saverin, said in an e-mail.

"Mr Saverin acted responsibly in fulfilling his fiduciary responsibilities as a director of Jumio," he said.

"He was harmed as much as, if not more than, any other investor of the company by former management's actions and is in fact contemplating his own claims against them."

Jumio filed for bankruptcy in March, about a year after Mr Saverin and Andreessen Horowitz Fund II invested US$15.5 million (S$21 million) in the company.

Mr Saverin tried to buy the company out of bankruptcy but was outbid in May when Centana Growth Partners won a court-supervised auction with an offer of US$850,000.

Bloso, based in the British Virgin Islands, held more than 3.9 million Jumio shares, according to bankruptcy court filings.

Mr Saverin held more than 2.8 million shares in the company, which makes verification software for online transactions.

Mr Saverin also has invested in other start-ups including Anideo, a developer of mobile applications, and ShopSavvy, a price-comparison service.

In February, he joined a US$15 million round of financing for Indonesian e-commerce start-up Orami.

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A version of this article appeared in the print edition of The Straits Times on October 12, 2016, with the headline 'Saverin sued in fight over bankrupt start-up'. Print Edition | Subscribe