Facebook co-founder Saverin sued in fight over bankrupt US start-up

Eduardo Saverin, co-founder of Facebook, speaks during a Wall Street Journal Unleashing Innovation event in Singapore.
Eduardo Saverin, co-founder of Facebook, speaks during a Wall Street Journal Unleashing Innovation event in Singapore.PHOTO: BLOOMBERG

WILMINGTON, DELAWARE (BLOOMBERG) - An investor in Jumio Inc has sued Facebook co-founder Eduardo Saverin and other directors of a mobile-payment company, accusing them of mismanaging the start-up and duping shareholders about its prospects.

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

Mr Saverin, a billionaire venture capitalist based in Singapore, 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. Mr Saverin's statements and ones made by other directors misled Bloso officials about Jumio's operations and duped them into investing US$5 million (S$6.88 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 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 LP invested US$15.5 million in the company. Mr Saverin tried to buy the company out of bankruptcy but was outbid in May when Centana Growth Partners LP 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 Inc, a price-comparison service. In February, he joined a US$15 million round of financing for Indonesian e-commerce start-up Orami.