Federal prosecutors in San Francisco said Thursday that the founder of a venture-backed AI chat startup allegedly used over $4 million of investor funds to purchase a home, fund private schools, buy luxury cars, and even pay for his wedding venue. Authorities called the founder’s fraud “brazen and wide-ranging,” where he vastly overstated the company’s revenue and other financials, per the indictment.
Alex Beckman, the founder and former CEO, and his wife Valerie Lau Beckman, were charged with wire fraud, conspiracy to commit wire fraud, securities fraud, among other charges. Lau Beckman is an attorney that worked as general counsel for Industry Ventures, a startup fund, and worked closely with On, which was formerly known as GameOn Technology.
Since Beckman founded it in 2014, On raised over $125 million in investment from venture capital firms B3 Capital and Quest Venture Partners, along with numerous celebrities, including the retired NFL legend Joe Montana, and the retired NBA star André Iguodala, according to Pitchbook. Prosecutors said that “in most years, GameOn’s annual revenue was materially less than $500,000.”
Beckman, Lau Beckman and On, as well as On’s investors, did not immediately respond to comment requests.
On, which was valued at over $260 million, according to Pitchbook, claims to be a customer service-focused AI-based chat system that works with numerous sports teams including the New York Yankees, the Sacramento Kings, and the Oakland Roots, a soccer club. None of those teams responded to Forbes’ request for comment.
In July 2024, Beckman resigned as CEO after being pushed out by the board, which had discovered an elaborate deception, Venture Beat reported. According to a letter sent to shareholders at the time, a company account that should have had $11 million in it, only contained $0.37.
Prosecutors also say that in June 2024, Lau delivered a falsified financial statement to a bank that purported to show that the company had over $13 million in its account, when in fact, it had just $25.93.
Hans Swildens, the CEO and founder of Industry Ventures confirmed that Lau Beckman left the company on December 31, after four months of maternity leave. Swildens declined to comment further.
The couple were arrested on Thursday and made their initial appearance in a San Francisco courtroom.
“The Bay Area is home to incredible innovation and hard-working entrepreneurs, but innovation cannot grow through fraud,” Patrick D. Robbins, a federal prosecutor, said in a statement. “Schemes like the ones that defendants are charged with threaten our financial markets and cheat investors.”
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