Summary:
Shiloh Luckey, founder of ComplYant, is under FBI investigation for alleged securities and bank fraud.
The SEC has charged her with using VC funds to pay for personal expenses like her home, Super Bowl tickets, and a Caribbean wedding.
She misled investors by claiming monthly revenues grew to over $250,000, but the company only averaged about $250 per month.
ComplYant raised over $13 million, including a $5.5 million seed round led by Craft Ventures, before abruptly shutting down.
Luckey has launched a new startup, HabitLoop, and continues to give financial advice on TikTok despite the ongoing investigations.
Shiloh Luckey's Alleged Fraud Scandal
Shiloh Luckey, the founder and former CEO of ComplYant, a tax-compliance startup based in Los Angeles, is facing serious legal troubles. The FBI is conducting a federal criminal investigation into allegations of securities and bank fraud, while the SEC has filed civil charges against her.
Toronto, Canada - 22 June 2022; Shiloh Luckey, Founder & former CEO, ComplYant, on Centre Stage during day two of Collision 2022 at Enercare Centre in Toronto, Canada. (Stephen McCarthy/Sportsfile for Collision via Getty Images)
The SEC's Allegations
According to the SEC, Luckey misused millions of dollars from venture capital funds for personal expenses. These include:
- Paying for her home
- Purchasing Super Bowl tickets
- Funding trips to Aspen, Miami Beach, Turks and Caicos, and Lisbon
- Covering costs for a destination wedding in the Caribbean
- Paying for her car
The SEC claims that Luckey painted a rosy picture of ComplYant's revenue growth to investors, stating that monthly revenues increased from around $2,500 in November 2020 to over $250,000 by September 2022. However, the reality was starkly different: the company only generated an average of about $250 in monthly revenue during that period and averaged fewer than four new subscribers each month.
Background and Funding
Luckey founded ComplYant in 2019 to help small businesses navigate tax regulations. In 2022, the company raised a $5.5 million seed round led by Craft Ventures, a San Francisco venture firm co-founded by investor and White House advisor David Sacks. Overall, ComplYant raised more than $13 million from top venture capitalists.
Despite the funding, the company abruptly shut down last year, leaving over 50 employees without final paychecks for seven weeks and missing 401(k) contributions.
Regulatory Crackdown
This case highlights the increased scrutiny from regulators on startup founders. Monique Winkler, SEC regional director, warned, "Startup founders cannot fake it until they make it by falsifying revenue metrics." Recent cases, such as the seven-year prison sentence for Charlie Javice and fraud charges against Mozaic Payments' former CEO Marcus Cobb, show that authorities are taking a tougher line on fraudulent activities in the startup world.
Luckey's Response and Current Activities
When reached by telephone, Luckey said, "I don't have anything to offer you," and hung up. She is representing herself in court and has not responded to the SEC allegations.
Since ComplYant's shutdown, Luckey has continued to post instructional videos on her TikTok channel, which has nearly 24,000 subscribers, offering advice on taxes and accounting. In October, she launched a new startup called HabitLoop, described as a digital financial assistant to help people manage their money. In a video, she stated, "I grew up with very poor financial habits," and added, "This is something I built on hard lessons."
The SEC also alleges that Luckey falsely represented herself as a CPA, with no record of her ever having the accreditation.
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