Funds intended for coupon app
A Palm Beach County businessman convinced investors to provide funds for a new coupon app like Groupon before using some of the money to pay gambling debts.
Despite obtaining $20.5m from investors, Gerald C. Parker did not start a new business. He used the funds to pay gambling debts he racked up at two local casinos operated by the Seminole Tribe. A significant amount was also paid to salesmen who pitched the idea to investors.
Misappropriated funds
Parker described himself to investors as an internet visionary with big plans to create a coupon app to rival those like Groupon and LivingSocial.
convinced 400 investors to provide $20.5m in funding
According to the Securities and Exchange Commission (SEC), the chief executive of Social Voucher convinced 400 investors to provide $20.5m in funding for the business.
The SEC ruled that Parker misused $4.6m of the investor funds. He owed money to two casinos, which amounted to $2m. He used the funds that were invested to pay off these gambling debts and paid an additional $9.6m to pay salesmen who went around pitching the coupon app idea.
The amount paid in sales commissions was ‘exorbitant’, according to the SEC.
A federal fraud suit has been filed against 76-year-old Parker, who faces charges for making false and misleading statements to investors and prospective investors.
Social Voucher woes
In September 2018, 16 of the investors filed a lawsuit against Social Voucher and Stocket Inc., an affiliated company.
The lawsuit stated that Social Voucher was no longer in operation after a raid took place the previous June. FBI agents raided the Palm Beach County head office at that time, yet it is unclear as to why a raid was conducted.
Investors filed the lawsuit because they feared the Social Voucher app might falter. Miami attorney Jeffrey Schneider represents the investors in their case.
According to Schneider, the e-commerce and gaming aspect of the Social Voucher app was intriguing enough that it garnered the attention of many investors. He said:
They could find the app and play the game. That, more than anything else, was what lured them in.”
The attorney stated further that because the findings from the raid in 2018 have not been released by the Department of Justice, what exactly happened to the money of the company is unknown. A complete account of money going in and out of the business remains outstanding.