Feds allege mUrgent misled investors about business results and customers.
An email marketing company that caters to restaurants has been accused of investor fraud.
mUrgent, a family-controlled business based in Santa Ana, CA, allegedly offered $10 million of stock to investors, but misrepresented its business relationships and results, according to a Securities and Exchange Commission complaint. The SEC also alleges that mUrgent misrepresented its plans for an initial public offering.
"These guys are a pretty big player in the restaurant email vertical," said Simms Jenkins, CEO of BrightWave Marketing, an email-focused digital agency that also has a strong presence in the restaurant vertical.
mUrgent did not reply to requests from ClickZ News asking for its response to the SEC allegations.
In a lawsuit filed in U.S. District Court last month, the SEC contends mUrgent's management hired "fronters" to make cold calls, beginning in 2008, to identify likely investors and "closers" to finish the sales.
During those calls and in investor information packets, mUrgent identified companies they claimed were major customers. "In fact some of these major, well-known companies did not have any business relationship with mUrgent when investors were solicited," the SEC stated in its lawsuit.
"Many investors wrote checks or wired monies to buy mUrgent shares solely in reliance on the false promise of mUrgent's upcoming public offering or other rosy business prospects," the SEC stated in its lawsuit.
mUrgent, a family-controlled private company, raised approximately $9.6 million from at least 130 investors, according to the SEC.
Named as defendants in the case were: CEO Vladimir "Boris" Bugarski, Chief Financial Officer Vladislav "Walter" Bugarski, and Chief Operating Officer Aleksander ("Aleks") Negovan Bugarski. Boris and Aleks are twin brothers; their father is Walter.
The SEC also charged the Bugarskis misused investor funds, collecting cash salaries and bonuses totaling more than $400,000 each.
"The Bugarskis also used mUrgent as their personal piggybank and funded their lifestyle by charging the company for numerous expenses such as luxury cars for Walter and his wife," the SEC alleged.
According to mUrgent's website, its past or current clients - identified as "Who has trusted mUrgent" - purportedly include Marriott, Bojangle's, Golden Corral, and Denny's.
Join the Industry's Leading eCommerce & Direct Marketing Experts in Chicago
ClickZ Live Chicago (Nov 3-6) will deliver over 50 sessions across 4 days and 10 individual tracks, including Data-Driven Marketing, Social, Mobile, Display, Search and Email. Check out the full agenda and register by Friday, Oct 3 to take advantage of Early Bird Rates!
Anna Maria Virzi, ClickZ's executive editor from 2007 until 2012, covered Internet business and technology since 1996. She was on the launch team for Ziff Davis Media's Baseline and also worked at Forbes.com, Web Week, Internet World, and the Connecticut Post.
IBM Social Analytics: The Science Behind Social Media Marketing
80% of internet users say they prefer to connect with brands via Facebook. 65% of social media users say they use it to learn more about brands, products and services. Learn about how to find more about customers' attitudes, preferences and buying habits from what they say on social media channels.
An Introduction to Marketing Attribution: Selecting the Right Model for Search, Display & Social Advertising
If you're considering implementing a marketing attribution model to measure and optimize your programs, this paper is a great introduction. It also includes real-life tips from marketers who have successfully implemented attribution in their organizations.
September 23, 2014
September 30, 2014
1:00pm ET/10:00am PT
October 23, 2014
1:00pm ET/10:00am PT