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.