With today’s announcement from Pfizer (NYSE:PFE) indicating they are that much closer to a Covid-19 vaccine, its time to look forward to who the Biden administration will appoint to prosecute the tens of thousands of SBA PPP loan scammers who reaped tens of billions after the Trump administration made it a simple feat to fill out a form and run with the money.
The SBA has recently published a list that contains thousands of companies that received over $150k each. Many received several million dollars. And, the SBA is scheduled to release an even more comprehensive list comprised of tens of thousands of companies that received less than $150k. The current list and the one soon to come out provides a roadmap to criminal enterprises and unsavory categories.
Propublica is making the interrogation easy for amateur sleuths.
Take for example a company known as SOSV Payroll LLC, and its interesting connection to a company profiled here last year, “Seaquake.io”, which appears to be not much more than a spiderweb of intertwined shell companies that claims to build software applications for trading cryptocurrency. Our prior reporting has led most to appreciate that if it looks like a duck, walks like a duck and quacks like a duck, it is a duck, and within the context of investor scams, Seaquake is the queen of ducks, especially when its former business development executive stated “they sell nothing but vaporware and nobody has bought it, other than investors who were deceived into buying into the company.”
SOSV Payroll is a Delaware entity with a principal office in Princeton, NJ and according to corporate filing records, is structured as a “Foreign Limited Liability Company.” The company also registered with the State of Colorado in February 2019. According to SBA PPP loan application documents filed in April 2020, they say they have 30 employees. The SBA PPP loan was approved and made via First Republic Bank for somewhere between $350k-$1million.
Of interest, this entity is a direct affiliate of Ireland-based venture fund “SOSV, The Accelerator VC”, which claims to have $700m in AUM. Soon after receiving the SBA loan, SOSV announced they made a direct investment in the above-mentioned Seaquake.io, a holding company with multiple corporate shells including in Colorado. More relevant, Seaquake has been a defendant in multiple actions, including allegations of investor fraud brought against Seaquake CFO Matthew Krueger and co-founder Andrew Ross Stark aka Ross Stark aka Stark Katz. According to criminal background searches, Katz has a lengthy history of charges ranging from breaking and entering to domestic violence to stalking.
UPDATED MARCH 2020: Add a bank loan fraud perpetrated by Katz and Krueger in connection with Seaquake OPS LLC, a Wyoming entity that is part of the web of Seaquake companies. Recently discovered, Seaquale OPS LLC did in fact apply for and did receive a Paycheck Protection Loan of $22,813 through Wells Fargo Bank, National Association, which was approved in May, 2020. In that loan application, Selen Katz, former wife of Andrew Katz, and the victim identified in the felony assault charge is identified as an employee of Seaquake. Her title, according to a LinkedIn profile is “creative director” and her date of employment is the same month in which the PPP Loan was applied for.
We don’t know why an affiliate to a $700m AUM Ireland-based venture fund needed to apply for an SBA PPP loan. We don’t know if it’s kosher or not. We do know that the SBA PPP loan program has been exploited by tens of thousands of firms. How or if President-elect Joe Biden and his Vice President, Kamala Harris, the former California Attorney General will be able to claw back and/or prosecute those who submitted false loan documents and received taxpayer money is a question that may never be answered. The good news is that detailed data regarding more than $100bil in loans handed out, including the business names and addresses pertaining to the millions who received loans in amounts under $150k is expected to be released in December.
The above-referenced Seaquake enterprise (first exposed by MarketsMuse last October after Law360.com published a federal lawsuit against the company and its principals) also has corporate shell registrations in California, Wyoming, Florida, and the United Kingdom (at last count). According to confidential sources, at least two of its subsidiaries will be unveiled for having received SBA PPP loan support, despite former insiders acknowledging the company has no product, has no customers, and no documented salaried employees, other than Mssrs. Katz and Krueger, and in April (immediately prior to submitting loan applications), a new LinkedIn profile indicated this company added a “creative designer”, who also happens to be co-founder Katz’s wife. Ms. Katz also appears to be a fashion model and Instagram influencer, according to her profile at www.instagram/seloupe.
Now that Pfizer appears to be one step closer to solving the Covid-19 vaccine crisis, one can hope that we will all go back to business, including SBA, IRS, and state fraud investigators, who can focus on bringing SBA loan predators to justice.
(Source: Law360.com ) Andrew R. Katz, aka Ross Katz, aka Stark Katz an Arvada, Colorado man who is last known to reside in either of New York City or Southern California, and uses California, Colorado, Florida and New York drivers licenses while claiming to be a former FX trader for EFG Bank, and who now presents himself as co-founder of Seaquake.io, a”digital asset infrastructure company”, along with Seaquake CFO Matthew J. Krueger of San Francisco, who claims to be a former PayPal “Finance Manager” and the former “Head of Finance” for Venmo, have both been named as Defendants in a Federal Court complaint alleging the two men advanced a systematic scheme to defraud a Florida-based investor group. Also named in the action is Dylan Knight, a UK man who is listed as a co-founder and Chief Technology Officer for the company. The Federal Court complaint cites multiple accounts of securities fraud, fraud in the inducement, and wire fraud.
Andrew Katz Latest Arrest: April 2021 Miami Florida; 11 Counts
According to a Zurich-based private equity fund manager who had been repeatedly approached by Katz to invest, “All of the patented elements of old-fashioned investor fraud have been perpetrated by these Seaquake characters, casting yet another shadow of skepticism on the entire digital asset industry. It is amazing how brazen these individuals are. Based on their apparent actions, one can hope that law enforcement officials will do their jobs and prosecute these people quickly. Even if the wheels of justice spin slow, anyone in the industry should be alert to these people and be aware they have already destroyed any future professional career in any industry.”
According to the Federal Court complaint, Katz lists former jobs at UBS Bank and EFG Capital in investor offering documents, the company’s website, as well as his Linkedin profile, despite Finra having no record of Katz being licensed by that securities industry regulator at any time, and despite EFG Capital having no record of his employment. More importantly, the court filings include a series of email communications, text messages, and group chat messages on Linkedin in which Katz and Krueger made a series of fraudulent representations that induced the investors to enter into a so-called “SAFE Agreement” with the company. Investors were of the belief the funds would be deployed to a high-frequency trading application that Seaquake principals, including so-called CTO Dylan Knight of the UK, claimed to be operating.
JANUARY 2021 UPDATE: SEAQUAKE CO-FOUNDER ANDREW KATZ CHARGED WITH FELONY ASSAULT AND GRAND LARCENY IN NEW YORK; FACES MINIMUM 2 YEAR PRISON SENTENCE
BREAKING NEWS FEB 2022 UPDATE
ANDREW KATZ, CEO OF PURPORTED CRYPTO FIRM “SEAQUAKE.IO” CONVICTED OF ASSAULT CHARGES IN NEW YORK AND FLEES, LEAVING BEHIND $100K CASH BOND; NOW A FUGITIVE SOUGHT BY NEW YORK POLICE
According to the complaint, only several days after the investors executed the agreement with the company and wiring funds to a Seaquake account at Signature Bank in New York, Katz then informed the investors the high-frequency trading application was “not in fact in production and the [investor] funds would be placed into a money market account until such time as the software was ‘production ready.” Defendants Krueger and Katz also made a series of assertions as to pending institutional investors who committed to providing capital to Seaquake, all of which turned out to be false, according to the filing. According to court documents and independent background searches, it turns out that Katz has driver licenses in New York, Florida, Colorado, and California, and is also registered to vote in Florida.
UPDATE MARCH 2021: SEAQUAKE ENTITY ‘SEAQUAKE OPS LLC’, A WYOMING CORPORATE SHELL NOW SUSPECTED OF SBA LOAN FRAUD; APPLIED FOR AND RECEIVED PPP-RELATED LOAN
This latest charge adds to a pending list of other criminal matters, including a likely bank loan fraud perpetrated by Katz and Krueger in connection with Seaquake OPS LLC, a Wyoming entity that is part of the web of Seaquake companies. Recently discovered, Seaquale OPS LLC did in fact apply for and did receive a Paycheck Protection Loan of $22,813 through Wells Fargo Bank, National Association, which was approved in May, 2020. In that loan application, Selen Katz, former wife of Andrew Katz, and the victim identified in the felony assault charge is identified as an employee of Seaquake. Her title, according to a LinkedIn profile is “creative director” and her date of employment is the same month in which the PPP Loan was applied for.
Katz has a history of criminal charges, from trespassing charges in New York to domestic abuse charges in Los Angeles. This private investigator’s backgroundreport is telling. Other background searches indicate that Katz, along with his mother, Alyson Katz of Arvada, Colorado were plaintiffs in a class action law suit brought against a Utah-based school for emotionally-challenged youth, a facility that Katz was apparently sent to by his parents and attended for at least two years while he was a teenager.
If only Andrew Katz’s wife, Selen Katz, a Turkish national and Instagram Influencer who apparently works as aswimsuit model, didn’t need Katz to help her secure a Green Card. Otherwise, perhaps she’d realize that being married to a scam artist is not the path to a happy future in the U.S. More important, actions pending against Katz could raise eyebrows from US immigration authorities who will be evaluating her request for citizenship. She should hope that more recent frauds committed by her husband and his partner in connection with PPP loans don’t add fuel to the criminal investigation fire burning under their butts.
Back to the primary coverage….Once the investors realized they had been scammed and then demanded the return of the funds, Katz and Krueger took steps to dissolve “Seaquake Partners LP”, the corporate entity the investors sent their funds to, according to the corporate register agent. According to records in the filing, Defendants Katz and Krueger wrote to the investor informing “we will not communicate with your attorney and we have no obligation to provide any further information..” Concurrently, the Defendants transferred the investor funds from the company account at Signature Bank in New York to multiple, newly-created Seaquake entity accounts at a Compass Bank BBVA branch in California, near where Krueger lives. Thereafter, bank records indicate Katz and Krueger dispersed the funds to various internal company accounts, and then transferred a bulk of the investor’s funds to crypto exchange Coinbase, which they moved days later to crypto exchange and custody platform Binance.
As acknowledged by the defendants’ attorney, Yasin Daneshfar of Florida law firm Becker and Poliakoff, Katz and Krueger also moved tens of thousands of dollars to personal accounts the defendants established at Compass Bank. Attorney Daneshfar argued “the so-called “SAFE Agreement” did not preclude the defendants from dispersing the money as they saw fit.” Daneshfar further acknowledged in a recent court appearance that, in addition to the defendants enriching themselves with much of the investor’s funds, the investors’ funds have also been used by Katz and Krueger to pay the Becker law firm in their effort to defend themselves against the investors in federal court. When challenged with this use of funds by the federal court judge who pointed to the series of communications from Katz to the investors, Attorney Daneshfar was said to have responded to the judge with a smirk and a shrug of his shoulders.
While much of the information obtained in the federal court filings may seem to be the source of good fodder for a ten cent crime novel, according to one Switzerland-based venture capital executive who is focused on the digital currency space and who had also been solicited by Seaquake to serve as both an advisor and to provide investment funds, “All of the patented elements of old-fashioned investor fraud have been perpetrated by these Seaquake characters, casting yet another shadow of skepticism on the entire digital asset industry. It is amazing how brazen these individuals are. Based on their apparent actions, and whether or not they get caught by law enforcement officials, they have effectively destroyed any future professional career in any industry.”
Despite all of the shenanigans, David Streltsoff, a Senior Vice President for San Francisco broker-dealer “US Capital Global” and a former salesman for high-frequency trading firms was apparently not deterred from associating himself with Seaquake. According to his LinkedIn profile in the months of September through November 2019, Streltsoff served as “Business Development Executive” for the company, while also a registered broker-dealer for US Capital. Streltsoff’s rofile was updated at the end of November after Streltsoff was served with a federal court subpoena for information pertaining to his involvement with Seaquake. According to a former investigative journalist, now a due diligence advisor to fund managers evaluating crypto startups, Streltsoff told him “It took one too many days for me to figure out this company was peddling nothing more than vaporware, and the scam accusations against them were eye-opening, so I terminated my association with them.” Jeffrey Sweeney, the CEO of US Capital Global has not replied to inquiries.
Update: Since the litigation was filed, at least one other investor has been identified as having been scammed. That investor was apparently introduced to the company in June 2019 by a friend who was employed by Seaquake.io as “business development executive.” That friend sent the investor a so-called Safe Agreement, along with wire payment instructions to a Seaquake bank account held by a Bank of America branch in Colorado. Once that investor learned of the recent court action, the investor contacted Katz and demanded the return of the money sent to Seaquake in July. Katz replied via email stating “we have no record of having executed a Safe Agreement with you, and the former employee provided you with incorrect wire instructions, so we never received your money, and we don’t owe you anything.” When the investor provided Katz and Krueger with Bank of America correspondence that affirmed the Seaquake account information was correct and confirmation from the bank the wire payment had in fact been credited to the account Katz created, Katz ceased all further communication. That investor has since filed a criminal complaint and the former executive is said to be cooperating with law enforcement authorities. Perhaps Mr. William Bao Bean, a principal of SOSV Ventures / Chinaccelerator –which recently disclosed making an investment in “Seaquakes”, as did Jeremy Colless, Managing Partner of down-under VC “Artesian Capital” both failed to get the memo…(?)
In November, the federal court judge lifted the temporary restraining order on bank accounts controlled by Seaquake principals Katz and Krueger, and cited concerns as to whether the Florida court was the appropriate jurisdiction to litigate the action. Plaintiffs are expected to continue the litigation.
Katz was last seen in December at the Hotel Kai Tulum resort in Cabo San Lucas vacationing with his wife, who posted an assortment of photos baring ‘birthday bling’ while sipping margaritas.