California woman indicted in $13.3 million startup investor fraud scheme

Federal authorities have arrested a 42-year-old California woman accused of orchestrating a $13.3 million investor fraud scheme involving her startup company, using the illicit proceeds to fund personal luxuries that included a Tesla, an Inglewood home, Super Bowl tickets and a destination wedding.

Shiloh Luckey, a resident of Inglewood, was apprehended on Sunday in Fort Lauderdale, Florida, just prior to embarking on a cruise vacation. After her release on bond in the Sunshine State, she is scheduled to appear in a Los Angeles federal court in the coming weeks.

According to the U.S. Attorney’s Office, Luckey faces an indictment charging her with nine counts of securities fraud, three counts of wire fraud, one count of bank fraud, and two counts of money laundering.

Federal prosecutors allege that between September 2020 and September 2023, Luckey deceived investors into funding her Los Angeles-based business, ComplYant App Inc. She reportedly presented prospective backers with updates, pitch decks, and promotional materials that falsely inflated the firm's subscription numbers, customer base, cash reserves, and recurring revenue.

Additionally, Luckey allegedly persuaded victims to invest by falsely asserting she was a licensed certified public accountant with extensive experience in accounting, tax management, and compliance. Authorities noted that she has never held a CPA license.

Relying on these misrepresentations, victims poured millions of dollars into what they believed was a promising startup based on Luckey's claims, according to court documents.

In reality, prosecutors contend that Luckey diverted a portion of the raised funds toward personal expenditures, including her residence in Inglewood, a Tesla car, and a wedding on the Caribbean island of Anguilla.

By September 2023, ComplYant suffered severe liquidity problems and shut down entirely, causing investors to lose their entire financial contributions. Prosecutors estimate that Luckey fraudulently obtained at least $13.3 million in total.

The indictment also details an alleged check-kiting operation in September and October 2022. Prosecutors say Luckey wrote a bad $1.5 million check from a ComplYant bank account lacking funds, deposited it into a company account at a separate bank, and wired the money to buy her home before the first institution identified the check as worthless.

She then cleared the negative balance created by the check-kiting scheme by depositing fresh proceeds from incoming securities-fraud investors, officials said.

If convicted on all counts, Luckey faces a maximum sentence of up to 30 years in federal prison for bank fraud, up to 20 years for each count of wire and securities fraud, and up to 10 years for each count of money laundering.