The founder and former CEO of a Canadian AI company has been charged by U.S. authorities with allegedly duping investors to secure venture funding.
In a criminal complaint, Matthew Derrick Hudson, the founder of Invenia Technical Computing Corp. — a company that promised to use AI to optimize participation in the North American energy markets — was charged with wire fraud for allegedly falsifying financial statements, invoices and other documents to deceive prospective investors about the company’s financial success.
In a parallel civil enforcement action, the U.S. Securities and Exchange Commission (SEC) also alleged that Hudson violated securities laws.
According to the SEC’s complaint, between October 2020 and January 2022, Hudson conducted two rounds of venture funding for the company based on material misrepresentations to investors about Invenia’s financial condition and performance, “including by creating and providing investors with falsified financial statements, invoices and other documents.”
For instance, according to the criminal complaint, shortly before Invenia closed its Series B funding round, Hudson provided documents to investors claiming it had C$218 million in cash and approximately C$295 million in revenue — when it actually had C$6 million in cash and C$26 million in revenue.
The SEC also alleged that one of the funding rounds was never authorized by Invenia’s board.
“To carry out that offering, Hudson allegedly provided investors with, among other things, fake investor lists, board resolutions, and closing documents, including one set of closing documents that contained the forged signatures of various other purported investors,” the regulator said.
The scheme allegedly enabled the company to raise US$120 million from investors.
The allegations have not been proven, and Hudson is presumed innocent of the criminal charges.
The SEC’s complaint, filed in the U.S. District Court for the Northern District of California, seeks permanent injunctions, disgorgement plus prejudgment interest, civil penalties and an officer-and-director ban.
Hudson was arrested last week in California and released on bond pending trial. He is next scheduled to appear in federal court on Nov. 17.