An alleged scam used not only falsified documents, but a fake bank website that allowed users to log into fabricated bank accounts, to defraud a private tech company out of 239 million shares of its stock, U.S. authorities allege.
The U.S. Securities and Exchange Commission (SEC) charged a purported investor, Charles Cole, and his lawyer, Torben Welch, along with three companies controlled by Cole, with allegedly defrauding Infinite Reality Inc. (now known as Napster Corp.) out of millions of shares, representing about 25% of the company’s stock, by falsely promising that Cole would invest US$3.4 billion in the company.
In a parallel criminal case, Cole was also charged by the U.S. attorney for the Southern District of New York (SDNY) with wire fraud, conspiracy to commit wire fraud and conspiracy to commit securities fraud.
According the SEC’s complaint, starting in late 2024 and continuing into early 2026, Cole and Welch allegedly defrauded Infinite Reality by falsely claiming that Cole controlled US$55 billion in cash, and that he promised to invest in the company in various transactions — ultimately, the company issued shares to him and his shell companies, but it was never paid for those shares.
“As part of that scheme, Cole, and others acting at his direction, repeatedly lied to Infinite Reality about his ability to pay for the shares — fabricating bank records, creating sham correspondence, and establishing a fake website to mirror that of a foreign bank — to deceive Infinite Reality into believing that Cole had billions of dollars he was prepared to invest in the company,” the criminal indictment alleged.
Indeed, the scheme went so far as to establish offshore servers to host a fake version of a Malaysian investment bank’s website that included a login feature, which allowed the conspirators to deceive executives from Infinite Reality by tricking them into thinking that they were accessing a genuine account at a bank that Cole claimed held US$11 billion of his assets — prompting the company to issue millions of shares to a shell company controlled by Cole.
The SEC also alleged that Cole then used 45 million of his Infinite Reality shares as collateral to secure a US$1-million bank loan — allegedly defrauding that lender too.
None of the allegations have been proven, and Cole is presumed to be innocent of the criminal charges.
In its case, the SEC is seeking permanent injunctions against all defendants, disgorgement against Cole and his companies, and civil penalties against Cole and Welch.