By Jonathan Stempel
(Reuters) - The founder of GameOn, a San Francisco artificial intelligence startup, has been indicted for running a "brazen and wide-ranging" six-year fraud that cost the company and investors more than $60 million, federal prosecutors said on Thursday.
Alexander Beckman, 41, who was also GameOn's chief executive, was charged with 23 criminal counts. His wife Valerie Lau Beckman, 38, a lawyer who worked on GameOn matters, was also indicted and charged with 16 counts.
Each faces charges including fraud, securities fraud, conspiracy, identity theft, and Lau Beckman faces an obstruction charge. Both were arrested and pleaded not guilty on Thursday. The couple married in October 2023.
A lawyer for Beckman did not immediately respond to requests for comment. It was not immediately clear whether that lawyer also represents Lau Beckman. The U.S. Securities and Exchange Commission filed related civil charges against both defendants.
Thursday's charges came 10 months after Ismail Ramsey, the U.S. attorney in San Francisco, said in an interview that his office was targeting AI start-ups before they went public.
Founded in 2014, GameOn offered a chatbot that claimed to be "the industry leading enterprise-grade conversational AI platform," whose customers included professional sports teams and leagues and prominent fashion brands.
Authorities said Beckman misled investors by describing tens of millions of dollars of nonexistent revenue, inflated cash balances and fake customer relationships.
They said Beckman also fabricated bank statements and audit reports, including one purportedly from "Big Four" accounting firm PwC, and impersonated in writing at least seven people to share false information.
Lau Beckman, who worked at a venture capital fund, allegedly gave her husband genuine audit reports to help him create bogus reports, and tried to delete hundreds of GameOn-related files from her employer's records after a grand jury probe had begun.
Prosecutors also said the couple spent $4.2 million of investor funds on a San Francisco home, private school payments, luxury vehicles and their wedding venue, among other items.
The scheme allegedly ran through Beckman's July 1, 2024 resignation as chief executive, court papers show.
Ten days later, GameOn announced its financial statements were false and laid off nearly all employees, the SEC said.
"The Bay Area is home to incredible innovation and hard-working entrepreneurs," said First Assistant U.S. Attorney Patrick Robbins, "but innovation cannot grow through fraud."
