The SEC filed a fraud complaint against a Philly-area founder

The Securities and Exchange Commission filed a civil fraud complaint against Philly-area startup founder Josh Verne this month.

The Philadelphia Inquirer first caught the filing, reporting today that Gladwyne-based Verne’s company Ownable, which rented electronic devices to people who couldn’t afford to buy them, raised $31 million from investors. However, the SEC said Verne spent more than $9 million of the funding raised on personal expenses.

“The SEC also accuses Verne of hiding Ownable’s losses through $5 million in ‘Ponzi-like’ payments to reassure some investors, so he could attract new ones,” per the Inquirer. “In other cases, he made promised investments, then sold them, and pocketed shareholders’ money instead of giving it to them, according to the SEC filing.”

Verne’s previous company was FlockU, an online content platform that targeted college students, which was acquired by Becker Associates LLC in 2018. After that, Verne moved to worked on Ownable, as Technical.ly reported then.

Ben Franklin Technology Partnership of Southeastern Pennsylvania was one of the investors in FlockU and lists Ownable as an investment on its website.

David Adelman, cofounder of FS Investments, was the largest contributor to Ownable, investing $3 million, according to the Inquirer. (Adelman was also an investor in FlockU.) Prominent Philadelphia business people Michael Rubin, Bart Blatstein, Rob Zuritsky, William Harvey, Roger Braunfeld and David Magerman were also investors in the company.

See the Inquirer report Sarah Huffman is a 2022-2024 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Lenfest Institute for Journalism.