A Classic Case Study in FRAUD

26 July 2021 – Recently, ICO and startup fraud has dominated the headlines of many news sources. While these recent cases all involve sums of money far in excess of any before (especially crypto fraud), theft of assets is certainly not a new phenomenon. Since the early days of Wall Street, fraud has consistently fooled the markets, investors, and auditors alike. In this article, we analyze a classic case of a fraudster deceiving investors in a startup/ICO fraud.

EZeeFRAUD was founded to act as an anti-fraud whistle blowing organization, set up to expose and prevent fraud. We are proud to have been named one of the “51 Best Fraud Detection Startups Based Out of California” by WELP Magazine (we’re number 32 on the list) and we have recently been written about by Threat.Technology (a leading cyber security news publication). We founded our organization specifically to blow the whistle on scams and frauds, and we hereby present the classic case of the EZeeBUY Fraud.

David Estrada is an American citizen living in Tokyo, Japan. He has been living in Japan for more than 20 years, and has a verified history of fraud and theft in the Tokyo community. He has used a previous membership in the prestigious Tokyo American Club to con members into lending him money (which he never repays) or “investing” into a business (where everyone gets defrauded).

David Estrada on the road in Asia – conning investors

In late 2017 / early 2018, he founded a company called EZeeBUY (also known as “EZeeBUY Experiences”) and used it as a vehicle to defraud numerous investors, advisors, employees, and vendors. He essentially took the idea from another startup being developed at the time called ZWOOP — launched by MPayMe founder and former Powa executive Alex Gadotti. Later that same year, Estrada began to contact numerous individuals (friends, former business associates, and people he had recently met) to invite them to “invest” in a company he was founding called EZeeBUY. The people whom he convinced to be involved (either as co-founders, investors, or advisors) can be seen here. Each of the co-founders (and three of the advisors) invested 2 million Yen each for an equity share of the business. David Estrada, the founder, told everyone that he invested 18 million Yen of his own money for 51% of the shares — but it was later discovered that he did not invest any money at all — the co-founders and advisors bore 100% of the risk. Here is the shareholding cap table:

After working diligently to launch and grow the business for nearly a year (without pay, and funding their own expenses) the co-founders began to realize that Estrada was not running the business in a way that was honest and transparent. One of the advisors who was working within the business on virtually a day-to-day basis, provided this summary:

The Founder actively engages in identity fraud at EZeeBUY.

He uses fabricated names/identities to communicate and negotiate with potential partners, misleading them to believe they are corresponding with 3rd party accountants and lawyers. We have evidence he personally orchestrates and writes these communications and sends them out under fictitiously created names and email addresses.

EZeeBUY demonstrates no financial controls and has no financial visibility with co-founders/investors.

The Founder refuses to share financial details (standard business financials such as burn rate, spend, funding, etc.) with EZeeBUY co-founders and investors. Investors have no idea where their money is, and have initiated legal action against the company’s founder.

The Founder has created fraudulent corporate documents. Through our due diligence, we have discovered numerous corporate documents with the FORGED SIGNATURES of investors, co-founders, and other unrelated parties.

EZeeBUY to date has not paid any of its suppliers/contractors as promised. Our due diligence has revealed that none of the suppliers or contractors who have completed work for EZeeBUY have been paid as agreed — despite contracts clearly committing the company. Creditors include developers, fundraising services, office space providers, and former employees. We estimate that the company has contractual obligations far in excess of the amount of total paid-in capital, and is likely insolvent.

The Founder misrepresents funding raised for EZeeBUY. During our due diligence, we discovered pitch decks and video (from investor presentations) that claim EZeeBUY has raised US $1m from external investors. We have found no evidence that this is true.

The Founder is using EZeeBUY to defraud investors. We have been contacted by multiple investors who have invested either in the EZeeBUY company or EZ8 Tokens (cryptocurrency) and have been provided with NOTHING in return. It appears he has simply stolen their money.

The Founder’s LinkedIn profile states that he is located in San Francisco, when in fact he is located in Tokyo, Japan. Additionally, the EZeeBUY website contains multiple job openings — our due diligence has revealed that none of these opportunities are genuine.

This classic case of FRAUD is something every potential investor can learn from. Looking back, the RED FLAGS were everywhere: (1) A founder with a classic narcissistic personality disorder; (2) A founder who told tall tales about owning 11 Ferraris, attending Harvard University, and owning a country house with a wine cellar containing 30,000 bottles of wine; and (3) A founder who refused to engage in any financial transparency with the co-founders.

In our next article, we will detail David Estrada’s interrogations by the Japanese Police, details of his attempted ICO Fraud, and other classic fraudulent activities. Stay tuned.

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