AI chatbot startup founder, lawyer wife accused of ripping off investors in $60M fraud

The co-founder and former CEO of AI startup GameOn is in a pickle. After exiting the top job last year under a cloud, he's now in court – along with his wife – for allegedly bilking his company and its investors out of more than $60 million.

Federal prosecutors in California announced this week a 25-count indictment of Alexander Beckman and his wife Valerie Lau Beckman, with charges ranging from wire and securities fraud to identity theft and obstruction of justice. It is claimed the pair screwed GameOn, now known as ON Platform, out of millions of dollars between 2018 and July 2024, when ON finally parted ways with Beckman after months of concerns over the financial state of the business.

The pair, of San Francisco, were arrested following a FBI investigation, and appeared in federal court in the city on Thursday morning for an initial hearing. They are presumed innocent unless and until convicted.

'Fake it until you make it' to the extreme, allegedly

Per its website, ON offers what's said to be an enterprise-grade AI chat service, for things like customer support and inquiries, which it claims is used by brands including Live Nation, Spectrum, Armani Exchange, and dozens of sports teams and leagues.

According to the indictment [PDF], Beckman, 41, not only allegedly fraudulently fabricated revenue and inflated bank account balances to impress GameOn's investors, successfully convincing them into giving the biz more than $60 million, he also impersonated "at least" seven real people from banks, sports leagues, and one of the Big Four accounting firms to legitimize those fake statements, it is claimed.

Lau, 38, whom prosecutors identified as working as a lawyer at a venture capital firm, has been accused of providing Beckman with genuine audit reports from her employer that were used to create fake audit reports for GameOn. She is also accused of delivering a fake GameOn bank account statement to a bank branch for distribution to an investor in order to falsify the balance in an account. The prosecution alleges the true balance of the account was a mere $25.93, while the falsified statement allegedly claimed the account held over $13 million.

Why go to all this trouble, as alleged by the Feds? So that they could take at least some of the money invested in GameOn, stemming from those faked statements, and spend it on themselves, it is claimed.

"Beckman and Lau allegedly used over $4 million of GameOn investor funds on personal expenses, including purchases of residences in San Francisco, payments to private schools, and payments to their wedding venue," the US Dept of Justice alleged in a press statement. 

Lau earned the obstruction charge by allegedly deleting files related to her work with the San Francisco-based GameOn from her employer's records while a grand jury was investigating the matter.

If convicted, the pair may face lengthy jail sentences. The case involves nine counts of wire fraud, three counts of securities fraud, and one count of wire fraud conspiracy, with each charge carrying a maximum sentence of 20 years. There's also additional possible sentences of five years for securities fraud conspiracy, ten years for using stolen proceeds to make purchases, and 30 years for each of two charges of making false statements and bank fraud. Six counts of identity theft carry a maximum penalty of two years each, and Lau's obstruction charge is worth up to 20 years. The charges vary between the pair.

"The [San Francisco] Bay Area is home to incredible innovation and hard-working entrepreneurs, but innovation cannot grow through fraud," first assistant United States attorney Patrick D. Robbins said of the charges. "This indictment should serve as a reminder that we will investigate and hold fraudsters accountable."

Game ... off?

It's not clear what has happened to ON since Beckman's departure, but judging from an internal letter to shareholders reported in July following his exit, the business's prospects didn't look good.

According to the letter, Beckman quit under pressure from the board following concerns over the state of the upstart's financial situation.

"After Beckman's resignation, we conducted a thorough investigation into the status of the company's bank accounts," the letter said, adding that those accounts had been a "subject of consternation for months."

That probe concluded the board had been assured ON had about $11 million in an account used to fund company operations, yet it apparently only contained $0.37.

"After a series of meetings over the weekend, the board and management determined that the company would need to pause operations and lay off nearly all of its workforce," the company wrote. That move was effective July 8, 2024.

ON's current status is unclear. Its website is still up and functional, and several LinkedIn profiles of employees indicate they're still with the company. ON hasn't posted an update to the site since last June, however, and the company's social media channels have been languishing for even longer.

We contacted ON and several employees to learn more about the status of the outfit, and haven't heard back. ®