Izea’s shareholders file lawsuits.
Executives at Orlando ad-tech company Izea were intentional or reckless in making false financial statements about the health of the company, a new federal lawsuit contends.
Izea’s stock on NASDAQ imploded early last week after the company acknowledged a potential multimillion-dollar error in its financial reporting. The company share price dropped 18 percent on April 2 and 19.3 percent the next day, finishing the day at $2.42. It had closed March 30 at $3.60.
The first lawsuit, filed late Wednesday in Los Angeles, accuses Izea of operating as “a fraud or deceit” and seeks class action status on behalf of all stockholders who acquired stock between May 25, 2015, and April 3, 2018.
It names Izea’s founder, chairman and CEO Ted Murphy; and Chief Financial Officer Leann Hitchcock as defendants along with one named plaintiff, stockholder Julian Perez. Handling the lawsuit is The Rosen Law Firm in L.A.
“We deny the allegations in the lawsuit and intend to vigorously defend ourselves and the corporation in the lawsuit,” Murphy said in an emailed statement Friday.
The lawsuit says, “The senior officers and/or directors of the Company, had actual knowledge of the material omissions and/or the falsity of the material statements set forth above, and intended to deceive Plaintiff and the other members of the Class, or, in the alternative, acted with reckless disregard for the truth.”
Two more firms announced another similar lawsuits by Friday, including another in Los Angeles federal court, by Bragar Eagel & Squire of New York.
The company (NASDAQ: IZEA) announced April 2 that it had been reporting millions of dollars in gross profit for one of its business segments, but those numbers actually represented total revenue. That means Izea may have to explain to investors why it will now be cutting its profit numbers by millions, but the end result is not clear until the company files its restatements.
Company executives declined several requests for additional comment.
On Tuesday, Izea filed a notice with the Securities and Exchange Commission, saying the errors likely will require restating its past 11 quarterly earnings reports over three years, and two annual reports, as filed with the SEC.
Ponzi scheme
A real estate broker who ran a $5 million Ponzi scheme in the Orlando area based on fake real estate has pleaded guilty.
Attorneys representing victims in civil lawsuits in Orlando said the scheme dated back years and included at least 100 victims and $40 million.
Leone Alfano La Cava, a former sales agent for major homebuilders, had been arrested in Miami in January 2017 on 17
counts of fraud.
He roped in buyers from Italy and Venezuela to pay him for Central Florida properties that he claimed to own. Although he owned some homes, he did not own much of what he claimed, and only paid investors back with money from new investors – the classic definition of a Ponzi scheme.
La Cava faces up to 20 years in prison, but his plea deal indicates authorities won’t object to a lighter sentence because of his admission of guilt.
The Sentinel had previously reported on federal seizure of his properties in January 2015. Federal agents seized property in Orlando, Windermere and Aventura at that time.
Space hotel
Orion Span, a California company, unveiled its ideas for Aurora Station on Thursday – a commercial space station that would house a luxury hotel.
It would probably launch from the Cape Canaveral area, said Frank Bunger, CEO of Orion Span.
"Aurora Station and future Aurora travelers will likely be launching out of the Cape. With a roughly monthly launch cadence, we anticipate spending a lot of quality time in Florida,” Bunger said.
Whether or not it sounds far-fetched, it would be grossly expensive -- $9.5 million for a 12-day trip. ( You can reserve now with an $80,000 deposit.) The idea is to put the craft in low-earth orbit, about 200 miles up. The plan is to launch in late 2021 and host its first guests in 2022.
Several leaders of the company have serious backgrounds in space, including Marv L. LeBlanc, COO, a former executive with the ARES Corporation, and CTO David Jarvis, who spent 13 years at Johnson Space Center in Houston, providing operations support to the Japanese Space Agency, a partner in the International Space Station.
The company claims it has shortened the 24-month training regimen to normally used to prepare travelers to visit a space station, and streamlined it to three months.
Besides experiencing weightlessness and seeing Earth from space, guests would also take part in research experiments such as growing food while in orbit or stay in touch or live stream with their loved ones back home via high-speed wireless Internet access.