Once-Hot Startup At Center Of Fraud Allegations Changes Its Strategy - And Its Name
In December 2018, a company called Fintiv filed a lawsuit against Apple claiming the tech giant had infringed on a patent for a mobile wallet management system
Based in Austin, Texas, Fintiv is a virtually unknown entity in the tech world, describing itself as being in the business of mobile payments and marketing campaigns. But Fintiv used to be known by a different name, Mozido, a once-hot mobile payments startup at the center of a large alleged investment fraud and criminal prosecution.
According to an amended certificate of incorporation filed with Delaware’s secretary of state, Mozido has changed its name to Fintiv. Adolfo Salume, Fintiv’s chairman, confirmed to Forbes that “Mozido is now doing business as Fintiv” and that the company is actively working to enforce its broad patent portfolio.
In February, two months after Fintiv sued Apple, federal prosecutors in Maine indicted Michael Liberty, accusing the founder of Mozido of orchestrating an investment fraud in connection with his fundraising activity around Mozido, the company he once claimed would revolutionize global payments. Mozido itself was not charged.
The name change occurred after securities regulators accused Liberty of perpetrating an investment scam in 2018. Charlie Wiggs, president of Fintiv, signed the Delaware filing changing Mozido’s name to Fintiv a few days after the Securities & Exchange Commission charged Liberty last year of defrauding 200 individual investors. The SEC claimed Liberty raised $55 million from individuals who thought they were investing in Mozido and diverted a large portion of those funds for his personal use. Again, Mozido itself was not accused of any wrongdoing by the SEC.
Liberty, who has pleaded not guilty to the criminal charges filed against him and has previously denied wrongdoing, is one of Fintiv’s shareholders. Other shareholders include funds managed by financial giant Wellington Management and hedge fund legend Julian Robertson.
Mozido raised $300 million from big investors to build a mobile payments company and was valued at about $5.6 billion when it purchased PayEase, a Chinese payment processor that generated the vast majority of Mozido’s revenue. In addition, Liberty raised some $55 million from individual investors for Mozido, most of which was transferred using shell companies to fund other Liberty companies, payments to his ex-wife and interior decorating, federal prosecutors claim. He is even accused of using some of the money he raised for Mozido to pay a discouragement penalty issued by a federal judge against Liberty related to a previous Liberty investment scheme that resulted in an SEC enforcement action years ago. Liberty’s lawyer declined to comment.
The individual investors from whom Liberty raised money started to ask Liberty questions about their Mozido investment following the publication of news articles in 2016, federal prosecutors claim. Forbespublished a detailed article about Mozido in July 2016 calling the company “the financial industry’s Theranos.”
Mozido sold its most meaningful unit, PayEase, last year to pay back a large debt obligation that was partly used to repay employees for unpaid work. Mike Love, who played a big management role at Mozido for years and worked closely with Liberty, is a director of Fintiv. So is Michael Liberty’s cousin, Stan Liberty. In its lawsuit against Apple, Fintiv is represented by the law firm headed by Marc Kasowitz, who for years represented Mozido.
Some of the money Liberty raised was used by Mozido to acquire and develop patents. Liberty showed a keen interest in patents and once bragged that Mozido had collected 100 of them. The patent Fintiv is using to sue Apple lists inventors in South Korea, and Mozido acquired the patent when it purchased the South Korean entity that owned it in 2014.
“We have the mobile wallet patent for the banked and unbanked,” Liberty touted in an interview with Forbes in 2016. It is an “extensive portfolio.”
Adolfo Salume, Fintiv’s chairman, says the company has formed a division to consolidate its patents and enforce them, preferably through licensing. Salume added that Fintiv also continues to offer its mobile payments and loyalty marketing products. He said Fintiv’s policy is to not comment on the criminal and regulatory actions against Michael Liberty.
“We have decided to pursue our interest in terms of defending our intellectual property. … Our first inclination is to have a private negotiation like we did with Apple, and a lawsuit is only a product of the refusal to have a private negotiation,” Salume said. “There are other companies using our technology without a license so part of the task of our board is to protect the value of the investors in the company and we do have a strategy, not for lawsuits but for licenses … a last resort is a lawsuit.”