Federal agents arrested the former head of a Los Angeles tax compliance startup in Fort Lauderdale, Florida, as she was trying to board a luxury cruise ship. She has been charged with defrauding venture capital funds of more than $13 million (£10 million). Shiloh Luckey, 42, also known as Shiloh Johnson, was arrested on Sunday and later released on bond by a federal court in Florida, according to a press release from the United States Attorney’s Office for the Central District of California. Federal prosecutors allege that Luckey tricked investors into putting money into her now-defunct company, ComplYant App Inc, by falsely claiming she was a licensed certified public accountant (CPA) and making up the company’s recurring revenue figures. Prosecutors say that instead of building a genuine technology business, Luckey used investor money to fund an expensive lifestyle, including an Inglewood property, a Tesla and a luxury wedding on the Caribbean island of Anguilla.
Arrest at the cruise terminal
According to details released by the US Department of Justice, a federal grand jury in Los Angeles returned a 15-count indictment against Luckey on September 1. The charges include nine counts of securities fraud, three counts of wire fraud, one count of bank fraud and two counts of money laundering. The Federal Bureau of Investigation, which is leading the investigation, arrested Luckey in Florida before she could leave on vacation. She is expected to appear before a judge at the United States District Court in downtown Los Angeles in the coming weeks. If convicted on all charges, Luckey faces up to 30 years in federal prison for bank fraud, up to 20 years for each count of securities and wire fraud, and up to 10 years for each count of money laundering.
Phantom clients and fake credentials
Court documents describe what prosecutors say was a planned, multi-year fraud carried out in the Los Angeles technology sector. Luckey founded ComplYant in 2019 and marketed the app as a digital tool that helped small businesses manage complex tax requirements through a monthly subscription model. Between September 2020 and September 2023, Luckey pitched the software to venture capital investors. Prosecutors allege that she used false pitch decks, made-up financial updates and inflated cash balances to make ComplYant appear to be a fast-growing and highly profitable software company. To build trust with investors, Luckey repeatedly claimed that she was a licensed CPA with extensive experience in corporate accounting and tax strategy. However, federal prosecutors said in the indictment that Luckey had never been licensed as a CPA. Investors were allegedly misled by the false financial figures and claims about her qualifications. Venture capital groups eventually invested more than $13.3 million in the company.
A house of cards built on bad checks
Federal authorities also allege that Luckey carried out a check-kiting scheme in late 2022 to buy her home in Inglewood, California. During September and October 2022, Luckey allegedly wrote a $1.5 million check from a ComplYant bank account that did not have enough money to cover it. She deposited the check into another ComplYant account at a different bank and quickly wired the money to complete the property purchase before the banks detected the shortfall. When the first account fell deeply into the negative, prosecutors allege that Luckey used new money raised from venture capital investors to cover the missing funds.
Complete loss for venture investors
By September 2023, the company’s financial problems became impossible to hide. ComplYant faced severe cash shortages, suddenly stopped operating and eventually shut down completely. The collapse left venture capital investors facing total losses on their $13.3 million investments. Prosecutors allege that much of the money had already been spent on company expenses and Luckey’s personal lifestyle, including her Caribbean wedding. The case is being handled by Assistant United States Attorney Andrew M. Roach of the Major Frauds Section in Los Angeles. An indictment is a formal accusation of wrongdoing and does not mean the accused has been found guilty. Federal officials stressed that Luckey is presumed innocent unless and until she is proven guilty in court.