Albuquerque tech company Lavu seeks to recover almost $240,000 from a Mississippi business that allegedly used Lavu's own technology to steal from the firm.
Lavu filed motions last week in the U. S. Bankruptcy Court for the Southern District of Mississippi that seek to move three bankruptcy cases against the defendants forward after a five-month delay.
The motions signal Lavu's continued efforts to recover the money, which a federal judge ordered that May Day Movers and Damion May pay the Albuquerque software company in an August 2020 default judgment. In all, the judge found Lavu was entitled to a principal amount of $236,500, minus any money recovered as part of a related $49,000 judgement against Natasha May.
A default judgement is often ordered when a defendant fails to plead or defend their case.
Two months after the default judgment, the defendants all filed for Chapter 7 Bankruptcy protection and their cases stalled for almost six months. At the end of June, the court re-assigned a judge to the cases. Lavu’s motions came about two weeks later.
Lavu CEO Saleem Khatri could not be reached for comment. And the company's attorney, Jeff Rawlings of
Rawlings & MacInnis, P.A., declined comment.
The case dates back to April 2020, when Lavu alleged in a U.S. District Court for the Southern District of Mississippi lawsuit that Damion May, along with his company May Day Movers LLC, used Lavu's Sourcery invoicing platform to fraudulently obtain the money about two months earlier.
Lavu provides point-of-sale software and hardware to the restaurant industry. Its Sourcery platform allows users to pay invoices using checks drawn from Lavu's own bank account while replacing that money with funds from a bank account linked to the client. But, according to its court complaint filed in the April 2020 lawsuit, Lavu was unable to recover $237,100 out of a total of $440,400 drawn on behalf of May Day Movers as its bank account had insufficient funds.
Lavu’s court complaint accused May Day Movers of using some of the funds to purchase two luxury cars — including one BMW vehicle worth more than $54,000 — from the Mercedes-Benz of Jackson dealership in Mississippi. The company used the money to also pay three individuals, including defendant Natasha May. The payments totaled more than $58,000, the complaint says.
The impact of the alleged theft is unclear, but it took place at the beginning of the Covid-19 pandemic and related restrictions which ravaged Lavu's main customer base. It was previously at the forefront of Albuquerque's bustling tech startup scene, receiving a Local Economic Development Act award for the growth of its workforce, but then faced a sustained period of layoffs that eventually put an end to those aspirations.
Lavu also had trouble paying rent during the pandemic, admitting in a separate court case with its former landlord, Albuquerque Plaza Office Investment LLC, that it had not paid rent. As of the end of September 2020, Lavu had 27 full-time employees in Albuquerque, according to the state, down from more than 130 two years ago.
Lavu was founded in 2010 by Corey Fiala and Andy Lim, who now leads Albuquerque point-of-sale and online ordering company Addmi Inc. In 2015, Lavu disclosed a $15 million Series A investment round led by Aldrich Capital Partners, an investment firm with a presence in Washington, D.C., and Silicon Valley. The next year, Lim was replaced as CEO by Marc Chesley, who left the post after three months. Ohad Jehassi was then put in charge before Khatri was hired as CEO.
After Khatri's appointment, Lavu acquired two companies, the first of which was Pennsylvania-based MenuDrive. The next deal was with Sourcery in the Bay Area.
Lavu "has no plans to curtail its operations or to discontinue any of its business lines," Khatri told Business First in an email last year.
