The founder and CEO of a former Milwaukee startup backed by investors including gener8tor and BrightStar Wisconsin Foundation Inc. is facing civil charges from the U.S. Securities and Exchange Commission (SEC) alleging that he committed fraud and misappropriated $2.15 million in investor funds.
Blessing Egbon was the founder of Exit 7C Inc., which created an app designed to help fleet drivers securely pay for gas. According to an SEC complaint filed Aug. 10, the startup raised $6.47 million from at least 14 investors by providing forged bank statements, and made-up revenue and profit numbers.
Egbon then spent more than $530,000 on luxury nightclubs, $269,900 on chartered jets, $62,500 on villa rentals and tens of thousands of dollars on other personal expenses including alcohol and sporting event tickets, the complaint alleges.
Exit 7C participated in gener8tor, a Wisconsin-based accelerator program, in 2016. Gener8tor invested $90,000 in the company. Exit 7C also received $50,000 from the St. Louis Arch Grants program, $50,000 from BrightStar, $50,000 from a Wisconsin nonprofit that invests in minority entrepreneurs, $200,000 from a California venture capital firm and $5 million from an international venture capital firm, among other investments.
Exit 7C's investors include San Francisco's Forum Ventures and Right Side Capital Management LLC, and Seattle's 9Mile Labs, according to Crunchbase.
Gener8tor has been cooperating with investigators for a few months, according to its co-founders Joe Kirgues and Troy Vosseller. BrightStar confirmed that it had been notified about the investigation but didn't provide further comment.
"We're deeply disturbed by the allegations, which allege a high degree of fraud against the company and all of its investors," Kirgues and Vosseller said in an email.
Egbon, 34, could not be reached for comment. He founded the company in 2015 as CoOp Fuels Inc., based in North Carolina. In 2016 he changed the name to Exit 7C and moved the headquarters to Milwaukee, where he currently resides, the SEC complaint states.
Between 2015 and 2020, Exit 7C generated around $400,000 in gross revenue and never made a profit, according to the complaint. He allegedly provided investors with financial results showing that Exit 7C was a profitable, growing company.
For instance, in its 2016 gener8tor application, Exit 7C reported that its ethanol delivery business was profitable and that the company had $15,000 in monthly cash flows. As it was seeking investment from an international firm, it reported gross sales of $79.5 million and gross profit of $6.35 million for 2019, the complaint states.
In July 2020, Exit 7C's board of directors began conducting an internal investigation and restricted Egbon's access to company money. The board dissolved the company in October.
The SEC is requesting a trial by jury and is seeking an injunction, civil penalties, an officer and director bar, a penny stock bar, and disgorgement with pre-judgment interest.
