The Securities and Exchange Commission is suing Paul Pereira, former CEO and co-founder of artificial intelligence-powered advertising software platform Alfi, for fraud.
The regulator claimed that Pereira made numerous false and misleading statements about Alfi's financial performance, even creating a burner account on a social platform for traders in an attempt to boost the now-bankrupt company's stock price.
Pereira refuted these claims, telling Accounting Today in a call: "All I have to say is it's not true. I can tell you it's certainly not true."
The claim was filed Tuesday in the U.S. District Court for the Southern District of Florida. The SEC is seeking a permanent injunction, an officer-and-director bar (which would prohibit him from serving as an officer or director of a public company), and a civil penalty against Pereira for violating antifraud provisions.
Pereira, 62, co-founded Alfi, originally named Lectrefy, in April 2018. He served as the Miami Beach, Florida-based company's CEO and on its board of directors for four years until resigning in February 2022.
Alfi aimed to use artificial intelligence and data analytics to measure and predict human responses to advertisements. Its success largely depended on the size of its advertising inventory (or revenue inventory), but by November 2020 the company had generated no revenue and was running out of funds to operate the business, according to the
Alfi soon came to be described as a "meme stock," a term describing stocks that gained popularity on social media among retail investors from 2020 to 2021, resulting in extreme price volatility. For this reason, boosting Alfi's online presence was a priority for Pereira, according to the complaint.
The SEC claims that Pereira made an anonymous account on Stocktwits under the pseudonym "Uptix12" to make false and misleading posts, including, "I wouldn't doubt that ALFI have $10 mm to $20 mm in revenues already in their back pocket!" In reality, the company was set to report only $17,000 in revenue.
Soon thereafter, Pereira stated in a YouTube interview that the company was entering into a contract with the founder of a large restaurant chain to deploy its technology in the restaurants. The SEC claims that Pereira "knew, or was reckless in not knowing, that no such contract had been contemplated by the parties."
The complaint further alleges that Pereira made multiple false and misleading statements on social media and in company-issued press releases, including that "available advertising inventory by the end of 2021 is expected to be in excess of $100 million and by the end of 2022 in excess of $500 million."
The company had less than $5 million in advertising inventory at the time, and Pereira did not have a reasonable basis to believe that it would achieve $100 million by the end of 2021, according to the complaint. Alfi filed for bankruptcy in October 2022.
"As alleged in our complaint, Pereira tried to boost the company's stock price through his false and misleading statements," Eric Bustillo, director of the SEC's Miami Regional Office, said in a
