The FBI is investigating a startup founder accused of spending $5.5 million in VC funding on a house and Caribbean wedding

This morning, we covered how fake investors prey on desperate startup founders. This story shows how that trust can break down in the opposite direction.

According to a litigation notice released by the Securities and Exchange Commission (SEC), first reported by Business Insider, federal authorities are now investigating a venture-backed startup founder accused of misleading investors and using millions of dollars in VC funding for personal expenses.

The SEC said it has filed charges against Shiloh Luckey (formerly Shiloh Johnson), the founder and former CEO of tax-compliance startup ComplYant App, Inc., alleging she fraudulently raised more than $13 million, mainly from venture capital investors, between 2020 and 2023.

“The Securities and Exchange Commission announced today that it filed charges against Shiloh Luckey (formerly Shiloh Johnson), the founder and CEO of technology startup, ComplYant App, Inc., for allegedly fraudulently raising more than $13 million, mostly from venture capital investors, between 2020 and 2023,” The SEC said in a Litigation Release No. 26424.

David Sacks’-Backed Tax Startup CEO Defrauded Venture Capital Firms, SEC

Court filings show Luckey is under federal criminal investigation by the FBI and the U.S. Attorney’s Office for alleged securities and bank fraud. In a parallel civil case, the SEC alleges Luckey painted a sharply inflated picture of ComplYant’s business performance while diverting company funds to cover personal spending, including a home purchase, luxury travel, Super Bowl tickets, and a destination wedding in the Caribbean.

“The founder and CEO of a now-defunct online tax software startup fraudulently raised over $13 million from venture capital investors, the SEC said. From October 2020 through September 2023, Shiloh Luckey vastly overstated the revenue and number of subscribers for her startup, ComplYant App Inc., and falsely claimed to be a licensed certified public accountant,” Bloomberg reported, citing the SEC.

Reached by phone, Luckey declined to comment, saying, “I don’t have anything to offer you,” before hanging up.

ComplYant was founded in 2019 with a pitch aimed squarely at small businesses struggling to comply with state and local tax rules. The company promised to simplify cross-jurisdictional filings, a familiar problem that has drawn investor interest for years. In 2022, ComplYant closed a $5.5 million seed round led by Craft Ventures, the San Francisco firm co-founded by investor and White House advisor David Sacks.

A spokesperson for Craft Ventures did not respond to requests for comment. The FBI and the SEC declined to comment on the criminal investigation.

The SEC’s complaint alleges that the gap between ComplYant’s internal finances and what investors were told was extreme. According to the filing, Luckey told backers that monthly revenue had climbed from roughly $2,500 in late 2020 to more than $250,000 by September 2022, supported by claims of steady subscriber growth.

The reality, regulators say, looked very different.

“Luckey painted a rosy picture for investors of ComplYant’s business performance,” the SEC said in a statement. “However, ComplYant only generated on average monthly revenues of about $250 during roughly the same time period and averaged fewer than four new subscribers each month.”

The SEC also alleges Luckey represented herself as a certified public accountant despite having no record of ever receiving the credential.

As money flowed in, ComplYant scaled quickly. The company hired more than 50 employees. Then, last year, it shut down without warning, Business Insider reported. Employees say communication stopped abruptly. It took weeks for final paychecks to arrive, and some workers later discovered missing 401(k) contributions, according to prior reporting.

In April, Luckey was formally notified that she was under federal criminal investigation, a fact disclosed in a recent petition she filed seeking to pause the SEC’s civil case. The filing cites the overlap between the civil allegations and the ongoing criminal probe.

The SEC alleges Luckey siphoned at least $2.2 million in company funds for personal use, including trips to Aspen, Miami Beach, Turks and Caicos, and Lisbon, as well as payments tied to her wedding, car, and house. Luckey, who is representing herself in court, has not responded publicly to the SEC’s allegations.

The case lands amid a broader shift in how regulators approach startup misconduct. For years, early-stage companies operated with lighter oversight than public firms, even as founders pitched aggressive growth stories and investors rushed to back hot deals with limited diligence. Following collapses such as Theranos and FTX, enforcement agencies have signaled a lower tolerance for fabricated metrics.

“Startup founders cannot fake it until they make it by falsifying revenue metrics,” SEC regional director Monique Winkler said in a statement.

Recent cases point in the same direction. Charlie Javice received a seven-year prison sentence for fraud tied to inflated user numbers. Mozaic Payments’ former CEO, Marcus Cobb, also faces fraud charges. Regulators appear increasingly willing to bring both civil and criminal cases when investor disclosures cross from optimism into deception.

Even after ComplYant’s collapse, Luckey has maintained a public presence. She continues to post tax and accounting advice on TikTok, where her account has nearly 24,000 followers. In October, filings show she launched a startup called HabitLoop, described as a digital financial assistant for personal money management.

In a video introducing the new company, Luckey framed the project as a response to her own financial struggles.

“I grew up with very poor financial habits,” she said. “This is something I built on hard lessons.”

For an ecosystem built on trust, the case stands as a reminder that breakdowns do not run in just one direction. Founders worry about fake investors. Investors worry about fake numbers. When both fears collide, regulators tend to follow.

ComplYant