The founder of data analytics firm Centricity, Michael Brackett, has been indicted in Manhattan federal court on charges of attempting to defraud investors. Brackett allegedly manipulated bank statements and revenue numbers to create a false impression of his company’s success, which purportedly utilized artificial intelligence technologies to forecast consumer demand in real-time.

Brackett managed to raise $2.5 million from angel investors in 2019 to establish Centricity, claiming he would secure an additional $10 million in 2021. However, the company later collapsed, with Brackett resigning. Prosecutors contend that the fraud ceased when Centricity failed to attract more investors and ran out of funds. Despite claiming to have 13 large U.S. manufacturers and retailers as clients, it was found that only two firms were actually customers.

According to prosecutors, Centricity circulated documents suggesting $3.7 million in annual revenue to investors and short-term lenders. An unnamed victim firm wired $500,000 to Centricity based on this information, only to discover the fraud shortly afterward. Brackett allegedly transferred the victim firm’s funds out of the account, leading to Centricity’s downfall.

Brackett, a U.S. citizen who was residing in Switzerland, faces charges of securities fraud and wire fraud. He was arrested in Maine by federal authorities.

This case echoes similar instances of alleged fraud involving startups manipulating metrics to deceive investors and partners. The fintech startup Frank and SoftBank’s Vision Fund have also been embroiled in similar controversies, raising concerns about the need for transparency and diligence in the startup ecosystem.