The former chief executive and the CFO of Digi Outdoor have been charged with defrauding investors in the digital billboard company, siphoning off more than $2 million to pay for their own personal expenses.
The U.S. Securities and Exchange Commission said CFO Shannon Doyle participated in the fraud by, among other things, forming a fake vendor called Signworks that charged Digi Outdoor for sign construction and installation work and using the address of a girlfriend as its business address.
Doyle allegedly also used at least $2.3 million of the funds deposited in Signworks’ bank account to pay the expenses of CEO Donald MacCord Jr. and for his own businesses. Of the $4.5 million the two executives raised from investors, the SEC said in a civil complaint, $3.6 million was transferred to Signworks.
MacCord is accused of spending more than $1.6 million in investor funds on such things as a London vacation, apparel from Italian clothiers, and a deposit on a BMW vehicle for his stepson. He and Doyle were arrested Monday on parallel criminal charges.
“MacCord and Doyle went to great lengths to conceal their fraud by creating fake invoices, loans, and leases so they could use Digi as their personal piggy bank and bilk individual investors,” Jina L. Choi, director of the SEC’s San Francisco Regional Office, said in a news release.
According to the SEC, the two men worked together at a company that sells outdoor signage for advertising before MacCord founded Digi in 2009. He hired Doyle as CFO in December 2010.
From 2013 through at least November 2014, the SEC said, Digi offered investments in the form of convertible promissory notes with two-year terms and paying 25% interest annually. MacCord and Doyle allegedly told investors the money would be used to construct and install digital signs for commercial advertising around Washington, D.C.
“Rather than building Digi’s business, MacCord and Doyle surreptitiously siphoned off more than $2 million for themselves,” the SEC said.
The complaint also says the two executives made false statements in a regulatory filing for a public offering of Digi shares and are “currently soliciting investment for a new venture.”