GreenTech startups are booming as environmental issues become increasingly important. In fact, venture capitalists have invested over $20 billion into green-tech in the past five years. But like every growing field, there are amazing companies but also blatant frauds. Arizona-based Advanced Green Innovations (AGI) is one instance of such fraud.
Founder Ken Losch got investors to buy in with a mission to allow semi-trucks to be powered by natural gas instead of regular fuel.
The extent of the fakery? Some $200 million in funding from investors. Estimates show the extent of the fraud to be only a fraction of the total funding amount, though. Still, a lofty $37 million.
But AGI started scamming investors far before it had its comfortable $200 in funding. Even when it had $133 million, it didn’t have a marketable product.
Although AGI had quite a few subsidiaries, indictments were focused primarily on ZHRO Solutions, which would produce kits that helped consumers allow semi-truck engines to appropriately run on natural gas.
In 2013, engineers estimated it’d take two years to finish production. Even so, Losch promised investors their kits could be delivered by December of that same year.
Consequently, “Losch told engineers working on the fuel injector product that they were prohibited from communicating with AGI business development personnel or having direct contact with investors and potential investors,” according to the indictment.
The second investor in AGI, Chris Haver, wants Losch out. Haver and his friends and associates allegedly put more than $60 million into AGI and believe there is no path forward so long as Losch is attached to the company.
But although blatant fraud seems obvious to them, it isn’t as much to the arbitrator. Haver shared, “Ken Losch was indicted on 17 counts of fraud by the U.S. Attorney’s Office.”
Losch pleaded not guilty to said 17 charges, composed of serious allegations including wire fraud scamming investors out of $37 million in and around 2013.
A Pheonix arbitrator sees some claims against Losch to be unsupported and has currently allowed Losch to continue running the company at the time of this writing.