GatherOnline Startup Scam
by Michael Van Andel and David price – part 1
Because of his background in fund management and investing, at ABSA Group
, Michael Van Andel together with David Price decided to start their own Tech Startup and quit their everyday jobs.
They never intended to invest their own money, so they started looking around to outsource the production of their first website to gullible young programmers they found on freelancing websites, this way they found Alexandru Blaga, an IT student from Iasi, Romania.
They managed to get him on board by promising the world to him, a lot of money, shares in the company, relocation to Australia, and so on, if he could deliver a basic implementation of an initial trivial initial idea, there was no concrete idea to begin with so that lead to a very incoherent code base because of the frequent changes that had to be implemented, which required very high maintenance resulting in a lot of extra work that Alex Blaga had to do.
The product created by Alex Blaga would later be pitched to gullible investors that believed GatherOnline actually had a development team behind them.
After Alex finished the first prototype, they went through their first crowdfunding, in which, with the help of Michael Van Andel investor connections, together with investors usually found on crowdfunding websites, managed to get around $500.000 (Article
). People tend to invest because they see others invest, so that lead to quite a large amount being raised.
Until this point they didn’t pay Alex Blaga almost any money, but instead they managed to convince him to continue working for extra shares (shares he never got, but we will get to that).
While this happened Michael Van Andel managed to convince other investors, connections he had from his work place, to invest in GatherOnline with the promise they will launch mobile apps and they will be a huge hit, and used the previously successful crowdfunding campaign as argument to the validity and value of the GatherOnline product he was developing, none of the investors being aware of what was really going on.
Because the only person that knew the application well, both backend and frontend was Alex Blaga they had to convince him, by promising to pay him all the outstanding money they promised until then and a huge extra, to deliver an Android and IOS application, which were needed to be pitched to investors for a next round of funding.
Of course Alex Blaga eventually caught on with what was happening and the fact that he was being exploited, so he stopped responding to their messages. After he stopped responding David Price started sending people after him to persuade him to come back and also gave him a small sum of money to convince him that they changed their ways. He came back thinking they will keep their word and pay him the monthly salary that was promised to him but of course this never happened so after a few more months he quit for good and didn’t give them the code for the applications.
They were already a lot behind schedule with the launch of the mobile applications and at the same time the website was very buggy so they had to hire a Croatian outsourcing company to take care of the website. I will not go into details about their work on the product because it was mostly maintenance and they charged GatherOnline quite a lot of money for their work without delivering the needed mobile applications nor improving the website’s functionality.
At that point they were hemorrhaging money to pay for website maintenance (to Croatian team) and were at risk to lose the investors waiting on the mobile apps so they became desperate trying to get Alex back to finish the mobile applications, so in the process of finding people to go after Alex (which changed his phone number to get away from them) they found me and my brother. They told me a short story that would partially explain their situation and the reason they want to find Alex but instead of agreeing to go after Alex I told them I can finish the prototypes for their mobile applications in 3 weeks, which I did.
After some QA testing and implementing the new requirements into the mobile apps we launched them by January 2017, me and my brother spent our New Year’s working on the apps. Without knowing too many things about what was going on, and in general being of good faith, I trusted we will get shares in the company and payment increase after 6 months of working for them as we agreed in the beginning.
Immediately after they launched the apps they managed to get the money from the investors that were waiting on the mobile applications through a crowdfunding campaign hosted at Equitise.com ( link ) I must say I’m deeply disappointed on the screening and company assessment methods used by crowdfunding websites. Basically all user statistics were faked and I have the database to prove it (You can see screenshots below).
During this crowdfunding campaign they also managed to get a lot of extra funds from naive investors that, like me and my brother, believed the numbers they saw on the presentation decks and thought we are dealing with trustworthy people.
When I got access to the production database I noticed 95% of the accounts were fake and all content was manually added by freelancers hired on Upwork ( link
But as long as the public doesn’t know and investors can’t check for themselves the show goes on.
After this second crowdfunding round (that got them nearly $700.000) Michael Van Andel was starting to get in trouble at his daily workplace, forced to resign. Also the investment company he worked at found out about him pitching his startup scam to the investor pool of the company.
Even before the second crowdfunding was over a third one was started on Seeders.com ( link
), again a lot of fake information was provided but no one knew at that time. Even the developers were coerced into investing during that round. The company managed to raise another $250.000 and at this point I was expecting to get the salary raise that was promised to me when I joined, 8 months passed since I started working for them and the raise was suppose to happen after 6 months.
For the third round a lot of people were convinced to invest because they were promised the technology stack will be completely updated.
I basically build 60% of the new technology stack by myself (80% of the mobile applications, 70% of the new angular frontend, and also worked on the symfony 3 backend) so a raise would have been in order but instead me and my brother got fired without any notice. The $114.000 equity, for which I worked a lot of extra hours, even 17 hours per day in some weeks, had been withheld and they tried to buy it back for $2600 (50 times less than what they said it’s worth).
Before his resignation, Michael Van Andel was already funneling money from GatherOnline using fake hires, but because he lost his investment job at ABSA Group
he had to compensate the decrease in capital by taking even more money from the company, using his own name this time.
Because of his greedy nature he of course decided to cut the budget of the only department that actually did something to deserve the invested money, the tech department, namely me and my brother.
He was able to do that because between January and June I managed to find some good programmers with affordable salaries, some of which were my friends, that could handle software development for both web and mobile.
I didn’t mention that before that, he hired a few freelancers, without consulting with me, that turned out to be frauds, some worked using multiple accounts, others did very bad work, which were eventually fired because I managed to expose them.
One month before my brother and I were fired the budget cut was announced, the budget cut was being redirected to pay for Michael Van Andel salary on top of the money he was already getting for the fake hirings. Most of the tech team members were new so they didn’t understand what was happening.
In response to that I sent an email to Michael, David and the tech team in which I pleaded for the budget cut to not affect the tech team but instead allow us to vote for the positions that were least useful to the company (like the fake hires). Of course the tech team agreed with that but Michael started making up stories that all of the made up roles are relevant to the company. If I didn’t know better how the traffic and users are generated I would have also been tricked.
Of course he didn’t want to have anyone opposing him in the company or exposing for the fraud he is, so he used the email I sent him as a justification for firing us without notice.
He kept saying that the Board of Directors decided so, but the board of directors is only made up of him, Michael Van Andel, David Price, and another few fake hired people that he uses to steal money out of the company.
The main shareholders of GatherOnline are Michael Van Andel (41%), David Price (38%) and Vincent Dravert (4.5%).
Based on the amount I was offered for my shares, $2,600 for $114,000 worth of shares, the company valued at about $6,500,000 is worth about $147,000, which is the amount of money that was actually invested in development in the last 10 months (since I started working for them), money paid out of the $1,000,000 received from investments, most of which David and Michael already embezzled.
The methods used in this scam are very subtle and almost makes it seem like a legit business:
They promise you whatever it takes for you to start working for them, promising they will pay you after everything is finished and also giving you a lot of equity.
They created and maintained conflict inside the development team by complaining privately about how bad the other developers are, and encouraging you to start fights with them, while in team meetings they act like they are against it. They use whatever is said about the developers to justify a salary decrease or firing them and canceling their equity.
They get people to invest by using fake statistics, hire people to generate content and create fake accounts.
They make promises to investors they can’t keep and coerce them to invest using manipulation techniques.
They hire cheap SEO freelancers that can provide them with traffic and users, most of the traffic coming from india and users created by the SEO freelancer using scripts.