An Arlington start-up that promised to help people root out schemes and scams in their own lives was, nearly from the start, a cash cow for the founder’s extravagant lifestyle, start-up CEO Daniel Boice acknowledged in Alexandria federal court Friday.
Boice admitted last year that he sustained his start-up by lying to investors, then used a good chunk of their funding to live the lush life of a mogul.
“It would be difficult to describe the havoc you created by your fraudulent actions,” Judge T.S. Ellis III said before sentencing Boice to eight years in prison. “It’s an egregious fraud.”
Revenue was “very low and declining . . . for Trustify’s entire life,” Assistant U.S. Attorney Russell Carlberg said in court Friday, yet Boice “immediately began siphoning large sums of money” from the company for himself.
The model was viewed skeptically from the start by veteran private investigators, who said Trustify’s rates were too low to generate quality work and the kind of profit Boice claimed.
Most of the money came from investors, for whom Boice painted a picture of success by making up balance sheets and forging promises of funds from other sources.
Eighteen million dollars went into the company between 2015 and 2019, prosecutors said. While some was used for legitimate expenses, millions of dollars were not.
When staff started asking about their unpaid wages, he fired them the week after Thanksgiving. When he was sued by investors, Boice said he was being targeted by “old White male 1 percenters and their silver spoon trust fund inheriting lackeys.” When he was ordered in court to pay his staff back and give up control of the company, Boice moved to Florida, started calling himself Keith, and got a job at a medical software company that is now suing him for fraud and theft.
He had the “apparent belief that these were rich people who could afford to be defrauded,” Carlberg said, and as a “99 percenter” he was entitled to their money.
But “a lot of employees got taken for a ride and wound up very hurt,” Carlberg said. “There was real harm here.”
Boice spent at least $3.7 million on himself, which Carlberg called a “conservative estimate.” (The Securities and Exchange Commission estimated the amount of money at closer to $8 million.) That self-dealing included payments on homes in Alexandria and Cape May, N.J.; vacations to Mexico, Israel and Italy; and a private jet to take his children to camp. He spent nearly $3,000 in one month alone at the Inn at Little Washington, a luxurious restaurant and hotel in Virginia.
Boice hired a retired Arlington County sheriff’s deputy as a personal chauffeur and a former U.S. vice-presidential staffer as a “house manager.” She left after three months, she told an FBI agent, because of “shady” behavior, including unpaid bills and declined credit cards. “His spending was out of control,” she said, according to the interview notes. “Huge amounts of Amazon boxes arrived daily.” A Trustify employee told the FBI that he stopped telling Boice when investor funds came in to keep the founder from raiding them to pay off his own credit card bills.
Corporate funds also were spent on a flashy “film noir” inspired Crystal City office from which the company was ultimately evicted, along with unsuccessful ad campaigns.
Boice’s second wife, who founded Trustify with him, settled related claims with the SEC for $71,850.
Public defender Todd Richman said Boice had accepted all responsibility for his “terrible, abysmal choices,” including by agreeing to pay an $18 million debt “from which he will likely never get out from under.”
Trustify was not designed as a scam, he said, but “a real company that employed real people and created a real service utilized by thousands of real customers.”
But when the business model proved unsustainable, Richman said, Boice was unable to accept another failure in the middle of a custody battle with his ex-wife and estrangement from his parents.
After their divorce, his first wife wrote the court, “Danny soon became a person I no longer recognized. He became consumed with success, or at least the appearance of it. He was driven to an unhealthy level and it was evident that all of his decision-making — personal and professional — was oriented towards his unbridled ambition. Predictably, it all came crashing down around him.”