Charles Cole indicted for defrauding Napster out of 239M shares

Charles Cole, a 57-year-old Mooresville, North Carolina man, was indicted connected ligament fraud and securities fraud charges for allegedly obtaining 239 cardinal shares of Infinite Reality, present known arsenic Napster, by fabricating grounds that helium controlled billions of dollars helium ne'er had.

The indictment, unsealed Thursday successful the Southern District of New York, charges Cole with 1 number of ligament fraud, 1 number of conspiracy to perpetrate ligament fraud, and 1 number of conspiracy to perpetrate securities fraud. The charges transportation maximum sentences of 20 years, 20 years, and 5 years successful prison, respectively, the U.S. Attorney's Office said.

Prosecutors allege that betwixt June 2024 and March 2026, Cole and others acting astatine his absorption repeatedly lied to Infinite Reality astir his quality to wage for the stock. According to the indictment, Cole fabricated slope records, created fraudulent correspondence, and built a fake website designed to reflector that of a overseas bank, convincing Infinite Reality helium had billions of dollars acceptable to invest. The institution issued the shares to Cole and entities helium controlled, but Cole ne'er provided immoderate funds.

The U.S. Securities and Exchange Commission filed a parallel civilian ailment connected Thursday against Cole, his lawyer Torben M. Welch, and 3 entities controlled by Cole: Beacon Heart, LLC, Heart of Humanity, LLC, and Avranoc, LLC. According to the SEC's complaint, Cole falsely promised to put $3.36 cardinal successful Infinite Reality and, unneurotic with Welch, told the institution that Cole and Avranoc controlled astatine slightest $55 cardinal successful assets. Infinite Reality issued the shares successful precocious 2024 and aboriginal 2025 but received nary money.

After obtaining the stock, Cole and Welch pledged astir 45 cardinal of those shares arsenic collateral to unafraid a $1 cardinal indebtedness from a third-party lender, which Cole ne'er repaid, the SEC said. Welch allegedly provided forged documents and made mendacious assurances to the lender successful transportation with the loan.

Infinite Reality yet rescinded the shares it had issued to Cole and his entities, according to the indictment.

"Fraud is fraud, whether successful our nationalist markets oregon our backstage markets," U.S. Attorney Jay Clayton said successful a statement. "As alleged, Charles Cole built a fabrication of wealthiness utilizing fake slope records, sham correspondence, and a fraudulent slope website, past utilized that fabrication to get hundreds of millions of shares with nary volition of paying for them."

In a connection to Billboard, Napster said it had been engaged with instrumentality enforcement from the outset, aft initially coming guardant arsenic a unfortunate of misconduct, and that its enactment for the ongoing process remains active.