A Bath native was arrested in Maine on Tuesday for charges of wire and securities fraud after he allegedly used falsified financial data to trick a venture capital firm into investing $500,000 into his artificial intelligence startup.
Michael Brackett, who grew up in Maine and now lives in Switzerland, faces up to 40 years in jail for lying to potential investors about the financial health of his now-defunct company, Centricity Inc., according to an indictment filed in a federal court in Manhattan.
Brackett, 36, spent his youth helping run his family’s business, Brackett’s Market IGA in Bath, before becoming an executive at Hannaford, according to a March 2020 news release announcing the formation of Centricity. Brackett and co-founder Jason Nichols, the former head of artificial intelligence at Walmart, incorporated the startup in 2019 and promised its AI algorithms could analyze internet traffic for billions of data points to help grocery stores and retailers understand consumer preferences, the announcement said.
The company was running out of funds in early 2021, according to the indictment, but Brackett, who served as CEO, was painting a rosier picture to woo potential investors. He allegedly doctored a 2021 bank statement to change the company’s end balance from just under $95,000 to $595,000. At least one prospective lender noted the statement appeared manipulated, according to the indictment.
Court records allege that Brackett fabricated a list of clients and sent falsified annual revenue numbers to a New York-based venture capital firm in June 2021. Eleven of the 13 supposed customers on the list had never paid money to Centricity, and the two that did paid only “nominal amounts to test Centricity’s product.” The company had generated “only a fraction” of the $3 million in revenue Brackett claimed, according to the indictment.
After examining the document, the firm agreed to invest in Centricity and wired $500,000 to the company. Days later, the firm discovered the startup’s financial numbers were falsified and sought to reverse the transfer, according to the indictment, but Brackett had allegedly already emptied the account. He resigned within days, and Centricity folded shortly after.
Copy the Story LinkComments are not available on this story.
Send questions/comments to the editors.
