The founder of a Winnipeg-based technology firm has been arrested and charged in California with wire fraud, accused of deceiving investors out of approximately US$120 million. According to a criminal complaint, Matthew Derrick Hudson circulated falsified financial documents to secure backing for Invenia Technical Computing Corp. , his company that employs machine learning to analyze electricity markets. The U. S. Attorney’s Office for the Northern District of California unsealed the complaint on September 24. Hudson also faces civil charges from the U. S. Securities and Exchange Commission (SEC), which claims he violated securities laws. These unproven allegations add to a series of troubles at Invenia. Hudson and his co-founders launched the company in Winnipeg 19 years ago. Invenia promoted itself as offering improved predictions of next-day electricity usage through computer modeling designed to optimize energy consumption and reduce waste. The company expanded into trading and investing in next-day electricity markets, primarily in the U. S. , and by mid-2017 employed about 20 staff in Winnipeg and 10 in Cambridge, England. The SEC alleges fraud occurred during two funding rounds from 2020 to 2022. Its 17-page complaint states that external investors invested around US$86. 2 million into Invenia between October 2020 and March 2021, with an additional US$33. 5 million contributed by January 2022. During this period, Hudson reportedly made materially false and misleading statements to investors. A forged 2019 audited financial statement inflated Invenia’s annual gross revenue to roughly US$227 million, a roughly 1, 035% increase over the actual US$20 million, according to the SEC. The same statement reversed Invenia’s nearly US$10 million net loss into a positive net income of about US$114 million. The scheme also included fake emails and fraudulent invoices, per the complaint. The SEC highlights two investors based in San Francisco involved in the first funding round and states that one of two second-round investors also resides in San Francisco. The first round included five U. S. investors in total. Hudson, who was Invenia’s CEO and effectively its acting CFO at the time, also allegedly sent inflated financial results to other board members. The situation escalated when an investor contacted the board regarding the second funding round. The complaint asserts, “Hudson knowingly or recklessly fabricated virtually everything about the (second) funding round, which was never authorized by Invenia’s board. ” A special committee was formed in April 2022, uncovering the deceptive financial information.

By August 2022, both second-round investors were reimbursed under Hudson’s direction, but the first-round investors have yet to recover their funds, the SEC alleges. Hudson was terminated by the board in October 2022. Two months later, Bloomberg reported that Tribe Capital, a venture capital investor, slashed Invenia’s valuation by 95%, citing inflated financials and other irregularities. Approximately 75 Invenia employees across Winnipeg and Cambridge were laid off in early 2023, as previously reported by the Free Press. Earlier this year, the company was placed into bankruptcy by its board. Hudson has been released on bond pending trial and is scheduled to appear in U. S. federal court on November 17. The Free Press reached out to Hudson Monday morning but received no response by day’s end. If found guilty, Hudson faces up to 20 years in prison, a fine of US$250, 000, and restitution, as detailed by the U. S. Attorney’s Office. The SEC seeks permanent injunctions, including a conduct-based injunction, disgorgement with prejudgment interest, civil penalties, and a ban on serving as an officer or director. gabrielle. piche@winnipegfreepress. com