Three years ago, a soft-spoken mobile app developer named Jesus Rodriguez was hailed as one of the up-and-coming bright lights of Miami's emerging tech sector. Rodriguez's company, KidoZen, was among the first local companies chosen for mentoring by tech business incubator Endeavor Miami.
Rodriguez quickly claimed runaway success. He boasted millions in funding and more than 100 high-profile companies around the globe as clientele.
But Rodriguez was a fraud. He has now been sentenced to two years in federal prison and ordered to pay $5.5 million in restitution for lying to KidoZen investors.
His downfall is just the latest black eye for Miami's tech scene and for Endeavor Miami in particular. In March, group board member Alberto Chang Rajii was forced to resign after New Times and media in his home nation of Chile reported that he had inflated claims about attending Stanford and investing early in Google.
The two cases have raised concerns among some in the local tech community about whether investors and incubators are skeptical enough about new companies with big promises.
"Sadly, I am not surprised to see another Endeavor-related fraud after the news of Alberto Chang and now KidoZen," says one leading Miami tech investor who requested anonymity out of fear of retribution. "It really puts a black eye on all the efforts we're trying to achieve."
(Endeavor Miami hasn't responded to New Times' request for comment about Rodriguez's case.)
Update 4 p.m.: Endeavor Miami's managing director, Laura I. Maydón, says the group is "disappointed" by the conviction. Here's her full statement:
We are very disappointed by the news. Even though Jesus was disengaged as an Endeavor Entrepreneur for more than a year when he stopped being CEO of KidoZen, we expect anyone associated with the Endeavor network to adhere to the highest ethical standards. Needless to say he will never be able to return to our network.
Endeavor Miami did not play any role in KidoZen’s funding. Jesus had already raised his series A prior to being selected, and like his investors, we did not foresee this outcome.
Endeavor selects entrepreneurs based on track record, leadership ability and potential to scale. Once selected we provide mentorship services to accelerate their growth. Endeavor has a long track record of selecting high-impact entrepreneurs around the world. Endeavor Miami currently supports the growth of 13 companies that together generated in 2015 close to $80 million in revenues and more than 1,300 jobs.
Rodriguez first garnered big press in Miami in 2013, when he won a contest run by Endeavor Miami, the local branch of a global nonprofit that mentors young companies. His firm, KidoZen, was chosen after being "interviewed and vetted at Endeavor’s three-day International Selection Panel in Dubai," the Miami Herald reported at the time.
"We couldn’t be more thrilled," Matt Haggman, Miami program director for the Knight Foundation, told the Herald at the time.
KidoZen purported to develop mobile apps for big companies and claimed to grow rapidly. Rodriguez spoke often as an expert on mobile technology.
But doubts emerged last summer. The Information ran a damning story in August detailing concerns among investors that the firm was inflating its figures and didn't have nearly the funding it claimed.
They were right to be worried. By last fall, KidoZen had been sold to a Tampa company and Rodriguez was out. In federal civil court, burned investors sued the firm.
And in September, the feds moved in. Rodriguez was arrested and charged with one count of wire fraud. They said Rodriguez, from the beginning, had defrauded KidoZen's investors by claiming to have dozens of clients, more than $1 million in reserves, and a consistent profit.
Based on those claims, a hedge fund sank $5 million into his accounts in November 2013, about a month before his company won the Endeavor Miami contest. Instead of using that cash as promised to develop the business, he used it for his own benefit.
Rodriguez pleaded guilty in February. Last Monday, U.S. District Judge Robert Scola Jr. sentenced Rodriguez to two years of hard time, followed by three years of probation. He also has to repay more than $5 million.
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The case is an eerie echo of the odd saga of Chang Rajii, which played out in March. Chang Rajii founded a the tech investment company Grupo Arcano and became a major player in Miami's tech scene, getting a board seat on Endeavor Miami and initially a major sponsorship deal with the eMerge conference.
But that all fell apart when doubts were raised about Chang
Correction: An earlier version of this story incorrectly reported that Endeavor Miami gave a grant to KidoZen as part of its entrepreneur program.