Four local “angel investors” claim they were duped out of a massive payday by a Baltimore tech guru who convinced them his app-based business was a flop — before selling it to Groupon for $78 million.
Christopher Jeffery started OrderUp, an online restaurant delivery company, in 2009, thanks partly to $850,000 from four tri-state investors who helped him get off the ground.
With the 2013 merger of Seamless and GrubHub, the “angels” thought OrderUp, which concentrated on smaller markets like college towns, was ready to hit it big, they said in a Manhattan federal court lawsuit.
But in early 2014, Jeffery allegedly came to them with a tale of woe: OrderUp was about to go belly up, he claimed.
“Jeffery reported falsely that competition . . . was threatening the continued viability of OrderUp,” the investors charge in the suit.
If the financing “angels,” Charles Lipson, Doug Potolsky, Samuel Cooper and Steve Israel, didn’t redeem their original investments right then, Jeffery allegedly warned, “the company might not be able to pay them anything at all within a year.”
Lipson gave $500,000; Potolsky and Cooper each paid $125,000; and Israel chipped in $100,000, according to the suit. The angels are seeking unspecified damages.
Jeffery couldn’t be reached.