Co-founder of Hot Start-up Charged With Fraud

Jeremy Blackburn, co-founder of high-flying health care software company Canopy Financial, has been charged with fraud by both the Securities and Exchange Commission and the U.S. Attorney's office for the Northern District of Illinois, the two offices announced this evening. These announcements come in the wake of Canopy's Chapter 11 bankruptcy filing and our report on an FBI investigation into the company.

Blackburn "allegedly deceived a private equity firm that invested more than $60 million in Canopy stock this past summer by submitting a bogus auditor's report and falsified bank statements to the investment firm," according to a press release issued by U.S. Attorney Patrick J. Fitzgerald. The release goes on to say that Blackburn "fraudulently obtained more than $2 million of the investment funds for personal expenses and luxury items, and used a false bank statement in an attempt to obtain a mortgage on a new home."

The SEC has frozen Blackburn's assets. "To the extent he still has assets, we want them available for victims, as opposed to being spent by him as litigation is ongoing," SEC Associate Regional Director Robert Burson said in a phone interview.

Canopy Financial, a 2009 Inc. 500 company, has also been charged by the SEC. The company says in its executive bios that Blackburn received an MBA from the University of Chicago Graduate School of Business. An official with the university's registrar's office said the school could not find any record of an MBA graduate by that name.

Jason Del Rey

Senior reporter Jason Del Rey covers technology, branding, and company culture for Inc. magazine and contributes to the From the Reporters daily blog. Before joining Inc., his work appeared in Newsday, The (Newark) Star-Ledger, and the Staten Island Advance, and on ESPN.com. He lives in New York City.