Max Mito’s business trip to luxury villas in Morocco was a red flag to finance staff. EVP’s Misha Saul called in the cops after investing. A now-deleted Instagram post by StrongRoom AI’s lead designer Isabella Jorgensen in September 2023, captioned “Peter’s Moroccan extravaganza” with a brown love heart emoji, left members of the company’s finance department seething.
Jorgensen had just returned from a well-documented trip with her boyfriend and boss, Max Mito, the chief executive of StrongRoom, and Peter Bruce-Clark, one of the company’s directors. The CEO and co-founder of StrongRoom AI, Max Mito, allegedly admitted to EVP investor Misha Saul that the company’s revenue and debt figures were fraudulent. This confession came after the EVP invested $10.4 million in the Melbourne-based startup.
Details of this conversation were submitted in a Federal Court legal action, prompting the freezing of assets belonging to StrongRoom, its five directors, and the startup’s administrators and receivers. EVP alleges that StrongRoom AI, which claimed to be profitable, was losing $800,000 a month and misrepresented its debt levels by over $4 million. The legal documents presented to Justice Roger Derrington in the Federal Court in Brisbane on Thursday stated that EVP was “profoundly misled” by the cofounders, who engaged in “false, misleading or deceptive conduct” and “deliberate fraud” to secure the investment from EVP’s $41 million Opportunities Fund.
Misha Saul’s affidavit detailed his conversation with Mito. The cofounder admitted to booking loans and other funds as customer revenue, conceding that the revenue figures “may be inaccurate.” Despite this, Mito claimed he “didn’t intend to mislead” Saul. During the conversation, Saul confronted Mito about the falsified revenue and customer numbers, to which Mito responded affirmatively, admitting it was “wilful fraud.”
Problems within the company came to light through whistleblowers, including the CFO, who resigned in March due to resistance from Mito and the company’s poor governance and financial controls. She alerted Saul to issues within the company in a meeting on March 12 after preparing a PowerPoint presentation on February 28 about governance failings and financial discrepancies.
Following these revelations, Saul blocked Mito’s access to the company’s ANZ bank accounts and lodged a fraud/scam report with ANZ on March 21. StrongRoom, founded in Melbourne in 2017 by university colleagues Mito, Christopher Durre, and Kieran Start, seeks to streamline medication tracking, dosage management, and patient adherence.
Admission of fraudulent financial practices
Court documents reveal the company’s actual revenue to be around $1.7 million in the 12 months leading up to January this year, contrary to claims of $13 million in annual revenue and more than 1,500 customers by the end of 2024. EVP invested in StrongRoom at a pre-money valuation above $50 million, based on the belief that the startup’s annual revenue was around $6.1 million. Other investors include Artesian Venture Partners, Boab AI, Kalytix, InterValley Ventures, and UK-based Tyson & Blake.
Kalytix is run by StrongRoom director Peter Bruce-Clark, who was also implicated in the misuse of funds, including taking a personal trip to Morocco on the company’s dime. A former Head of Operations from January 2021 to July 2022, who resigned due to a toxic work environment, provided an affidavit supporting EVP’s case. It included allegations of tax evasion and fraud reported to the ATO in June 2024.
Another affidavit from a former Financial Officer, who resigned in September 2023, raised further concerns about the startup’s financial operations and governance. Governance issues were highlighted earlier this year when the startup was involved in a dispute before the Fair Work Commission, where Commissioner Scott Connolly criticized StrongRoom’s governance and Mito’s management approach. The current Federal Court case also involves StrongRoom director Divesh Dipak Sanghvi.
EVP claims Sanghvi knew of the fraudulent activities and held roles in companies benefiting from the misused investment funds. A property owned by Morton Court Pty Ltd in Portsea, tied to Sanghvi, was added to the freeze order. Administrators are now seeking expressions of interest, with the first meeting of the startup’s creditors scheduled for April 8.
The case will return to court on April 17. Directors Mito, Durre, and Bruce-Clark have yet to respond publicly to the allegations.
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