The founder and CEO of a Cincinnati-based e-commerce startup who defrauded investors out of millions of dollars between 2020 and 2022 has been sentenced to more than three years in prison.
Benjamin Cantey, 43, of Hyde Park, pleaded guilty last year in federal court in Cincinnati to one count of wire fraud. U.S. District Judge Matthew McFarland handed down the sentence on July 27.
Cantey's now-defunct startup, called Rumby, billed itself as “the future of laundry.” The idea was to connect customers with dry cleaners and laundry services throughout the U.S. via pickup and delivery services like DoorDash.
But according to federal prosecutors, Cantey’s business model was based on fraud.
To raise money, he lied to investors and potential investors about
Rumby’s financial stability, growth and potential growth, prosecutors said. He also lied about his prior business success.
According to prosecutors, Cantey defrauded 15 investors out of nearly $7 million.
In a 2022 email, Cantey told investors that Rumby had more than $150,000 in monthly revenue and had ended the month with $1.5 million in its bank account. But he had overstated the revenue by $100,000, prosecutors said in court documents, and the company’s bank balance showed it had been overdrawn by $53,000.
House in Hyde Park
Prosecutors also said that Cantey used the money for his personal benefit. In May 2022, he told an investor he needed an $850,000 loan to pay for attending a large industry show, but used that money and additional investment money to buy a house in Hyde Park.
He later repaid the loan using money from a different investor, prosecutors said.
As investors caught wind of alleged mismanagement and filed lawsuits, Cantey resigned and Rumby filed for bankruptcy.
He ultimately decided to meet with the FBI and cooperate with the investigation.
Alleged Texas scheme
Prosecutors said Cantey also was connected to a fraud scheme involving a different company in Texas that he co-founded. He was accused of depositing investment money directly into his personal bank account. The same year he left the Texas company, he started Rumby.
Cantey’s attorney, Zenaida Lockard, said in court documents that Cantey’s first job was at a nonprofit in another country. When he returned to the U.S., he got involved in the Silicon Valley startup culture, she said, which he found “intoxicating.”
The requirements seemed simple, Lockard said: develop a novel idea, market it and find investors. But Cantey’s dream proved to be short-lived.
He had difficulty managing large sums of money, she said.
Cantey tried to build a business but “failed miserably and let others down, in the process,” she said.
This article originally appeared on Cincinnati Enquirer: Cincinnati founder of dry cleaning tech firm sentenced for fraud
