Idaho Business Review IBR
James Hepworth
A Boise tech startup cofounder’s ex-wife says he stole $1.9 million in stock from her to help pay for lavish spending on luxury cars, a startup pro-football league and other expenses.
When James Hepworth, cofounder of First to File and chief technology officer for MarkMonitor, and his wife, Amy Evans, divorced in 2015 after 18 years of marriage, they split 40,424 shares of stock in an intellectual property management company based in the British Isles.
Hepworth was to hold on to all the shares and notify Evans if he sold them.
In a lawsuit Evans has filed, She said she learned that the shares in Redtop Holdings Limited Co., the parent company of CPA Global, an intellectual property management and technology company, had been sold two years earlier and that her ex-husband had pocketed the entire $1.9 million.
Evans went back to divorce court and in July obtained an $898,000 judgment against Hepworth. Earlier this month, she sued in U.S. District Court in Boise to recover what she’s owed.
Evans said it appears she’ll be able to recover part but not all of the amount from Hepworth’s bank accounts, acccording to court documents.
“A large portion of the judgment (in excess of $300,000) remains unpaid with no real likelihood of collecting from Hepworth individually as his individual assets will be exhausted,” Boise attorney Matt Christensen wrote in a federal court filing.
Hepworth and fellow entrepreneur Faisal Shah cofounded Mark Monitor, which helped companies stop online infringement of their logos, brands, domain names and products, and to protect against online fraud and phishing threats. The men sold the company in 2012 to Thomas Reuters for a price Shah has said was in the “hundreds of millions” of dollars.
The next year, Hepworth and Shah sold First to File, an online patent management company they’d spun off of MarkMonitor in 2006, to CPA Global for an undisclosed price.
They also cofounded Nebula Shift, a now-defunct tech business incubator in downtown Boise.
Evans alleges that Hepworth and his current partner, Michela Swarthout, misappropriated her money. She accuses them of lavish spending and shuffling the money between eight shell companies registered in Idaho, Montana, Wyoming and Delaware, all but one formed after the shares of stock were cashed in.
The money Hepworth received on Nov. 3, 2017, from the stock sale was deposited into a bank account of Swarthep, a company registered in Wyoming a week earlier, Evans claimed in court documents. (Swarthep is a blend of Swarthout and Hepworth.) Weeks later, $605,000 was transferred to HZ Global, another of the couple’s new companies, registered six days earlier, also in Wyoming.
The next day, HZ Global transferred $600,000 to a bank account with an unknown owner.
Numerous other similar transfers are also listed in court documents.
Evans claimed companies controlled by Hepworth and Swarthout spent more than $568,000 to buy a number of luxury automobiles, including a 2006 Lamborghini, a 2012 McLaren, a 1957 Porsche Speedster and a 1964 Ferrari 250.
The cars were bought on behalf of a Garden City company, Luxe Imports LLC. Swartout registered the company with the Idaho Secretary of State on Dec. 26, 2017 and filed a statement of dissolution on Aug. 19, 2019, according to online records.
Luxe Imports, Evans contended, owned luxury automobiles supposedly leased for short periods of time to people with memberships. But she said the cars were not titled in Luxe Imports’ name and it does not appear the company received lease or membership income from those cars.
Between December 2017 and May 2019, Evans said Swarthep transferred nearly $158,000 to Citibank for credit card debt.
In October 22018, Swarthep paid $110,000 to Pacific Pro Football, a startup professional football league scheduled to debut next year in four Southern California cities.
Players who might otherwise go to college are to receive $50,000 each to play in a two-month season. They would give up their NCAA eligibility to better their chances of landing in the NFL draft.
The federal lawsuit accuses Hepworth and Swarthout of conversion, conspiracy and violation of state and federal racketeering statutes.
After Evans filed her initial suit in Ada County Magistrate Court, she said Hepworth and Swarthout left Idaho for an “undisclosed location,” possibly in Wyoming, and consolidated money from their various business bank accounts. On Monday, Hepworth told the Statesman that he is still in Boise.
Attempts to contact Hepworth and Swarthout before this story was published on Monday, Oct. 21, were unsuccessful. On Monday, Hepworth declined to comment on the allegations.
Editor’s note: This story has been updated to correct that James Hepworth and Michela Swarthout are partners, not married, and to add a denial from Hepworth to his ex-wife’s assertion in a court filing that he and Swarthout had left Idaho.
