VRsenal, maker of out-of-home VR products including an officially licensed Beat Saber arcade cabinet, has pushed back on fraud allegations raised in an indictment filed by a Colorado court last month.
On August 9th, a Larimer County, Colorado grand jury—which functions as a preliminary screening to gauge if there’s probable cause to bring charges to trial—returned an indictment alleging five criminal counts against three co-founders of VRsenal: Benjamin Davenport, Kirk Smith, and Gabriel Halsmer.
The indictment (which is linked in full further below) was published by Larimer & Jackson County District Attorney Clifford Riedel on August 12th, and notes, “the charges in the criminal indictments are only an accusation and all defendants are presumed innocent until, and unless, proven guilty in court.”
The crux of the charges filed is that the VRsenal founders sought to defraud an investor, Juan Rendon, of some $1.15 million by misrepresenting facts about VRsenal and the use of the capital. Rendon had given the company the money in a series of loans which were to eventually become part of a $3 million investment in VRsenal, according to the indictment. The indictment also intertwines with another ongoing legal matter involving VRsenal co-founders Davenport and Smith which alleges the two misappropriated $2.5 million from a prior employer, Blue Point Pellets.
VRsenal is best known for creating an automated virtual reality arcade cabinet. Notably, the company holds the exclusive rights to operate the popular VR title Beat Saber in an arcade machine in all regions outside Asia. The company claims their flagship cabinet is available in 100 locations, serving 40,000 plays per week. Beat Saber developer Beat Games declined to comment on the matter.
Upon reaching out to VRsenal for comment on the allegations—expecting a ‘We can’t comment on ongoing legal matters’ (a typical response from any company accused of legal wrongdoing)—Road to VR received a six page statement rebutting the allegations.
Signed by VRsenal co-founder Ben Davenport, the statement (which is linked in full further below) paints the situation as a breakdown of investment negotiations and a civil matter rather than criminal wrongdoing. According to Davenport, following the fizzling of the proposed $3 million investment that was to subsume Rendon’s loans, VRsenal attempted to negotiate repayment. Apparently not happy with the offering, Rendon filed a civil lawsuit over the matter, though the court concurred with VRsenal that agreements made between Rendon and the company specified that such matters would be handled outside of the court system through an arbitration process, according to Davenport.
Davenport’s statement goes on to say that Rendon, “with the aid of some overly zealous prosecutors in Larimer County, Colorado, […] suddenly exaggerated his civil claims into criminal charges through the use and abuse of the grand jury system.”
“It is a lie. Plain and simple. There is no other term for it,” Davenport said in the statement. “We know that there is not one shred of evidence in existence that can prove these allegations, because there can obviously be no evidence where no such thing ever occurred.”
He says that communiqué between VRsenal and Rendon proves there was no conspiracy to defraud Rendon of the money he loaned to the company during the investment negotiations.
Alongside promoting the company and its product, a large portion of VRsenal’s statement focused on pointing out that an indictment is not a determination of guilt, but rather the filing of charges which will eventually be tried in court; the statement also calls into question the grand jury process itself.
“Not only were we not allowed to present any evidence to the grand jury or tell our side of the story, we didn’t know that we were being accused of anything at all. We found out the details of what the grand jury had concluded about us the same way most other people did—a friend sent us a link, and we read about it online.” Davenport wrote. “Business deals sometimes go bad, just like this one did for us. And when they do it’s no fun for anyone involved. But the criminal justice system should not be used and abused in order to leverage civil business claims and disagreements into criminal charges,”
Indeed, an innocent or guilty verdict will come only after a criminal trial is conducted; Davenport writes, “we expect to be fully vindicated on all counts.”
The complete indictment from the Larimer County grand jury and the statement from VRsenal are available below:
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