Scheme by Fluid Truck defrauded investors of $11M, lawsuit says

An investor in Fluid Truck, the Denver-based vehicle rental startup, has accused its founders of masterminding a “corrupt, unlawful and unconscionable scheme” to take more than $11 million from vehicle owners and then file for bankruptcy to get away with their “naked theft.”

“Simply put, Fluid Truck is stealing from its vehicle owners to fund its ongoing operations,” says Tim Urban, an entrepreneur in Littleton who is suing on behalf of 100 investors.

A spokeswoman for Fluid Truck, Emily Allen, declined to discuss those theft claims.

“While we cannot comment on pending litigation, our vehicle owners are our top priority and we continue to focus on addressing their needs and driving success for them,” she said.

The company was founded in Denver in 2016 as Fluid Market, an Uber-for-everything app that allowed users to rent a vast assortment of household items and vehicles. By 2018, it had become Fluid Truck and focused exclusively on vehicle rentals. It has since expanded to other major cities, raised $63 million in a single funding round, and partnered with Ikea.

But Urban claims that Fluid is now a “failing business” careening towards bankruptcy and a sale to Kingbee Rentals, a similar company out of Utah. His class action lawsuit, filed Thursday in Denver’s federal court, includes an August email from Scott Avila, Fluid’s CEO.

“I promised transparency and open communication, so I want to be candid — we are facing significant financial challenges that we have yet to solve for,” wrote Avila, who took over for Fluid’s sibling co-founders James Eberhard and Jenifer Snyder in mid-July.

“As a result, we are still unable to process arrears payments, including insurance claim payouts and monies owed for vehicle sales,” he explained to Urban and others. He promised Fluid would do better in the future and has an “unwavering focus on stabilizing our financial situation.”

Fluid operates what it calls the Fluid Vehicle Investor Platform, or FVIP, which allows investors to buy fleets of vehicles, rent them out through Fluid, and sell them through Fluid when they get too old. Fluid deducts costs for repairs and fees, then hands the proceeds to investors.

Urban says that he invested by buying 47 vehicles, leasing them through Fluid, and then letting it auction off 29 of those. For years, he was satisfied. Then the calendar turned to 2024.

Urban says that Fluid has auctioned off 14 vehicles of his this year for $415,000 and pocketed all of the proceeds. He claims that Fluid has acknowledged owing him $178,000.

“After months of delays, deception and obfuscation about the status of payment, Fluid has finally admitted to Urban and other (investors) that it is intentionally keeping more than $11 million in stolen funds owed to (them) as sales and claims proceeds,” his lawsuit states.

Eberhard and Snyder were removed from their executive roles to limit Fluid’s legal “exposure created by this illegal scheme” but remain on the board of directors, according to Urban. Snyder, who is also a lawyer, did not answer requests for comment. Neither did Eberhard.

“Notwithstanding this supposed change in company leadership,” Urban alleges, “Mr. Avila and the current management team have continued to perpetuate the same scheme to steal FVIP owners’ money by keeping those funds and refusing to repay the FVIP owners.”

Urban says that he spoke with Doug Trussler, a partner at Bison Capital in Los Angeles, this month — Bison was part of that $63 million capital raise in 2021 and has a seat on Fluid’s board — and was told that Fluid “is resolved to keep the sales proceeds stolen from Urban.”

“To prevent the repayment for Fluid Truck’s widespread theft, Fluid Truck, Bison Capital and other investors intend to continue this scheme by gaming the system,” Urban alleged last week. “Their plan is to place Fluid Truck into bankruptcy, invest a portion of $20 million into Kingbee Rentals, and then have Kingbee Rentals buy Fluid Truck’s assets out of bankruptcy.”

Kingbee, which also did not return requests for comment, announced Oct. 3 that it and Fluid would be collaborating to provide their customers with more vehicle options. The press release announcing that collaboration did not suggest Kingbee would be acquiring Fluid.

The ouster of Eberhard and Snyder was first reported Aug. 28 by TechCrunch, which wrote that it was done at the behest of Bison and Ingka Investments, Ikea’s venture arm. The move followed steep financial losses and difficulties paying vendors, TechCrunch reported.