When Be Great Partners founder and managing partner Lin Miao planted his incubator’s flag in Los Angeles a little more than two years ago, he had grand plans to turn it into a major player in the city’s burgeoning tech scene through a flurry of seed investments, glitzy networking parties and a string of co-working facilities.
But Miao hit a $150 million bump in the road a few months later when the Federal Trade Commission said the fortune he used to bankroll Be Great came as a result of a scam. Now, with its founder forced to liquidate his assets in the face of a massive judgment, Be Great has disappeared.
The company vacated its 21st-floor office at 5900 Wilshire Blvd. on Feb. 28, according to a spokeswoman for landlord Ratkovich Co. The Miracle Mile location housed its corporate office as well as a co-working facility that charged businesses $295 a month for workstations and other office amenities.
A second Be Great co-working space, on Jefferson Boulevard in Culver City, was even shorter-lived. After opening in December 2013 as the first of what was to be nine such facilities, Be Great vacated the site three months later, claiming it could no longer pay the rent.
One of Be Great’s stated goals was to bring Hollywood glamour and style to Silicon Beach, a community known for its casual and laid-back approach.
It frequently hosted lavish, open-bar parties that doubled as showcases for its startups and featured Hollywood club DJs, celebrities and entertainment industry investors. Many events took place at Be Great’s Wilshire office, while others were thrown on hotel rooftops, at a private mansion in the Hollywood Hills and on a yacht in Marina del Rey.
Yet despite launching a couple of well-regarded ventures, including Culver City’s Enplug and MeUndies as well as Oakland’s DealFlicks, Be Great was not around long enough to make much of an impact, and its apparent demise – its principals could not be reached for comment – was largely met with a shrug in the tech community.
Beyond parties, several Silicon Beach insiders said, Be Great brought little substance to the L.A. tech scene.
“Be Great was a great networking kind of organization,” said Dan Chen, managing director of tech investment banker Siemer & Associates in Santa Monica. “But as far as actually helping companies build startups, helping mentor them and nurture them, it was very lacking as a platform.”
The shuttering of Be Great’s Wilshire headquarters late last month came nine months after Miao agreed to a $150 million judgment to end a FTC lawsuit against him and several corporate defendants related to a scam run by his former company, Tatto Inc.
The FTC accused Miao and his Tatto partner Andrew Bachman in December 2013 of engaging in a scheme that involved charging cellphone consumers for unauthorized subscription text message services, such as celebrity news alerts or horoscopes.
Judge Dale S. Fischer of the U.S. District Court for the Central District of California, sitting in Los Angeles, froze Miao’s assets in January 2014. Shortly after, the court allowed him to accept a $125,000 loan from his parents to keep Be Great in business.
The court permitted Miao to repay the loan in 13 monthly installments, a period set to conclude April 1.
Because Miao was not able to pay the full $150 million judgment, it was partially suspended by the court on condition that he relinquish all his known assets.
According to the judgment, those included 14 bank accounts; a life insurance policy; a residential property in Los Angeles, one in Beverly Hills and three others in Chicago; a 2013 Mercedes SUV, a 2014 Range Rover SUV, a 2011 Audi and a 2008 Bentley; and 12 pieces of premium jewelry.
He was allowed to keep $5,000 in a lone Bank of America account.
Also taken were Miao’s stake in three companies: Skinny Bikini Swimwear, a Las Vegas online retailer, and a pair of real estate ventures, Bloc Priya Avatar I and Bloc DT 1.
Thomas McNamara, a San Diego attorney appointed by the court to receive and liquidate Miao’s assets, has until March 31 to sell the seized property, which the FTC originally valued at more than $10 million when the judgment was announced.
In a status report filed Oct. 30, McNamara wrote that Miao’s properties in Los Angeles and Chicago had sold or were in escrow for about $3.25 million. The property in Beverly Hills, on Gloaming Drive, was listed for nearly $1.9 million but had failed to attract a buyer. It remains listed for sale.
Miao, who was born in China but attended high school in Utah and graduated from Boston’s Babson College in 2008, could not be reached for comment, and it is unclear if he remains in Los Angeles.
According to court filings, the Bentley and Range Rover vehicles sold for a combined total of $121,800, but the other two cars had zero net equity as the loans exceeded market value. New York auction house Sotheby’s had scheduled the jewelry items to be included in a Dec. 9 auction with projected proceeds of between $500,000 and $800,000. McNamara did not return a request for comment, and the fate of the outstanding assets is still unclear.
In filings, the receiver told the court that the process of transferring the interests in corporate entities to the receivership had begun, but that legal challenges remained.
Skinny Bikini officials did not return a request for comment, and a representative of the real estate ventures declined to comment.
Be Great fade
As far as Be Great’s business, it had been ailing for at least a year before it closed.
In a January 2014 filing, McNamara wrote that its balance sheet showed “minimal current assets and a large deficit in working capital.” In November 2013 alone, Be Great tallied a loss of nearly $315,000.
Miao, who made millions while running Tatto, had been using his own money to pay the incubator’s bills. But since he could no longer fund Be Great himself, its future prospects were grim.
“Absent some form of financing, these businesses will fail and the receivership claims may die with them,” McNamara wrote in a court filing.
And at this point, it’s hard to imagine someone else coming in to rescue Be Great.
“Who would ever trust a fox to watch the henhouse?” said a source in the tech investment community who wished to remain anonymous.
Despite McNamara’s prediction in early 2014 that Be Great would fail without a capital infusion, as recently as Nov. 14 the incubator hosted a large conference and festival at Los Angeles Center Studios that featured local tech luminaries Brian Lee, co-founder and chief executive of Honest Co., and Scott Painter, founder and chief executive of TrueCar Inc., as speakers.
It could not be determined how the event – or the operations leading to it – were funded.
And the judgment against Miao does not appear to have had any impact on the companies that received seed money from Be Great.
When it launched in 2013, Miao said the incubator planned to invest between $25,000 and $50,000 in 250 startups as well as offer them mentorship and office space.
On its website, which has not been taken down, Be Great lists 19 companies in its portfolio.
When reached for comment, Enplug co-founder and Chief Executive Nanxi Liu said she had not been contacted by government officials regarding the case.
“It didn’t really impact us,” she said of Miao’s legal problems.
In fact, Liu said she’s had little contact with Miao since Be Great invested in her company back in 2013, though she has participated in some of its events.
Representatives of MeUndies did not respond to requests for comment.
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