The U.S. Securities and Exchange Commission (SEC) has charged Michael Brackett, founder and CEO of the self-proclaimed artificial intelligence startup Centricity, Inc., with allegations of participating in a multimillion-dollar issuance fraud.

According to the SEC's allegations, from 2019 to 2021, Brackett raised $2.8 million from seven investors by making false statements about Centricity's clients and revenue, as well as Brackett's own education and employment background.

The complaint alleges that Brackett, in attracting potential investors, repeatedly told them that Centricity had contracts with several large national companies and that Centricity's revenue amounted to millions of dollars. In reality, as the complaint alleges, there is no evidence to suggest that Centricity or Brackett had any contact, let alone signed contracts, with most of the companies Brackett claimed were Centricity's clients.

The complaint also states that Centricity had no revenue in 2020 and less than $60,000 in revenue in 2021. It further alleges that Brackett misappropriated over $250,000 from Centricity for personal expenses, including a luxury apartment, a Tesla car, gym memberships, and personal debt.

The SEC filed a lawsuit in the U.S. District Court for the Southern District of New York, charging Brackett with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5.

The SEC seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties, and bars against Brackett from serving as an officer and director.