Vinod Khosla—KiOR biofuel company backed by Khosla went bankrupt amid fraud allegations, Mississippi sued for $77 million
KiOR, a biofuel company in which Khosla Ventures held 75% of voting shares and invested nearly $160 million, filed for bankruptcy in November 2014 after generating only $2.3 million in revenue against $629 million in losses. Mississippi Attorney General Jim Hood called it 'one of the largest frauds ever perpetrated on the State of Mississippi' and sued Khosla for $77 million repayment of state loans. The SEC fined the successor company $100,000 for misleading investors about biocrude yields. Shareholders received a $4.5 million settlement.
Scoring Impact
| Topic | Direction | Relevance | Contribution |
|---|---|---|---|
| Consumer Protection | -against | secondary | -0.50 |
| Corporate Transparency | -against | primary | -1.00 |
| Overall incident score = | -0.362 | ||
Score = avg(topic contributions) × significance (high ×1.5) × confidence (0.64)× agency (negligent ×0.5)
Evidence (2 signals)
Fortune investigation detailed KiOR's $629 million in losses, Mississippi AG called it one of largest frauds on the state
Fortune's in-depth investigation revealed KiOR generated only $2.3 million in revenue against $629 million in losses. Khosla Ventures held 75% of voting shares and invested nearly $160 million. Mississippi Attorney General Jim Hood sued Khosla and others for $77 million repayment. KiOR's costs ran $5-$10 per gallon even without counting the plant construction cost.
Washington Post reported Khosla's biofuel dreams failed to catch fire, SEC fined successor company
The Washington Post detailed how KiOR's successor company paid a $100,000 fine to the SEC to settle allegations of misleading investors about biocrude yields. A $4.5 million settlement was approved for 23,000 shareholders who lost money due to decreases in KiOR stock price. The stock went from over $20/share to 2.5 cents at bankruptcy.