Fraud unveiled: Dutch court nullifies €62.9m Rodeo software deal
Published on 15th July 2025
Case highlights the critical importance of due diligence and legal alertness for investors as SPA is annulled due to fraudulent activities by the founder
On 11 June 2025, the Amsterdam District Court annulled a share purchase agreement involving Rodeo Software, sending shockwaves through the investment community. The buyer was found to have been deliberately misled by the founder, the director of Rodeo Software, through falsified financial documents, inflated revenue figures, and a fictitious contract with Alphabet (Google).
The court's decision underscores the necessity for thorough due diligence and legal alertness in investment activities.
Fraudulent documents
After closing the transaction, the buyer discovered several alarming discrepancies in the financial documents and contracts provided by the founder. These irregularities included:
Incorrect annual accounts and forged bank statements
The financial documents, including annual accounts and bank statements, were found to be falsified. The founder had presented these documents to mislead the buyer into believing that the company's financial health and performance were sound.
Inflated ARR
One of the most striking discrepancies was between the claimed and actual revenue figures. In 2024, the founder had claimed that the company had generated €56.9 million in Annual Recurring Revenue (ARR). However, upon closer inspection, it was revealed that the actual ARR was only €250,000. This significant difference highlighted the extent of the deception and raised questions about the accuracy of other financial metrics provided by the founder during the due diligence phase prior to signing of the SPA in 2022.
Fictitious customer contract with Alphabet
To further enhance the company's perceived value, the founder presented a fictitious contract with Alphabet (Google). This non-existent contract was purported to be a major deal that would significantly boost Rodeo Software's future prospects. The discovery of this fictitious contract was a critical factor in the court's decision to annul the SPA.
Court's judgment
The court issued several significant rulings:
Annulment of the SPA due to fraud
The founder deliberately misled the buyer, leading to the annulment of the SPA. The court found that the founder's actions constituted fraud, and that the buyer's consent to the agreement was obtained through deceptive means.
Personal liability of the director
In addition to annulling the SPA, the founder was held personally liable for the deception.
This decision underscores the importance of personal accountability in corporate governance and serves as a warning to other directors about the consequences of engaging in fraudulent activities.
Refund of the purchase price and costs
The buyer was entitled to a refund of the purchase price and additional costs incurred as a result of the fraudulent transaction. The total amount to be refunded is €62.9 million.
This decision was significant due to the substantial financial implications and its reinforcement of the principle that victims of fraud should be fully compensated for their losses.
Implications for investors and legal professionals
The case underscores the critical importance of conducting thorough due diligence before entering into any investment.
Investors should scrutinise financial documents, contracts and other relevant information to ensure the accuracy and integrity of the data provided. This includes verifying the authenticity of financial statements and contracts, as well as assessing the credibility of the parties involved. In this case, conducting client due diligence, such as making a verification call to Google, could have potentially uncovered the fictitious contract and prevented the fraudulent transaction.
Personal accountability in corporate governance
The court's decision to hold the director personally liable for the fraud highlights the importance of personal accountability in corporate governance.
Directors must ensure that their actions comply with legal requirements under Dutch law, including the duty of care and the principles of reasonableness and fairness as outlined in the Dutch Civil Code. This includes maintaining transparency in their dealings, avoiding conflicts of interest, acting in the best interests of the company, and exercising independent judgment.
Osborne Clarke comment
The ruling by the court serves as a cautionary tale for investors and legal professionals, emphasising the necessity of vigilance and thorough scrutiny in investment activities. This case illustrates the importance of verifying the authenticity of documents and assessing the credibility of the parties involved in corporate transactions. Additionally, it highlights the need for client due diligence, such as making verification calls to confirm the legitimacy of material contracts.
Investors should also be mindful of the accuracy of ARR figures when evaluating subscription-based business models. Inflated ARR can significantly distort the perceived value of a company, leading to misguided investment decisions. By prioritising comprehensive due diligence and being alert to potential red flags, investors can better safeguard their interests and make more informed decisions.
