VRsenal, maker of out-of-home VR products including an officially licensed Beat Saber arcade cabinet, has pushed back on fraud allegations raised in an indictment filed by a Colorado court last month.

On August 9th, a Larimer County, Colorado grand jury—which functions as a preliminary screening to gauge if there’s probable cause to bring charges to trial—returned an indictment alleging five criminal counts against three co-founders of VRsenal: Benjamin Davenport, Kirk Smith, and Gabriel Halsmer.

The indictment (which is linked in full further below) was published by Larimer & Jackson County District Attorney Clifford Riedel on August 12th, and notes, “the charges in the criminal indictments are only an accusation and all defendants are presumed innocent until, and unless, proven guilty in court.”

The crux of the charges filed is that the VRsenal founders sought to defraud an investor, Juan Rendon, of some $1.15 million by misrepresenting facts about VRsenal and the use of the capital. Rendon had given the company the money in a series of loans which were to eventually become part of a $3 million investment in VRsenal, according to the indictment. The indictment also intertwines with another ongoing legal matter involving VRsenal co-founders Davenport and Smith which alleges the two misappropriated $2.5 million from a prior employer, Blue Point Pellets.

Image courtesy Main Event

VRsenal is best known for creating an automated virtual reality arcade cabinet. Notably, the company holds the exclusive rights to operate the popular VR title Beat Saber in an arcade machine in all regions outside Asia. The company claims their flagship cabinet is available in 100 locations, serving 40,000 plays per week. Beat Saber developer Beat Games declined to comment on the matter.

Upon reaching out to VRsenal for comment on the allegations—expecting a ‘We can’t comment on ongoing legal matters’ (a typical response from any company accused of legal wrongdoing)—Road to VR received a six page statement rebutting the allegations.

Signed by VRsenal co-founder Ben Davenport, the statement (which is linked in full further below) paints the situation as a breakdown of investment negotiations and a civil matter rather than criminal wrongdoing. According to Davenport, following the fizzling of the proposed $3 million investment that was to subsume Rendon’s loans, VRsenal attempted to negotiate repayment. Apparently not happy with the offering, Rendon filed a civil lawsuit over the matter, though the court concurred with VRsenal that agreements made between Rendon and the company specified that such matters would be handled outside of the court system through an arbitration process, according to Davenport.

Davenport’s statement goes on to say that Rendon, “with the aid of some overly zealous prosecutors in Larimer County, Colorado, […] suddenly exaggerated his civil claims into criminal charges through the use and abuse of the grand jury system.”

“It is a lie. Plain and simple. There is no other term for it,” Davenport said in the statement. “We know that there is not one shred of evidence in existence that can prove these allegations, because there can obviously be no evidence where no such thing ever occurred.”

He says that communiqué between VRsenal and Rendon proves there was no conspiracy to defraud Rendon of the money he loaned to the company during the investment negotiations.

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Alongside promoting the company and its product, a large portion of VRsenal’s statement focused on pointing out that an indictment is not a determination of guilt, but rather the filing of charges which will eventually be tried in court; the statement also calls into question the grand jury process itself.

“Not only were we not allowed to present any evidence to the grand jury or tell our side of the story, we didn’t know that we were being accused of anything at all. We found out the details of what the grand jury had concluded about us the same way most other people did—a friend sent us a link, and we read about it online.” Davenport wrote. “Business deals sometimes go bad, just like this one did for us. And when they do it’s no fun for anyone involved. But the criminal justice system should not be used and abused in order to leverage civil business claims and disagreements into criminal charges,”

Indeed, an innocent or guilty verdict will come only after a criminal trial is conducted; Davenport writes, “we expect to be fully vindicated on all counts.”

The complete indictment from the Larimer County grand jury and the statement from VRsenal are available below:

Larimer County Indictment VRsenal Statement

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  • Sven Viking

    It does seem pretty messed up that you don’t know a case against you is being brought before the grand jury until after the fact.

    • Jistuce

      In fairness, there literally IS no case until the grand jury issues a ruling. The grand jury hearing is not a trial. It is to determine if there’s even enough there to justify charges being issued(“probable cause”). Since it isn’t actually a trial, the standard is not “proven guilty beyond doubt”, and there’s no defense because the accused aren’t actually accused of anything unless the grand jury says “yes”.

      (Grand jury is not involved in civil suits, only criminal ones.)

    • Caven

      In addition to what Jistuce said, there’s also the whole investigation side to consider. Giving the subject of the grand jury investigation advance notice means that anyone who is actually guilty can make an informed decision on whether to destroy evidence, silence witnesses, or flee the country–all before the legal system has any authority to compel the subject to stand formally stand trial as a defendant in a criminal case.

      • Sven Viking

        Thanks, that does make sense.

  • ale bro

    are the beat saber cabinets out in the wild yet?

    • Mateusz Pawluczuk

      I played one in Blackpool UK. Unfortunately Vive wands were permanently attached to the cabinet via strong metal cord which made playing very restrictive and not fun at all.

      I understand they want these cabinets to be assistant free but there’s got to be a different way.

  • Jonathan Winters III

    Sounds like VRsenal is being honest about the matter, and the investor pulled the trigger on legal action too hastily.

  • VRskeptical

    After reading the indictment, the letter, and the indictment from Blue Point Pellets, It appears that they are criminals that found their way to make a legit company. Hence why VRsenal is not being pursued by law enforcement. The way they went about defrauding Blue Ocean and Blue Pellet LLC, with various companies and holdings in their name is strikingly similar to what they were trying to pull with Rendon. Unfortunately the ink was not quite dry with there involvement in Blue Point Pellets fraud that Rendon’s Lawyer uncovered there dirty secret. See for your self look up the Blue Point Pellets llc Indictment.

    • Jistuce

      That is what an indictment would look like, yes.

      Note that these charges are unproven allegations at this point.

      • VRskeptical

        Note that these criminals (not yet convicted) have used the same shell companies to funnel monies in both this indictment (https://www.larimer.org/sites/default/files/uploads/2018/08022018-press_release.pdf ) released August 2nd 2018 and the current indictment ( Link at end of article) released almost a year apart on August 12th 2019.

        Read them both and you will see a pattern in these unrelated indictments. They are 100% suspect and should be taken to Criminal court not civil as they would claim in there letter. Don’t believe me look it up for yourself. Very compelling evidence.

        • Jistuce

          An indictment is an accusation, not evidence. And they are currently suspects, not criminals.

          • VRskeptical

            If you commit a crime, regardless if you have been caught then you are a criminal. Period. In and Indictment there certainly is evidence presented, just not on both sides. My biggest point that you seem to avoid is what they have done in the past is suspect. What are your thoughts on both indictments as far as patterns you see? Do you think that they should not have been indicted? MIAGD

          • Jistuce

            My point is just that an indictment shows enough suspicion to begin an investigation. It is not proof, and is not even necessarily factually correct.

            To point at an indictment as PROOF of wrongdoing shows a grave misunderstanding of the legal system.

          • VRskeptical

            I’m glad you know how to reiterate the same point three times. I never said proof i said their actions were suspect. So thank you for proving my point again that there is enough suspicion to have a trial in the criminal court system. Not arbitration like they said in their letter.

          • Jistuce

            See, but you’ve skipped the trial and gone straight to pointing to the indictment as proof they are doing what they are accused of.

            “Note that these criminals (not yet convicted) have used the same shell companies to funnel monies in both this indictment … released August 2nd 2018 and the current indictment”

            “have used” is not the same thing at all as “were accused of”. You’ve said they DID these things and pointed to the indictments as proof of guilt.

          • VRskeptical

            You are 100% incorrect. “So thank you for proving my point again that there is enough suspicion to have a trial in the criminal court system” Good try, Game over. Troll or not.

          • Jistuce

            If I’m 100% incorrect, you might want to explain why you said something that stands in direct opposition to your stance. That’s a direct quote from you above, so if I’m 100% incorrect, it means… you didn’t say what you said?

          • VRskeptical

            So i see you want to Troll. Come out from under your bridge it is nice and warm here in the sun. The hair on your feet might even recede.

          • Jistuce

            Not likely. I’m a hirsute guy, and I burn easily. I still maintain you should say what you mean instead of claiming when corrected that you said the opposite of what you have in print.

        • WyrdestGeek

          On the one hand, if they haven’t been convicted of anything yet, then technically they’re not “criminals”, at least in the eyes of the law.

          On the other hand, if your assertion that they’ve done the same sort of thing before, then they’re probably serial scammers, and maybe this time they’ll get caught properly.

          I will be interested to see how the trial plays out.