DOJ and SEC Charge Man with Defrauding Napster of $3 Billion Investment

U.S. authorities have accused a North Carolina man of conning Napster out of a massive ownership stake by falsely pledging $3.36 billion he never had.

An indictment by the Department of Justice (DOJ), unsealed on Thursday (June 11) and obtained by Billboard , charges 57-year-old Charles Cole with three criminal fraud and conspiracy counts. Cole also faces parallel civil fraud claims a Thursday complaint from the Securities and Exchange Commission (SEC), which also names his attorney, Torben Welch , as a defendant.

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Over the course of 2024, Cole obtained 239 million shares of the digital media company Infinite Reality — roughly 25% of its total shares — by claiming he had access to $55 billion in cash, and promised to invest more than $3 billion in the company. Infinite Reality later rebranded to Napster after acquiring the streamer for $207 million in March 2025.

In the wake of the Napster acquisition, a Forbes investigation raised questions about the mysterious identity of the company’s $3 billion backer. The following November, Napster’s CEO reportedly told shareholders that the investment was not going to come through, saying the company had been the “victim of misconduct” and was cooperating with law enforcement to nail the fraudster.

Now, federal authorities claim that Cole never gave a penny to Napster and didn’t actually have the funds to do so. Cole allegedly duped Napster into believing he did have the money by creating a complex “fictitious paper trail” that included forged bank statements and a fake website, set up with offshore servers, to mirror a Malaysian bank’s real site.

“Cole, with Welch’s assistance, then used the fraudulently obtained shares in Infinite Reality to secure a $1 million loan from a private third-party lender that he never repaid,” reads the SEC complaint.

Reps for Napster did not immediately return a request for comment on the charges on Thursday. Cole and Welch could not immediately be reached for comment.

Napster’s origins infamously date back to 1999, when it shook the music industry by launching as a file-sharing site that allowed users to download tracks for free. The name later got recycled as a licensed streaming service that has changed hands a number of times over the years.

Napster was sold to the streamer Rhapsody in 2011, then to virtual reality concert app MelodyVR in 2020 and again to Hivemind Capital Partners and cryptocurrency company Algorand in 2022. This was followed in 2025 by the Infinite Reality acquisition, which promised to “transform Napster into a next-generation platform” using “immersive 3D technology.”

_Originally reported by [Billboard](https://www.billboard.com/pro/napster-3-billion-investor-fake-doj-sec-fraud-charges/)._