A series of lawsuits alleging financial misconduct have been brought against Joshua Bryce Newman ’01, a native of Silicon Valley who studied computer science and neuroscience at Yale.
Newman got his start in business and investing as an undergraduate in New Haven. As a freshman, he founded a Web consulting firm, according to a 2000 Wall Street Journal profile of budding entrepreneurs at Yale. According to his website, Newman served, beginning his junior year, as a managing partner of the Silicon Valley Ivy Venture Fund, which offered capital to start-ups developed by college students.
One year after his graduation from Yale, Newman founded an independent film production company, Cyan Pictures, in Manhattan. Cyan produced and released a number of low-budget movies in the early 2000s, including the 2003 film “Coming Down the Mountain.”
But Newman’s string of successes has been marred by complaints calling into question his investing practices and business ethics. Nearly two dozen individuals who have done business with Newman — including a co-founder of a social messaging site and a founder of an online clothing company — have alleged that Newman has a history of bouncing checks, failing to pay back debts and misrepresenting intentions, according to a report published last week by The New York Times.
Problems appeared to begin for Newman when Cyan failed to deliver on “Keeper of the Pinstripes,” a small-scale baseball movie focused on the New York Yankees, The Times reported. Newman’s company had claimed that the movie — which was set to star Josh Lucas — would require a $9 million budget for production. Newman took out loans to cover costs, many of which he later defaulted on, according to court records reviewed by The Times. Cyan went out of business in 2011.
Since then, Newman has paid back some of the investors, whether in full or in parts, and in some cases after being compelled by a court order. The Times discovered that the problem was more endemic, however, extending to numerous companies that Newman has controlled, including CrossFit NYC, the largest CrossFit gym in New York City, according to its website. He was pushed out from his management position in the gym last year, according to The Times.
David Cromwell, a senior lecturer at the Yale School of Management and a former president and CEO of JPMorgan Capital Corporation, said Newman’s investors were foolish to work with him. Indeed, he said, “No one who knows anything about what they are doing … makes loans.”
“Get Rich Quick schemes have been making suckers poor fast — for a long time,” Cromwell said in an email.
Even after the closure of Cyan and his dismissal from CrossFit NYC, Newman has not been deterred. Last September, an attorney for the National Pro Grid League, an athletics racing league, sent a cease-and-desist notice to Newman requesting he stop courting investors by telling them that he was raising money in association with the league, according to The Times.
Students involved in the start-up culture fear that Newman’s Yale connection could paint enterprising students, as Newman was more than 15 years ago, in a negative light. Dominic Becker ’18, who helped found a hedge fund called Elmview Capital Management this year, said that he thinks the public will fixate on Newman’s Yale degree and view the investor “as something along the lines of ‘a corrupt 1 percenter.’”
Becker said what he knows of Newman’s situation leads him to believe that the entrepreneur had good intentions, though he may have been overconfident. He said another problem might be miscommunication.
“Perhaps he’s not properly conveying the amount of risk involved in his business ventures to the people he is soliciting loans from,” Becker said.
Nicole Cai ’18, who was involved last semester with Net Impact, an organization that emphasizes social entrepreneurship and business at Yale, said that building a startup can be an arduous process and that raising funds is one of the most difficult yet crucial steps towards success of the project.
“But that should never justify fraud,” Cai added.