The daughter of billionaire Bill Gates, 23-year-old Phoebe Gates, is facing serious legal consequences and a potential sentence of up to 20 years in federal prison over an investigation into a massive financial fraud.
The scandal is related to her high-tech artificial intelligence (AI) fashion shopping startup Phia, co-founded with her Stanford colleague Sofia Kiani. An investigation by the authoritative media Bloomberg has uncovered internal messages that prove that the company intentionally implemented the illegal practice of “cookie stuffing“. Through it, the application's software generated fake clicks and appropriated commissions from online sales that it did not actually redirect.
What is “cookie stuffing“ and how did the scheme work?
Phia's browser extension is advertised as a digital assistant that helps users find the best prices and discount codes. However, checks by independent digital advertising experts found that the extension secretly opened background tabs and injected its own referral codes during checkout, even when users were not using the app. In this way, Phia was seizing commissions from other legitimate platforms and content creators.
The revelations hit the young entrepreneur's image hard:
- Revenue Collapse: After the fraudulent feature was forced to shut down in July, Phia's daily revenue dropped dramatically from $80,000 to just $10,000 - $28,000.
- Scale of Fraud: The illegal “cookie stomping“ accounted for a record 51% of the company's total reported sales for June.
- Terminated partnerships: Large affiliate networks such as Impact.com have already blocked the startup's access to their systems.
Threat of 20 years in federal prison
Legal experts, quoted by publications such as the New York Post and Futurism, emphasize that in American law this type of digital fraud is prosecuted as federal wire fraud. The law provides for a maximum penalty of up to 20 years in prison, accompanied by huge financial penalties and restitution.
Although no formal criminal charges have yet been filed against Phoebe Gates by prosecutors, leaked internal Slack hours prove that she and her co-founder have known about the “bug” for at least seven months and deliberately insisted on keeping the feature active to maintain high financial performance. Because of this, a number of aggrieved corporations, including eBay (which ironically was among Phia's investors), are considering filing large-scale lawsuits.
The startup Phia managed to raise over $43 million in funding from top investors and celebrities such as Kim Kardashian and Paris Hilton, but today the future of the company and Bill Gates' daughter herself remains extremely uncertain.