Gowex, the Madrid-based Wi-Fi service provider, has filed for bankruptcy protection, reports Reuters. Its CEO and president, Jenaro Garcia Martin, acknowledged he has been cooking the firm’s books for four years and resigned.
Gowex’s collapse followed a scathing report issued July 1 by Gotham City Research, which called the company a “charade” and alleged that 90 percent of Gowex’s revenue was nonexistent.
In a July 2 Twitter posting, Gotham City said: “Gowex is the first multi-billion $ market value company, since Sino-Forest, that we believe is a near-complete fraud,” reports Fierce Wireless.
Gowex operates free wi-fi hotspot services in 91 cities around the world, under its Wireless Smart Cities brand. Those cities include New York, Madrid, Dublin, Bordeaux or Santiago de Chile, through which it sells roaming, advertising and e-commerce services. The company says it also makes money from its business-to-business telecommunication unit.
Unlike competitors such as U.S.-based Boingo, which are reporting losses for expanding free wi-fi services, Gowex said it made a 28-million-euro ($38.19 million) profit in 2013.
Gowex was widely touted as an entrepreneurial success story. The company, which went public in 2010, noted that its partners and customers include Cisco, ZTE, Nintendo, AT&T, T-Mobile, iPass, Skype and Iberia. Gowex announced in January 2013 that it had signed a Wi-Fi roaming agreement with AT&T.
Gowex said in its statement that in anticipation it would likely not be able to meet debt repayments the board had agreed to file for bankruptcy and was looking at additional measures to protect the company’s interests.
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