Carl Freer: The entrepeneur who ran through £150m - then went spectacularly bust

MoneyWeek article: Profile of Swiss entrepeneur Carl Freer of Gizmondo, the games company that spent £150m on a product that brought in £1.5m before going spectacularly bust. How did this happen?

The early career of Carl Freer looks modest. He set up a small electronics business in Sweden in the 1990s and was named Swedish entrepreneur of the year in 1997. In 2002, he merged his business with a loss-making American carpet retailer and renamed it Tiger Telematics. His real interest in the firm was its Nasdaq-listing, which enabled him to raise finance for his new project a handheld games console incorporating GPS, which would also take photos, play MP3 music files and films and send and receive emails and texts.

The super-confident, multilingual Freer may have managed to generate a buzz among investors, but in the games industry the Gizmondo was a "running joke". It was unwieldy, ugly and overpriced, with a limited collection of games and a poor-quality camera. The promised car satellite navigation software never materialised and you had to pay extra to email or text. This didn't stop Freer from spending a fortune on its launch and leasing a shop in Regent Street for £175,000 a year.

Gizmondo Europe had been bleeding cash for some time (in 2004, losses reached £49m), but it wasn't until summer 2005 when it had been losing an average of more than £500,000 a day for six months that creditors closed in. In September, after a clutch of lawsuits, it was revealed that a fellow director, Stefan Eriksson, had been convicted of fraud more than a decade ago in Sweden where he and two other Gizmondo employees had been part of the "Uppsala mafia". All three quit and Freer followed, though he insisted he had committed no crime.

He is currently living in Beverly Hills, trying to raise finance for a new telecoms venture Xero Mobile. Earlier this year, Eriksson crashed a Ferrari on the Pacific Coast Highway while doing 160mph. "As a metaphor for the tale of Gizmondo," says Laurance in The Mail on Sunday, "the destruction of the Ferrari could scarcely be bettered".

Is Freer's slate as clean as he claims?

Freer's resignation last October followed news that fellow director Stefan Eriksson, the "jet-setting electronics magnate", was also Eriksson the "crook from Uppsala", says The Mail on Sunday. It transpired that Eriksson had been sentenced to ten years in Sweden for receiving stolen goods and attempting to defraud a bank of nearly $2m. He worked with Freer after he was released from jail and then brought two Uppsala cronies, Peter Uf and Johan Enander, into Gizmondo. Uf had been sentenced to more than eight years on fraud charges; Enander was sentenced to six for offences including assault and blackmail.

Freer has tried to distance himself from the Uppsala trio, but his own slate is not as clean as he might like. According to The Sunday Times, a police raid on his Bel-Air mansion and 110ft yacht yielded a stash of 16 guns. He has lied in the past to boost his reputation, says the paper, claiming in official papers that he was a trustee of Kings Medical Research Trust and that he co-founded a software company, VXtreme, which was sold to Microsoft in 1997. Both claims are untrue, though Freer says the VXtreme reference was a mistake.

In his teens, Freer was convicted of fraud after forging his parents' signature to get a loan and last year he was fined £135,000 by a German court for writing bouncing cheques while working as a car dealer in the 1990s. Freer says he cancelled a cheque after he thought he was being sold stolen cars. The bad smell surrounding Freer is likely to persist: details of opaque business transactions at Gizmondo are coming to light, and it is claimed his wife was paid over $170,000 for "marketing and public relations services".

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