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Former Silicon Valley CEO Indicted for Allegedly Defrauding Employees of StartUp
- protomyth 9y agofollow-up to this thread https://news.ycombinator.com/item?id=12379518 https://news.ycombinator.com/item?id=12379518
- x0x0 9y agoAn article with more backstory: http://www.bizjournals.com/sanjose/news/2017/06/08/wrkriot-isaac-choi-indictment.html http://www.bizjournals.com/sanjose/news/2017/06/08/wrkriot-i... I'm guessing Al Brown, the CTO, is gonna leave this one off his resume. Here's his side of the story, btw https://news.ycombinator.com/item?id=12382955 https://news.ycombinator.com/item?id=12382955 -- he claims to have put $200k in. The feds didn't charge him, so presumably he was scammed along with everyone else.
- obstinate 9y agoOr he turned for immunity.
- x0x0 9y agoTrue, I didn't think of that! Penny's account -- which to be clear I'm not arguing against; just reconciling multiple stories in my head -- made him sound shady, but putting in $200k of his own cash (if he so did; at this point, I'd want to see wire transfer receipts directly from the bank) is a pretty clear indicator he really was conned too.
- Shivetya 9y agoAnother article as well http://www.businessinsider.com/wrkriot-burned-700000-allegedly-lied-to-employees-2016-8 http://www.businessinsider.com/wrkriot-burned-700000-alleged...
- rdlecler1 9y agoListening the the Theranos story I can't figure out why she hasn't been charged.
- un9T64pPJGY7vR 9y agoWhy is that? Which law did Theranos or their founder break?
- sooheon 9y agoIt's always hard to tell without hearing intonation whether questions like this are asked in good faith out of genuine curiosity, or as a bid to steer the conversation towards semantics and nits. Whether one can list the specific laws broken by Theranos in their specific jurisdiction is one question, whether the fraudulent nature of the company passes the bullshit test is another.
- orthoganol 9y agoSeeing as people I know who don't even know or care much about Silicon Valley talk about Elizabeth Holmes like she's the next Jeff Skilling (something about Houston I guess), it seems, at the minimum, highly likely, given lawsuits, severed ties, total collapse, etc. that she trafficked in fraud. You're welcome to push PR on me, but you're fighting common sense, for better or worse.
- deleted 9y ago[deleted]
- nkw 9y ago18 USC 1343, 18 USC 1001, and/or 15 USC 78j(b)?
- Bartweiss 9y agoI'd be surprised if it wasn't wire fraud (1343) at least, all that takes is sending an email with the claims. The only challenge would be proving that a specific person knew a specific claim was false.
- justboxing 9y ago(somewhat) related story (from last Nov) => "After exposing Silicon Valley scam in viral post, Penny Kim finds new startup home in Dallas" https://www.dallasnews.com/business/technology/2016/11/24/exposing-silicon-valley-scam-viral-post-penny-kim-finds-new-startup-home-dallas https://www.dallasnews.com/business/technology/2016/11/24/ex...
- flipp3r 9y agoHah, I was thinking of this story when reading the justice.gov page.. They actually put an update on the bottom of the blog with a link to the justice.gov page. Looks like it's the same person.
- e9 9y agodefinitely the same person: https://www.forbes.com/sites/womenatforbesfiles/2016/10/12/penny-kim-the-personal-story-of-deception-hubris-and-the-networks-of-trust-in-silicon-valley/#2aab362f42bf https://www.forbes.com/sites/womenatforbesfiles/2016/10/12/p...
- godzillabrennus 9y agoI'm so glad that this is the result. I was following this in the days after Penny Kim wrote her story and still don't understand how anyone can be as stupid as Isaac and raise any capital. I guess pedigree matters more to investors than I'd like to believe.
- flippyhead 9y agoMe too!
- asdfologist 9y agoDidn't he lie about his pedigree too?
- robteix 9y ago> Choi sent a series of individualized emails to WrkRiot’s employees stating that salary payments were forthcoming, and attaching documents purporting to confirm wire transfers from a U.S.-based bank to the bank accounts of the recipient WrkRiot employees. In reality, as alleged in the indictment, Choi sent forged wire transfer confirmations in order to induce WrkRiot employees to continue working for the company without being paid. I don't get it. How long can you fool anyone with this? A couple of days at most? And after that you're irrevocably and unquestionably revealed to have lied? How does that help you in any way?
- pmorici 9y agoIf you aren't accustom to receiving wires and most normal people aren't you might not realize they generally only take 1 business day to clear. Scammers often find benefit in areas that aren't commonly well understood.
- nolok 9y agoA fair amount of the "clearing" time is usually not spent in clearing but in processing. Eg I don't know how common this is elsewhere, but here most of the banks I've delt with charge you more for a 12h/24H/immediate wire, and their regular service is in the 48h/72h (we're talking guaranteed time here, it's not uncommon for the regular option to be done under 36h).
- cstejerean 9y agoWhere is "here"? In the US wire transfers happen the same day as long as you schedule them before the cutoff, otherwise it's next business day. ACH takes longer, but that's not a wire transfer.
- FireBeyond 9y agoWhich is insane. When I lived in Australia, 10+ years ago, inter bank transfers were settled within 4 hours (often hourly). Intra bank, immediately.
- rodionos 9y ago> An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. This verbiage sounds somewhat strange given the evidence they collected, but upon googling, this seems to be the standard clause in FBI indictments.
- speby 9y agoYep, indicted just means being charged, which generally means a trial to result in a guilt/not-guilty verdict or out-of-court settlement.
- dpark 9y ago> or out-of-court settlement. You mean a plea bargain? Criminal cases can't be settled out of court. Prosecutors have no authority to sentence a criminal so cannot "settle" in the absence of the judge.
- tomkat0789 9y agoI remember Kim's story mentioned some H1B's from Asia who seemed stuck. What happened to them?
- e9 9y agoGood question. Hopefully they were able to figure it out. I had bad experience at startups on H1B. On my first day at the job on H1B, in the first 10 minutes I walk into CEO's office and he says the company has 1 month of runway in the bank. Imagine my reaction after I just moved my family to Silicon Valley. It turned out fine for me at the end but after that experience I feel that it's immoral for startups to hire H1Bs.
- softawre 9y agohttps://medium.com/startup-grind/i-got-scammed-by-a-silicon-valley-startup-574ced8acdff https://medium.com/startup-grind/i-got-scammed-by-a-silicon-...
- Simulacra 9y agoI think in twenty years someone is going to write a book about all of the startups out there that raked in the cash, never produced a viable, profit-making product or service, and eventually went bankrupt. There's an excellent article about the startup Tilt[0] and how it just went boom, and then bust. Makes me wonder if at least some of the startups out there know they're vapor but want to ride the gravy train. [0] https://www.fastcompany.com/3069164/how-tilt-veered-off-course https://www.fastcompany.com/3069164/how-tilt-veered-off-cour...
- kesselvon 9y agolike Crinkl? I mean look at how many companies go public on the Dow without ever showing profitability...Netscape's IPO seems to have created this trend where tech IPOs don't have to be viable businesses
- Simulacra 9y agoWow I had to look Crinkl up, what a cluster... yeah that. Wow. I'm sure someone is already working on an in-depth analysis where someday we can look back and say: vapor, vapor, vapor, scam, great idea but no monetization, vapor, scam, etc. etc...
- TarpitCarnivore 9y agoWhat was the photo company that raised 50M before launch, Color?
- ferentchak 9y agoThere's a company I would list here but it's in bad taste because they are popular and my comment would not fit into the 140 character limit!
- ethn 9y agoThis blog post[0] is ostensibly an account from one of their actual employees––considering the fraudulent actions happened on the same dates and both founders sent a fake wire as the account noted; among other shared similarities. Quite vindicating if it is so. [0] https://medium.com/startup-grind/i-got-scammed-by-a-silicon-valley-startup-574ced8acdff https://medium.com/startup-grind/i-got-scammed-by-a-silicon-...
- gefh 9y agoI knew it sounded familiar - glad to see some action taking place, but jail time will not get those employees their money back, and it may prove hard to get any money out of him if he's currently broke.
- philfrasty 9y ago„Isaac Choi, aka Yi Suk Choi, aka Yisuk Choi, aka Yi Suk Chae, aka Isaac Chae, (Choi)“ What is this about?! Do they have a legal obligation to list all his (nick)names?
- blazespin 9y agoProbably not, but it does help them make their case. I think the point of the press release was a shot over the bow of so called entrepreneurs doing the same thing. They're trying to send a message, but I think they also want to show that this guy was particularly egregious.
- gaius 9y agoWhy would you go by so many different names if you weren't trying to hide something?
- api 9y ago> The founder and chief executive officer of a now-defunct Silicon Valley technology start-up company was charged in an indictment unsealed yesterday in Orange County, California with allegedly defrauding several of his company’s former employees by luring them to join his company based on false and misleading statements about his educational, professional and financial background, and by allegedly enticing them to continue working for his company by providing them with forged documents purportedly reflecting payments for unpaid salaries. I experienced something a little like this years ago. It was an awful experience, owing mostly to the fact that I was too young and naive to recognize it quickly and run away.
- crawfordcomeaux 9y agoI remember reading about WrkRiot's fall on HN. It doesn't look good for Choi. I'm feeling sad over it because our justice system is designed to destroy lives, not repair them. I wouldn't wish most prison systems on my worst enemy.
- justforFranz 9y agoYou might expect more of these problems coming to light as this current economic expansion ages and starts to wobble.