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> Choi sent a series of individualized emails to WrkRiot’s employees stating that salary payments were forthcoming, and attaching documents purporting to confir

> 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 ago
If 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 ago
  A 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 ago
    Where 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 ago
      Which is insane. When I lived in Australia, 10+ years ago, inter bank transfers were settled within 4 hours (often hourly). Intra bank, immediately.
- firebird84 9y ago
  I recently did a domestic wire that only took a few hours to clear. That's the whole point of it all, otherwise I'd be using ACH... Edit On second thought, it might depend on whether the banks on either side of the transaction are fed members. If they're not, I can see how it would take longer.
- solotronics 9y ago
  I am probably biased in favor but really this is an awesome application for cryptocurrency.
wojt_eu 9y ago
After a couple days the fraudster could claim that the wire transfer bounced, take another two days to check with their bank. Then they could say the problem is on recipient bank's problem with SWIFT/BIC code format and pretend to attempt the transfer again. They might even go as far as actually commission the transfer in front of the recipient but then cancel it in the evening before it's cleared. Another way to buy some time could be to send transfer for one percent of the amount and then claim it was a mistake with decimal point. I guess this could be stretched to two weeks before recipients are convinced of the fraud.
- nolok 9y ago
  As someone who has worked for an american company (I'm not from there and was working remote) and paid by wire, it legitimately happens enough that it would be believable. I once had to wait over a month for a wire to work out (fault was ultimately on my bank's side). So, yes, an international wire being delayed for a couple of weeks because "issues" wouldn't alarm me enough that I would stop all work instantly.
walshemj 9y ago
having my salary wired and not having a standard bank paymenent for may salary would be a huge flag for me. I wonder if the employees SS and tax payments where also not being paid - I have worked for a company that wet bust the hard way and it turned out that they had not being paying my NI stamp so no unemployment for me.
austenallred 9y ago
My guess is the founder was frantically trying to raise money somewhere. That would make such behavior slightly more rational, I suppose, though no less criminal.
- Bartweiss 9y ago
  Almost certainly. That would both make it feel more ethical to the founder ("I'm just bridging the gap!") and look less useless ("If I can make it to Friday they'll get all the backpay, there's no problem!"). Without new money on the horizon it's simply incoherent, to say nothing of immoral. Of course, none of that makes it right. There are plenty of startups that handle this without cheating successfully. I've gotten the phone call saying "we can't pay you now, but here's our fundraising schedule and when we expect to have money". It might lose you some staff, but I think it's not as bad as most people expect - either the situation looks good and people stay, or the situation looks bad and you weren't going to save the company regardless.
  - pmiller2 9y ago
    How does that kind of situation ever look good? Failure to make payroll means you no longer have a company.
    - ferentchak 9y ago
      I know of a company where the owner oftentimes bounced payroll checks (before common direct deposit) for years. Last I checked that company sells ~400 million dollars of goods at a solid margin and prints money while all of his competitors are going to dust. I am sure it's an uncommon story but in his case the hustle worked out for him. In short it doesn't look good but sometimes at least it works.
- gmarx 9y ago
  and if the startup had ultimately been successful this would be part of the founding myth and many people would think it was a positive
ProblemFactory 9y ago
> > 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? I have (briefly) worked with a few people like this in the past. There is no clever long-term plan to it, they are persistent "excuse makers". If a problem, like employees complaining about not being paid, comes up, they will find the quickest way to solve it for today by making up a new excuse. And in their mind, they aren't even doing anything wrong - they honestly believe that the big sale or investment round will definitely close any day now, and they are just "motivating" the team to get through a slump.
- athenot 9y ago
  I can confirm this type of personality exists: got to work with someone like that. They are in perpetual denial about the real state of their company and tend to surround themselves with "advisors" that will only say what they want to hear.
  - blazespin 9y ago
    There's a lot of resurrection stories floating around about startups. Apparently, these things actually happen.
misiti3780 9y ago
I literally had this happen to me by a "non-silicon valley" startup. I reported this person to the DA (NYC), and nothing came of it. If any reporters want more info, contact me.
- pavel_lishin 9y ago
  > I reported this person to the DA (NYC), and nothing came of it. How long ago? Choi's infraction seems to have taken place 9 months ago - that sounds pretty speedy, in terms of the justice system.
  - misiti3780 9y ago
    reported to the DA 11/2014 - this person stole well over 100K from multiple employees - if any lawyers have any comments on how to handle this at this point, i would love to hear it
    - x0x0 9y ago
      Get your own attorney. Seriously, the consultation is free. This is my standard advice: Write down everything that happened, in order. Be brief but don't leave important facts out. This is important so you can clearly lay out your claims, your actions, what you can prove, etc. You don't want to be in the lawyer's office forgetting pieces of your story. You lived this; he/she didn't. Notate this timeline with where you have supporting documents. Bring the above to a couple different attorneys for a free consultation. You can find them with the local bar association or, if you've used a lawyer for anything, he or she will be able to recommend a colleague in the right area.
    - greenyoda 9y ago
      Did you try filing a wage-theft claim with the state's Labor Department? https://www.labor.ny.gov/workerprotection/laborstandards/workprot/lshmpg.shtm https://www.labor.ny.gov/workerprotection/laborstandards/wor... (There's a section about "Unpaid/Withheld Wages".)
gedrap 9y ago
I had experience with this kind of employers in my very young days, when time and time again 'probably something wrong with the bank' or dozen of other bs excuses. If you are inexperienced, very short on money (e.g. a student), and have no one to discuss these issues with, rationality might go out of the window. You can convince yourself that everything will be fine very soon, you will get your money next week, etc. So it's not very surprising. Quote from the original Medium post: We had 8 young Chinese employees on H-1B visas with us as developers, limited in experience but eager to please and learn. They end up being the ones to suffer the most. 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-...
- e9 9y ago
  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.
  - valuearb 9y ago
    It's certainly immoral not to tell you that before you take the job.
bgribble 9y ago
When a less-powerful entity owes a more-powerful entity money, the debt obligation works to ensure that they get their money back. Like when you owe a bank money. When the more-powerful owes money to the less-powerful, the debt obligation works to ensure that the less-powerful person's choices are limited to "walk away from my money" or "wait around and hope". When someone says they are going to pay you, you really really want to believe. Funny how the debt obligation always works in the more-powerful party's favor :( I have had a very similar situation happen twice, once when a VC gave a small startup the "check is in the mail... no wait we have to transfer money.. no wait we have to liquidate an investment" BS while the employees worked without pay for months on end. My first startup job, and the LAST time I will work for any amount of time without getting paid. The second time (different company) the founder/VC (allegedly) defrauded the other investors by puffing up the startup's prospects, and then when the startup got acquired by ${BIGCO} for a very very low valuation only the founder walked away with any money... he was indicted, I think, I had to produce years worth of email for trial discovery and was lucky not to have to testify. In my experience, working for a messed-up/sketchy startup is just a resume item that most people have, and you hope you only have one of...
- Bartweiss 9y ago
  This is a reasonable summary, but I still don't understand the specific behavior in this case. Stonewalling and lying are often effective for whoever's in power. Giving clear, easily-falsified evidence to everyone you're crossing still doesn't - as evidenced by the fact that lots of startups fail to pay, but this one is leading to a prosecution.
  - neurotech1 9y ago
    Allegedly forged wire transfer confirmations that were done in Photoshop is what crossed the line towards prosecution for wire fraud. Excuses and stalling isn't the same thing.
    - Bartweiss 9y ago
      Yeah, that's what confused me. Delaying tactics wouldn't have been shocking, but actual fraud seems like an enormous risk for virtually no payoff.
daxorid 9y ago
I saw this kind of thing twice firsthand in 2000-2001. I suspect when the current bubble's funding tide goes out, you'll find many seemingly upstanding founders resort to desperate, and illegal, measures.

pmorici 9y ago

If 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 ago
A 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 ago
  Where 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 ago
    Which is insane. When I lived in Australia, 10+ years ago, inter bank transfers were settled within 4 hours (often hourly). Intra bank, immediately.
firebird84 9y ago
I recently did a domestic wire that only took a few hours to clear. That's the whole point of it all, otherwise I'd be using ACH... Edit On second thought, it might depend on whether the banks on either side of the transaction are fed members. If they're not, I can see how it would take longer.
solotronics 9y ago
I am probably biased in favor but really this is an awesome application for cryptocurrency.

wojt_eu 9y ago

After a couple days the fraudster could claim that the wire transfer bounced, take another two days to check with their bank. Then they could say the problem is on recipient bank's problem with SWIFT/BIC code format and pretend to attempt the transfer again. They might even go as far as actually commission the transfer in front of the recipient but then cancel it in the evening before it's cleared. Another way to buy some time could be to send transfer for one percent of the amount and then claim it was a mistake with decimal point. I guess this could be stretched to two weeks before recipients are convinced of the fraud.

nolok 9y ago
As someone who has worked for an american company (I'm not from there and was working remote) and paid by wire, it legitimately happens enough that it would be believable. I once had to wait over a month for a wire to work out (fault was ultimately on my bank's side). So, yes, an international wire being delayed for a couple of weeks because "issues" wouldn't alarm me enough that I would stop all work instantly.

walshemj 9y ago

having my salary wired and not having a standard bank paymenent for may salary would be a huge flag for me. I wonder if the employees SS and tax payments where also not being paid - I have worked for a company that wet bust the hard way and it turned out that they had not being paying my NI stamp so no unemployment for me.

austenallred 9y ago

My guess is the founder was frantically trying to raise money somewhere. That would make such behavior slightly more rational, I suppose, though no less criminal.

Bartweiss 9y ago
Almost certainly. That would both make it feel more ethical to the founder ("I'm just bridging the gap!") and look less useless ("If I can make it to Friday they'll get all the backpay, there's no problem!"). Without new money on the horizon it's simply incoherent, to say nothing of immoral. Of course, none of that makes it right. There are plenty of startups that handle this without cheating successfully. I've gotten the phone call saying "we can't pay you now, but here's our fundraising schedule and when we expect to have money". It might lose you some staff, but I think it's not as bad as most people expect - either the situation looks good and people stay, or the situation looks bad and you weren't going to save the company regardless.
- pmiller2 9y ago
  How does that kind of situation ever look good? Failure to make payroll means you no longer have a company.
  - ferentchak 9y ago
    I know of a company where the owner oftentimes bounced payroll checks (before common direct deposit) for years. Last I checked that company sells ~400 million dollars of goods at a solid margin and prints money while all of his competitors are going to dust. I am sure it's an uncommon story but in his case the hustle worked out for him. In short it doesn't look good but sometimes at least it works.
gmarx 9y ago
and if the startup had ultimately been successful this would be part of the founding myth and many people would think it was a positive

ProblemFactory 9y ago

> > 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? I have (briefly) worked with a few people like this in the past. There is no clever long-term plan to it, they are persistent "excuse makers". If a problem, like employees complaining about not being paid, comes up, they will find the quickest way to solve it for today by making up a new excuse. And in their mind, they aren't even doing anything wrong - they honestly believe that the big sale or investment round will definitely close any day now, and they are just "motivating" the team to get through a slump.

athenot 9y ago
I can confirm this type of personality exists: got to work with someone like that. They are in perpetual denial about the real state of their company and tend to surround themselves with "advisors" that will only say what they want to hear.
- blazespin 9y ago
  There's a lot of resurrection stories floating around about startups. Apparently, these things actually happen.

misiti3780 9y ago

I literally had this happen to me by a "non-silicon valley" startup. I reported this person to the DA (NYC), and nothing came of it. If any reporters want more info, contact me.

pavel_lishin 9y ago
> I reported this person to the DA (NYC), and nothing came of it. How long ago? Choi's infraction seems to have taken place 9 months ago - that sounds pretty speedy, in terms of the justice system.
- misiti3780 9y ago
  reported to the DA 11/2014 - this person stole well over 100K from multiple employees - if any lawyers have any comments on how to handle this at this point, i would love to hear it
  - x0x0 9y ago
    Get your own attorney. Seriously, the consultation is free. This is my standard advice: Write down everything that happened, in order. Be brief but don't leave important facts out. This is important so you can clearly lay out your claims, your actions, what you can prove, etc. You don't want to be in the lawyer's office forgetting pieces of your story. You lived this; he/she didn't. Notate this timeline with where you have supporting documents. Bring the above to a couple different attorneys for a free consultation. You can find them with the local bar association or, if you've used a lawyer for anything, he or she will be able to recommend a colleague in the right area.
  - greenyoda 9y ago
    Did you try filing a wage-theft claim with the state's Labor Department? https://www.labor.ny.gov/workerprotection/laborstandards/workprot/lshmpg.shtm https://www.labor.ny.gov/workerprotection/laborstandards/wor... (There's a section about "Unpaid/Withheld Wages".)

gedrap 9y ago

I had experience with this kind of employers in my very young days, when time and time again 'probably something wrong with the bank' or dozen of other bs excuses. If you are inexperienced, very short on money (e.g. a student), and have no one to discuss these issues with, rationality might go out of the window. You can convince yourself that everything will be fine very soon, you will get your money next week, etc. So it's not very surprising. Quote from the original Medium post: We had 8 young Chinese employees on H-1B visas with us as developers, limited in experience but eager to please and learn. They end up being the ones to suffer the most. 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-...

e9 9y ago
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.
- valuearb 9y ago
  It's certainly immoral not to tell you that before you take the job.

bgribble 9y ago

When a less-powerful entity owes a more-powerful entity money, the debt obligation works to ensure that they get their money back. Like when you owe a bank money. When the more-powerful owes money to the less-powerful, the debt obligation works to ensure that the less-powerful person's choices are limited to "walk away from my money" or "wait around and hope". When someone says they are going to pay you, you really really want to believe. Funny how the debt obligation always works in the more-powerful party's favor :( I have had a very similar situation happen twice, once when a VC gave a small startup the "check is in the mail... no wait we have to transfer money.. no wait we have to liquidate an investment" BS while the employees worked without pay for months on end. My first startup job, and the LAST time I will work for any amount of time without getting paid. The second time (different company) the founder/VC (allegedly) defrauded the other investors by puffing up the startup's prospects, and then when the startup got acquired by ${BIGCO} for a very very low valuation only the founder walked away with any money... he was indicted, I think, I had to produce years worth of email for trial discovery and was lucky not to have to testify. In my experience, working for a messed-up/sketchy startup is just a resume item that most people have, and you hope you only have one of...

Bartweiss 9y ago
This is a reasonable summary, but I still don't understand the specific behavior in this case. Stonewalling and lying are often effective for whoever's in power. Giving clear, easily-falsified evidence to everyone you're crossing still doesn't - as evidenced by the fact that lots of startups fail to pay, but this one is leading to a prosecution.
- neurotech1 9y ago
  Allegedly forged wire transfer confirmations that were done in Photoshop is what crossed the line towards prosecution for wire fraud. Excuses and stalling isn't the same thing.
  - Bartweiss 9y ago
    Yeah, that's what confused me. Delaying tactics wouldn't have been shocking, but actual fraud seems like an enormous risk for virtually no payoff.

daxorid 9y ago

I saw this kind of thing twice firsthand in 2000-2001. I suspect when the current bubble's funding tide goes out, you'll find many seemingly upstanding founders resort to desperate, and illegal, measures.