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The Almighty Buck The Courts United States

CEO of Defunct Silicon Valley Startup Indicted For Allegedly Tricking Employees Into Working For Free (theregister.co.uk) 102

The founder and CEO of a shuttered Silicon Valley startup has been indicted for tricking employees into working without pay and for lying about his credentials and financing. From a report: In an indictment unsealed this week, Isaac Choi, founder and CEO of failed Silicon Valley job search startup WrkRiot, was charged with five counts of wire fraud for allegedly defrauding former employees. Problems at the upstart surfaced in August when Penny Kim, former head of marketing for the company, published an account of her experience at an unnamed biz. She said the unspecified outfit failed to pay her and forged wire transfer confirmations to make it appear it had transferred owed funds. After it emerged that Kim was talking about WrkRiot, the company threatened legal action. By the end of August, when former CTO Al Brown acknowledged being the person referred to as "Charlie" in Kim's post and corroborated her claims, WrkRiot had shut down its website and Facebook page.
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CEO of Defunct Silicon Valley Startup Indicted For Allegedly Tricking Employees Into Working For Free

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  • by taiwanjohn ( 103839 ) on Friday June 09, 2017 @10:26AM (#54585229)

    Tom Sawyer?

  • Bad reporting (Score:5, Insightful)

    by gurps_npc ( 621217 ) on Friday June 09, 2017 @10:38AM (#54585315) Homepage

    I hate when they do this stuff. Forging a wire transfer is NOT 'tricking you into working for free'. Instead it is tricking people into thinking they were paid. Or more accurately: Wire Fraud against their own employees.

    Tricking someone into working for free would mean the employee had to have done something stupid like accepting a bet on a coin flip that turned out to be a two headed coin.

    What person felt the need to downgrade the horrible crime of wire fraud into merely 'tricking'?

    • Re:Bad reporting (Score:4, Informative)

      by omnichad ( 1198475 ) on Friday June 09, 2017 @10:45AM (#54585363) Homepage

      If they kept working after seeing the forged wire transfer, then they were also tricked into working for free. It really can be both.

      • by shess ( 31691 )

        If they kept working after seeing the forged wire transfer, then they were also tricked into working for free. It really can be both.

        Eh, once upon a time I had a series of contracts where each one ended with a substantial unpaid amount owed to me. It didn't just start out with non-payment, initially they paid on time, then they got a little behind, then it became a bit to-do to get money out of them because they couldn't meet all their payments. That usually took many months, so, yeah, I could have immediately gotten all huffy and walked, but that would be trading a known work situation with a fuzzy payment situation for an unknown wor

        • True, but this was a startup in question, and they are notoriously bad about paying and there is virtually no chance in hell you will get super rich at a startup (though people are tricked into thinking this). It's also a startup with a stupid concept, which does virtually the same thing as 20 other startups with the same stupid concept. If you're not being paid then you lose *nothing* by leaving.

      • by radarskiy ( 2874255 ) on Friday June 09, 2017 @12:22PM (#54586097)

        gurps_nps is not claiming that the title is false, but rather that it is weakly descriptive of the story.

        If the title were "Isaac Choi is the founder and CEO of WrkRiot" that would also be true, but even less descriptive of what happened.

        At title that states that Choi committed wire fraud on the payroll contains enough information to let the reader know that people didn't get paid, the mechanism by which that happened, that it was a crime, and that the employees have standing to seek civil redress from Choi. Using "tricked" leave the reader wondering if the outcome is "too bad; so sad".

        Words mean things.

    • by Calydor ( 739835 )

      Would you be okay with calling it 'deceiving into working for free'?

      • Re:Bad reporting (Score:4, Insightful)

        by gurps_npc ( 621217 ) on Friday June 09, 2017 @11:21AM (#54585647) Homepage

        No. When you say working for free it means they knew they would not get money, something that implies they are really stupid.

        At the time they were working, they thought they would be paid. They did NOT work for free, they worked for money that was not paid. They were tricked into believing they were paid, they were not tricked into working for free.

        • Tricked into working for free, or working for substantially less than market rates, is standard startup behavior. Convince the mark that lots of money is coming later, that the options are at least the equivalent of cash, tell them that it's standard practice to work 80 hours a week for low pay.

    • by hawguy ( 1600213 )

      I hate when they do this stuff. Forging a wire transfer is NOT 'tricking you into working for free'. Instead it is tricking people into thinking they were paid.

      And since they were not paid for work that they did (presumably because the company told them they would be getting paid), they were tricked into working for free.

    • If you consider Slashdot to be reporting. TFA does have a much better headline.

    • by eltwo ( 4283339 )
      Well, the headline did trick me into reading the story.
      • True, "Tricked into working for free" sounds like an unusual case, worth a brief read. "Company commits fraud against its workers" is a more straight forward crime story, and boring because it happens too often.

    • by dkone ( 457398 )

      "What person felt the need to downgrade the horrible crime of wire fraud into merely 'tricking'?"

      Apparently just about any /. editor

    • What person felt the need to downgrade the horrible crime of wire fraud into merely 'tricking'?

      Someone who is contemplating taking a leap into the pharma business after failing in Silicon Valley.

  • disrupting "work" and "compensation"!
  • I dare you to find a CEO who DOESN'T trick (or just demand) his employees to work for free in the form of unpaid overtime.
    • There's some truth to that, but being on a salary is very different from fabricating fraudulent payment documents.

  • The moment it looks like my paycheck won't come through I'll start looking for a new job in a heartbeat. Most of the time it's either someone screwing up payroll in HR or the HR vendor having an electronic glitch. Incidents like that are usually resolved in 24 hours. One time I had a check sent via FedEx. I don't work for free.
    • I disagree with you more often than not. I probably don't like you much either. However, I have noticed a lot of people trolling you, and you have generally responded in more or less civil terms. I'm not sure I would respond as well in the same circumstances. Do keep ignoring any AC suggestions to stop posting, you're okay in my book.

  • The crime he committed was wire fraud against his employees. I believe that we're all hoping they give this Isaac Choi fellow each and every moment he's earned in prison.

  • by ErichTheRed ( 39327 ) on Friday June 09, 2017 @12:02PM (#54585967)

    Toward the end of the last dotcom bubble, you'd see stories similar to this, where the founder was able to keep their employees working even after the money was gone. I would imagine this happens a lot during the death stage in lots of small businesses. From what I've seen, the difference between tech startups and your average small businesses is that some of the employees become brainwashed to some extent. They've been putting in 100 hour weeks for so long that nothing will convince them that it's time to get out.

    I think part of the problem with startups is that the founders are these "serial entrepreneur" types who (a) have difficulty dealing with actual employees, and (b) have a huge personal financial cushion to fall back on and therefore have no idea how bad not getting a paycheck can be for "normal" people. Larger companies may move slowly and have dumb rules and a bureaucracy, but most large companies don't make it a regular habit of shorting employees' wages. Startup founders are a lot more likely to say "Oh well, I guess it's time to close up...time to chase that "Uber for nurses" opportunity!" and forget about who they're leaving behind.

    • by Nidi62 ( 1525137 )

      I would imagine this happens a lot during the death stage in lots of small businesses. From what I've seen, the difference between tech startups and your average small businesses is that some of the employees become brainwashed to some extent. They've been putting in 100 hour weeks for so long that nothing will convince them that it's time to get out.

      I think part of it is simply that they are used to it. My wife used to work for a small business that did payroll processing for other small businesses. Very often those business would barely have enough money in their accounts to cover the payroll each week (if at all). Since small businesses are very susceptible to fluctuations in revenue, being short on a check could be a somewhat common occurrence. And when the job market is bad enough a job that sometimes pays late is still better than no job at al

      • by HornWumpus ( 783565 ) on Friday June 09, 2017 @01:53PM (#54586663)

        If your employer can't make payroll, even one day late, and you are not actively looking, you are a fool.

        I took work (and company assets) home, the only time this ever happened to me. That company eventually paid and never even knew the assets had left the building (as I brought them back after I got paid).

        On the flip side, I knew a mechanic who was unfortunate enough to be on his day off when the IRS showed up and locked down his employer's facility. He was eventually charged with 'grand theft' for using his keys to enter and retrieve his own toolbox full of tools. Didn't even break the cop seal, but they claimed he saw it on the front door. Eventually walked, but the shyster bills were brutal.

    • Okay, but did they just convince the employees to continue without pay for a while, or did they lie about the payments? The twist in this case is that the company faked a payment or payments. That's pretty scummy.
    • It's like throwing good money after bad. I'm sure often the employees realize the company is in trouble, but...but...but...if the big break happens then everyone who is there will be rich (at least that's the thinking). So maybe I put in a few more weeks, you know, just in case this company hits the start-up lottery. Because I don't want to be that guy who quit the next Facebook at just the wrong time.

      CEO's will often use this strategy to manipulate people and then when things do go belly up, it's the emp
      • God damn, I've seen that.

        A friend of mine was the only person to make a _penny_ on 'Health Hero Network' stock. Because I talked him into unloading his options at the end of one of his 'that stupid frog is so fucking clueless' rants about his boss.

      • It's absolutely true, and everybody knows somebody who jumped ship right before things really took off. It's one thing to prattle on about sunk costs and level headed moves, but when you're in a situation where laving your job today guarantees no paycheck next week, and staying offers a glimmer of hope of not only next week's paycheck but the paychecks owed from last month it's (psychologically) hard to cut that life line. Doubly so if you actually believe in the company and what they are doing.

        CEOs prey on

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