Saturday, June 10, 2017

Silicon Valley startup CEO indicted for defrauding employees

EMPLOYEES of a Silicon Valley start-up ended up working for free because their CEO deceived them about the company's finances, according to a criminal indictment filed by the Department of Justice.

Isaac Choi was formally indicted June 8 in Orange County, his last known residence, according the DOJ.

Isaac Choi
Choi, the founder and chief executive officer of a now-defunct Silicon Valley technology start-up company, allegedly defrauded 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 for free by providing them with forged documents purportedly reflecting payments for unpaid salaries.

Choi is also known Yi Suk Choi, aka Yisuk Choi, aka Yi Suk Chae, aka Isaac Chae, (Choi), 36, most recently of Orange County and previously of Santa Clara, Calif.

The indictment alleges that Choi, while working at his company, known publicly as WrkRiot, falsely claimed that he received a degree from a prestigious New York business school, worked as an analyst at a major financial instution, had access to significant personal wealth, and was investing significant amounts of that money into the company.

The indictment further alleges that after certain WrkRiot employees came to learn that WrkRiot’s bank accounts did not contain the capital that Choi claimed to have invested, Choi falsely claimed that a significant portion of the money he pledged to invest was tied up overseas and elsewhere.

The indictment says that in August 2016, 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.

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.

The story came to light last year when a former Choi employee, Penny Kim, wrote a post on Medium saying she'd been scammed by an unnamed company, "Startup X." Other employees later identified the company as Choi's WrkRiot, a now defunct job-seeking platform said to rely on machine learning.

Kim's post was widely talked about in tech circles exposing the dark side of the Silicon Valley dream.

"My main goal [in publishing the post] was to show people the other side of what Silicon Valley and startups are like," Kim told Quartz last year. "Everyone has hopes and dreams. I did. I moved out to California to achieve that dream."