
Former Silicon Valley CEO Indicted for Allegedly Defrauding Employees of StartUp - protomyth
https://www.justice.gov/opa/pr/former-silicon-valley-ceo-indicted-allegedly-defrauding-employees-tech-company-start
======
robteix
> 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
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
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
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
Which is insane.  When I lived in Australia, 10+ years ago, inter bank
transfers were settled within 4 hours (often hourly).  Intra bank, immediately. 

------
ethn
This 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-...](https://medium.com/startup-grind/i-got-scammed-by-a-silicon-
valley-startup-574ced8acdff)

~~~
gefh
I 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. 

------
godzillabrennus
I'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. 

~~~
asdfologist
Didn't he lie about his pedigree too? 

------
justboxing
(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/ex...](https://www.dallasnews.com/business/technology/2016/11/24/exposing-
silicon-valley-scam-viral-post-penny-kim-finds-new-startup-home-dallas)

~~~
flipp3r
Hah, 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
definitely the same person:
[https://www.forbes.com/sites/womenatforbesfiles/2016/10/12/p...](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)

------
rdlecler1
Listening the the Theranos story I can't figure out why she hasn't been
charged. 

~~~
un9T64pPJGY7vR
Why is that?  Which law did Theranos or their founder break? 

~~~
ebbv
She made totally false claims about her technology to investors; claiming they
were performing tests with their own tech when they were using outside tech. 
That seems like fraud to me? 

The reality is she's too well connected and wealthy to see any jail time,
though. 

~~~
sjg007
Lead investor was a friend of her family if I remember the news correctly.  I
think there is also some deal to remunerate the investors with more shares in
exchange for not filing a civil suit, but that might liquidate the company. 
Not sure if the SEC has weighed in yet or if there are financial crimes. 
Maybe. 

Maybe there is hope the business can turn around.  They have enough cash that
they could buy a promising new technology/business. 

------
softawre
[https://medium.com/startup-grind/i-got-scammed-by-a-
silicon-...](https://medium.com/startup-grind/i-got-scammed-by-a-silicon-
valley-startup-574ced8acdff)

------
protomyth
follow-up to this thread
[https://news.ycombinator.com/item?id=12379518](https://news.ycombinator.com/item?id=12379518)

~~~
x0x0
An article with more backstory:
[http://www.bizjournals.com/sanjose/news/2017/06/08/wrkriot-i...](http://www.bizjournals.com/sanjose/news/2017/06/08/wrkriot-
isaac-choi-indictment.html)

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
Or he turned for immunity. 

~~~
x0x0
True, 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. 

------
tomkat0789
I remember Kim's story mentioned some H1B's from Asia who seemed stuck.  What
happened to them? 

~~~
e9
Good 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. 

------
crawfordcomeaux
I 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. 

------
Simulacra
I 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-
cour...](https://www.fastcompany.com/3069164/how-tilt-veered-off-course)

~~~
kesselvon
like 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

~~~
TarpitCarnivore
What was the photo company that raised 50M before launch, Color? 

------
api
> 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. 

------
philfrasty
„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? 

~~~
gaius
Why would you go by so many different names if you weren't trying to hide
something? 

~~~
jeeyoungk
Though, I think only "Issac" and "Yi Suk" are his names, and others seem to be
phonetic variations of his first / last names. 

~~~
gaius
That looks like a deliberate attempt to avoid being searchable for, which
makes it worse! 

------
justforFranz
You might expect more of these problems coming to light as this current
economic expansion ages and starts to wobble. 

------
rodionos
> 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
Yep, indicted just means being charged, which generally means a trial to
result in a guilt/not-guilty verdict or out-of-court settlement. 

~~~
dpark
> _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.