Ask HN: Can I sue startup co-founder over these ethical violations?
The less said about this the better. I'll speak in private correspondence using the email address the28thofmarch2011 at gmail dot com.

One note: I do not want to sue him. I'm pretty sure I could end his company, because even if it's not legally actionable this could become a PR disaster, but that's the last thing I want. I'm announcing my resignation tomorrow and what I do want is fair severance: a positive reference, fair treatment of my equity, and a schedule for repayment of back salary that doesn't subject me to financial hardship. (I burned through my savings to help build this company.)

What happened is this. There are four of us in the company. One of my co-founders is great and I would recommend (or hire!) him anywhere. He's a friend of mine from a previous job whom I hired into the company, which is one of the reasons I feel I have an ethical obligation not to destroy it. On other hand, one of the original founders is just a bad human being-- drug abuse on the job, physically violent issues with women, criminal records, bad work ethic, and abysmal quality of work. Some of the shit he's done I did not think a person could do and hold a job in the same life. In my opinion, this startup is not going to succeed and he (still not fired!) is the main reason why it has struggled and will fail.

Our CEO did not disclose these problems with the bad co-founder until after I'd been with the company for over a year. I'd been working purely for equity for most of that time. The CEO continues to show a complete lack of leadership not just by retaining the piece of shit but by allowing him to remain employed on ridiculously lenient terms that cause the rest of us to suffer. It has gotten to the point where the CEO, who seems to be slipping into serious crazy territory on account of the stress the bad founder has put upon him, refuses to acknowledge the bad founder's contribution to our slow progress (schedules have slipped by years). Instead, the CEO uses kid gloves around the problem founder because, for the past 3 months, that person has been actually doing work and the CEO doesn't want to upset the apple cart. Now, the CEO (who is seriously cracking up) blames me for the company's problems, when the only thing I've been doing to justify this claim is taking some time off (job interviews) in the past couple weeks.

Maybe I'm not a "real" investor, even though I think my back salary obligation makes me a legitimate bondholder, but if I were, at least the criminal activity of the rotten co-founder and probably the drug abuse are matters that he'd be legally required to disclose. Certainly in a partnership in the context of the financial industry, that would be true. (If it matters, this occurred in the state of New York.)

To make it clear, I do not want to sue him. Not at all. I want fair treatment of my back salary and equity, amicable separation, and I want to move on with my career. I'm young and talented and the last thing I want is to waste a year of my life suing the guy or ruining the company. But knowing that I can do so gives the me the leverage to negotiate fair terms of separation, and the knowledge that I can wreak Nordic indignation on him if he, e.g., gives me a negative reference or just decides not to honor my back salary, causing me financial hardship.

Also, I quite frankly think the reason for certain sloppy paperwork is that the CEO wanted to be able to scumbag me, which is why I don't expect to see most of the back pay, but it could give me a trump card: I never signed paperwork that would give code I've written work-for-hire status. I have no desire to use or "steal" any of this code (even if I legally could do so, it would be unethical) but, without my signature giving him ownership, wouldn't code I wrote while working for free be mine? (I do, of course, fully intend to transfer unambiguous ownership of the code to him, as long as I get fair terms of separation.) That's another piece of leverage I'd like to know that I have.