Chris Kirchner, the founder of Slync, a US$240 million logistics software company backed by Goldman Sachs, was charged with fraud by multiple federal agencies Tuesday.
In a complaint, the Securities and Exchange Commission accused Kirchner of fraudulently offering and selling more than US$67 million of securities, of which he allegedly misappropriated more than US$28 million for personal benefit. In separate criminal charges filed Tuesday, the Department of Justice accused Kirchner of wire fraud and misappropriating US$20 million from the company.
The charges came after FBI agents raided Kirchner’s Texas mansion Tuesday morning, towing multiple luxury vehicles from the property. Kirchner made an initial appearance before U.S. Magistrate Judge Hal R. Ray, Jr. later in the day. If found guilty of the DOJ charges, he could face up to 20 years in prison.
“We allege that Kirchner lied about Slync’s business to secure tens of millions of dollars from investors, a massive portion of which he then stole from the company to live extravagantly while not paying Slync’s employees,” Sheldon L. Pollock, associate director of the SEC’s New York Regional Office, said in a press statement.
Kirchner’s arrest comes months after he was ousted from his company amid allegations of “fraudulent behavior” first documented by Forbes in July. The report detailed how Kirchner had misrepresented Slync’s finances to the board, and fired executives who had raised concerns about his alleged misconduct.
According to the SEC complaint, from March 2020 until Kirchner’s termination in August last year, the founder continually misrepresented Slync’s financials to the board. Over the same time period, Kirchner allegedly misappropriated more than US$28 million of the funds Slync raised from investors by transferring tens of millions of dollars from Slync’s corporate bank accounts to his personal bank accounts. In other cases he paid for his personal expenses directly from Slync bank accounts.
In one episode detailed by the DOJ, Kirchner texted a Slync employee that he was transferring investors money into an “investor account and a “chase” account, and instructed the employee to approve the wires. Instead, US$20 million of Slync’s funds were transferred to his personal account. Kirchner then told his private bankers via an email that the US$20 million was a distribution “from my company” — a transfer that had not been approved by the board of directors.
The US$20 million, which equated to almost 40 percent of the capital raised during Slync’s series B funding round, was then allegedly used to purchase a private jet and pay for a luxury suite at a sports stadium.
Several of these transactions occurred at a time when Slync failed to make payroll, and employees were going without pay for months.
“Slync investors and employees are understandably outraged, and we sympathise,” U.S. Attorney Leigha Simonton said in a statement. “We look forward to holding Mr. Kirchner accountable in federal court.”
This story was first published on forbes.com
