Life can be chaotic at a startup. You never know how long the company can milk its investment cash, and being acquired is a luxury most never experience. Employees working for Isaac Choi, CEO of WrkRiot, got more than any startup employee ever bargained for.
As of early February, Choi is facing charges in federal court for defrauding investors and employees and could receive 20 years in prison for his crimes. Interestingly enough, the infractions at WrkRiot weren’t brought to light by any initial legal disputes, rather being reported in a Medium article entitled, “I Got Scammed by a Silicon Valley Startup.”
Penny Kim, the subject of the Medium post, continued with the company regardless of the red flags she was seeing. For example, the company wanted to compete in the digital market without an SEO-friendly name; and Choi, the CEO, had hired three full-time employees just to be his friends, rather than having a role with a company.
Anyone familiar with working in a new business knows that the process of growth isn’t always smooth. New companies are magnets for late payments, times of uncertainty, and high levels of stress from everyone involved, but the situation at WrkRiot went above and beyond, as a dismayed Kim reports.
After taking a job as the director of marketing, she noticed small signs that the job might be “too good to be true.” First, while she was on vacation, WrkRiot hired a social media manager who reports directly to the director of marketing without notifying Kim. This came after Kim noticed that salary and benefit negotiations were being mediated by company representatives that clearly had no HR experience.
These red flags began to get larger as Kim started to attend investor meetings. Instead of selling their business or their product, Choi and his associates spent the entirety of pitches to their investors talking about themselves.
The rest of the story is where unethical business turns into the crimes that got Choi, 36, into the predicament he now faces. The company hired a number of Chinese developers on H1-B visas, meaning that they were permitted in the country as long as they remained employed.
No one, not the Chinese developers and not Kim, was getting paid for their work and were starting to get antsy. Kim reports asking numerous times when she was going to be paid in full, as the executives had received cashier’s checks for their work in an insufficient amount.
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As a response, Kim received a falsified confirmation from Wells Fargo, which appeared to be a photoshopped version of an outdated payment confirmation page. It goes without saying that this is wildly illegal.
As time passed, people began to speak out about Choi, his partners, and his illegal business practices. The company began to fail when investors realized that WrkRiot wasn’t worth their money, and pulled out, but the other shoe dropped when the FBI and Department of Justice began to look into the company.
As it turns out, Choi and his partners were borrowing money from employees in the company and falsely claiming to investors and other employees that they were putting their own money into the company, when they, in fact, were not. Earlier this month, Choi pleaded guilty in court. He now faces a maximum penalty of 20 years in prison, and a $250,000 fine. A judge will announce his sentencing on May 24.
Maybe he’ll be sharing a cell with that Rigzone idiot. We can only hope, eh?