Ex-CEO of logistics startup Slync collared on multimillion fraud, embezzlement charges
Christopher Kirchner alleged to have hyped up biz to investors then siphoned off a slice of cash
The founder and ex-CEO of supply chain software startup Slync has been arrested on charges that he tricked investors into handing $67 million to the company then made off with $28 million to fund his "lavish lifestyle."
In a pair of dual actions released along with Christopher Kirchner's arrest yesterday, the Securities and Exchange Commission levied a case against him for the $67 million in fraudulent fundraising, while the US Attorney's office for the Northern District of Texas charged him with $20 million in wire fraud.
According to the SEC, Kirchner allegedly used the cash so his personal investment company, KFIM LLC, could buy a nearly half-million-dollar suite at a Texas sports stadium and to fund the purchase of a $16 million private jet.
All the while, the SEC said, Kirchner was "continuing to lie to investors about Slync's financial health and repeatedly failing to meet payroll deadlines for Company employees."
"[Kirchner] did this to fund a lavish lifestyle at the expense of those that trusted him to act responsibly and ethically," said FBI Dallas acting special agent in Charge James J Dwyer.
Per the SEC and DoJ complaints [both PDFs], Kirchner helped found Slync in 2017, and operated as CEO until he was suspended by the Board of Directors in July of last year over allegations related to the missed payroll payments, as well as misrepresentations about said payments "and public allegations regarding Slync funds, customers and accounts."
Kirchner was formally terminated in August 2022, but before that allegedly made off with the aforementioned $28 million. The FBI began its investigation that same month, the findings from which (along with the SEC allegations) follow.
- Musk, Tesla win securities fraud battle over that 'funding secured' tweet
- Software devs targeted as British tax authority makes fraud allegations
- IBM top brass accused again of using mainframes to prop up Watson, cloud sales
- SEC: Startup had 'no functional streaming service', raised $1.3 million anyway
In 2020, Slync was running out of funds so Kirchner organized series A and B funding rounds, which raised the SEC's $67 million figure. $50 million of that came in the series B round, which ended in December 2020, and that's the cash cache from which the SEC alleges Kirchner siphoned the money.
The DoJ claims that Kirchner lied to Slync's chief of staff – the only other person with access to the account to authorize large withdrawals – to tell him he needed to move the money to an "investment" and "chase" account that didn't actually exist.
Instead, Kirchner allegedly moved $20 million in Slync funds to his personal checking account, the DoJ said.
To keep his bank from getting suspicious, Kirchner allegedly misled the bank in emails, telling them the cash was a distribution award from Slync, which the DoJ said the board never authorized.
As for the $67 million in fraudulent fundraising charges from the SEC, those go hand-in-hand with the DoJ's charges.
"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," said Sheldon Pollock, SEC's New York regional associate director.
Speaking to the Dallas News, Slync chief marketing officer Greg Kefer, who joined the company this month, said it's cooperating with the investigations and is looking forward to moving on from this chapter of its history.
"This investigation is not the company's primary focus. We have moved on with our new CEO, John Urban, and are focused on delivering next-generation technology to the global logistics industry," Kefer said.
If convicted, Kirchner faces up to 20 years in prison, the DoJ said. ®