Technology constantly changes, of course, but fraud doesn’t. We have recently learned this from the Theranos and FTX scandals; now we have Slync. As a business ethics keynote speaker and business ethics consultant, I always stress that we do not get snowed under by fancy names for processes and “innovation,” but instead focus on who is at the helm, what they are saying and how transparently they explain the actual performance of their product or service.
In Dallas, former co-founder of Slync, Chris Kirchner’s is scheduled for arraignment on May 17. Kirchener’s company has also been characterized as Kirchner’s piggy bank. Slync was once valued at close to $250 million. He is accused of fraud of more than $25 million.
If convicted, he could face life imprisonment for wire fraud and money laundering.
Logistics
Slync produces a software program that automates invoices and documentation in the logistics and transportation areas. Kirchner as CEO has been accused by the Securities and Exchange Commission and Department of Justice of selling more than $67 million in securities. The reason he did this was that he allegedly spent more than $28 million of shareholder money to fuel his self-indulgent lifestyle.
According to the Department of Justice:
“Rather than focus on growing his fledgling business, Christopher Kirchner allegedly swindled investors out of millions of dollars he used to fund a splashy lifestyle—then allegedly attempted to cover his tracks by conning even more investors and by firing employees who dared question him.”
In short, Kirchner kept siphoning off money for personal use while he continued raising money to cover his tracks.
The new CEO, Greg Kefer, stated:
“As victims of Mr. Kirchner’s actions, we are looking forward to the day when justice is served. In the meantime, the company has moved on. We have… doubled down with $24 million in new funding, we are growing our customer base, and we are focused on building a great company.”
All well and good
The questions that circulate now are not so much about the technology, but about trust. For two years, Kirchner initiated about 100 transfers from one bank account to another and then into his personal bank accounts, plus another $20 million directly into his accounts as well.
Those who suspected were dismissed.
What blew the game apart, was his failure to make payroll. He kept trying to repair the damage by attracting new investment however, the board of directors never authorized it. Nor, did they authorize his personal, $16 million jet, luxury suites and other excesses such as attempting to buy a U.K. football (soccer) team.
As a business ethics keynote speaker and business ethics consultant, it sounded like an all-too familiar Ponzi scheme.
Said the FBI:
“As the indictment alleges, Kirchner chose to enrich himself by diverting corporate assets away from Slync in order to fund his lavish lifestyle. Deceptive acts of corporate greed not only erode investor confidence and employee trust, but also financial market integrity.”
About a year ago, Kirchner fired two employees “who expressed concern about his management of the company.” Then in the same period, Kirchner locked out key employees who had previously been able to access the financial data.
No wonder trusting this operation is such a difficult leap. While the technology may be there, the levels of responsibility, maturity and oversight were virtually nonexistent. The only thing to restore trust might be a return to solid, ethical practices.
Chris Kirchner’s impending imprisonment is his own doing. The fact that he took investors along for his ride, is the doing of everyone else in the organization. No doubt, there were troubling signs for years and those signs were disregarded. This is no different than the dynamic at FTX or Theranos.
We are in a strange time in the funding of technologies. Investors willingly disconnect from those who claim knowledge and vision that no one else sees. And, while technical expertise may be lacking, sensible policies such as a system of checks, balances and good accounting practices should not be difficult attain.
Kircher was given a free ride. Now he is making everyone suffer.
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