As we talked, the CEO stated he is putting in $2M to fund the startup in November. In December, with $400k or so in the company with the rest coming, we started to build. We grew steadily till about April with a prototype. At which point, the CEO kept mentioning money was coming and with a few different reasons on why it did not arrive.
I bridged May and June. As the stories piled up, I started to ask more pointed questions. I met Bernie, the lawyer who was real. Bernie has an office with Montgomery McCracken in NYC. I insisted the CEO to fly twice to NYC to meet with Bernie and resolve the funding issue. On the last trip, he claimed he got a $500k loan from his lawyer, Bernie, and his cousin, Tommy. The last payroll with ADP was made.
I did not find out till the beginning of August that the money for the last payroll came from one of the employees. I thought there was $500k available starting July. It became apparent it was not available shortly thereafter.
In July, Penny joined. We went through more stress at the company with the CEO stating every other week money was coming from a variety of sources – a line of credit from Mackie Research due to his personal connections, his money making it over, and different investors. None of it came to pass.
In August, I thought it better to let some of developers go as there was no funds to pay them and ask the other ones not to come to work until money is in the bank. An investor did come in that allowed us to make July’s payroll a month late.
I did not see any of the wire transfer confirmations till later as I was showed by a couple of the employees. I did not get a confirmation personally. The team was paid for that wire transfer (July).
In August, I tried to validate his story with his brother in law with no success. I was not able to corroborate any of his story after contacting his educational institution and prior institutional employer. This lack of trust came to a head a week ago and we parted ways.
The current story from the CEO right now is that the team will get paid for August on Monday to Wednesday this week. I have no idea if it is true.
To this day, I don’t understand the game plan from the CEO. Why accelerate into a brick wall? None of it makes sense.
I am currently out the bridge, expenses, August office rent and back pay.
It never occurred to me, till too late, that somebody would misrepresent so much of his story. For being naïve and believing in the dream, I am truly sorry.
I think one bit from Penny's article is particularly spot-on, and I've experienced it first-hand, as I'm sure many of us have: "Some may question why I took the job in the first place or continued to work for them when there were so many red flags. To those people I say this: there is also a default human condition to not give up."
Shame that some people prey on that human condition.
How much equity were you able to hang on to when you left? (Not that it will probably ever be worth anything :/)
Chances are VERY high he kept your $200k. He will be the only one on that burning plane ride with a financial parachute....
I suggest suing him or threatening criminal charges. he might magically find the lost payroll money and reimburse you....poor h-1b visa dudes will get jack shit.
There's not much to do for finance when the bank account is empty and your CEO says there will be more money there tomorrow for awhile. I bridged for a bit and then stopped when I could no longer believe him.