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WrkRiot CEO Pleads Guilty to Defrauding Employees (justice.gov)
144 points by minimaxir 6 months ago | hide | past | web | favorite | 50 comments

The prosecution started due to a very detailed account by Penny Kim about her experience at "a Silicon Valley startup": https://medium.com/startup-grind/i-got-scammed-by-a-silicon-...

The corresponding Hacker News thread doxxed WrkRiot and its employees, and things escalated from there: https://news.ycombinator.com/item?id=12379518

I remember this. There are only two points I don't fully agree with:

1. The remarks of keeping anonymity online... I think that's just good OpSec tbh. I'm on several sites and none that I can remember have a photo of me 2. The guy used to tout being a former JPMorgan Analyst... Maybe most people don't realize Analyst is one of the lowest positions at these institutions? Or the guy was just name-dropping the megabank

He was fraudulently name-dropping the megabank:

"Choi admitted in his plea... that he was never employed in any capacity by any financial institution..."

It's not quite that simple. Dan came in <48 hours later and put a stop to the witch hunts: https://news.ycombinator.com/item?id=12380163

48 hours is way too late. Even just a couple of hours is bad. However, it is understandable that dang cannot monitor every thread at all times. I wonder though, 1. was this happening while it was still on frontpage and 2. did anyone make use of the report functionality?

It had some effect. https://news.ycombinator.com/item?id=12387493

HN modding seems like a thankless job, so it seemed a bit misleading to imply HN was ok with it. I think Scott was brought on as a mod since then too, so there are more hands on deck now.

Oh I remember this. Good. I hope it costs him.

Honest question though:

> As part of his guilty plea, Choi admitted that while attempting to recruit potential employees, he made false and misleading statements about various topics, including his educational and professional history, and the amount of his wealth. Choi admitted in his plea that, in truth, he never attended any business school, that he was never employed in any capacity by any financial institution, and that he exaggerated his wealth.

Is "making misleading statements about various topics" a crime? If you tell your employees that you went to whatever business school, or your net worth is whatever etc etc... is that a crime?

> Is "making misleading statements about various topics" a crime?

On its own, no. OTOH, making material false statements to people with the intent of getting them to give you something of value is the core of the offense of fraud, which is both a crime and a tort.

Exactly this, and he took money from some of his employees under fraudulent terms according to the referenced Medium story.

The lede is the juicer story, but I suspect (having not read the indictment), that the basis for the wire fraud charge is:

> He further admitted that in August 2016, while at WrkRiot’s office in Santa Clara, he emailed several of his employees fake wire transfer confirmation documents purporting to reflect their salary payments for the purpose of convincing his employees to continue working for his privately failing company.

The evidence of wire fraud is very obvious in the original blog post: https://medium.com/startup-grind/i-got-scammed-by-a-silicon-...

Misrepresenting yourself in a business transaction for your own benefit is called fraud.

Your own personal benefit or the company's benefit? Because if the latter, I have a queue of tech start-ups ready to be prosecuted.

Both. As for your tech start-ups, are they making grandiose claims for where they want to be in 5 years' time? Or misrepresenting what they currently have? If the latter then they absolutely could be prosecuted.

If you are broke but borrow a BMW from a friend to go to an important client meeting fraud?

You misrepresented yourself. Maybe shady. Not sure if it is illegal. Clearly there has to be more to it than that?

Driving a BMW is not a representation of fact beyond maybe “I have permission to drive this BMW”, and would thus not be a misrepresentation of fact, material or otherwise.

If you photoshop the name of the client onto the title of the BMW, tell the client you're giving them the BMW in exchange for working for you, but then don't give them the BMW.

In this case, it reflects fraud. On top of the wire fraud that he committed by emailing a false financial statement.

If they ever used misleading statements to bind a legal contract including employment, yes it is a crime.

Probably not. If it was, for example, that Yahoo CEO, pre-Mayer, who also faked his credentials would have been arrested.

Not every crime, even those that are known to prosecutors, is deemed worthy of prosecution.

Eh, I guess. Seems quite common even among high profile people though. I also remember a dean from the MIT being caught for the same thing, after something like 20 years. She too just resigned, and that was that.

Does anyone have a link top the court docket or know how to find it? The case is supposedly characterized as "United States v. Choi, 17-CR-308-EJD (N.D. Cal.), 17-MJ-189-DUTY (C.D. Cal.)". I'd be very interested to read it, especially what Choi said for himself in court.

If you search PACER for "5:2017cr00308" it pops up for me.

The direct link to the case documents is: https://ecf.cand.uscourts.gov/cgi-bin/HistDocQry.pl?77183091...

PACER login required.

Well, they are taught to hustle, to do it first and ask for forgiveness later. Soon or later someone is going to cross the line. I'm glad they are caught and punished this time.

Who is "they" referring to?

Fake wire transfer?

Doesn't it take 24-48 hours max to materialize?

Yes. It was an extremely stupid move on his part.

Using this case as leverage to a man who pulled the same on me. A “simple” personal loan with months of lying and ultimately a fake wire receipt.

Why not just file suit? That should provide decent leverage.

Any lawyers here? How much can he get for this?

Up to 30 years.

Is that a realistic guess for what the sentence will be, or the theoretical maximum?

It's the maximum, so unless he has a prior criminal history, there is no way he will get anything resembling that. 30 years is his "whale sushi" sentence.


That's the maximum. They didn't mention what they will recommend. If I had to guess I would say 10 years.

It's white collar. I vote for 60 days and 3 years probation.

He only pleaded guilty to 1 count of wire fraud and not all five that were charged against him.

I would guess that his guilty plea is part of a plea deal that made this happen fast without years of litigation.

Talk about closure, I'm sure those who were part of the scam can rest a little bit easier I hope, albeit at a heavy cost.

To me, this was the scariest quote: Isaac Choi aka Yi Suk Choi, Yisuk Choi, Yi Suk Chae and Isaac Chae. I mean seriously, how many names can a person go by?

Many non-English-derived names (predominantly but not exclusively those from Asian cultures--Hebrew comes to mind) transliterate in different ways into English. If he'd had different translators at some point in his life, there may be documents with different variants. Ditto "Isaac", which is close-enough in terms of pronunciation that he may have adopted it later.

Or, in other words: there are two names there.

Taking an "American" first name (one that sounds vaguely phonetically similar to the actual first name or not) is a common practice.

I get that; what I was trying to say is that it's "different enough" that most people would call it a pseudonym rather than a transliteration. Hence, two names.

The last name Choi is pronounced Chae by Koreans. Don't see why it's so scary to you; Richard and Dick and Rich are in the same boat.

Actually, Choi (최) and Chae (채) are two different surnames, although they do sound similar (and would probably sound almost the same to English speakers).

On the other hand, transliteration of Korean personal names is always in a state of total chaos, so using Chae instead of Choi (or vice versa) is not technically wrong... although definitely unconventional.

To be fair, it's really just one name, with various English spellings. Isaac/Yi Suk and Choi/Chae

A couple different romanizations of the same Korean name, plus the extremely common convention of taking a common "American" (English) first name. It's not a red flag.

Sometimes it does all end in tears.

"Let us realize the arc of the moral universe is long, but it bends toward justice." - MLK

That quote doesn't refer to criminal justice.

People know it from MLK, who was making a statement about the resilience of the faithful and righteous. MLK was actually quoting the 19th century abolitionist Theodore Parker, who was speaking of the inevitability of the end of American slavery.

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