Former Slync CEO Indicted on Money Laundering and Wire Fraud Charges
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Slync co-founder Chris Kirchner has been indicted on federal charges nearly a year after a former executive’s lawsuit accused him of failing to make payroll and using the firm “as a personal piggy bank.”
Kirchner, who served as CEO of the supply chain management software company before being suspended and then fired in summer 2022, was charged with defrauding investors out of at least $25 million, according to Leigha Simonton, U.S. Attorney for the Northern District of Texas.
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Valued at more than $240 million in 2021, Slync makes a platform that automates backend logistics functions, such as documentation, invoicing and carrier management.
Documents show that 35-year-old Kirchner was charged via criminal complaint in February by both the Department of Justice and the Securities and Exchange Commission (SEC) for fraudulently selling more than $67 million in securities. At the time, the agencies alleged that Kirchner misappropriated over $28 million to bankroll his lifestyle.
On Tuesday, a federal grand jury indicted him on five counts of wire fraud and eight counts of money laundering. If convicted, the disgraced founder faces up to 20 years in federal prison per count of wire fraud and up to 10 years in prison per count of money laundering for a maximum of 180 years in prison.
“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,” said Simonton in a statement. “Investors deserved honesty; instead they got chicanery. We will not allow businesspeople to treat their stockholders this way. We look forward to proving our case against Mr. Kirchner in court.”
Slync last raised $24 million in venture capital funding led by Goldman Sachs.
“We are aware of the ongoing federal criminal case involving former Slync CEO, Christopher Kirchner, and continue to cooperate with the prosecutors,” Greg Kefer, chief marketing officer at Slync.io, told Sourcing Journal. “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 bolstered the Slync leadership team, our investors 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 investor funds, which were supposed to be used for “product development and other general corporate purposes,” were wired into the company’s account at the now-defunct Silicon Valley Bank.
But instead, Kirchner allegedly misappropriated the money. Between April 2020 and March 2022, Kirchner is accused of initiating nearly 100 wire transfers moving money from the Silicon Valley Bank account into the company’s account at JPMorgan Chase Bank, which only he could access. He then allegedly wired much of the money from the Chase account to his personal bank accounts.
In addition, authorities claim Kirchner wired $20 million directly from the Slync Silicon Valley Bank account into his personal checking account. He used some of those funds to buy a $16 million private jet and to secure a luxury suite at the stadium of a Dallas-area professional sports team. In January, the jet was sold for an undisclosed amount.
When Slync struggled to make payroll in the spring of 2022, Kirchner allegedly attempted to replace some of the misappropriated money by convincing at least four investors to wire approximately $850,000 to Slync as part of a purported Series C investment round, which. Slync’s board of directors never authorized.
Kirchner countered the payroll accusations by claiming that Slync’s cash was invested in illiquid assets that were difficult to divest and saying the government had frozen the firm’s accounts because he had personally transacted with sanctioned Russian entities. According to the indictment, neither explanation was true.
“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,” said Chad Yarbrough, FBI Dallas special agent in charge. “If you deceive and defraud your investors and employees, the FBI will persist in our efforts to bring you to justice.”
In June 2022, Kirchner allegedly fired two Slync employees who expressed concern about his management of the company, one being former vice president of engineering Jason Selvidge, who sued Slync the next month.
The Selvidge lawsuit brought attention to Kirchner’s behavior, with the plaintiff alleging that the co-founder failed to pay minimum wages and to pay wages on time after his termination. He also accused the former CEO of unfair business practices, breach of contract and retaliatory behavior.
Selvidge alleged in his lawsuit that Slync’s former chief financial officer Samar Kamdar was fired by Kirchner after voicing concerns about the company’s financial reporting to the board. Kamdar said Kirchner was the only executive at the company who had access to the company’s investment account, according to the lawsuit.
He also urged the Slync board to look into Kirchner’s attempt to buy the Derby County Football Club, a professional soccer team out of the U.K., out of administration, a deal he ultimately failed to secure.
Immediately following his suspension by the board in late July 2022, Kirchner removed certain IT administrator privileges from key Slync employees, preventing the employees from accessing Slync’s computer systems. He then allegedly attempted to delete approximately 18 gigabytes of Slync data, including emails, according to the DOJ.
In October 2022, Slync tapped John Urban, who served as a strategic adviser to the company four nearly four years, to serve as new CEO and board chairman.
The FBI’s Dallas field office conducted the investigation. Assistant U.S. Attorneys Joshua D. Detzky, Blake J. Ellison and John de la Garza are prosecuting the case.
Kirchner’s arraignment is scheduled for May 17.
