A Silicon Valley dream collapses in allegations of fraud

Like so many bright, young entrepreneurs these days, Isaac Choi arrived here last year, set up shop and promised employees that he would lead them to the Silicon Valley dream. That dream is turning out mostly to be a mirage.

This week, Choi's company, WrkRiot, began unraveling in a highly public fashion. Its former head of marketing revealed that the start-up had been mired in internal chaos and had sometimes paid employees in cashier's checks before delaying payment altogether. She also alleged that Choi had forged wire transfer documents to make it look as if compensation were on the way. By late Tuesday, WrkRiot had taken itself offline. The veracity of Choi's credentials are now also in question.

While WrkRiot is not widely known, the start-up's collapse has gripped Silicon Valley. Choi's situation may be extreme, but the company's implosion has a familiar ring to many who came west to be the next Mark Zuckerberg - but ended up instead at the next WrkRiot. Silicon Valley is always eager to celebrate its success stories, but the reality is that numerous tiny start-ups that few ever hear about form the tech industry's dysfunctional underbelly.

"With the exception of the alleged fraud, almost anyone who has worked at a start-up has experienced most everything that went wrong at WrkRiot," said Semil Shah, a start-up investor based in Menlo Park, Calif. "People don't realise the word start-up is a broad concept that includes everything from a proven entrepreneur raising $15 million to a guy with money from friends." To an outsider, he said, "they're both the same."

On Hacker News, an online forum for techies, WrkRiot's tale has exploded into one of the most popular threads, attracting more than 500 comments, including one from a poster who said that the start-up's experience "is pretty much a rite of passage here." Tech blogs have also seized the tale; one called it "one of the ugliest start-up stories we've ever heard."

Penny Kim, the former head of marketing at WrkRiot who wrote about her experience at the company, including the forgery allegations, said, "I'd heard stories about late paychecks or start-ups failing, but who expects fraud in Silicon Valley?"

WrkRiot terminated Kim's employment in mid-August after she filed a wage claim. She has since filed a retaliation complaint against the company and moved to Dallas, where she previously lived. In an interview this week, Choi, 35, said WrkRiot, which is based in Santa Clara, Calif., near where Intel has its headquarters, was "like any company. If you want to talk start-ups, all start-ups have problems." When asked about the forgery claims, Choi said Kim was a disgruntled employee who was fired for cause and that the accusations were "unfair to my guys."

Along with the start-up, Choi's personal credibility is on the line. As he built WrkRiot, the entrepreneur said that he graduated from the Stern School of Business at New York University and that he worked at J P Morgan for nearly four years as an analyst. NYU and J P Morgan both said they had no record of Choi. At least one company listed on his LinkedIn profile also could not be found.

Choi, whose LinkedIn profile has since been wiped clean, did not respond to questions about his resume. His lawyer, Bernard Fishman, said he was not aware of the allegations against WrkRiot until contacted by The New York Times.

Choi set up his start-up in June 2015 under the name 1For.One, with a mission of helping people find the perfect job online. He brought in advisers with expertise in recruiting and data science and eventually hired nearly 20 employees, including Chinese nationals under work visas.

The company later changed its name to JobSonic with a tagline, "Finally, a lightning fast job platform that cares." Eventually, the start-up settled on the vowel-challenged name of WrkRiot. Choi said the company had not raised any money from venture capital firms but that he had "a bunch of private investors who are high-net-worth individuals who believe in the company." WrkRiot's former chief technology officer, Al Brown, said Choi had intended to put $2 million of his own money into the company, but that only $400,000 materialised.

©2016 The New York Times