A Silicon Valley Dream Collapses in Allegations of Fraud


September 1, 2016

SAN FRANCISCO — 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.

September 1, 2016

SAN FRANCISCO — 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, Mr. 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 Mr. 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 Mr. Choi’s credentials are now also in question.

While WrkRiot is not widely known, the start-up’s collapse has gripped Silicon Valley. Mr. 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 realize 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 and family.” 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 Ms. 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, Mr. 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, Mr. Choi said Ms. Kim was a disgruntled employee who was fired for cause and that the accusations were “unfair to my guys.”

Along with the start-up, Mr. 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. N.Y.U. and J. P. Morgan both said they had no record of Mr. Choi. At least one company listed on his LinkedIn profile also could not be found.

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

Mr. 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.

Mr. 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.” He said one investor was related to him and one was not, but would not say how much money the company had.

WrkRiot’s former chief technology officer and co-founder, Al Brown, said Mr. Choi had intended to put $2 million of his own money into the company, but that only $400,000 materialized.

“I did not find out till the beginning of August that the money for the last payroll came from one of the employees,” Mr. Brown wrote in online comments this week.

In Ms. Kim’s post about her experience at the company, which she did not initially identify but later confirmed was WrkRiot, she wrote that the start-up, without consulting her, hired someone who would report to her, did not plan ahead on its business — and had no idea what its business really was — and was repeatedly turned down by investors. The chief executive, later identified as Mr. Choi, also borrowed money from employees, she said.

“Nothing about that start-up surprises me anymore and it all seems like a horrible nightmare I was lucky enough to wake up from,” she wrote.

Since Ms. Kim’s disclosures, others have told her they were also shortchanged by start-ups. Michelle Young, the founder of the online travel guide Untapped Cities, reached out to Ms. Kim to tell her about an undisclosed start-up that bought ad space from her company — but then stopped paying.

Ms. Young was eventually offered $40,000 in guaranteed business by the start-up if she agreed to a nondisparagement clause. She did not sign and is still waiting for some of the money she is owed.

“At some point the checks stopped coming,” said Ms. Young. “There were warning signs. Offers that seemed too good to be true.”

After Ms. Kim’s post, several of WrkRiot’s advisers and former employees moved to distance themselves from the company. Daniel Tunkelang, a former WrkRiot adviser who has worked at LinkedIn and been a consultant at Pinterest, terminated his relationship with the company and wrote in a blog post, “I should have gotten to know the company and its leadership better before associating myself with them and lending them my credibility.”

At WrkRiot, a handful of the start-up’s remaining 10 or so employees gathered on Tuesday night to discuss their situation, according to a person who attended the gathering and spoke on the condition of anonymity because he was concerned about retaliation.

A few were hopeful that Mr. Choi could save the company. Some of the Chinese nationals whose work visas are tied to their employment said their visa extensions were in limbo, partly because WrkRiot had missed a payment to the paycheck-processing company ADP, making it impossible for the government to verify their employment through ADP.

By then, WrkRiot had shut down its website, its Facebook page and its Twitter account. Many of the employees are now hunting for other Silicon Valley start-up jobs.

Courtesy: NY Times