Christopher S Kirchner, the co-founder and former CEO of Slync, Inc., is facing charges from both the SEC and the US Attorney’s Office for the Northern District of Texas, for fraudulently offering securities and wire fraud respectively.

The SEC’s complaint alleges that Kirchner sold more than $67m of securities to multiple investors, of which more than $28m was misappropriated for his personal benefit.

“We allege that Kirchner lied about Slync’s business to secure tens of millions of dollars from investors, a massive portion of which he then stole from the company to live extravagantly while not paying Slync’s employees,” said Sheldon L Pollock, Associate Director of the SEC’s New York Regional Office.

$16m private jet, but employees unpaid

According to the SEC’s complaint, between January 2020 and January 2022 Kirchner also misrepresented Slync’s financial condition to investors. That included customer revenue, the type and volume of contracts with existing and potential customers, and the planned use of the raised funds.

Kirchner also allegedly misappropriated more than $28m of the funds that Slync raised from investors, using one of Slync’s accounts to pay for his personal expenses and transferring other funds from Slync corporate bank accounts to his personal accounts.

“As the criminal complaint alleges, Mr. Kirchner used his position as a CEO to defraud investors and the company he worked for by diverting funds for his personal benefit.”

James J Dwyer, FBI Dallas Acting Special Agent in Charge

At least some of the misappropriated money was allegedly employed to fund Kirchner’s personal investment entity, KFIM LLC, and to pay for his lavish expenses, such as a $495,000 luxury suite at a local sports stadium and a $16m personal private jet – all this while Slync employees went unpaid on several occasions.

The SEC’s complaint was filed in the United States District Court for the Northern District of Texas, and charges Kirchner with violating the antifraud provisions of federal securities laws. The SEC seeks permanent injunctive relief, disgorgement with prejudgment interest, civil penalties, and an officer and director bar against Kirchner. The regulator also seeks disgorgement with prejudgment interest from KFIM LLC as a relief defendant.

Wire fraud

According to the DOJ’S complaint, Kirchner told an employee in text messages that he was transferring investor funds of $20m into “an investment account” and a “chase” account, and instructed the employee to approve the wires. The money, however, allegedly then went into Kirchner’s personal account. In turn Kirchner told private bankers in emails that the $20m was a “distribution” from his company.

“This defendant flaunted his apparent wealth while allegedly diverting millions from company coffers into his private bank account,” said US Attorney Leigha Simonton.

The $20m was taken from some $50m raised during the company’s Series B investment round.

“We allege that Kirchner lied about Slync’s business to secure tens of millions of dollars from investors, a massive portion of which he then stole from the company to live extravagantly while not paying Slync’s employees.”

Sheldon L Pollock, Associate Director of the SEC’s New York Regional Office

“As the criminal complaint alleges, Mr Kirchner used his position as a CEO to defraud investors and the company he worked for by diverting funds for his personal benefit. He did this to fund a lavish lifestyle at the expense of those that trusted him to act responsibly and ethically,” said FBI Dallas Acting Special Agent in Charge James J Dwyer.

The US Attorney’s Office, Northern District of Texas has charged Kirchner via criminal complaint with wire fraud, and he faces up to 20 years in federal prison if he’s convicted.