The former CEO of a Texas-based software company was named in a civil lawsuit filed by the U.S. Securities and Exchange Commission and a criminal complaint filed Tuesday that accuses him of misappropriating $20 million from the company he founded and also fraudulently offering and selling $67 million of securities to investors.
Christopher S. Kirchner, 35, cofounder and former CEO of supply-chain management software startupSlync Inc., was arrested Wednesday morning on a charge of wire fraud for allegedly diverting $20 million in company funds to his private checking account.
The charge carries a maximum penalty of 20 years in prison.
“Slync investors and employees are understandably outraged and we sympathize,” said U.S. Attorney for the Northern District of Texas Leigha Simonton in a news release announcing the criminal case. “We look forward to holding Mr. Kirchner accountable in federal court.”
Kirchner served as CEO of Slync from 2017 until 2020 when the company’s board of directors suspended him in the wake of misconduct allegations. The government alleges Kirchner told a company employee whom he asked to approve the wire transfer that the funds were coming from an investor and being transferred into an investment account.
But instead the money went to his personal account, according to the SEC. He told private bankers the $20 million was “a distribution” from the company.
Kirchner used the money—which was about 40 percent of the $50 million raised from private equity and venture capital investors—to fund what the government refers to as a “lavish lifestyle,” including the purchase of a $16 million Gulfstream jet and a $495,000 luxury suite at an unnamed NFL stadium.
The case is being prosecuted by assistant U.S. attorneys Joshua Detzky, John de la Garza and Blake Ellison.
As for the civil action, Kirchner is accused of offering and selling more than $67 million of securities to multiple investors but misappropriating more than $28 million of that sum for his personal benefit.
Kirchner allegedly misrepresented Slync’s revenue and the volume of contracts with existing and potential customers to investors between 2020 and 2022. According to the complaint, he transferred more than $28 million of company money to his personal account that he used to pay personal expenses and to fund a personal investment entity, KFIM LLC.
The civil complaint also alleges Kirchner failed to make payroll distributions to Slync employees multiple times during that same time period.
He’s accused of violations of the antifraud provisions of federal securities law. The government is seeking disgorgement and civil penalties from Kirchner as well as a ruling that would bar him from serving as an officer or director in the future.
The civil lawsuit is being handled by SEC attorneys Jessica T. Quinn, Mary Kay Dunning, Sheldon L. Pollock, Steven G. Rawlings and Derek Kleinmann.
Counsel information for Kirchner wasn’t immediately available Tuesday.
The civil case number is 4:23-cv-00147.