Christopher Kirchner, the convicted founder of logistics software startup Slync.io, is staying in prison.
In a unanimous decision handed down Monday by the U.S. Court of Appeals for the Fifth Circuit, a three-judge panel affirmed Kirchner’s 20-year sentence for a variety of charges. Kirchner’s trial took place in the U.S. District Court for the Northern District of Texas.
Kirchner, listed as 38 years old by the Federal Bureau of Prisons, has a release date of September 6, 2040.
The judges summed up the saga of Kirchner by saying the Slync.io founder and CEO, “diverted millions of investor funds to bankroll a lavish personal lifestyle instead of building his company.”
“When the money ran dry, he doubled down–launching new financing rounds and luring investors with fabricated documents and other material misrepresentations,” the judges wrote. “A jury saw through it.”
The ultimate conviction of Kirchner was for four counts of wire fraud and seven counts of money laundering. After Kirchner was fired by the board, Slync.io attempted to come back from its financial scandal but was unsuccessful.
Diverting funds for personal use
The judges’ decision spends the first few pages reviewing the fraud that led to Kirchner’s conviction and imprisonment. It recaps how Kirchner raised $7.2 million in early 2020, a more than $50 million raise later that year and into 2021, and $850,000 in the first half of 2022, a desperation move just to make payroll as the walls were closing in on the fraud.
There were guidelines in place that were established to govern Kirchner’s access and use of the funds. Kirchner’s chief of staff, Tim Kehoe, was supposed to be a second line of defense on transfers of funds to other accounts from the main pool of money at Silicon Valley Bank. But Kirchner, according to the judges’ recap, found ways around that.
He spent some of those diverted funds on a variety of personal expenditures. The judges list “wine, golf clubs, private jet charters, and personal credit-card debts.” He also purchased a luxury suite at AT&T Field, home of the Dallas Cowboys as well as ultimately buying a private jet.
Cracks in the scheme began in spring 2022 when the company started missing payroll. Soon after, according to the judges, “an investor alerted Slync’s CFO that he believed Kirchner was misrepresenting the company’s financial performance.” A subsequent investigation led the board to suspend Kirchner on July 24, 2022.
Kirchner appealed his conviction on several grounds. They fell into two broad categories.
One was the questioning of witnesses during the trial and whether the questioning was proper. The second broad area was whether some of the financial transfers and other steps Kirchner took could be considered part of a criminal scheme.
The court rejected all the claims. “Viewed against the entire trial record, the district court did not plainly err in its limited questioning of witnesses,” the judges said. The transfers “(supplied) sufficient evidence for wire-fraud convictions.” Other activities conducted by Kirchner could be properly viewed as part of a “single scheme.”
Even the accountant was confused
The judges quoted the testimony of Kirchner’s forensic accountant. “You have money that is going from business accounts, going to personal accounts, back to business accounts,” he testified. “You have personal things being purchased out of business accounts. You’ve got business expenses being paid out of personal accounts. Clearly, one of the most convoluted and commingled cases I’ve seen.”
Slync.io, after its big fund raise in 2022, was described as a “logistics visibility solution that offers a multiparty intelligent supply chain operating platform that delivers logistics orchestration for shippers, logistics service providers and carriers to manage global operational issues and multi-enterprise data.”
A message to an attorney for Kirchner had not been responded to by publication time.
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