'Brazen theft.' Former University of Kentucky student accused in $67 million fraud

A former Lexington resident and University of Kentucky student has been accused of siphoning $28 million from a company and using it for expensive personal purchases, including a $16 million jet and a luxury box at a sports arena.

Christopher S. Kirchner was charged with wire fraud in a federal criminal complaint.

Authorities arrested him Valentine's Day at his home in a gated community in Westlake, Texas, near Houston, according to court records.

The U.S. Securities and Exchange Commission filed a separate civil complaint against Kirchner, 35, alleging he lied over and over to investors to get money for his company, Slync.io, and drained much it for himself even as the company didn't meet payroll at times.

"This case concerns an offering fraud orchestrated by Kirchner . . . involving his brazen theft of over $28 million of investor funds to fund his lavish lifestyle," SEC attorneys said in the complaint.

Kirchner had his initial court appearance this week and was released pending trial. Court records do not list an attorney for him in either federal case, and efforts to reach him were not successful.

Kirchner went to Tates Creek High School, according to a prior Herald-Leader story, and attended UK to pursue a degree in marketing and communications but left in 2009 before graduating, Forbes said in a profile last year.

He and others founded Slync.io in 2017. The company says it provides software to manage supply-chain logistics.

Kirchner was the chief executive officer. That gave him considerable control over company bank accounts that he abused to misappropriate money, the federal complaints allege.

The SEC complaint alleges that between January 2020 and May 2021, Kirchner orchestrated two stock offerings to raise money for Slync.

Kirchner falsely claimed millions in revenue, complaint says

Kirchner repeatedly lied to investors, grossly inflating how the amount of money the company was making, misrepresenting the number of contracts it had and making false claims about how their money would be used, the complaint says.

The complaint includes a number of examples of the alleged fraud:

In January 2020, Kirchner sent an email to a potential investor claiming the company was approaching $3 million in annual recurring revenue; that it had signed another seven-figure deal and was close to closing on two more; and that its customers included three of the five biggest global freight companies.

In reality, the company had no existing contracts that would have generated $3 million in annual revenue and hadn't signed deals with the freight companies, the complaint said.

In March 2020, Kirchner told an employee of an investor that Slync had a $288,000 deal with a customer that planned to boost its commitment to $1.02 million a a year.

However, there was no $288,000 deal and Slync ultimately collected just $17,500 from the customer, according to the complaint.

Kirchner told another investor that Slync had a $2.2 million contract with a customer, but at the time it really had only three unsigned agreements with that customer worth $105,000 in total.

In January 2021 Kirchner gave information to an investor that claimed Slync had total revenue of more than $3.2 million in 2020, when in fact it was just $175,715.

In January 2022 Kirchner told an investor in an email that Slync had total revenue of $3.2 million in 2020 and that it ballooned to $23.3 million in 2021, when in fact the amount it earned and collected was just $175,714 in 2020 and $667,778 in 2021, the complaint says.

Kirchner fraudulently offered and sold more than $67 million in securities and took more than $28 million of it, switching money from the company to accounts he controlled almost as soon as it came through in some cases, the SEC alleges.

Expensive purchases with company money

The company had a system in which Kirchner and another employee had to approve any transfer of more than $100,000 by the other, according to an affidavit filed by Qiana Davis, a special agent with the FBI.

Kirchner circumvented that control with a series of transfers of less than $100,000 from one company account to another that he controlled exclusively and then on to his personal accounts, federal authorities allege.

Between January 2021 and May 2022, Kirchner made 74 transfers, totaling just over $7 million, from one company account to the second company account he controlled by himself, the SEC said.

In one case in December 2020, Kirchner allegedly lied to the other company employee who had to sign off on transfers about the reason he wanted to move a large amount of money.

After the other employee gave the okay, Kirchner wired $20 million from a company account to his personal bank account, intending to use it to buy the jet, the SEC complaint alleges.

Kirchner told other Slync employees he used successful cryptocurrency investments to buy the jet.

The SEC and the FBI listed a number of other purchases Kirchner allegedly made with money he took from Slync, including $274,000 to a company that provides luxury concierge services for private jet aviation; $209,000 to a provider of "on demand" private aviation, including aircraft management services; $75,000 for luxury items and experiences, including clothing purchases and expenditures at a golf club and vineyard; $495,000 for a luxury box at an unnamed sports venue; $22,000 for the membership fee at a golf and social club; and $902,000 in personal credit-card charges.

Kirchner also allegedly diverted money from Slync to a company he and his wife owned, called KFIM, and used it to make investments.

CEO lied to secure millions, then stole it, SEC says

"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, an official at the SEC, said in a news release.

Slynk was late paying employees six times between April and June 2022 , in part because of Kirchner's misappropriations, the SEC said.

Kirchner forged a wire confirmation in May 2022 to show he had transferred money to cover payroll when in fact he hadn't, according to the complaint.

After the payroll shortfalls generated media scrutiny, the board at Slync suspended Kirchner and hired a consulting firm to investigate the company's finances.

The next day, the board alleged Kirchner had tried to delete electronic data in connection with the investigation. The board fired him in August.

The company said in a statement that it is cooperating with the federal investigations and that "as a victim of Christopher Kirchner's actions, looks forward to a just resolution of this matter."

Wire fraud is punishable by up to 20 years in prison.

(C)2023 Lexington Herald-Leader. Visit kentucky.com. Distributed by Tribune Content Agency, LLC.