4 Startup CEOs That Have Done Time In Prison

When you think of CEOs, it would be impeccably-dressed executives in designer suits, not crooks in orange jumpsuits. But that is exactly what some founders of startups had to put on for the duration of the time they spent in prison. When CEOs overstep the bounds of the law, then they have to pay for their crimes, just like any ordinary person.

Some CEOs committed their crimes at the peak of their success; others had their taste of prison and came out better men by creating their startups. Here are four young tech CEOs who have done time in prison. Read the stories of their crimes and how they fared.3

4 Startup CEOs that Landed in Prison

Charlie Shrem IV

Charlie Shrem, the founder and CEO of BitInstant, a startup bitcoin exchange that has since shut down, was convicted of aiding and abetting unlicensed money transmission. BitInstant allowed its users to purchase using bitcoins at more than 700,000 stores that accept the digital currency.

Shrem was charged with participating in a money laundering scheme with another person. They sold $1 in bitcoins to Silk Road user to buy drugs and illegal stuff anonymously. Silk Road is the deep web’s black market for unlawful activities. Shrem began his sentence in March 2015 and was released in June or July 2016, serving less than the 24 months he was sentenced to.

In a post-release statement, Shrem says he looks forward to new projects and is extremely grateful for the support of people.

Gurbaksh Chahal

The law has finally caught up with Gurbaksh Chahal, an Indian-American tech founder who created four tech companies and a restaurant. He sold the first two, ClickAgents for $22 million and BlueLithium for $300 million. He was fired as CEO on the third startup RadiumOne in 2014 after being found guilty of two counts of misdemeanor on domestic violence battery charges.

He was initially charged with 47 counts of felony in August 2013 after a video in his penthouse bedroom showed him hitting a girlfriend 117 times in 30 minutes. But the judge ruled the video as inadmissible as evidence because it was seized without a warrant. The woman involved had also refused to testify, and rumors abounded that she had been paid $4 million to keep quiet.

After being kicked out of his third startup, Chahal founded the fourth, Gravity4 in July 2014. But by September, a second incident of domestic violence was reported. Chahal was not charged separately this time but his probation was revoked. On August 12, 2016, the judge sentenced the tech mogul to 12 months in a county jail for violation of his probation and a recurring pattern of assaulting women.

Nirav Tolia

Nextdoor is a social networking startup that helps neighbors connect with each other. But its CEO Nirav Tolia wasn’t feeling neighborly when he fled the scene of a car crash on a highway in Brisbane, California in May 2014. Tolia was driving a BMW X5 SUV when he tried to overtake a slow Honda del Sol driven by a woman. The coupe swerved to avoid being hit, spun out of control and crashed, causing injuries to its driver. Witnesses who took down Tolia’s car’s plate number led the police to him and charged him with felony hit and run.

A month later, Tolia pleaded no contest and was able to get away with a reduced charge of misdemeanor hit and run. A San Diego hit and run attorney says a felony hit and run may be downgraded to a misdemeanor based on mitigating factors. In Tolia’s case, his community standing as an upright person without any intention to run away from his responsibilities was viewed in his favor.

Frederick Hutson

Hutson is different from the rest in that he served time in prison first before founding his own startup. At 24, he was incarcerated for drug trafficking in Las Vegas. Hutson had several legitimate enterprises before he entered the marijuana trade. His business was to bring in marijuana from Mexico where it eventually went to his Las Vegas mailing shop via FedEx, DHL and UPS. It was a UPS driver that ratted him out to the authorities. During his 51 months in jail, the seed for Pigeonly was planted and when he got out, he put his idea into business.

Pigeonly is a platform that centralizes prisoners’ database from all 50 states, making it easy for kin to find them. Hutson should know – he was moved eight times during his jail term. Signing up on its website allows family members to email and post their pictures on their account. These are printed and the hard copies are sent to the inmate since prisoners are not allowed access to the internet. Another popular product is their telephone service, which they charge as local calls. Inmates get to talk with their loved ones more because of the cheaper rates. Pigeonly sends over 250,000 photos to inmates and facilitates two million minutes in calls monthly.

Category Business