An ex-employee tell us that before his departure, former Pay By Touch CEO John Rogers shopped the company around to investors for $5 a share. (The company isn't publicly traded, but has issued shares to investors and employees.) It didn't seem like much until I took a closer look at Rogers's bankruptcy filling — specifically item 10 on page 21.
Pay By Touch, the biometrics firm run into the ground by cocaine addict and convicted felon John Rogers, is accelerating plans to lay off 49 employees. Originally scheduled for this week and next, the layoffs are happening early, a tipster tells us, so that Pay By Touch won't have to issue Friday's paychecks to the affected employees. An all-hands meeting is scheduled for 10:30 a.m. today.
Employees smart enough to flee the sinking ship known as Pay By Touch are getting their comeuppance. While the new custodial rule of Tom Lumsden has managed to raise $9 million, part of which is earmarked for six weeks of missed paychecks during founder John Rogers' last hurrah, he's not wasting pennies on deserters. A tipster forwarded us an email exchange between a "screwed employee," who was originally told ex-employees would be paid back wages alongside the suckers, and Pay By Touch HR executive Judy Nelson. Here's the key piece of the email:
A tipster tells us Gary Hawkins, "the originator and moving force for SmartShop, Pay By Touch's only successful product, has been let go." This, our source says, "would indicate that Eula Adams and company have no interest in continuing the business, but plan to close it down and sell it off." This follows news that court-appointed consultant Tom Lumsden had secured a $9 million loan in order to catch up on missed payrolls, and layoffs were to be announced this week.
Wondering who was willing to put up $9 million to bail out Pay By Touch, the troubled San Francisco biometrics firm? Current backers, collectively holding $96 million in debt, are Och-Ziff Capital Management Group, Denarius Touch and Plainfield Asset Management. What's that old saying about throwing good money? [VentureBeat]
Who's the lucky chap appointed by the Delaware Chancery Court to oversee the mess that is Pay By Touch? That'd be Tom Lumsden, senior managing director at advisory firm FTI Consulting. He's spent 29 years getting companies shipshape, and if his leaked memo is any indication, he's all about getting things done. He's been on the job for maybe four business days and has already secured $9 million to help Pay By Touch do important things like pay employees.
Pay By Touch, the company whose biometric technology lets you ... well, yes, that ... may finally pay its employees who have worked pro bono for the past six weeks. Something to do with founder and convicted felon John Rogers skipping town. According to a forwarded memo (posted after the jump), court appointed custodian Tom Lumsden has cashed in some favors to raise $9 million to put toward one of the three missed payroll periods and cover employee benefits and expenses. An added bonus: the funds are enough, Lumsden writes, to "enable me to commit that you will be paid going forward for this month and beyond." So why aren't employees receiving all that they're owed? Good question. At least those foolish enough to stick around can have a happy Turkey Day knowing that, with court approval, they'll receive a paycheck this Wednesday. Two things Lumsden didn't say: Who gave the company that $9 million, and what strings were attached to the money.
Pay By Touch, the San Francisco biometrics company in the middle of a legal implosion, employs over 700 people in offices scattered across the country. Previously, we reported that the man at the top, cocaine addict CEO John Rogers, is a convicted felon. Word out of Pay By Touch, however, is that Rogers had his 1998 felony converted to a misdemeanor. Fine. Show us those papers. But either way, a new legal classification won't change what Rogers actually did to his ex-girlfriend and her property. Here are the legal documents detailing the incident so you can see for yourself. It's all there: legal threats, destroyed kitchens, and a promise to make her life a "living hell." Our source has asked us to blur the victim's name.
A source tips us off to how Pay By Touch CEO John Rogers celebrated his 40th birthday at the office. "They had a cake decorated with '240 by 40,' which meant $240 million raised by the time he was 40. The guy is a serious egomaniac." An egomaniac whose company faced legal trouble almost since its formation. If you're the sort who slows down to check out the wreck on the other side of the road, here's the whole sordid history, culled from mountains of legal filings.
Pay By Touch continues to get slapped around legally. A Delaware court has ordered it be placed under outside control, thanks to investor concerns over management. No kidding? Convicted felon and CEO John Rogers blew $190 million-plus in venture funding and has a slew of unpaid employees. He also has a bad case of moral bankruptcy.
Back in June 2004, an email from biometrics firm Pay By Touch went out to potential investors. It touted a "very special & very unusual" investment opportunity. Three years later, Pay By Touch investors were sending out a very different kind of memo about their special and unusual investment. Pay By Touch is the 750-employee company run by financially and morally bankrupt convicted felon John Rogers. The subject line of the recent missive? "The time for change is now." Here's the 100-word version.
Pay By Touch CEO John Rogers has an addiction problem. And we're not talking about his cocaine habit, which multiple sources confirm often kept the convicted felon out of the office for days at a time. During his rocky tenure at the top of the company, Rogers had a bad habit of milling through new CEOs and CFOs.
John Rogers, the founder of biometrics startup Pay By Touch, has filed for personal bankruptcy, the San Francisco Business Times reports. On top of that, four employees are seeking $60,000 or more in back pay from the company, and are trying to force Pay By Touch into bankruptcy to get what they're owed. Pay By Touch is not actually in bankruptcy yet, and the company could try to oppose the move in court or come to a settlement. Rogers, who has a controversial past, holds two-thirds of the company. But investors who have arranged a $163 million loan for the company are suing in a dispute over the makeup of the board. Add that credit line to the $190 million in venture capital the company has raised. With $350 million in stake, you'd think investors would be fighting over how to salvage something from this troubled company.
The investors whose $190 million investment in biometrics startup Pay by Touch is now at risk can't say they didn't know any better. Founder and chairman John Rogers "is just this side of a con man," writes a Valleywag commenter who claims to be a former Pay by Touch employee. Rogers, it turns out, has a history of scandals. There was the time Rogers reportedly blackmailed his girlfriend's husband with threats to turn the cuckold into the IRS. Charming, eh? Here are highlights from a 2001 article in the Minneapolis Star-Tribune:
Despite glowing reviews in the press for its biometric payment system, "serial venture raisers (and huge burners)" Pay By Touch is going under, a tipster tells us — and hints that a Chapter 11 bankruptcy filing is possible. Apparently founder and chairman John Rogers has gone missing after a tenure marked by what our tipster called a "spend big, live big, party big, girls, drugs, meals binge of a global scale." Sounds like a fun way to burn through nearly $200 million, raised from the likes of Mobius Venture Capital, the Getty family, and Global Trust Ventures. In a very unusual move, Global Trust cofounder Robert Sigler joined the company as its CFO in July. As far as we've heard, investors never get their hands dirty working at a company in their portfolio — unless they suspect something's going seriously wrong, and they want to pore over the books. Any idea what Sigler has been seeing? Tell us more.
Mobile Rules, a business-plan competition for wireless startups, is promising winners the ultimate booby prize: their photo on the cover of Red Herring magazine next March. One small problem: With printing and distribution bills reportedly unpaid, the Herring has given up on the paper-magazine business. An online-only magazine cover somehow seems unsatisfying. But give Herring publisher Alex Vieux this much credit: It's a very economical prize.
Expect more venture capital funding for Research In Motion-wannabe Visto, a wireless-email software company any minute now. CEO Brian Bogosian is once again telling any hack who will listen that the company is on an imminent path to an IPO. Bogosian's drummed up over $300 million in funding repeating the same line every couple of months since 2004. Don't expect an actual IPO this time either, a tipster tells us. "That would require some uncomfortable scrutiny," he writes. Here's a rundown of Visto's not-so-virtuous cycle.
AT&T is taking Vonage to court over patent infringements, just like everybody else. AT&T seeks an injunction, alleging Vonage infringed on a patent related to VOIP calls on standard telephone devices. Who knew there was anything left to gain from suing Vonage? Verizon and Sprint already had their way with the company when judges ruled in their favor in two prior suits. (Photo by Torbert Timson)
When Red Herring, the troubled tech publisher, got an eviction notice, editor-in-chief Joel Dreyfuss tried to pass it off as a quirk of publisher Alex Vieux's financial-management strategy. "That's just how Alex pays his bills," said Dreyfuss. Or rather, doesn't pay his bills. Already, Vieux's Herring has been ordered to pay Comerica Bank $180,457 plus interest for an unpaid loan. But now, it looks like he don't even have the time, money, or inclination to dispute his debts. A look at San Mateo County Court records reveals that two recent cases brought against Red Herring, Inc, have been awarded to the plaintiffs in default judgments. In other words, Vieux's legal representatives didn't even bother to show up in court.
Word around Seattle is that Jobster CEO Jason Goldberg is headed out of the troubled job-search website — for parts east. Sources say that Goldberg's husband, Thomas, has been telling friends of their upcoming move to New York City and, on his last day at Seattle advertising firm Wong Doody, sent out a company-wide goodbye email indicating that he was leaving for geographical reasons, not personal or professional ones. Goldberg glosses over the rumor, telling us "My husband Thomas is applying to graduate-school programs in a number of cities. We currently have no plans to move. And no, I am not leaving Jobster." Though he might be mistaken on that last part. We've heard that the VC community in Seattle is abuzz about the Jobster board's stealth search to replace him. Why is the CEO always the last to know?
