Paging Lou Pai...
Though likely not on Lou's spending level, the former CEO of startup Turvo Inc., found out the hard way that expensing nearly $80,000 in company funds at a strip club is apparently not OK with the company's board of directors.
As a result, Scott Lang, the company's new CEO, aims to stress the company's new policy: employees are not allowed to entertain clients at strip clubs, according to Bloomberg.
Former CEO Eric Gilmore has been accused by the company's Board of expensing $76,120 at strip clubs over the course of a 3 year span. The Board removed him as CEO in May. Gilmore didn't deny the allegations, but instead turned around and sued the Board of Directors, claiming they didn't follow proper protocol for his termination. Turvo disputes this, saying they settled in September and that all the proper steps were taken.
Lang is a former executive from the energy industry who joined Turvo just before Thanksgiving. The startup, based in Silicon Valley, makes software to help companies track the movement of freight and is backed by about $85 million in Venture Capital. In his first interview as CEO, Lang said he is trying to help the company move past the scandal and, when asked about whether or not he tries to win over clients at strip clubs, he responded: “Never have. Never will.”
The Board's quick reaction at Turvo shows that more and more companies are quietly addressing allegations of misconduct before they become public. The #MeToo movement has already claimed the jobs of many technology executives, like Kris Duggan of Betterworks Systems, and has cost Ken Fisher's firms billions of dollars in assets managed.
Gilmore started the company in 2014 and was a veteran of Microsoft and Coupons.com. Mubadala Investment Co., the Abu Dhabi-based sovereign wealth fund, led investors with a $60 million injection into the company last year. Soon after, Gilmore hired a new CFO, who discovered the pattern of "unusual charges" from the CEO.
The strip club related expenses spanned most of the company's life and Gilmore made "no effort to conceal them", according to Bloomberg. More than $125,000 in entertainment charges were flagged by the new CFO during a review of corporate spending: more than half of them were from strip clubs.
In May, after the board found out, Directors for Mubadala and VC firms Felicis Ventures and Activant Capital, told Gilmore that his time as CEO was over and demanded he sign a separation agreement. Gilmore declined and argued the process violated the company's bylaws because the confrontation wasn't at first presented as a formal board meeting. The board disagreed and Gilmore's lawsuit over the dispute lasted 3 months before settling.
Gilmore remains on the Board and is the company's largest shareholder. His two co-founders also still hold executive roles at the company.