The DOJ has launched a criminal investigation into allegations that AI-powered HR company Deel, valued at approximately $17 billion, orchestrated a spying operation inside a competing Silicon Valley company.
The Wall Street Journal reports that federal prosecutors have opened a criminal investigation into allegations that Deel, an AI-powered human resources company, recruited a spy to infiltrate a rival firm and steal confidential information. According to documents reviewed by the Journal and sources familiar with the matter, the investigation marks a significant escalation in a corporate espionage case that has rocked Silicon Valley.
Grand jury subpoenas were recently issued by Craig Missakian, the United States attorney for the Northern District of California, seeking information about an alleged spying operation that Deel purportedly conducted inside Rippling, a competing human-resources company. The subpoenas, sent out in recent weeks, represent the first indication that federal authorities are treating the matter as a potential criminal case rather than solely a civil dispute between business rivals.
The allegations stem from an affidavit filed in April by Keith O’Brien, an Ireland-based employee of Rippling, who claimed that Deel Chief Executive Alex Bouaziz personally recruited him and provided specific instructions regarding what information to extract from Rippling. O’Brien’s sworn statement alleges that other Deel executives participated in the spying scheme, including Bouaziz’s father, who serves as the company’s executive chairman and chief strategy officer.
A spokeswoman for Deel responded to the revelation by stating that the company is not aware of a criminal investigation but expressed willingness to cooperate with authorities. The company has previously denied wrongdoing, stating: “We deny all legal wrongdoing and look forward to asserting our counterclaims.”
Court documents that have been unsealed provide additional details about the alleged operation. According to these filings, an entity connected to Deel transferred $6,000 to a bank account owned by the wife of Dan Westgarth, Deel’s Chief Operating Officer. The documents allege that the identical amount was then forwarded from that account to O’Brien mere seconds later, suggesting a potential payment scheme designed to obscure the origin of the funds.
Neither Alex Bouaziz, his father, nor Westgarth responded to requests for comment about the investigation. O’Brien’s attorney declined to provide any statement on the matter.
Deel operates in the human resources technology sector, providing services that help companies hire international employees when expanding their operations. The company handles the complex paperwork, legal requirements, and administrative issues associated with establishing local staff in foreign jurisdictions, making it an attractive option for businesses seeking to build global workforces quickly.
Despite the serious nature of the allegations becoming public earlier this year, Deel’s business appears to have continued growing. A funding round announced in October, several months after the alleged spying became public knowledge, increased the company’s valuation to $17.3 billion from a previous $12 billion. This substantial increase suggests that investors remain confident in the company’s business model and growth prospects, even as the legal controversy unfolds.
The company represents one of the most successful investments in the portfolio of Andreessen Horowitz, one of Silicon Valley’s most prominent venture capital firms. According to a court filing, the firm held a 20 percent stake in Deel as recently as this past summer. At the company’s most recent valuation, that stake would be worth nearly $3.5 billion, making it a significant asset for the venture firm.
Deel has publicly stated its ambitions to conduct an initial public offering either this year or next, which would allow the company to raise additional capital through public markets and provide liquidity for early investors. However, the ongoing criminal investigation could potentially complicate those plans, as companies facing serious legal challenges often delay public offerings until such matters are resolved.
The criminal investigation represents a potentially serious threat to Deel’s business and reputation. If prosecutors ultimately bring charges, the company and individual executives could face substantial penalties. Corporate espionage and theft of trade secrets can result in criminal charges under federal law, with potential consequences including significant fines and, for individuals, prison sentences.
Read more at the Wall Street Journal here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
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