Justice Department opens criminal investigation into Deel over espionage allegations
According to the WSJ, federal prosecutors are examining allegations that Deel ran a covert operation inside competing HR software firm Rippling. A spokeswoman for Deel said: “We are not aware of any criminal investigation. We will always cooperate with the relevant authorities and provide any necessary information in response to valid inquiries.”
The Justice Department has opened a criminal investigation into allegations that Deel, the global human-resources software company, recruited a spy inside rival firm Rippling, according to the The Wall Street Journal.
Grand-jury subpoenas were sent out in recent weeks by Craig Missakian, the U.S. attorney for the Northern District of California, the WSJ said. The subpoenas seek information related to what authorities are examining as a possible spying operation allegedly run by Deel inside Rippling, a competing HR-technology company.
A spokeswoman for Deel said: “We are not aware of any criminal investigation. We will always cooperate with the relevant authorities and provide any necessary information in response to valid inquiries. Our lawsuit in Delaware against Rippling details how the company has orchestrated a years-long smear campaign against Deel. The lawsuit gives several examples of how Rippling has made false and misleading claims about Deel in the press, with regulators and with courts across the country. Over the years, many of these have been overturned or dismissed, including a civil claim in Florida last year. As Rippling’s business continues to falter, Deel is winning in the market, and the truth will win in court.”
The inquiry marks a sharp turn in a dispute that until now had played out largely through civil litigation and public filings. A criminal investigation brings the full weight of federal law enforcement into a case that already touches on trade-secret theft, covert payments and the use of intermediaries, issues that resonate far beyond a single rivalry in Silicon Valley.
The investigation follows months of legal maneuvering between Deel and Rippling, including newly unsealed court records that detailed what Rippling described as a covert operation financed through Deel’s corporate accounts. Those documents, made public in November, outlined allegations that funds were routed from a Revolut account belonging to Lets Deel Ltd through the personal bank account of Alba Basha, the wife of Deel’s chief operating officer, Dan Westgarth, before being passed to a former Rippling employee accused of stealing confidential information.
According to the unsealed filings, $6,000 was transferred through Basha’s account and forwarded to Keith O’Brien, the former Rippling employee, within seconds. Subsequent payments, Rippling alleged, were made in cryptocurrency to obscure their trail. O’Brien later admitted to passing internal documents to Deel for monthly payments before being caught in a sting operation, according to the same filings.
Those allegations form the core of Rippling’s civil lawsuit accusing Deel of racketeering, trade-secret theft and unfair competition. Deel has denied wrongdoing, dismissed Rippling’s claims as recycled accusations, and countersued, arguing that Rippling itself orchestrated an infiltration scheme and financially incentivized O’Brien to cooperate.
What changes now is not the substance of the allegations, but their venue. A federal grand jury investigation signals that prosecutors are examining whether the conduct described in civil court filings rises to the level of criminal behavior. The subpoenas issued by the U.S. attorney’s office suggest investigators are seeking to reconstruct how the alleged operation was funded, authorized and executed, and who inside the company may have known about it.
The dispute has unfolded against the backdrop of rapid growth at Deel and a sweeping overhaul of its leadership ranks. Since the litigation began, the company has hired a new chief financial officer and president, general counsel, chief compliance officer and chief risk officer. Deel raised a $300 million Series E at a $17.3 billion valuation in October as executives openly discussed a long-term ambition to pursue an initial public offering.
