The Department of Justice has reportedly opened a criminal investigation into HR and payroll startup Deel over allegations that it hired a corporate spy to leak information on its biggest rival, Rippling, reports The Wall Street Journal.
In an emailed statement to TechCrunch, Deel says that it is “not aware of any investigation. We will always cooperate with the relevant authorities and provide any necessary information in response to valid inquiries.”
Deel’s statement then makes its own allegations against Rippling. It points to its own lawsuit that alleges its rival has been on a “smear campaign,” claiming it’s beating the competitor in the market, and adding, “the truth will win in court.” Rippling declined comment.
This is arguably the biggest drama between two HR startups ever.
To recap, Rippling sued Deel in May, and revised the suit in June, alleging that its rival planted a corporate spy. The Rippling employee was caught in a sting operation and confessed to being a paid spy for Deel in an Irish court via a sworn written statement that reads like a Hollywood movie. The employee testified that he took Rippling’s sales leads, product roadmaps, customer account info, names of superstar employees, whatever was asked for, and handed it over to Deel executives.
Rippling’s suit, which is ongoing, charged its rival with violations of the federal racketeering law (known as the RICO statute and typically used against organized crime) among other laws it cited. But despite using phrases like “criminal syndicate,” this was a civil suit, not a criminal prosecution.
Deel countersuited Rippling, also alleging spying by impersonating a customer, among other claims.
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The spy lived in fear
The man who confessed to spying agreed to testify in Rippling’s case, and Rippling agreed to pay him for legal and travel expenses, according to the man’s cooperation agreement released as a court document and seen by TechCrunch. Deel is now calling the man Rippling’s “paid witness.”
But the man also went back to court alleging that his family was living in terror because he believed men from Deel were following him. Deel’s lawyer initially denied this but later dis …