2 days after raising $502 million, Magic Leap called the cops to say an employee had stolen $1 million

Magic Leap CEO Rony Abovitz

  • A police report filed by Magic Leap in October alleges that the company was falsely billed for more than $1 million.
  • The report alleges that an outside recruiting firm, which worked with Magic Leap’s Senior Manager for Talent Acquisition, collected fees for 39 hires it had no involvement with.
  • The incident and investigation, which are ongoing, illustrates the turmoil at the fast-growing company.

Magic Leap, the secretive Florida startup developing futuristic augmented reality glasses, raised a whopping $502 million in October.

Two days later, it called the cops and told them an employee had stolen over $1 million over a period of 23 months. 

Magic Leap’s allegation of theft, which has not been reported until now, is one of several strange problems that have bedeviled the young company, whose innovative technology is a subject of both fascination and skepticism among industry insiders. 

Magic Leap’s augmented reality technology has dazzled a string of early users, including celebrities like Shaquille O’Neal and Steven Spielberg, who have been granted access to its Florida test lab to try prototypes. The glasses produce a hallucinatory effect by superimposing advanced computer graphics onto the wearer’s view of the real world. 

But the company, led by CEO Rony Abovitz, has been plagued by missed deadlines, executive departures and other turmoil.

The allegation of the stolen money, involving an HR manager and a recruiting company, follows another incident involving the company’s head of security and allegations of extortion. Together, the incidents, deadlines, and departures raise questions about Magic Leap’s ability to timely deliver a much-hyped technology that has attracted billions of dollars from backers including Google and Alibaba.

A need for bodies

Magic Leap HQMagic Leap’s total of $1.9 billion raised since 2011 makes it the most well-funded startup in the AR space. The next most richly funded AR startup is Pokémon Go parent Niantic, which has raised $225 million. 

Those billions have funded huge and rapid growth for a company that now has offices in Los Angeles, Mountain View, Seattle, Austin, Dallas, the UK, New Zealand, and Israel, according to its website. That’s in addition to its new headquarters in Plantation, Florida,a former Motorola facility, it moved into in 2017.

From its beginning in 2011 with a few employees in a room, Magic Leap has swelled into 1,400-person organization, albeit one that has not yet launched a commercial product. 

The rapid growth may have created the opportunity for alleged misdeeds. Magic Leap filed an incident report with the Plantation, Florida police department in October 2017 which alleged that an outside recruiting firm falsely claiming to have filled jobs at the company and collected the fees.

Cheryl MartinThe report describes an outside hiring agency called the Hampton Group, that claimed to have worked alongside Magic Leap’s Senior Manager for Talent Acquisition at the time, Cheryl Martin. 

According to the October 19 police report, with Martin’s help, the Hampton Group invoiced Magic Leap for more than $1,000,000 in recruiting fees for 39 hires from August 2015 to July 2017.  After an internal investigation, the company found the Hampton Group had no involvement in any of those hires, a Magic Leap auditor told the police.

Magic Leap wants to press charges, according to the police report. The investigation is ongoing, said a person familiar with the matter. Martin did not respond to requests for comment and declined to comment through a representative. In a conversation with Business Insider, Ann Smith of The Hampton Group said she could not remember the events because she had recently taken medication, and later declined to comment through a representative. 

Not quite standard security procedures

Shaq Magic LeapBut that isn’t the only allegation of internal turmoil that Magic Leap is dealing with. On Wednesday, the company filed a pre-emptive lawsuit against Todd Keil, its senior director of global security, who it alleges is trying to extort millions of dollars from the company under the guise of whistleblower lawsuits. You can read the entire complaint at The Verge, which first reported the lawsuit. 

In the complaint, Magic Leap makes several explosive allegations, including that Keil paid $250,000 above market rates to hire an Israeli security vendor that he personally knew. Magic Leap also says that Keil has claimed the company may have intended to reverse-engineer Microsoft’s Hololens, a competing augmented reality hardware device — a claim that Magic Leap denies.

The lawsuit also provides a revealing window into the level of mistrust and paranoia at the company, which has struggled to combat leaks, describing an effort to spy on Keil with a digital camera.

Magic Leap’s VP of Physical Security “wanted to assess whether the security cameras in the newly opened Florida facility might be vulnerable to manipulation or disruption by handheld personal devices, including digital cameras,” according to the lawsuit, so he stuck a digital camera in the room he shared with Keil.

A photograph of a Magic Leap prototype was published by Business Insider in February 2017. “As all of you know, certain of our confidential information has recently leaked to the media. This constitutes not only a violation of our policies and procedures, but could also potentially violate various federal criminal statutes,” Abovitz wrote in a memo to employees the week after Business Insider’s story published. 

Keil did not respond to an emailed request for comment. 

The aim of the complaint filed this week was to head off Keil’s efforts, and Magic Leap felt it had nothing to hide, according to a person with knowledge of the company’s reasoning behind the preemptive suit. 

Growing pains or red flags?

Magic Leap OneGiven Magic Leap’s fast growth, some level of turmoil is to be expected. In fact, one person familiar with Magic Leap’s operations downplays the significance of the incidents.

“It’s growth pains. That happens when you quadruple in size every year for five years,” the person said. 

The race to bring its product to market has resulted in a $50 million per month burn rate, according to a separate person familiar with the matter. And the allegations of financial shenanigans raise questions about its ability to manage its finances and operations, even as it seeks to raise more cash.

Magic Leap filed paperwork authorizing it to raise up over $1 billion in its most recent round, and it has continued to seek investment. German media giant Axel Springer, Business Insider’s parent company, said it invested an undisclosed amount in Magic Leap last month. Magic Leap is currently in talks with Saudi Arabia’s Public Investment Fund for an investment which could total as much as $400 million, the Financial Times reported. PIF did not return Business Insider’s request for comment. 

All that capital is funding a multi-pronged organization seeking to create a new industry. Magic Leap is not just designing computer hardware and glasses. It also has a large content operation called Magic Leap Studios, with hundreds of employees.

And it’s getting closer to finally releasing its product. CEO Abovitz confirmed last month that Magic Leap will release a “creator version” of its smartglasses before the end of the year. The smartglasses are called Lightwear, and they attach with a cord to a pocket-sized computer and battery, called Lightpack. 

How do the glasses perform? Nearly everyone who has tried Magic Leap’s demo has said it is amazing. However, discussion of the experience is limited by a required non-disclosure agreement.

Even NBA Commissioner Adam Silver said he was constrained from discussing the experience because he signed an NDA while he discussed the basketball league’s partnership with Magic Leap at a Recode conference last month. “I’ve signed the NDA too, so I’ve seen the first generation of it,” Silver said.

The company still has some big hurdles to overcome. 

One current issue with the headset is battery life and charging; the device doesn’t charge while it’s plugged in and being used at the same time, according to people familiar with Magic Leap’s hardware. Solving this issue is important to ensure that people could continue to use the device while it’s plugged in.

Magic Leap also needs to ensure that there is a strong and steady pipeline of interesting apps and experiences for early adopters of its glasses.

That’s a lot to deal with, even without lawsuits and police reports.

Business Insider’s parent company, Axel Springer, is an investor in Magic Leap through its subsidiary Axel Springer Digital Ventures.

SEE ALSO: After 6 years and $1.9 billion, secretive startup Magic Leap unveils its smart glasses for first time

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Matt's Inside Line: Scoop on Lucifer, Big Bang, Suits, Once, SHIELD, Timeless, Criminal Minds, #OneChicago and More – TVLine

Is Lucifer about to Cainblock himself? Is S.H.I.E.L.D. heading for a wedding? Which #OneChicago couple will face fresh conflict? Will Timeless get musical? Read on for answers to those questions plus teases from other shows.

Have any scoop on the Pierce/Chloe romantic relationship on Lucifer? —Emily
“After Monday’s episode, Chloe and Lucifer seem closer than ever, don’t they?” co-showrunenr Joe Henderson tells Inside Line. “What better time for a wrench to get thrown in the works?? Expect Pierce/Chloe to start heating up very soon… and Lucifer may be partially to blame for it!

Anything on Suits‘ Harvey and Donna? —Ana
Only that the Season 7B premiere (airing Wednesday, March 28 on USA Network) kicks off immediately after the pair’s kiss, and quickly dive into its aftermath — including how it will change Harvey and Donna’s working and personal relationship (as well as Harvey and Paula).

Any scoop on what will transpire on The Big Bang Theory this spring? —Mario
Although it seems as if Leonard, Penny, Sheldon and Amy are the only residents of their multi-story, elevator-challenged apartment building, the fact is they do have other neighbors. And we’ll meet a few of them in an upcoming episode. “Sheldon and Leonard are vying for the head of the Tenants’ Association,” showrunner Steve Holland teases of the plot. “And Leonard has to go knock on some apartment doors to do some politicking.”

Now that the humans of iZombie‘s Seattle know about zombies, any chance Liv will be able to reunite with her mother and brother? —Dina
“We have so many storylines that we are servicing in this show, and we have so many regulars with their own storylines, that it hasn’t made sense quite yet for that to be a focal story point,” star Rose McIver said when we visited the show’s set. “But it’s definitely hovering there. I hope we come back to that soon. I am fascinated by Liv’s dad, who he is…. There was talk about trying to bring it in this season, but it’s been such a dense plot. I think the writers have focused, at the moment, on what’s going on in wider Seattle.”

Any Timeless scoops? Potential storylines involving certain historical events? —Eve
It sounds like the Time Team’s trip to Hollywood circa the 1940s is going to be particularly delightful — and lyrical! “We’re trying to figure out what Rittenhouse wants with Citizen Kane, because they’re trying to steal that movie, and we meet Hedy Lamarr,” Abigail Spencer previews. And to that end, “Wyatt and Lucy go undercover as the next big musical duo,” the actress shares with a laugh. “[Rufus is] a playwright-turned-screenwriter, and when we get the attention of [Paramount Pictures president] Barney Balaban, [Rufus says], ‘And this is my new musical duo, White Folks!’ It’s really hilarious. … We go into a party that he throws with [William Randolph] Hearst, so it’s Barney Balaban and Hearst and Hedy Lamarr, and Barney Balaban is like, ‘You guys should get up and perform a song,’ and we’re like, ‘No, no, no, no.’ Wyatt and Lucy fight about it, and then Wyatt pushes Lucy on stage, and comedy ensues.”

Any Criminal Minds scoop to share? It’s been a while! —Diane
As one might have surmised when we first told you about it back in August, the Matthew Gray Gubler-directed episode involving clowns is “creepy,” Kirsten Vangsness told me. She then said to watch for this moment: “When we’re breaking down the case, [Agent Simmons] talks about how he’s afraid of clowns, and there was an episode years ago where Garcia said she hates clowns — because once at a birthday party a clown honked her breasts. So we have a little moment where without saying anything, I’m like, ‘I hate clowns too!’” Fun fact: Gubler taunted coulrophobics off-camera as well. “He held a Prom Clown contest, where everybody dressed up as clowns,” Vangsness shares. “It was pretty weird.”

What’s next for Chicago P.D.‘s Sgt. Voight now that the body of his son’s killer has been found? —AJ
The discovery presents “a major problem” for the sergeant and “certain other members of his team,” showrunner Rick Eid teases. “Olinsky and Voight’s relationship will be put to the test. The body’s discovered, an investigation begins, and you’ll figure out who your friends are.”

Will we see Chicago Fire‘s Dawsey tackle problems together this season as opposed to being at odds with each other? —Rachel
Eep, we’ve got bad news: “There’s some conflict coming” for the married couple, showrunner Derek Haas previews. “We have a new firefighter [played by Damon Dayoub] coming into the firehouse who’s got a history with [Dawson]…. I’m not going to say whether it was romantic or not, but they know each other from just out of the academy.”

We know it’s Agents of S.H.I.E.L.D., but can we hope that we might get to see FitzSimmons actually having a wedding? —Eva
I hope so,” Elizabeth Henstridge told us at the 100th episode party, “but Simmons doesn’t have the best track record of things turning out well!” Iain de Caestecker is of the same, skeptical school of thought. “I don’t know if we’ll ever see it,” he said. “It’s something that might be, hopefully towards the end of the show, hinted at, maybe in a flash forward, but I don’t know. The cool thing about their relationship is it’s been kind of a roller coaster, but through it all, you’ve always felt that they’re kind of inseparable. They’ll always kind of come back together. They’ve got a bond that’s kind of unbreakable.”

When is Ducky coming back to NCIS? Miss him! —Shellie
David McCallum in fact returns next Tuesday, March 6 — in a truly wonderful episode guest-starring Drew Carey as a retired Marine Sergeant — and then also appears in the March 13 episode, in which American Pickers host Mike Wolfe plays himself.

We haven’t heard anything about Once Upon a Time‘s Rumple in a while! Anything that can be said on what challenges will come up for him in his quest for the Guardian so he can unite with Belle? —Ashley
“We know that he has a very tough mission, which is to resist his darker impulses so he can keep his heart clean and go back to Belle, and that is going to be challenged,” says co-creator Eddy Kitsis. “Whether as Weaver, as Rumplestiltskin or as Gold, he is the Dark One who wields the most powerful dark magic, and at some point someone’s going to want to take that knife. And so I would say that we’re going to see a couple of people go after him … and it is going to be very tough for him to not punch back.” Bonus scoop: The continuity nerds out there will be happy to know that an upcoming flashback will explain why Rumple was back to his scaly self at the time the new curse hit.

Any plans to have a more serious and meaningful relationship between Chicago Fire‘s Sylvie Brett and Chicago P.D.‘s Antonio Dawson? –Marybelle
The romance will be “reignited in [next week’s] crossover,” but Fire showrunner Derek Haas says on-and-off is “kind of now the pattern with them.” As he notes, “I think it’s realistic because I have known plenty of friends who have had relationships like this one, where they’re right for each other, and then they’re wrong for each other, and then they’re right for each other, and you, as a friend, have a hard time keeping up.” And when it comes to a longterm “Brettonio” relationship, TV logistics often get in the way. “We’re trying to figure out how we can even do that, honestly, from a scheduling standpoint,” Haas admits. “But I really like their chemistry. And they’re cute together, they’re great actors. So it’s not going to be over any time soon, but it’s not going to be as stable as Casey/Dawson.”

DESIGNATED SURVIVORAny scoop on Designated Survivor? —C.B.
If you’re one of the handful of remaining viewers wondering what Damian Rennett was retrieving from his pocket when Hannah went ahead and shot him, showrunner Keith Eisner says that “ultimately” we will get that answer. “That’s a slow reveal, but yes… there are more shoes to drop with Damien and the hacker story, I promise.”

Can find out which villains are going to share scenes on Gotham? Will we get Riddler and Jerome? Riddler and Scarecrow? Penguin, Riddler and Jerome? —Alexandra
As Robin Lord Taylor will detail in an upcoming TVLine feature, you of course are getting a cra-a-a-azy amount of Penguin/Jerome action over in Arkham. Additionally, Cory Michael Smith told me, “There’s a really interesting ‘alliance’ where Penguin and Riddler find each other again.” And though not a villain per se, Smith also said, “There’s some fun stuff between Gordon and Nygma toward the end of the season, that has to do with Lee Thompkins.”

Do you have any information on who is after Danny on Hawaii Five-0 and why? —Sarah
I am hearing that there will soon be a resolution to “Who shot Danny?” when the team was infirmed mystery, and it will reveal a past relationship Danny had literally right before meeting Rachel.

Real questions from real people get real answers! If you need the Inside Line on a favorite show, email InsideLine@tvline.com(With reporting by Vlada Gelman and Scott Huver)

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DA, sheriff withholding crucial information in drug case, defense lawyer claims – OregonLive.com

A defense lawyer this week blasted the Clackamas County District Attorney’s Office for an alleged pattern of failing to turn over information in criminal cases that may favor defendants, bucking a fundamental constitutional obligation.

The attorney, John Henry Hingson, represents a man charged in a drug crime and says the Sheriff’s Office won’t turn over personnel information for the deputy who investigated the case.

In an unusual series of motions, Hingson accuses the prosecutor’s office of a history of ignoring state and federal discovery statutes, a basic concept in criminal law.

Hingson blamed the Sheriff’s Office for keeping information about the misconduct of police officials from prosecutors, yet said the district attorney ultimately is responsible for making sure relevant information gets to the defendant.

He called the issue a “constitutional crisis” and asked the court to intervene by taking the extraordinary step of placing the sheriff and district attorney under oath and ordering them to agree to a series of instructions regarding the disclosure of information in criminal cases.

Tung Yin, a professor at Lewis & Clark Law School, called Hingson’s motions “an attack upon the integrity of the DA.”

“It’s not saying the system didn’t work in this one case,” he said. “It’s saying the system doesn’t work at all. And the reason is the DA has either given up or doesn’t care or is afraid to push back against the sheriff’s refusal to let the DA’s office make the call on these discovery issues.”

District Attorney John Foote issued a statement Friday saying his office has a “proven public track record” of acting independently and meeting its legal obligations to defendants.

“Mr. Hingson’s accusations are just that: accusations without any facts to support them,” said Foote, adding that the claims are an attack on the integrity of the lawyers who work for him. “He will get his opportunity to provide whatever facts he claims to have in a public courtroom to a judge. So far he has provided none.”

In the felony drug case, Hingson said the prosecutor “intentionally refused to disclose” information about the deputy’s background because the office didn’t have access to Sheriff’s Office personnel records.

The Sheriff’s Office, Hingson said, also refused to disclose the information, arguing that the deputy’s personnel file is confidential and not relevant to the case. A lawyer for Clackamas County reviewed the deputy’s file and concluded nothing in it was relevant to the case.

Hingson argues that not releasing the information violates so-called the Brady law named for the 55-year-old landmark U.S. Supreme Court ruling in Brady v. Maryland, which requires such disclosures.

Foote and Sheriff Craig Roberts have tangled publicly over the issue of misconduct by deputies or supervisors.

Foote has publicly criticized Roberts for failing to alert him when sheriff’s officials are under an investigation that could lead to criminal charges, as is the practice in the Portland Police Bureau.

Roberts, meanwhile, has said his office has notified prosecutors of multiple instances of investigations involving police officials. Roberts and a lawyer for the county didn’t immediately respond to a request for comment.

— Noelle Crombie




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