Kairos founder alleges pressure to sell facial recognition to law enforcement, files counter-suit
Kairos founder Brian Brackeen has counter-sued the company he started and its interim CEO Melissa Doval, alleging that Steve O’Hara, chairman of the company’s board of directors, did not share Brackeen’s prioritization of avoiding bias, and pressured him to change his position against selling facial recognition technology to law enforcement agencies. Brackeen alleges that he was denied 34 weeks of salary payment to improve the company’s cash flow, according to TechCrunch, and is seeking $10 million in damages.
That conflict resulted in O’Hara, Doval and others at Kairos “intentionally destroying his reputation and livelihood through fraudulent conduct, the publication of malicious falsehoods, and the commission of illegal corporate acts,” according to the counter-suit.
Kairos raised $0.5 million in emergency capital with a share offering which valued the company at $1.5 million, or $0.01153 per share. Kairos has previously been valued at $120 million, with a memo to shareholders obtained by TechCrunch stating that the lower price is due to the company’s precarious financial situation. The offering was fully subscribed, and decreased Brackeen’s ownership stake by 90 percent, and included a condition that the Kairos board of directors be reconstituted with only O’Hara, Doval, and Director Mike Gardner as members. At a shareholder meeting, originally scheduled for last week, but now expected to occur in the near future, Brackeen hopes to force a vote on whether he should be reinstated as CEO, and the board removed.
“We’ve come to expect this behavior on his behalf,” Doval told TechCrunch in an email. “We stand firmly with our original complaint and the courts will rule in our favor once they are presented with the evidence for the case. Our fiduciary duty is to our stakeholders, and we remain dedicated to doing right by them.”
O’Hara told TechCrunch that the company is not attempting to sell its technology to law enforcement that he is aware of, and that it does not plan to do so before resolving any issues related to bias and privacy.
The memo to shareholders suggests that the emergency capital will keep it afloat through Q1 2019, at which point new sales or fund-raising are expected to stabilize it. For his part, Brackeen has received an offer of $3.5 million in investment from Beyond Capital Markets, contingent on him being returned as CEO, and the resignation of the board. He hopes to raise a further $1.5 million in venture capital.
Brackeen recently told Biometric Update that the legal conflict contains a lesson for founders like himself about protecting themselves as their company grows.