A jury will decide whether Kirchner misappropriated at least $25 million of capital he had raised to scale his supply chain software company. Prosecutors allege he moved the capital to personal bank accounts and spent it on a “lavish” lifestyle, including a $16 million private jet, a luxury suite at a Dallas stadium, and, at one point a bid for a soccer club—all while he struggled to meet payroll. If convicted, Kirchner could go to prison for the rest of his life. (Kirchner’s attorney declined to comment and Slync did not respond before press time)

If you’ve followed along, these founder fraud trials have really stacked up over the last couple years. Here’s a quick highlight reel of key dates from cases I’ve followed:

—May 2023: Frank founder Charlie Javice charged with $175 million fraud

—May 2023: Theranos founder Elizabeth Holmes started her 11-year prison sentence

—November 2023: FTX founder Sam Bankman-Fried convicted of multiple counts of fraud

—December 2023: Nikola founder Trevor Milton sentenced to four years in prison for fraud

—January 2024: A sentencing hearing is expected for founder Manish Lachwani, who pled guilty to fraud last year

—May 2024: Trial date set for Ozy Media founder Carlos Watson’s fraud and identity theft trial

You get the picture. It’s—well—a lot. It seems that part of the job of being a venture capitalist in 2023 may just be organizing speaking arrangements at court. A list of potential witnesses prosecutors may call from Kirchner’s trial includes names of investors who led Slync’s investments from Goldman Sachs and Blumberg Capital. You’ll recall that, just a few months ago, Paradigm cofounder Matt Huang took the stand during the high-profile SBF case.

Federal regulators are making one thing crystal clear with all these cases: Don’t lie to your investors.

The aforementioned list showcases some of the more brazen examples of founder deceit (or alleged deceit for those who have yet to stand trial). But what’s telling is how some of these founders accused of fraud have responded to the allegations—effectively arguing that exaggerations of financials or “puffery” are an integral part of the startup game and merely the price you pay for innovation. Last week, when I was writing about the latest update to Carlos Watson’s impending trial—where prosecutors are attempting to revoke his bail—I spent some time reading through the motion he filed last year to dismiss his indictment. Here is a part of it:

Take, for instance, claims that Mr. Watson or his colleagues lied about the identities of potential lead investors when soliciting investments from sophisticated counterparties in early private funding rounds, or that he and other Ozy employees provided pro forma financial information that turned out to be inaccurate in hindsight. It is not criminal to hedge one’s bargaining position or to provide optimistic projections about the future that, with the benefit of hindsight, turn out not to materialize… 

Early stage venture capital investors take big risks on new, unproven ideas knowing full well that most of these bets will not pay off but in the hope that a few of those gambles will yield massive returns. For this reason, the reasonable early stage venture investor has a significantly different sense of what is material than other types of investors. When read in the correct context—the world of venture funders—the alleged discrepancies in pro forma accounting and puffery are immaterial as a matter of law and therefore are an insufficient basis for alleging a crime.

Watson isn’t the first one to run with this kind of argument. You may recall Elizabeth Holmes’ trial, where she argued from the stand that she didn’t mean to mislead investors—she was simply being overly optimistic.

“I wanted to talk about what this company could do a year from now, five years from now, ten years from now. They weren’t interested in today, or tomorrow or next month. They were interested in what kind of change we could make,” Holmes offered on the stand. In opening statements for his trial, Sam Bankman-Fried’s attorney said that “working at a startup is like building a plane as you’re flying it.” 

Historically, these kinds of arguments haven’t proven very successful before a jury. Watson has yet to be tried, but prosecutors have alleged that he has done much more than “hedge” his bargaining position: He is facing accusations of dramatically inflating Ozy’s revenue figures to investors, furnishing fake contracts, and for playing a role in the impersonation of media executives, among other things. (Watson and his lawyer didn’t return my request for comment)

Federal prosecutors have made it clear that they want these cases to serve as warnings to the rest of the industry. After Nikola’s founder was sentenced to prison, U.S. Attorney Damian Williams published a statement saying: “Today’s sentence should be a warning to start-up founders and corporate executives everywhere—‘fake it till you make it’ is not an excuse for fraud, and if you mislead your investors, you will pay a stiff price.”

But the healthy number of founders fighting serious criminal fraud charges right now suggests that the warning hasn’t quite stuck.

On Friday…Spirit Airlines sent a letter to its investors, commenting on the Massachusetts court’s ruling to side with the Federal Trade Commission and block JetBlue’s acquisition of the company. The letter, which was filed with the SEC in an 8-K, said that JetBlue and Spirit were “reviewing the Court’s decision” and “evaluating next steps.” Spirit said that it disagrees with the ruling and that it “continues to believe that a combination with JetBlue is the best opportunity to increase much needed competition and choice by bringing low fares and great service.”

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- Oleria, a Seattle, Wash.-based provider of autonomous identity security solutions, raised $33.1 million in Series A funding. Evolution Equity Partners led the round and were joined by Salesforce Ventures, Tapestry VC, Zscaler, and others.

- Alphathena, a Warrenville, Ill.-based indexing platform for financial advisors, raised $4 million in funding. ETFS Capital led the round and was joined by Hyde Park Angels. 

PRIVATE EQUITY

- Blackstone agreed to take Tricon Residential, a Tustin, Calif.-based owner and operator of single-family rental homes, private for $3.5 billion.

- Arcline Investment Management agreed to take Kaman (NYSE:KAMN), a Bloomfield, Conn.-based producer and distributor of aircraft bearings and components, private for approximately $1.8 billion. 

OTHER

- LiveRamp agreed to acquire Habu, a San Francisco, Calif. And Boston, Mass.-based data collaboration platform, for $200 million.

PEOPLE

- Cherry Ventures, a Berlin, Germany, London, U.K., and Stockholm, Sweden-based venture capital firm, promoted Dinika Mahtani to partner.

- Periscope Equity, a Chicago, Ill.-based private equity firm, promoted Joe McIlhattan to principal.

- Top Tier Capital Partners, a San Francisco, Boston, Mass. and London, U.K.-based fund of funds, hired Jonathan Biggs as partner and promoted Michelle Ashworth to partner. Formerly, Biggs was with SVB Capital.