(Bloomberg) -- Uber Technologies Inc.’s former security chief must face criminal charges that he defrauded drivers in an alleged coverup of a massive data hack at the ride-hailing company six years ago.
U.S. District Judge William H. Orrick’s decision keeps Joe Sullivan’s trial on track for September after prosecutors late last year added fraud charges to the case.
Sullivan was originally charged in 2020 with obstructing an investigation and concealing the 2016 theft of personal data of 50 million customers and 7 million drivers. He still faces those two counts.
Prosecutors “adequately stated that obtaining money from Uber drivers, in the form of service fees, was an object of Sullivan’s alleged scheme,” Orrick wrote in Tuesday’s ruling. “There may have been other objects of the alleged scheme,” the judge wrote, adding that the revised indictment including the wire fraud charges “sufficiently asserts that this was one.”
Orrick said at a June 2 hearing that while he might be blocked under the law from throwing out the fraud charges, he also had misgivings about the legitimacy of the counts -- and the government’s case more broadly.
Read More: Uber’s Troubled Past Haunts Criminal Case of Ex-Security Chief
Assistant U.S. Attorney Frederick Dawson argued that by concealing the hack from drivers, Sullivan was attempting to prevent them from defecting to competitors’ platforms and “keep the money flowing” to Uber. Sullivan also kept the hack secret due to his own ego, because he didn’t want to admit the failure on his watch, Dawson said.
The motive “seems implausible,” Orrick said at the June hearing. The judge was also critical of Dawson’s claim that Uber’s obligation to disclose the hack was necessarily “intertwined” with Sullivan’s, such that Sullivan caused Uber to violate its duty to report the breach.
Orrick said he was dubious about the government’s plan to prosecute only Sullivan at the September trial knowing that he will point a finger at “an empty chair defendant” -- the company.
Uber cooperated with the government’s investigation and isn’t a named defendant in the case.
Sullivan was fired soon after Dara Khosrowshahi joined Uber in 2017 as chief executive officer and set out to remake Uber’s scandal-ridden reputation. Sullivan argues he was scapegoated. He argues Khosrowshahi jettisoned him in an effort to close a $9 billion investment deal with SoftBank Group Corp.
Sullivan, a former federal prosecutor and longtime Silicon Valley fixture who previously headed security for Facebook, faces as long as 20 years in prison if convicted of the most serious charges against him -- though his sentence would likely be far less.
His lawyer, John Cline, argued in a court filing that the fraud charges are an attempt by prosecutors to dress-up an otherwise “unappealing” case into a “full-fledged fraud case with sympathetic victims.”
Cline declined to comment on Tuesday’s ruling.
The case is U.S. v. Sullivan, 20-cr-00337, U.S. District Court, Northern District of California (San Francisco).
(Updates with excerpt of judge’s ruling in fourth paragraph)
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