Kyle Sandler: The Alabama Startup Scam | 215

Kyle Sandler spent much of his life searching – for an identity, for a purpose, for a place where he fit in. But when he discovers he has a gift for sales, everything changes. Kyle takes his talents to a small town in Alabama, where he opens Round House, a startup incubator that promises to put his new community on the tech map. Armed with big-name drops – including an alleged connection to Google – Kyle dazzles wide-eyed investors into opening their wallets. But as the money pours in, cracks begin to form – and an entire town is about to learn just how much their visionary has been taking them for. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Sarah Hagi?

  Audible subscribers can listen to all our episodes of Scamfluencers ad-free right now. Join Audible today by downloading the Audible app.

• 0:14Scaachi Koul?

  Sarah, do you ever watch Shark Tank? Or perhaps its Canadian equivalence, Dragon's Den?

• 0:20Sarah Hagi?

  Absolutely. I've watched so many episodes of both of them. And I feel like Shark Tank, anytime you're in a hotel, it's on. Anytime you're in a hotel, an episode of Shark Tank is playing. And I love it.

• 0:34Scaachi Koul?

  Yeah, Shark Tank is a show exclusively made for hotels. I watched a lot of Dragon's Den when I was younger. And it felt really good to pretend like I had any idea what the market wanted, or how much of it they wanted.

• 0:47Sarah Hagi?

  No, I genuinely became a business expert watching these shows. I'm like, 10% for blah, blah, blah. I'm like, what? I don't even know what the hell they're talking about. What is this?

• 0:57Scaachi Koul?

  Right.

• 0:57Sarah Hagi?

  But you know, you feel like you understand.

• 0:59Scaachi Koul?

  Yeah, it feels good to pretend. Well, today's scammer is one of those suspiciously rich, dubiously credentialed investors who love to promise the world to vulnerable entrepreneurs who dared to dream big, but was only in it for his slice of the pie.

• 1:17Scaachi Koul?

  It's late 2015, and Parker Owen is walking into an office in a small town in Alabama. Parker is a former Auburn University student in his early 20s with blonde hair, blue eyes, and a baby face. He looks like he just wandered out of a frat house. But today, he isn't looking for a party. He's walking into a startup incubator, a place made for people like him who have big entrepreneurial dreams. The incubator is called Roundhouse, and the inside feels more West Coast startup than rural Alabama. It has a sprawling, open concept floor plan with members riding around on hoverboards and staff pounding Monster Energy drinks. There's a creative and collaborative atmosphere, a sense of optimism, and of course, free

• 2:02Scaachi Koul?

  snacks. But Parker isn't here to soak up the vibe. He's meeting with the founder of Roundhouse, a meeting that could be a make or break moment for him. He's trying to raise $2.5 million for his company, and he's about 600 grand short. Like many incubators, Roundhouse provides resources and mentorship to entrepreneurs with promising ideas in exchange for a cut of the pie if the business succeeds. But what makes Roundhouse unusual isn't how it works, it's where it's located, a small town not far from Auburn called Opelika. At Auburn, Parker launched a company called Fraps. That's short for fraternity wraps. The company makes advertising decals for college students' laptops, the same way companies

• 2:46Scaachi Koul?

  wrap cars with ads. Using tracking software on the laptops, students are paid for every minute the ad is visible in high-traffic areas on campus.

• 2:55Sarah Hagi?

  Yeah, that isn't a surveillance nightmare at all.

• 2:58Scaachi Koul?

  No, it's totally fine, it's totally cool. It's scrappy, it's very college, and Parker genuinely believes it could turn into something big. But right now, it's stuck in that in-between phase where people are interested, but without more money, the company can't really grow. So some of his old business professors recommended he hit up a guy named Kyle Sandler, the founder of Roundhouse. Kyle seems like your typical startup founder. He's 40 years old, wears wire-rimmed glasses and promo t-shirts for tech companies, and he's a social butterfly who loves to yap. And he has an impressive resume. Word around town is that Kyle was one of the first 100 employees at Google. So, as Parker gets ready to pitch, there's a lot riding on how this goes.

• 3:41Scaachi Koul?

  If Kyle likes Fraps, he'll invite Parker to join Roundhouse and help him raise the rest of the money he needs. Parker would have the support and investment to make his business real, and he wouldn't even have to leave Alabama to do it. Luckily, Kyle is immediately interested in Fraps. Here's Parker talking about it years later on the HBO show Generation Hustle.

• 4:01Speaker 02

  He told me from point-blank, he said, "This is something that I want to invest in. I can write you a check right now for the full $2.5 million."

• 4:10Sarah Hagi?

  I mean, this is how these things happen, right? Like, you meet a guy who believes in you, and nothing bad ever happens after that?

• 4:17Scaachi Koul?

  Yeah, it's a dream come true, and that's the end of this episode. Well, Kyle doesn't actually write Parker a check for $2.5 million, but he does welcome Parker and Fraps into the official Roundhouse portfolio. Parker is thrilled. But as he settles in at Roundhouse, he can't help but notice a few things about Kyle that seem off. Like, not what you'd expect for a super-successful tech guy. For one thing, Kyle's teeth. OK, sure, it's kind of superficial, but Kyle's teeth look like they've never seen an orthodontist. Parker can't help but wonder how someone who's supposedly so rich never bothered to get his teeth fixed.

• 4:56Sarah Hagi?

  That is a pretty good observation. Even Cardi B raps about it. "Gotta beg and fix my teeth," you know?

• 5:03Scaachi Koul?

  Exactly. Well, Parker notices other things, too. Like when Kyle invites him and some of the other entrepreneurs over to his mansion for a party. The property is huge, with an Olympic-sized swimming pool. But when Parker walks inside, he's shocked to see that it is an absolute pigsty. Almost literally. It's not just untidy or cluttered. There's actual animal poop everywhere from Kyle's dogs, cats, and birds that he hasn't bothered to clean up. Another time, Parker is at Kyle's house for a movie night. And when Kyle goes to queue up the film, Parker clocks that Kyle's DVR is filled with episodes of "American Greed," the CNBC show about financial crimes. Kyle is obsessed with it.

• 5:47Scaachi Koul?

  Parker's spidey senses are tingling, and he's on to something, whether he knows it or not. Because the reputation Kyle has in town is built on a foundation of lies. The mansion, the parties, the animals are all being paid for using investor money. And to keep it going, Kyle needs to bring in more and more shareholders. But for the dozens of entrepreneurs and investors who've already bought into the dream of a Silicon Alabama, believing in that dream is about to come at a very steep price.

• 6:24Scaachi Koul?

  From Audible Originals, I'm Sachi Cole.

• 6:27Sarah Hagi?

  And I'm Sarah Hagee.

• 6:28Scaachi Koul?

  And this is Scamfluencers.

• 6:38Scaachi Koul?

  Kyle Sandler spent much of his life on the outside looking in, trying to find himself and where he fit in. He wasn't the smartest guy in the room or the most connected, but he was a natural at sales and knew how to make people believe. And when he landed in a small Alabama town dazzled by big tech dreams, he realized that gift was worth a lot of money. Kyle opened Roundhouse, a startup incubator promising Silicon Valley riches in the heart of the South. All he needed was investors, and in Opelika, Alabama, they weren't hard to find. Just drop the word "Google" and wallets opened. But Kyle wasn't building the next big thing. He was building a lie. And by the time the bright-eyed founders and small-town investors who bought into his vision start asking questions,

• 7:23Scaachi Koul?

  it's already too late. This is Kyle Sandler: The Alabama Startup Scam.

• 7:33Scaachi Koul?

  Three decades before Kyle was calling the shots at his own incubator, he was an awkward pre-teen trying to make friends in Baltimore. It's the mid-'80s, and Kyle's goofing off with four friends at a mini-golf course. I'm picturing it like a scene right out of Stranger Things, with all your classic putt-putt obstacles and a handful of arcade games near the front. The kind of place where unsupervised children can spend their whole allowance in one afternoon. Kyle's just 10 years old, a Pacific Islander adopted by white Jewish parents. His mom had been told she couldn't have kids, so adopting Kyle felt like a miracle. But when Kyle was young, he was diagnosed with leukemia. He was in and out of the hospital until he was around eight years old, when the cancer finally went into remission.

• 8:17Scaachi Koul?

  And despite what the doctors told his mom, she is able to have kids. And over time, Kyle ends up with four younger siblings, all white, like their parents. His mom always tries to treat Kyle the same as her other children, but as Kyle gets older, he feels his outsider status more and more. He also suffers his fair share of bullying and is desperate to fit in. So Kyle learns to go along with whatever his friends are doing, whatever it takes to be part of a group, even if it crosses the line. Which is how Kyle gets embroiled in a mess at the putt putt course. While we don't know exactly how this all went down, I like to imagine that Kyle and his friends are messing around, sending golf balls flying all over the course when the owner of the place approaches. They think maybe they're in trouble,

• 9:02Scaachi Koul?

  but instead, the guy makes them a wild offer. How would they feel about burning the place down? He'll pay them 500 bucks. Presumably, the owner wants to cash in on the insurance policy, although why he's outsourcing arson to a bunch of kids, we don't know.

• 9:19Sarah Hagi?

  You know, I really hope these kids ask for more money because that is not enough to burn a place down.

• 9:25Scaachi Koul?

  Yeah, right. Well, these kids are 10 and this is the 80s. So they're like, hell, yeah. $500 is a lot of money. So Kyle and his friends come back later at a designated time. The owner has left the doors unlocked and put out gasoline. But when the kid criminals arrive, they see an opportunity to get even more cash. Here's Kyle talking about it on the Locked In Podcast.

• 9:49Speaker 03

  It dawns on us that there's like 10 video game machines in there and we have the keys to the place. So we open up the video games and they're filled with quarters because I guess he didn't think about it either.

• 10:01Scaachi Koul?

  So the kids run home, grab pillowcases, and then return to fill them up with all the loot. When they've unloaded all the change, they do as the putt putt owner requested and light the place on fire.

• 10:13Sarah Hagi?

  It's just so crazy to trust literal children to help you commit your insurance fraud by burning down your business.

• 10:22Scaachi Koul?

  Yeah, I mean, these are not career criminals. They're just a bunch of 10 year olds. So a few weeks later, one of them starts buying treats for everyone in their class from the cafeteria, all with quarters. That gets the attention of the principal, who asks him where all the change came from. The kid folds immediately and he rats on the rest of the gang, including Kyle. From Kyle's recollection, all of the kids end up having to do some community service. But the adult in this mix, the mini golf owner, goes to prison. For most people, this would be a wake-up call. But Kyle can't seem to shake his troublemaker behavior. Friends remember him regularly taking money from his mom's purse. When his parents promise a reward for good grades,

• 11:06Scaachi Koul?

  he photocopies the report card of a smarter friend and doctors it. Although the copy is done so poorly, his parents sniff it out and are furious. And his early act of pyromania follows him around. A rumor starts circulating that he burned bridges, literally, in their Baltimore neighborhood. But as Kyle gets older, he'll finally find a place where he feels that he belongs. And while he won't need to light things up to impress his friends, he'll be striking a different kind of fire, all his own.

• 11:39Scaachi Koul?

  It's 2006, decades since Kyle was getting into teenage trouble. He's 31 now, still living in Baltimore, and he's finally found his footing. He has a stable job at T-Mobile and has become one of the top salesmen at his store. Today, his supervisor hands him a package to check out. It's from Google. Kyle's worked hard to become so well-regarded at work, but it's been a winding road, including spending his 20s working at radio stations, where he got tangled up in some light pay-to-play schemes with the record companies. But when the industry cracked down on corruption, Kyle got spooked and he got out. He wound up working for T-Mobile on a whim, only to find he was a natural at it.

• 12:21Scaachi Koul?

  He has great sales numbers, and he's always invited to employee awards, which is how he got on Google's radar. Kyle opens the package and pulls out a new phone. It has a quirky keypad and looks like a BlackBerry, but it also has a touchscreen. Remember, this is 2006, and it's still a year before the first iPhone was released and everyone got used to touchscreens. The phone in Kyle's hand is so new, it doesn't even have a name yet. But the rumor is that Google will call it an Android. Most people would play with it for about a week and move on. But Kyle whips out his Handycam and records his experience trying out the Android. And then he takes it a step further, creating what he calls the first Android blog called The Droid Guy.

• 13:06Scaachi Koul?

  This is before social media influencing was even really a thing, and a full year before the Android becomes available to the mass market.

• 13:15Sarah Hagi?

  It is really cool that he had these instincts to be like, oh, people want to know about this, maybe I'll upload it. And he's also just so lucky that there's no competition. Because imagine if there was. I don't think he would be the one to shine, probably.

• 13:30Scaachi Koul?

  Yeah, I mean, it was a moment in time. And the blog does take off. Apparently, people are dying to know more about this phone. Kyle expands the blog, writing up reviews and reports of other phones and new releases. The blog becomes so successful that he's able to quit his job at T-Mobile and focus on The Droid Guy full-time. He even starts putting out video dispatches from tech conferences and hosting some of his own meetups for Android lovers. The Droid Guy opens doors for him. Google flies him out to their headquarters where they wine and dine him. Kyle takes photos of himself at the Google campus and uploads them to Facebook. At this point, he's a legit tech influencer with a big presence on Twitter, YouTube, and BySpace. R.I.P.

• 14:14Scaachi Koul?

  And The Droid Guy gives him one more thing he wasn't expecting: love. Ali Fox, who manages a T-Mobile store outside of Birmingham, Alabama, reads the blog and reaches out, asking if she can write for the blog, too. Kyle says yes. And soon, they're meeting up at tech conferences around the country. At one of them, their professional relationship takes a personal turn. They hook up, and nine months later, in 2007, their daughter is born.

• 14:41Sarah Hagi?

  His life is going amazingly. I am so scared to know what happens next because this is the dream for most people.

• 14:48Scaachi Koul?

  Yeah, man, it's all pretty good. The droid guy continues to flourish. And in 2011, after running the blog for five years, Kyle claims he sells it for $10 million. This nets Kyle more than enough money to set up a stable, comfortable life for him and his family. He and Ally have gotten married and they moved to Auburn, a small college town in her home state of Alabama. But Kyle isn't done with tech. Flushed with cash, he launches a new blog called Niblets, which is all about startups in smaller markets outside the big financial hubs. Given where he got his start, in Baltimore, maybe Kyle sees opportunity in reminding Silicon Valley that innovation can happen anywhere. And he gets involved with President Obama's Startup America Initiative,

• 15:33Scaachi Koul?

  which also promotes entrepreneurship in smaller cities. Then Ally's mom introduces Kyle to her friend, the administrator of a tech incubator at Auburn University. The administrator loves the Niblets blog and suggests that Kyle run it out of Auburn's incubator. Not long after, Kyle becomes their entrepreneur in residence, providing advice and mentorship to business students. Or at least, that's how he recalls it. Auburn University has denied Kyle had any official role on campus. Around this time, a new idea starts to take shape. Kyle sees all of these college kids starting new companies, but anything they create using university property is technically owned by the school. He wants to provide an off-campus environment

• 16:18Scaachi Koul?

  where they can maintain ownership over the companies they create. So Kyle decides he'll open his own incubator, where he can help shepherd them through and then take a cut of the profits on the backend. In a small town dazzled by big tech names, he's about to discover just how far a good story and a photo on Google's campus can take you.

• 16:41Scaachi Koul?

  It's 2014, and Emily Boss is walking into the best opportunity she's ever had, working for Kyle Sandler at his brand-new startup incubator in Opelika, Alabama. Emily is in her early 30s with a shaved undercut hairstyle, big jewelry, skinny jeans, and a thin, funky scarf. She has a degree in entrepreneurship and has been waiting for a chance like this. In a town of around 30,000 people, these opportunities don't come around often. The town is still shaking off the hangover of the 2008 financial crisis six years earlier. But the local government has been making moves. They recently approved an initiative to make Opelika one of the first gig cities in the US,

• 17:23Scaachi Koul?

  a place with internet speeds of up to 1 gigabyte per second. It's meant to lure tech companies and remote workers to help reinvigorate the local economy. And Kyle's new startup incubator, called The Roundhouse, is proof that it's working. When Emily arrives at work, her new boss, Kyle, greets her at the door. He directs her towards her seat at the front desk, where she'll work as a community director. Emily is thrilled to be a part of revitalizing Opelika. And when Kyle tells her about his past at Google, it confirms the rumor she'd heard, that Kyle was one of their first 100 employees. Emily has no reason to doubt him. The whole town seems excited to have him around.

• 18:06Scaachi Koul?

  Here's Emily talking about it in the HBO show Generation Hustle.

• 18:10Speaker 04

  Kyle definitely had a way of talking about things that made you feel like, wow, I want to know about that. Like, virtual reality, like buzzwords that people around here didn't necessarily understand and wanted to know more.

• 18:25Scaachi Koul?

  Yeah, this sounds like he also was very ahead of the curve when it came to tech guy promises, you know? Knowing a lot of the right things to say, the right words to use, getting people curious. That's how a lot of people get by. Yeah, it's really effective. And Emily throws herself into the job. She reaches out to potential new members and organizes community events and pitches, where she and Kyle share the Roundhouse business model. Startups apply to join, and if Kyle thinks their idea has promise, he brings them on. In exchange for equity in their business, Kyle gives the entrepreneurs space to work, resources like printers and free energy drinks, and mentorship in how to build and grow their companies. Roundhouse also has investors,

• 19:10Scaachi Koul?

  people willing to spend upfront in the hopes that one of the fledgling startups will make it big and pay them huge dividends. Kyle also takes his pitch on the road to local Rotary Clubs, the Young Republicans Club, and even Auburn University. He's looking for people to buy equity shares in the incubator. And based on the valuation of Roundhouse, he's allowed to fundraise up to half a million dollars from outside investors. Selling any shares beyond this amount would be illegal under securities law.

• 19:39Scaachi Koul?

  Kyle tells Emily that investor money will flow directly to the startups through separate deals he structured with each founder. Emily is focused on the vibes of Roundhouse more than the financials, so she takes his word for it. And why wouldn't she? Kyle's sparkling backstory, confidence and smooth talking has the town of Opalika entranced. Investors aren't just interested, they're knocking down his door. But no one's asking follow-up questions or doing any due diligence. So when one of the tech world's most controversial players comes calling, Kyle won't hesitate to expand his seemingly unchecked influence. It's early 2015, a few months since Roundhouse opened.

• 20:24Scaachi Koul?

  Kyle pulls into a parking spot outside the incubator in a brand-new Jaguar. The flashy sports car turns heads in Opalika, which is exactly what Kyle wants. After all, he has a reputation to maintain as a former Google exec and tech capitalist millionaire. But the truth is, that background at Google, it's a total sham. A while ago, someone saw a Facebook photo of him on Google's campus and asked if he worked there. And Kyle just said yes and ran with it. It's been part of his lore ever since, and he's never corrected anyone. And Kyle's payout from the droid guy? He's burned through all of it. So now, he's paying for his Jaguar, his rent and childcare

• 21:07Scaachi Koul?

  by co-mingling his own savings with his investors' money. He still believes one of the companies at Roundhouse will hit it big and make everyone rich. But that won't happen unless he keeps up the facade of success. Plus, this persona has finally earned him the praise and attention he's wanted ever since he was a kid.

• 21:26Sarah Hagi?

  I cannot believe he burned through all of that money so fast and that he, in the time he was spending that money, couldn't figure out a way to leverage the thing no one else was doing. Like, what is your problem? You had everything. You had everything.

• 21:43Scaachi Koul?

  Yeah, he really blew it, but no one else knows that yet. And his patina of success is especially important today because Kyle has a very important meeting. An old acquaintance recently reached out and said that John McAfee wants to talk to him. Yeah, that would be John McAfee of McAfee Antivirus. Sarah, what do you know about John McAfee?

• 22:05Sarah Hagi?

  I know that this guy was making some very crazy, front-facing videos on social media before he died mysteriously. I don't remember what it was. But I remember being like, this guy is so weird. And he was, he turned into like a real conspiracy dude, right?

• 22:23Scaachi Koul?

  Yeah, you're right. He's a real weirdo and a definite scammer. In fact, he is our very next episode. So we're going to get into all of it. But for now, here's what you need to know. John's a guy in his late 60s with leathery skin from the sun, frosted tips, and a creatively styled goatee. He's both charismatic and unsettling. The type who's hard to put your finger on and you can never fully trust him. John recently founded an incubator like Kyle's, where companies paid 20 grand to join. In exchange, John would leverage his famous name and promote their company on social media. But things have gotten messy. Some of his incubator companies allege that John hasn't been holding up his end

• 23:04Scaachi Koul?

  of the bargain. So John wants Kyle to absorb his startups under the Roundhouse umbrella. He's hoping that'll wipe the slate clean. Even though John's reputation isn't what it was at the peak of McAfee Antivirus, his name still opens doors in the tech world. Kyle jumps at the chance to work with him. John is living in Tennessee, but visits Opelika every couple of weeks to check on his incubator companies. And it doesn't take long for Kyle to discover how far John has fallen. He's dead broke. Kyle later claims that when John comes to town, Kyle foots the bill for the hotel. Over time, he and John develop a close relationship.

• 23:45Scaachi Koul?

  Kyle helps get John a feature in USA Today, promoting their partnership to the world. According to Kyle, that gets the attention of a company called MGT Capital Investments. MGT has bounced from industry to industry, but now they're looking to pivot to cybersecurity, and they want John to sign on as their new CEO. They offer him an eye-popping $40 million, but John turns it down. He thinks that between speaking fees, consulting, and his incubator companies, he can make it on his own. Kyle can't believe it. That's so much money. Plus, secretly, Kyle thinks that the startups John brought in under Roundhouse are shit, with no potential.

• 24:28Scaachi Koul?

  So Kyle isn't shocked when John is still struggling six months later. Kyle can't have his partner up against the ropes like that. So they start thinking about ways to drum up press and attention again. Here's Kyle talking about what happened next on the podcast, Rise Above.

• 24:44Speaker 03

  Three shots to the wind, man. We're just talking at this dinner, and me and another buddy were like, I said, I'm like, you gotta do something big, like run for president. Like, this is how this came up for real.

• 24:57Sarah Hagi?

  This is actually a thing people were doing at the time. It was, you know, 2015, all these random people were running for president. This is just so funny and weird.

• 25:07Scaachi Koul?

  It's so weird. And Kyle says it as a joke, but the next day, John calls him up and says that he's in. In September 2015, John McAfee files the paperwork to run for president. Kyle is named a campaign advisor, and they make the Roundhouse his official campaign headquarters. John is embraced by the Libertarian Party, and he starts doing surprisingly well, not just politically, but financially. They start raking in millions of dollars in donations in Bitcoin and through PayPal, but according to Kyle, a good portion of that is never reported. By the end of the year, Kyle leaves the campaign, supposedly to focus on his own businesses. But maybe it's just a move of self-preservation.

• 25:51Scaachi Koul?

  He knows John's not gonna win. Besides, Kyle's gotten what he wanted out of it: attention, credibility, and more investors eager to get in on Roundhouse. Plus, everyone at Opalika loves him.

• 26:06Sarah Hagi?

  He did get all that, but also he still has all this money to pay back that he's been using as his own. So I don't really know what the truth is here. Like, what's real?

• 26:16Scaachi Koul?

  Yeah, you're right. Here's another chance for Kyle to pay people back and make things right. But that's not what happens. All of his friends and neighbors are none the wiser.

• 26:28Scaachi Koul?

  On Kyle's 40th birthday, the town all gets together to throw him a surprise party. Kyle is decked out in a dark suit and a plastic top hat. He's smiling from ear to ear as the mayor reads a proclamation declaring his birthday is now Kyle Sandler Day. Kyle has made his mark on Opalika, but he's nowhere near finished. And an earnest, young investor with a squeaky clean story is about to give him something John McAfee never could: A heartwarming way to launder his money and his reputation.

• 27:14Scaachi Koul?

  Kyle's relationship with John McAfee is just one way he's garnering national attention. Around the time Kyle first gets involved with John McAfee, in late 2014, he also discovers a local superstar in the making. Kyle has been volunteering with Opalika Middle School's Young Entrepreneurs Academy program. And there's one young man whose idea sticks out above the rest: 13-year-old Taylor Rosenthal. Taylor is a quietly confident kid with an original-style Bieber haircut and a Pee-wee football player vibe. I have a photo of him in front of his pitchboard. Sarah, can you describe it?

• 27:50Sarah Hagi?

  OK, he's wearing a bowling shirt that's red stripes on black. The whole theme of this is red and black. It's branded with his, you know, business idea. And he's in front of a poster board that just like... You can tell he actually made this because only a child would use those colors and that contrast.

• 28:09Sarah Hagi?

  No shade to this child, but he needs to loosen up a bit. I think he's so cute. He looks too professional. He's a baby adult. He is one of those baby adults. I know, and I'm just kind of like, just be a kid, you know? Poor guy. Oh, I love him. Something bad's gonna happen to him, obviously. Great. I really like his little bowling shirt, for what it's worth.

• 28:33Scaachi Koul?

  Well, Taylor's idea is called RecMed, and it's deceptively simple. He's been playing baseball for years, and he's noticed that often, when a kid gets hurt, parents don't have what they need to help. Sometimes not even a Band-Aid. So Taylor's idea is to set up a pop-up stand selling first aid kits at sporting events. The kits come in three sizes and include supplies like cold packs and gauze. Taylor developed the idea with his mom, an x-ray tech, and his dad, a sports medicine trainer. Kyle listens intently to Taylor's pitch, and he loves it. He approaches Taylor and invites him to become the youngest founder to join Roundhouse. Taylor gladly accepts, and within six weeks of their first meeting, Taylor launches his debut first aid pop-up.

• 29:17Scaachi Koul?

  Taylor's got a great idea and a go-getter attitude. And Kyle, he says he believes in the kid. And maybe he does, but he also knows that Taylor has incredible public relations potential. The Roundhouse needs a boost to keep the cash flowing in, and Taylor's fresh face will make for incredible investor bait.

• 29:39Scaachi Koul?

  A few months later, Taylor stands in front of a green screen, ready to shoot his first promo video. He's wearing his RecMed uniform, a red and black bowling-style shirt with the company's logo over his heart. The whole thing is very DIY, and while he's more professional than your average teenager, there's no denying that he is still a kid, which is honestly half of the appeal for investors. Here's part of his pitch.

• 30:04Speaker 05

  Have you ever been to an amusement park, and your child falls to the ground and scrapes their knee? Then you had to walk all the way to the front of the park to get a Band-Aid? This cuts into the time you could be having a blast and riding rides.

• 30:18Sarah Hagi?

  Why does it sound like he's about to cry? This will cut down on the time. You could be having a blast or any cry. He's just an intense kid. I'm not making fun of him. I'm very, very endeared by him. It is just so funny how intense this all is and how, once again, this kid is, something is gonna happen and I'm scared.

• 30:38Scaachi Koul?

  I know, I know. I'm sorry, try to hold on. Well, Taylor, his parents and Kyle have all been working together to take his idea to the next level. What started as a pop-up stand has morphed into something bigger. A vending machine stocked with first aid kits. The machines will cost $5,500 wholesale and the plan is to sell them to places like stadiums and amusement parks. With Kyle's help, Taylor and his family have made a prototype for the machine and raised $100,000 in angel investments. Taylor is over the moon. Since joining the Roundhouse, he's watched Kyle and the other adults take his idea seriously. He started going to the coworking space after school and even over Christmas break.

• 31:20Scaachi Koul?

  Then Kyle approaches Taylor with some incredible news. A healthcare company has offered to buy RecMed for $30 million.

• 31:30Sarah Hagi?

  I know in these kind of tech stories, a lot of money is thrown around, but like this kind of stuff just doesn't happen at all anymore today with a child. And to me, it is so crazy that there's this offer for $30 million and it's for a child's vending machine.

• 31:47Scaachi Koul?

  Yeah, man. Taylor doesn't even know how to comprehend a number that big. He's eager to cash in, but Kyle has a different idea. He suggests that Taylor holds out for an even better deal. Maybe they'll get 40 million, even 50 million. And Taylor trusts Kyle. He wouldn't be where he is now without him. So with Kyle's encouragement, Taylor and his parents decide to turn down the $30 million offer. Roundhouse capitalizes on this moment by sending out a press release announcing the offer and the rejection. A teen CEO turning down $30 million drums up a lot of attention. Taylor starts getting invited to consumer tech conferences like CES and TechCrunch Disrupt.

• 32:30Scaachi Koul?

  The Huffington Post covers his story and Taylor appears on CNN and MSNBC. All those hours practicing his pitch with Kyle are paying off. Taylor is poised, earnest, and believable because he is completely genuine. Here he is being interviewed by Stuart Barney on Fox Business.

• 32:48Speaker 06

  You turned it down.

• 32:49Speaker 05

  I did.

• 32:50Speaker 06

  I said earlier that you were a very smart young man. What are you doing, turning down $30 million at the age of 14?

• 32:57Speaker 05

  It took a while to think about it, but we had felt like the time wasn't right. We kind of wanted to grow and develop the company a little bit more.

• 33:08Sarah Hagi?

  I mean, yeah, the point is that he will be more valuable, that this $30 million isn't anything, which is a huge gamble. It's betting on the future, basically.

• 33:17Scaachi Koul?

  Well, at first, the decision to turn down the deal seems like the right choice. Johnson & Johnson invite Taylor and his parents to their offices in June 2016 for a meeting. Kyle also shows Taylor emails that say Six Flags is interested in buying 100 vending machines, a deal worth more than half a million dollars. Taylor is probably so grateful for Kyle's guidance. Roundhouse just had its first major success with one of its other startups. A secure file-sharing platform called DemonSaw recently cut a deal worth $40 million. It's proof that the kind of money Kyle is promising Taylor can actually happen. But what Taylor doesn't know is that this recent Roundhouse success was a fluke.

• 34:00Scaachi Koul?

  Kyle is still stealing from the incubator's investors, and he hasn't been completely honest in his dealings with Taylor either. And once Taylor realizes that, he'll need more than a Band-Aid to heal from this betrayal.

• 34:16Scaachi Koul?

  It's 2016 and Kyle is having a drink at 8th and Rail, a local Opa-likka bar. It's the kind of place where you can listen to live music or watch the game, but also order sushi and a slice of cheesecake. Kyle has barely touched his drink when an enthusiastic investor slides into the seat next to him and starts talking about Roundhouse. He's heard about the incubator and is excited about its potential, and he's willing to cut Kyle a check for 30 grand right now. The media attention that Taylor and RecMed are bringing to Roundhouse has inspired people in Opa-likka. Tons of locals want to buy equity stakes in the incubator. But Kyle has a problem. He's already hit the legal cap. He sold $500,000 in equity,

• 35:00Scaachi Koul?

  the maximum amount he's allowed to sell under securities law. What he should do now is pause fundraising and focus on actually developing the startups he's already brought in. That's how the model is supposed to work, and that's how his investors will get paid. But $30,000 is sitting right there, and Kyle has never been great at saying no to easy money, so he gives in and he takes the check. And once he crosses that line, it becomes easier and easier to take more money. By the time it's over, Kyle has sold 200% of Roundhouse's equity to more than 70 investors, twice what he's legally allowed to do. Here he is, talking about it on the podcast, Rise Above.

• 35:41Speaker 03

  Eventually, I do run out of equity and start overselling. I'm just doing stupid, totally horrible reckless things, thinking that and hoping and praying that one of my startups becomes like the next big thing and I can right all these wrongs.

• 35:56Sarah Hagi?

  You know, for a lot of these stories, I also never know if the people are intentionally scamming or if in their minds, there's another story of like, oh, I will never get caught. Nothing bad's going to happen because these things will work out and I'll be able to pay everything back and it'll all come out in the wash. And it's so crazy to me that you could be dealing with these huge amounts of money and think that there is still some way, it's just gonna be fine.

• 36:20Scaachi Koul?

  Yeah, it's a really powerful level of delusion. And meanwhile, Kyle is still mixing investor money with his personal bank account. He's been using that slush fund to buy 24 cars and three houses, including one in Mobile where his young mistress lives. Kyle has also been lying to his star founder, Taylor. For example, that $30 million offer for RecMed? It was fake. That's why he encouraged Taylor not to take it. And the interest from Six Flags? Also fake. But Taylor repeating those stories on CNBC and CNN helps bring in new investors. Taylor doesn't have a clue he's being used as bait.

• 37:01Sarah Hagi?

  So also, you know, none of these news organizations even ask, "Hey, can we see the offer? Like, show us anything that proves this is real."

• 37:10Scaachi Koul?

  No. No. But not all Roundhouse startups are happy with Kyle. Parker Owen, the guy behind the laptop rap company Fraps, is pissed. It's been almost five months since he joined Roundhouse, and he hasn't seen any money. He's been draining his savings to keep his company going and only has eight grand left in his bank account. But when Parker confronts Kyle, Kyle is remarkably unsympathetic. His whole demeanor seems to change, and he becomes completely aloof. Smirking, he tells Parker that this is just how the game is played, and they're gonna have to renegotiate, likely because he just doesn't have the money to give. But Parker rejects that idea and packs up.

• 37:55Scaachi Koul?

  Fraps is done with Roundhouse for good. Kyle has been running this scheme for years now, and it's been working. The media tension, Taylor's story, the McAfee connection, they've dazzled his investors and kept the questions at bay. But Parker won't be the last person to start asking where the money went. And when other partners raise the alarm, Kyle's operation will start to buffer and fail.

• 38:22Scaachi Koul?

  It's June 2016, and Emily, the Roundhouse community manager and Kyle's right hand, has been fielding calls from anxious investors all week. They aren't calling to hear about new startup pitches. They want to know what's happening with their money. Despite pumping millions into Roundhouse, none of the investors have seen any dividends. Emily assumes that there must be a reasonable explanation and fills Kyle's calendar with meetings for them to talk about it. But he blows them all off. Then Emily receives a notice that Roundhouse is overdue on its utility bills. She finally gets Kyle on the phone and tells him that they can't even afford to keep the lights on. She demands to know what is going on.

• 39:04Scaachi Koul?

  Kyle asks her to float the money herself and promises to pay her back. He says he's scheduled to receive an annuity payment from Google around his birthday in November, and that influx of cash will solve everything. He also offers to buy out anyone who's still unhappy. Emily just needs to keep the investors at bay until then.

• 39:24Sarah Hagi?

  You know, it is so cowardly when these CEOs, founders, give the grunt work to their underling of being like, okay, so we don't have any money, and all you actually have to do is make everyone happy with the fact that there is no money. And I'll be figuring it out outside of frame.

• 39:43Scaachi Koul?

  Yeah, no worse job. And Emily is not about to use her own money to cover Roundhouse's bills. Instead, she tells Kyle that he needs to show up for the investor meeting tomorrow. No more excuses. She tells herself that it'll all be fine. The investors will get their money, Kyle will pay the utility bill, and everything will go back to normal. The next day, Emily arrives at the office before Kyle. She waits for him, worried that he's going to bail yet again. And finally, he shows up. But instead of heading to the conference room, he just goes to a corner and starts working on his laptop. Emily is weirded out, but Kyle is the successful entrepreneur, and tech is an unconventional industry. So she keeps waiting.

• 40:29Scaachi Koul?

  A little while later, he calls Emily and a colleague into a meeting and assures them that everything will be fine. And to prove it, he hands them a document, a Fidelity Investments report showing all of his holdings. See? The money is in there. Emily wants to believe him, but then her colleague speaks up. He looks Kyle right in the eye and tells him he knows that that document is fake. He watched Kyle Photoshop the Fidelity logo on the top just minutes earlier. Emily can't believe it. She had no idea that Kyle would go as far as forging a document to keep up this ruse. Here she is, talking about it on the Hulu series Scam Goddess.

• 41:09Speaker 04

  It was heart wrenching. Everything I thought was real is fake and that he was a lie and that I knew it in my heart at that point.

• 41:19Sarah Hagi?

  I do feel bad for Emily because this was also before everyone knew what we know now about how easy it is for these founders and tech people to be scammers. Like now it's synonymous with scamming sometimes if you say certain buzzwords, but these people legitimately had no idea what they were in for.

• 41:37Scaachi Koul?

  Yeah, Emily had been holding on to the possibility that everything was fine up until that moment. And now that belief is gone. And she's not alone. Around Opalika, the cracks are showing. Kyle's charm has fully worn off. Some angry investors have started digging into Kyle's past and have sniffed out his lies, like that he never actually worked at Google. Emily is crushed, but this isn't going to stay a quiet internal conflict between Kyle and his investors. There's major money on the line, and some of the people he's taken it from want to see Kyle pay the price with more than just cash.

• 42:30Scaachi Koul?

  It's spring 2018, almost two years since Emily and her colleague confronted Kyle. And FBI Special Agent Chris Gravel is in the Bureau's Alabama office planning a major sting. They're about to nab an elusive fugitive, Kyle Sandler. Agent Gravel's been working on this case since 2016, when some of Kyle's investors tipped off the feds that he'd stolen their money. A criminal background check turned up several old fraud and theft charges from a business Kyle started in his 20s, and she discovered that he's been using different names for years to secure fraudulent loans. So, in December 2016, she sent Kyle a target letter, letting him know that they were looking into him.

• 43:11Scaachi Koul?

  She ordered him to report to the FBI offices to discuss the investor's allegations. But shortly after the letter went out, Agent Gravel got word that Kyle had closed Round House and skipped town. Then, he ghosted Agent Gravel and never showed up to the meeting with the FBI. So, the manhunt was on. Eventually, Agent Gravel tracked him down in Texas. He was living near Texas A&M University on a ranch next door to Chuck Norris. And he had the audacity to set up a new media company and solicit investors.

• 43:46Sarah Hagi?

  There are just so many details about the choices Kyle makes that are so funny outside of the scam. Like, you live on a ranch next door to Chuck Norris? What the hell? And also, you ran out on the FBI and you're still trying to get investors?

• 44:03Scaachi Koul?

  I mean, it's arrogance beyond compare. But Agent Gravel has set up the perfect sting, thanks to a local car dealer who has some beef with Kyle. Apparently Kyle stiffed him on some payments and slandered his business online through a burner Google account. So now, the dealer is more than happy to help the feds. He and Gravel devise a plan where he'll invite Kyle to meet up to discuss Kyle's late payments. Then, the FBI will swoop in and bring Kyle to justice. Gravel is back in Alabama when her Texas counterparts put the plan in motion. She watches the body cam footage of the sting later. An officer approaches Kyle in the parking lot and asks if he's Kyle Sandler. Kyle says yes, and the officer puts him under arrest.

• 44:48Scaachi Koul?

  It's all pretty anticlimactic, except for the woman standing next to Kyle, who is emotional and extremely confused. Apparently, she's Kyle's new third wife, even though he never actually got divorced from the first two.

• 45:04Sarah Hagi?

  So this guy is Paulie also?

• 45:07Scaachi Koul?

  Worst guy you know has two wives, yeah. Kyle is booked in Texas, where he sits in jail for about a month while authorities arrange his transfer back to Alabama. When he finally gets there, he learns he's being charged with wire fraud and securities fraud. Each count carries a maximum sentence of 20 years, so he could be going away for a very long time. Kyle is staring down a future in prison. There's no perfect pitch or angel investor who can save him now. He has one card left to play before the court: radical honesty.

• 45:46Scaachi Koul?

  In February 2019, Kyle walks into a courtroom in the US District Court in Alabama. He enters the room wearing an orange jumpsuit and shackles. He's visibly nervous, humbled by his current circumstances. The evidence against him was so strong that Kyle pled guilty to both counts. Now, he has one more chance to address the court before learning his fate. His lawyer has told him he'll likely face four or five years in prison. But as he listens to the US attorney go on and on about how he used people's hard-earned money as his personal piggy bank, Kyle worries it might be longer than that. One of his investors implores the judge to impose the maximum sentence, especially since Kyle exploited a child to defraud his investors.

• 46:31Scaachi Koul?

  Sarah, can you read what he tells the judge?

• 46:33Sarah Hagi?

  Yes, he says, quote, "Remorse doesn't begin to say it. I'm disgusted with myself."

• 46:40Sarah Hagi?

  Yeah, too little, too late, brother.

• 46:42Scaachi Koul?

  Yeah.

• 46:42Sarah Hagi?

  Remorse doesn't begin to say it. Maybe try. It's a good place to start, actually.

• 46:47Scaachi Koul?

  While Kyle braces himself for the judge's decision, he's sentenced to five years in prison, and the judge orders him to pay $1.9 million in restitution. In prison, Kyle finds a new identity for himself. He gets a job in the kitchen. He studies to become a paralegal and starts helping his fellow inmates with their legal filings. He also comes out as gay and starts a relationship with a man that he meets in prison. Toward the end of his sentence, Kyle is moved to a prison camp where he gets more freedom. But then, the former droid guy gets in trouble for having a cellphone, so he's sent back to a medium-security prison until his eventual release in February 2022.

• 47:29Scaachi Koul?

  Kyle is out of prison now, and these days, he hosts his own podcast about the experience. He also runs a prison consulting company called Prison Tips, helping people prepare for life behind bars. As of last year, he is still with the man he met in prison. Emily was hired by a new company in Opa-land called Colab, a coworking space that opened in the old Roundhouse location. She returned to her role as community manager and worked there for six years until 2021. She's now a freelance photographer and still living in Opa-land. Roundhouse is not listed on her LinkedIn profile. After Roundhouse first closed, Taylor's father told a reporter that they were working to get RecMed back on track, but the company never really took off.

• 48:12Scaachi Koul?

  Taylor's LinkedIn profile still lists him as the CEO of the company. Kyle wanted to prove that the spirit of Silicon Valley could thrive anywhere in the country, that small towns deserved a shot at the big dream. It wasn't a bad idea. It just needed someone honest enough to build it.

• 48:32Scaachi Koul?

  The more we host the show, the harder it is to trust somebody with the backstory of like, I was bullied because it's like, well, are you going to do something to me about that?

• 48:41Sarah Hagi?

  Yeah, it's like making my trauma everyone's problem by scamming.

• 48:45Scaachi Koul?

  Yeah. Kyle also was kind of on the cutting edge of a lot of this like tech reviewing blog stuff.

• 48:52Sarah Hagi?

  Yeah.

• 48:52Scaachi Koul?

  You know, he was one of the first, he certainly was the first to get that Android. And he could conceivably still be doing that today. I mean, looking at phones and talking about phones and talking about how your phone works is its own cottage industry. I mean, it is like how Wirecutter exists. And he could still be doing that, but instead he got arrogant, like everybody we talk about on the show. And he was like, hmm, time to be weird to a child.

• 49:16Sarah Hagi?

  Oh, absolutely. Yeah, that's so true. It's like, a lot of the people who are the most famous in those worlds have been doing it since YouTube times, like when YouTube was new. So in my mind, it's like, wow, if you just, again, like all our scammers, if you just had the patience and believed in yourself, you could have been swimming in cash by now. But I think he was always meant to scam also. He just seemed like the scammer. It's people who just are kind of like losers and can't accept that they're not cool.

• 49:43Scaachi Koul?

  The thing about Kyle's idea that these smaller cities need incubators so that they can be titans of industry, I guess is true, but I think it also meant that he could take advantage of people because maybe they wouldn't know better. I mean, you could already take advantage of people in Silicon Valley pretty easily. So I imagine taking advantage of someone in Opelika is also very doable.

• 50:03Sarah Hagi?

  Oh, for sure. I think a huge part of it is that he went to this town that really needed something like this. And he ended up becoming kind of like the king of a very small world.

• 50:15Scaachi Koul?

  I feel like this scam is obviously awful to do to people because they're coming to you with all of their hopes and like everything they want for their future and they think you're going to make them rich. But doing that to a little boy in a bowling shirt is so much more evil than doing that to any adult.

• 50:32Sarah Hagi?

  Yeah, and it's also like a pretty disprovable lie. I mean, I'm questioning a lot of the people involved in this. Obviously, no shade to the child. Once again, I must reiterate, this kid is cute.

• 50:43Scaachi Koul?

  So cute.

• 50:44Sarah Hagi?

  It just makes me so Angry that it's that easy to fake that there's a $30 million offer. It's like, nothing is real.

• 50:51Scaachi Koul?

  I mean, I'm a little comforted at least that the $30 million deal was fake. Because if they had turned it down and it was real, I think that would have been, we would not be able to get through this episode.

• 51:01Sarah Hagi?

  That would have taken a toll on that child forever. Yeah.

• 51:04Scaachi Koul?

  Yeah. I feel like too, this is another story of a scam artist who just couldn't live in his full truth. Like couldn't really be himself, felt like he was at odds in his family because of his race. Probably felt that way at school because of his race and clearly because of his sexuality as well. I mean, coming out that late in your life, that changes how you move through the world. Cause you can't really be yourself. I think he was just so used to faking it. And so what's one more lie about money when you're already lying about who you are to yourself?

• 51:37Sarah Hagi?

  It just seems like he got really used to feeling like a fraud and in turn kind of became one. Or just feeling like, well, nothing's real. May as well just make everything up.

• 51:48Scaachi Koul?

  Does this make you feel more suspicious of the Shark Tank investors of the world? Or do you feel like now you have more respect for them because they did it legitimately?

• 52:00Sarah Hagi?

  Oh, honestly, I have not a lot of respect for any of this kind of like, for as much as these people succeed, they also fail and make really bad investments. It's like, kind of just these chances they're taking with crazy amounts of money. Also, children shouldn't be involved in the gambling of being in startups. I, again, not to discourage a child from trying, but to me, it's like, it's a disgusting, sick world. Let kids be kids. Kids shouldn't have jobs at all.

• 52:29Scaachi Koul?

  I think the lesson is that we have to keep children out of first round seed investment, for sure. They should be running lemonade stands and being loud on the subway. They should be ripping cigs behind school.

• 52:43Sarah Hagi?

  Yep.

• 52:43Scaachi Koul?

  And shooting cans with a BB gun. And I do not think they should be in investor meetings with Johnson and Johnson.

• 52:49Sarah Hagi?

  Kids used to play with slingshots. That was enough for them. And now it's seed money? No, thanks. Get out of here.

• 52:55Scaachi Koul?

  All it took for us to become our parents was hearing about a little kid get taken advantage of by one investor.

• 53:00Sarah Hagi?

  You know, when I was a kid, my favorite toy? Wheel and stick.

• 53:04Scaachi Koul?

  Wheel and stick. I used to spin a quarter around. That's all I needed. A quarter and the sun. Why isn't this boy outside burning ants with a magnifying glass?

• 53:13Sarah Hagi?

  We're doing boomer nostalgia.

• 53:16Sarah Hagi?

  You know what? It's also pretty crazy. He has a story forever now. Like, hey, like, what was your childhood like? Okay, so when I was 13, I came up with these vending machines and this guy basically lied. And like, you're part of this crazy story where like-

• 53:29Scaachi Koul?

  Listen, I think you either get money or you get a good story. So it's good that he got a good story.

• 53:34Sarah Hagi?

  Okay, write that down. You get money or a good story. Merch.

• 53:38Scaachi Koul?

  That's the lesson. You can either become immediately wealthy, but possibly in a dubious way, or you're gonna write a really good memoir one day, man.

• 53:47Sarah Hagi?

  Yes, absolutely.

• 53:56Scaachi Koul?

  From Audible Originals, this is Kyle Sandler, The Alabama Startup Scam for Scamfluencers. I'm Sachi Cole.

• 54:03Sarah Hagi?

  And I'm Sarah Haggie. If you have a tip for us on a story that you think we should cover, please email us at [email protected]. We use many sources in our research. A few that were particularly helpful were Scam Goddesses episode, The Gig City Grift, Generation Hustle's episode, The Alabama Exit, He Rode Into Alabama, A Tech Savior, Then Swindled Millions by Jay Reeves for the Associated Press, and The Opalika Auburn Newses, Round House Closes by Tyra L. Jackson, and Facing the Fallout by Rebecca Martin, along with additional reporting in The Opalika Observer.

• 54:38Scaachi Koul?

  Jessica Ford wrote this episode. Additional writing by us, Sachi Cole and Sarah Haggie. Alex Burns is our story editor. Our senior producers are Sarah Enni and Ginny Bloom. Our associate producer is Charlotte Miller. Our managing producer is Desi Blaylock. Fact checking by Kalina Newman. Sound design by James Morgan. Additional audio assistance provided by Augustine Lim. Our music supervisor is Scott Velazquez for Freeze on Sync. The executive producer for Audible is Jenny Lauer-Beckman. The head of creative development at Audible is Kate Navin. The head of Audible Originals North America is Marshall Louis. The chief content officer is Rachel Giatza. Copyright 2026 by Audible Originals LLC. Sound recording copyright 2026 by Audible Originals LLC.

• 55:25Scaachi Koul?

  Follow Scamfluencers on the Audible app or wherever you get your podcasts. You can listen to all episodes of Scamfluencers ad-free by joining Audible.