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Startup maestro duped Alabama town through network of lies

February 26, 2019

OPELIKA, Ala. (AP) — Looking back, there are so many reasons Kyle Sandler was able to separate so many people from so much of their money.

Sandler rolled into this old railroad crossroads at a time when Opelika (Oh-puh-LIE-kuh), was trying to bounce back from the Great Recession. The city of 30,000 needed a boost.

Soon, everyone who mattered had heard Sandler’s captivating story: He was one-time Google executive who got rich on the West Coast and moved to their east Alabama town. He drove a sporty Jaguar and had, in his own words, “a heart of gold.”

So when Sandler opened a business incubator called the Round House, people bit. Their faith only deepened when Sandler aligned himself with local John McAfee, an early pioneer of internet security, and landed national media coverage for a local teenager with an idea for a new kind of vending machine said to be worth millions.

“Kyle was a master. I think he could get money out of a guy living under a bridge,” said Chuck Wacker, one of dozens of locals who invested in the Round House.

In all, authorities said, Sandler raked in investments totaling about $1.9 million from more than 50 investors, all the while diverting their money for his personal expenses like child care, rent and cars. Wacker said he lost about $35,000.

“He swindled an entire community,” said Amanda Senn, deputy director of the Alabama Securities Commission.

In a series of telephone interviews from jail with The Associated Press, the 43-year-old Sandler said he never intended to pull off a scam but got greedy.

Sandler said he settled in Opelika mainly because his wife, an Alabama native, wanted to move home. Opelika, the state’s first “gig city” with high-speed fiber-optic network, provided an incentive of free internet service worth about $50,000, he said.

“I thought he had a good idea,” Mayor Gary Fuller said.

The city also had attracted John McAfee, who founded the corporate predecessor of computer security giant McAfee Inc. He noticed Sandler driving the Jaguar, and the two struck up a relationship.

Sandler also acted as a mentor for young entrepreneurs. That’s how he met Taylor Rosenthal, 13 at the time.

A baseball player for years, Taylor was struck by a business idea at the ballpark.

“Every time a kid got hurt, I would notice that a parent wouldn’t be able to find just a Band-Aid, and I tried to come up with something in an eighth-grade class called the Young Entrepreneurs Academy,” he said in a 2016 interview on CNN .

Taylor’s initial plan for selling first-aid supplies morphed into a vending machine dispensing injury-specific products.

Incorporation records show RecMed LLC formed on Dec. 1, 2015, with Sandler as registered agent and Taylor and his parents as co-owners. The company was based at the Round House. Sandler produced a promotional video , and an article in Inc. magazine named Taylor one of 20 teen entrepreneurs “set for success” in 2015.

Media coverage swelled, particularly when it came out that an undisclosed company had offered Taylor $30 million for RecMed but he wanted $50 million. National media outlets lined up for interviews without verifying the story.

To Taylor’s family, it all seemed very real.

Father Terry Rosenthal, in an email exchange with the AP, said Sandler showed them a document indicating pharmaceutical giant Johnson & Johnson was interested, and the family met with the company in June 2016. Sandler also showed them emails from theme park giant Six Flags expressing interest in purchasing 100 machines.

With publicity mushrooming, Sandler and the Round House were hot commodities. McAfee decided to stage a quixotic campaign for president in 2016 and announced his bid at the Round House with Sandler as an adviser.

“I loved Opelika, and they loved me,” Sandler said.

Without warning, in December 2016, the Round House closed. Sandler’s only explanation was a newspaper interview in which he said he “lost control.”

That was only a sliver of the truth.

Before the shutdown, some investors uncovered Sandler’s secret — he wasn’t the person he portrayed himself to be — and confronted him. He never worked at Google, Sandler now admits, and he wasn’t wealthy. He also had multiple arrests in several states for theft, forgery and check fraud.

Taylor Rosenthal’s parents learned Sandler had created fake documents and lied to them to produce the $50 million story the boy unwittingly told.

Of all the people scammed by Sandler, McAfee said, the Rosenthals were hurt the worst.

“That was the most tragic of the things he did. He sucked in this 14-year-old boy. He used that kid viciously,” McAfee said in an interview.

Sandler was arrested last June in Texas, where he was working on another company planning to seek investors.

In raising nearly $2 million in Opelika, Sandler took in twice as much as the Round House was worth, authorities said. A judge ordered him to forfeit all the money.

Sandler pleaded guilty to federal charges of wire fraud and securities fraud in August and faces a maximum sentence of 20 years on each. He also faces a theft charge in state court, and defense attorney Richard Keith said Sandler likely will get four or five years in prison total.

Neither investors nor the media checked his background, Sandler said, and he began stealing as money rolled in. He admits using others — particularly Taylor Rosenthal.

“Taylor is guilty of nothing. The only thing he did was get manipulated by me. I feel really bad about that,” Sandler said in a telephone interview from jail, where he awaits sentencing, set for Thursday in Montgomery.

Sandler said he dreams of raising money to repay his victims once free, and he wants to do it in the most unlikely of places: Opelika.

“I hope they will have me back,” he said.