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Magic Leap says its head of security tried to ‘extort millions of dollars’ with frivolous lawsuits

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Magic Leap

Secretive augmented reality startup Magic Leap is alleging that its current director of global security tried to extort the company for “millions of dollars” by threatening to file frivolous lawsuits against it. In a complaint published yesterday, the company asked a Texas court to preemptively declare that Magic Leap did not discriminate or retaliate against Todd Keil, a former Department of Homeland Security employee who joined Magic Leap in 2015. It claims that Keil was preparing to “falsely pose as a victim of unfair employment practices” and sue Magic Leap for violating age discrimination and whistleblower protection laws.

Magic Leap paints Keil, who it hired as senior director of global security, as a disengaged employee with a “gross misunderstanding” of the regulations and market practices in his field. Among more general complaints about Keil’s performance, Magic Leap says he didn’t show up at a “high risk” meeting where an employee with a “history of erratic behavior” was being fired, and that he paid $250,000 above market rate to hire a security firm that he had a “personal relationship” with. In December, Keil allegedly hired an attorney to tell Magic Leap that he was filing lawsuits under Florida’s whistleblower protection and age discrimination acts.

The complaint doesn’t specify exactly how Keil was demanding money from Magic Leap, but it says the claims were “an effort to extort millions of dollars” from the company.

“Mr. Keil believes that Magic Leap does not want these items disclosed in the public forum and has demanded payment of millions of dollars from Magic Leap in exchange for not publicly filing these baseless whistleblower claims. Mr. Keil perceives he has leverage to utilize this sensitive information concerning these security-related matters — which are covered by a Confidentiality/Nondisclosure Agreement that he signed when he joined Magic Leap — because if exposed, they may generate serious adverse consequences for Magic Leap’s ongoing development efforts.”

Magic Leap has weathered multiple lawsuits involving its own employees. Two former executives sued it in 2016, claiming they had been unjustly fired and robbed of shares in the company. Magic Leap sued the same two employees for misappropriating trade secrets, and the whole dispute was settled last year. In February 2017, the company was hit with a sex discrimination lawsuit from another former employee, who also later settled with Magic Leap.

According to Magic Leap, Keil planned to make claims that were either incorrect or specious. In one case, Magic Leap employees and partners apparently received several HoloLens headsets as part of Microsoft’s developer pilot program, but (according to Magic Leap) they quickly sent them all back. It says that Keil falsely claims a manager planned for Magic Leap to keep one of the devices, potentially for reverse-engineering, and that the company retaliated against him for discussing the risks involved in keeping the headsets.

In another incident, Keil supposedly unnecessarily warned the company off hiring interns from Iran and China or working with an unnamed London-based company owned by a Chinese company with military intelligence ties. In a third, Magic Leap says he accused the company of spying on him with a digital camera, which the company says was a conspicuously placed device designed to test security system vulnerabilities.

Keil’s supposed age discrimination complaints are more nebulous, but allegedly involve being left out of meetings or denied pay raises, among other things. Keil didn’t immediately reply to a request for comment from The Verge via LinkedIn.

Magic Leap has historically been reticent to reveal details about its business or products, but it unveiled an augmented reality headset called the Magic Leap One in December, setting a launch date of this year. This case is far less dramatic than earlier lawsuits, but it reinforces those complaints’ descriptions of a fractious workplace.