Evolve Hires Ex-Con Fmr Synapse Compliance Chief To Aid Recon Efforts, Sources Say
Bryan Keltner, Synapse Cofounder, Hit With Fraud Lawsuit Just One Month Ago
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Evolve Hires Ex-Con Former Synapse Compliance Chief To Aid Recon Efforts, Sources Say
In mid-July, an Evolve Bank & Trust spokesperson told the Wall Street Journal that reconciliation, necessary in order to return end users their funds, was on track to be completed in “a matter of weeks.”
But, more than two weeks later, little progress is evident, based on Evolve’s status report filed last week as part of the Synapse bankruptcy case.
According to its filings, the bank expects its reconciliation efforts to take approximately two months — once it has obtained the necessary account and transaction data, which the most recent report doesn’t indicate has yet been achieved.
Now, according to multiple sources with knowledge of the matter, Evolve has engaged a former Synapse employee to help it with its reconciliation efforts: Synapse cofounder and former Chief Compliance Officer Bryan Keltner.
Keltner, a Memphis-area native, met now-former CEO Sankaet Pathak and other early Synapse employees at the University of Memphis, which both men attended.
Keltner, from a prominent Memphis area family, was instrumental in securing Synapse’s initial $700,000 investment from Jeff Webb, founder of athletic apparel company Varsity Brands, and Doug Marchant, founder of payments firm Concord EFS, which was acquired by First Data in a deal valued at $7 billion.
Webb and Marchant helped facilitate introductions to Synapse’s first two bank partners: Triumph Bank and Independent Bank, according to former employees.
Keltner’s local Memphis connections and the trust of early investors helped secure him the title of “cofounder” at Synapse, but, according to early Synapse employees, at the time, it wasn’t clear what his day-to-day role at the company would be.
Keltner ended up leading compliance for the company, at least occasionally using the title of “Chief Compliance Officer” in communications reviewed by Fintech Business Weekly.
One early Synapse employee described it as “psycho” that Keltner led compliance, as he had no relevant experience. According to Keltner’s LinkedIn profile, prior to Synapse, he worked as a club concierge and in security at Memphis institution The Peabody hotel.
In addition to his role leading compliance, Keltner also sat on Synapse’s board in the early years.
Keltner appears to have held these roles when Synapse’s relationship with what would become its most important bank partner, Evolve Bank & Trust, was first negotiated and operationalized.
That Evolve was comfortable onboarding Synapse as a partner, given the company had only been operating for about three years when they began working together and Synapse management’s lack not only of financial services experience, but any professional work experience, raises questions about what kind of due diligence Evolve conducted on Synapse.
An interagency due diligence guide for community banks considering partnering with fintechs lays out topics banks should consider and potential sources of information, including:
business experience and operational history
business strategies and plans, including key personnel and employment practices, such as background check procedures
qualifications and backgrounds of company directors and principals, including resource and succession planning
financial condition
market information, including on clients and competitors
organizational and business documents, such as licenses, charters, articles of incorporation, and so on
regulatory compliance, including a fintech’s risk and compliance processes and policies, procedures, training, and internal controls
risk management and control processes, including information on risk and compliance staffing
information security policies, procedures, and controls
business continuity planning and incident response
service level agreements
reliance on subcontractors
While the interagency guidance specifically addressing partnering with fintechs was released in 2023, it was primarily a repackaging of existing guidance and best practices for how community banks should evaluate selecting vendors and technology service providers.
Wrestling Matches, “Erratic Behavior,” And A “Total Shit Show” Company Offsite
Early Synapse employees describe Keltner as a “drug addict,” but say that, during the period he was actively working at Synapse, he appeared to be sober.
That may have been a challenge, given what former employees and former Synapse clients describe as a rowdy and sometimes “violent” office environment.
One former client described a chaotic visit to Synapse’s office, a residential house in the tony Twin Peaks neighborhood of San Francisco, where employees would go silent when Synapse cofounder and then-CEO Sankaet Pathak entered the room, as they “were terrified to interact with him because of his erratic behavior.”
The owner of that Twin Peaks house later sued Pathak, Keltner, and Synapse for breach of contract, fraud, and damage to the house, saying that the lease did not permit the property to be used as a commercial office. The suit, filed in 2021, seeks nearly $1 million for unpaid rent and damage to the property; the case remained unresolved at the time Synapse filed for bankruptcy in April 2024.
Pathak’s “erratic behavior” was profiled in a 2020 Forbes piece and led to a harassment and discrimination lawsuit against the company and Pathak personally. The suit was eventually settled.
During that same office visit, the former client described Pathak as “[getting] a bunch of employees drunk” and “[holding] a wrestling match,” resulting in several employees sustaining injuries.
It wouldn’t be the only ill-fated “wrestling match” at the company.
During an early 2017 offsite in Yosemite, which one attendee described as a “total shit show,” Keltner and Synapse’s general counsel at the time, Lawson Baker, also wrestled each other, which resulted in both men getting a black eye and Baker sustaining a broken ankle, according to sources with first-hand knowledge of the incident.
Sometime after the Yosemite offsite and in advance of raising its $17 million Series A in late 2017, Keltner was removed from Synapse’s board and another early employee, operations lead Hillary Quirk, was given the title of “cofounder” and joined the board, according to sources with knowledge of the matter.
Quirk remained at the company until August 2022, according to her LinkedIn profile.
Keltner stepped back from day to day employment at Synapse sometime in late 2017 or early 2018, and the company bought back shares from Kelter for a sum in the millions of dollars, according to sources familiar with the transaction.
Keltner, reached by phone last week, confirmed the approximate timing of when he ceased regular work at the company.
Keltner’s Legal Troubles: DUIs, A Marijuana Business/Ponzi Scheme, And A Real-Estate Dispute
Around the time he stepped back from day-to-day work at Synapse, Kelter faced the first of several legal issues, pleading no contest to a DUI charge in San Francisco in January 2018.
The limited court information immediately available suggests Keltner may have served about 20 days in jail, paid a fine and restitution of about $1,632, and was prohibited from operating a vehicle with any measurable amount of alcohol in his system.
A couple of years later, Keltner pled no contest to misdemeanor DUI and hit-and-run charges stemming from an incident in Placer county, near Sacramento, in May 2020.
According to the charging information available, Keltner had a blood alcohol level around twice the legal limit. Per the case summary, it appears Keltner served a 20 day jail sentence beginning on July 14, 2021.
Around the same time, Keltner faced a criminal charge in Sacramento county, most likely also a DUI. A bench warrant was issued for Keltner’s arrest when he failed to appear for a February 2021 progress report.
The arrest warrant was ultimately recalled, and it appears Keltner served another brief jail sentence.
The criminal cases aren’t the only legal challenges Keltner has faced, however.
In 2021, Keltner sued a former business partner, Gleb Tabachnik, and his business entities, Legends of Healing and Dragon’s Lair Enterprises.
The suit says Keltner believed he was investing $250,000 in Tabachnik’s marijuana businesses, but that, in fact, Tabachnik was operating a sort of Ponzi scheme.
Keltner’s attorneys withdrew from representing him in the case, writing that they hadn’t been able to contact Keltner for about a year and that he had failed to meet the terms of their retainer. Keltner ultimately dropped the suit.
Reached for comment, Keltner said that Tabachnik was “broke,” and, with little hope of recovering any funds, there was no point in pursuing the suit.
And about one month ago, in late June 2024, Keltner was sued for fraud and intentional misrepresentation, with the plaintiff alleging that after paying Keltner $370,000 to purchase a property, Keltner reneged on the sale agreement but kept the money.
Asked for comment, Keltner described the suit as frivolous, saying that he was evicting the tenant and the suit was an attempt to drag out the process.
Evolve Is Engaging Keltner To Assist With Reconciliation Efforts, Sources Say
Despite Keltner’s substance-related and civil legal problems, Synapse continued to periodically engage his services.
Internal Synapse records indicate that Keltner was classified as a 1099 employee, reporting to Sankaet Pathak, from November 2018 to July 2021, and again from January 2023 to April 2023, reporting to then-CFO Mike Rasic.
Now, multiple sources confirm that Evolve is engaging Keltner in some capacity to aid with the Synapse reconciliation efforts.
Reached by phone last week, Keltner neither confirmed nor denied that he is working for Evolve, saying only that he is working on his own “trading business.”
For its part, Evolve did not respond to multiple requests for comment about its relationship with Keltner — though the bank’s willingness to engage a contractor with Keltner’s history suggests that Evolve has learned little from its previous due diligence failures or its recent wide-ranging enforcement action.
Other Good Reads
Size, Complexity, and Polarization in Banking (Acting Comptroller Michael Hsu)
Reflections on Bank Regulatory and Resolution Issues (FDIC Vice Chairman Travis Hill)
Statement on the Notice of Proposed Rulemaking on Brokered Deposits (FDIC Chairman Martin Gruenberg)
Turning Back the Clock: FDIC Proposes Significant Changes to 2020 Brokered Deposit Rule (Troutman Pepper)
The End of Banking History? Finishing the Unfinished Business of Financial Reform (Graham Steele/Roosevelt Institute)
Acquire Or Be Acquired? (Fintech Takes)
UX isn't given enough credit as a Fintech Superpower (Fintech Brainfood)
How I got ‘hacked’ and what that says about the banking system (FT)
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No one is covering this Synapse story like you. The ugly underbelly of how money props up unconscionable behavior is now open for public viewing. Thank you for the courage and conviction to press forward!!!