Remember that time the DEA raided our startup? — Startup Stories 101

One of the DEA agents hung his jacket on the Hulk statue in our office.

In 2008 more than 20 United States Drug Enforcement Agency officers stormed our offices in the Dallas INFOMART. I remember the scene like it was yesterday. I had brought my son to the office for the day and was in the process of launching the first mobile application for Android (ShopSavvy). I felt sick to my stomach when I watched a team of twenty armed DEA agents enter our offices. Before I could take a breath the lead agent from this DEA assault team handed me a search warrant as his agents breached the front door to our offices. My seven year old was in shock as were my partners and employees. The one thing I was certain of, was that I shouldn’t say anything — you should never talk to the police (much less the DEA or FBI). After reading the search warrant it was clear they had made a mistake. There were no servers in the location where they were serving the warrant. My partner began talking and instinctively I told him to head back to his office due primarily to my understanding of 18 U.S.C. § 1001 — if you don’t talk to a federal agent you can never be accused of lying to them much less prosecuted for misleading them (like Martha Stewart et al).

The INFOMART was home to our company as well as several other important datacenters (including Equinix its current owner). We occupied several suites — each unique legal properties. Our datacenter was originally owned by McLeodUSA and was being operated by the company that my partner and I owned. The DEA agent explained to me that they’d be taking every computer and server in the facility — equipment that we operated for a host of companies throughout the North Texas area — including banks, law firms, and medical facilities. I had heard of other datacenters who had been raided — each had been bankrupted by these raids through no fault of their own. They simply had the bad luck of licensing server racks to bad actors.

When I realized their search warrant was flawed and that they had no idea where our client’s servers were located I decided to break my own rule and “talk” to them. I was able to determine they were targeting one of our banking clients — a company that occupied just a single server rack in our datacenter. They had even “catfished” our company, trying to determine if our company was complicit in the money laundering program our client was allegedly at the heart of — calls that I actually fielded. Eventually they agreed to focus their ‘seizure’ on their target if I’d agree to cooperate — leaving our business operational and intact. It turns out the DEA had evidence that our client, who we had never actually met, was a major money launderer for Drug Cartels (Free tip for datacenter operators: KNOW YOUR CUSTOMERS).

My seven year old taking a picture of the DEA jacket on our Hulk statue.

I took the DEA agents to our colocation facility down the hall and identified the rack occupied by their target. Most of the DEA agents who were present during the first part of the raid returned to their field office and we were left with two agents and an engineer to finalize their ‘raid’. Interestingly the engineer rolled in a rack full of equipment to our facility — presumably to image the bank’s servers. Very quickly he told the agent in charge that he was a “Microsoft” engineer and not a “Linux” engineer — he didn’t have the expertise necessary to image the bank’s servers. I offered our CTOs services and we were able to provide the DEA with a complete image of the bank’s servers. Once they were cloned they removed the bank’s servers and took them into custody.

At the end of the day I was simply thankful that the DEA didn’t take our other clients servers — basically putting us out of business (and perhaps putting many of our clients out of business). I never really heard what happened to the suspects or their business other than the fact that they never paid their colocation bill again — I don’t think we worked very hard to collect their past due amounts.

Do you have a crazy startup story you can share? Tag it #startupstories101.

About The Author

Alexander Muse

Alexander Muse is a serial entrepreneur, author of the StartupMuse, contributor to Forbes and managing partner of Sumo. Check out his podcast on iTunes. You can connect with him on Twitter, Facebook, LinkedIn and Instagram.