A legal feud between the co-founders of
On July 24, Richard Chance, the co-founder and chief technology officer at Totem, filed a petition with the District Court of Tulsa County in Oklahoma against Totem Technologies and its founder and CEO, Amber Buker. He is seeking 20% ownership interest in Totem — something Chance says he was promised but has since been denied — and damages of $75,000 for financial losses and mental and emotional stress.
It's not unusual for strife to develop between fintech founders. The way they navigate it can spell success or trouble for the future of the company.
"When two people come together to
Buker recruited Chance in the fall of 2021 as a co-founder, chief technology officer and Totem app developer. They met through Natives in Tech, a nonprofit that helps Native American technologists network, build open-source tools and more. Both dove full-time into work on Totem in the summer of 2022.
"It was important for me to find a co-founder who was Native and to have a Native-built product," Buker said at the time.
Totem's digital banking app is the first created by and for Native Americans. The challenger bank will help each of its partner tribes offer uniquely branded apps that provide banking services, distribute government assistance and teach users how to build their credit.
In his petition, Chance, an enrolled member of the Cherokee Nation, stated that the two designed the logo, sought investors, met with tribal leaders and spread the word together. He alleges that Buker promised him at least 20% ownership in Totem but he has since been stripped of his stake in the company as Buker explores a potential sale. Chance reports that Buker blocked his access to company software and information technology on July 12 and threatened legal action for misappropriating company intellectual property.
Chance says he received his high school diploma but has not earned higher degrees or undergone formal training.
"Buker, using her superior knowledge of the law, took advantage of Chance's lack of understanding of the law and legal issues in order to get him to acquiesce to certain demands and to strip him of his rights to Totem," reads the petition. Buker and Totem "induced Chance to sign a contract that he would not have signed if it were not for Buker and Totem's false and misleading representations, concealments and fraudulent conduct."
Chance said Buker told him to set up an organizational repository for Totem on software development site Github and transfer all code and IP there, or else she would file criminal charges.
Buker rejected these allegations through her attorney, Dara Tarkowski. Totem's response to the petition is due by the end of August.
"Totem and Ms. Buker vehemently deny what we consider to be specious allegations set forth in this petition, and we look forward to communicating the truth to the court as the litigation process unfolds," said Tarkowski, managing partner at Actuate Law. "Ms. Buker is a proud member and enrolled citizen of the Choctaw Nation and is very saddened by the falsehoods that Richard Chance decided to publish."
The petition also suggests that Buker is attempting to sell Totem.
"Absolutely no serious conversations about that have taken place other than very generic discussions about future exit opportunities that would be typical of any startup," said Tarkowski.
Attorneys for Chance did not respond to a request for comment.
Totem launched its consumer accounts to the public in July. The company also plans to partner with tribes in different ways. That could mean tribes list their benefits in the Resources tab for free, market the app to their members, disburse tribal benefits and payroll directly into Totem accounts or white label the app under the tribe's brand. Depending on the type of partnership, tribes will receive a portion of interchange revenue — an incentive for them to market Totem and use it for digital payouts. The deposits are held by First Pryority Bank, a $383 million-asset institution in Pryor, Oklahoma.
In January, Totem
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"It will probably be a distraction in terms of management and the board spending time on it," said Gotsch. But in her experience, "the fact that co-founders do not get along is not a death knell for the company."
She recalls one portfolio company where a board member negotiated a settlement between two feuding founders, where one would leave the business and the other would take over full-time. The result was a successful exit for all shareholders.
Still, new investors will hesitate to
"Startups must demonstrate to investors that they have a compelling business model and the leadership necessary to implement it," said Michele Alt, partner at Klaros Group. "Totem aims to provide financial services to a severely underserved population. Hopefully, the litigation won't undermine confidence in Totem's leadership's ability to carry out this compelling business model."
Again, in Gotsch's experience, the situation may not inflict lasting damage.
"As long as investors see that everyone has come to a resolution and moved on, they will look at the company like any other," said Gotsch. "If a company successfully went through that process, that is a point in their favor because it shows that they dealt with a difficult situation and got to the other side."
